-----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, NIgrTv4ECIkaatnWaZrSUTlJkLASTVjlu/KRFKXu5eDY5rFr7lzl8utF5tCG+meY j6DXLHGgPw2PYWFrn7jjNA== 0000950135-08-003185.txt : 20080501 0000950135-08-003185.hdr.sgml : 20080501 20080430193143 ACCESSION NUMBER: 0000950135-08-003185 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20080501 DATE AS OF CHANGE: 20080430 EFFECTIVENESS DATE: 20080501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Metropolitan Life Separate Account UL CENTRAL INDEX KEY: 0000858997 IRS NUMBER: 135581829 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-147508 FILM NUMBER: 08791527 BUSINESS ADDRESS: STREET 1: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2125788717 MAIL ADDRESS: STREET 1: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 FORMER COMPANY: FORMER CONFORMED NAME: METROPOLITAN LIFE SEPARATE ACCOUNT UL DATE OF NAME CHANGE: 19920703 0000858997 S000004219 Metropolitan Life Separate Account UL C000058203 Equity Advantage VUL (MetLife) 497 1 b68365b1e497.txt METROPOLITAN SEPARATE ACCOUNT UL EQUITY ADVANTAGE VUL Flexible Premium Variable Life Insurance Policies Issued by Metropolitan Life Separate Account UL of Metropolitan Life Insurance Company 200 Park Avenue New York, New York 10166 This prospectus offers individual flexible premium variable life insurance policies (the "Policies") issued by Metropolitan Life Insurance Company ("MetLife"). You allocate net premiums among the Investment Divisions of Metropolitan Life Separate Account UL (the "Separate Account"). Each Investment Division of the Separate Account invests in shares of one of the following "Portfolios": METROPOLITAN SERIES FUND, INC.--Class A BlackRock Aggressive Growth Portfolio BlackRock Bond Income Portfolio BlackRock Diversified Portfolio BlackRock Large Cap Value Portfolio BlackRock Legacy Large Cap Growth Portfolio BlackRock Strategic Value Portfolio Davis Venture Value Portfolio FI Large Cap Portfolio FI Mid Cap Opportunities Portfolio FI Value Leaders Portfolio Franklin Templeton Small Cap Growth Portfolio Harris Oakmark Focused Value Portfolio Jennison Growth Portfolio Julius Baer International Stock Portfolio Lehman Brothers(R) Aggregate Bond Index Portfolio Loomis Sayles Small Cap Portfolio MetLife Mid Cap Stock Index Portfolio MetLife Stock Index Portfolio MFS(R) Total Return Portfolio MFS(R) Value Portfolio Morgan Stanley EAFE(R) Index Portfolio Neuberger Berman Mid Cap Value Portfolio Oppenheimer Global Equity Portfolio Russell 2000(R) Index Portfolio T. Rowe Price Large Cap Growth Portfolio T. Rowe Price Small Cap Growth Portfolio Western Asset Management Strategic Bond Opportunities Portfolio Western Asset Management U.S. Government Portfolio MetLife Conservative Allocation Portfolio MetLife Conservative to Moderate Allocation Portfolio MetLife Moderate Allocation Portfolio MetLife Moderate to Aggressive Allocation Portfolio MetLife Aggressive Allocation Portfolio MET INVESTORS SERIES TRUST--Class A (except as noted) American Funds Balanced Allocation Portfolio-- Class B American Funds Growth Allocation Portfolio--Class B American Funds Moderate Allocation Portfolio-- Class B BlackRock Large Cap Core Portfolio Clarion Global Real Estate Portfolio Cyclical Growth and Income ETF Portfolio Cyclical Growth ETF Portfolio Harris Oakmark International Portfolio Janus Forty Portfolio Lazard Mid Cap Portfolio Legg Mason Partners Aggressive Growth Portfolio Legg Mason Value Equity Portfolio Lord Abbett Bond Debenture Portfolio Met/AIM Small Cap Growth Portfolio Met/Franklin Income Portfolio Met/Franklin Mutual Shares Portfolio Met/Franklin Templeton Founding Strategy Portfolio Met/Templeton Growth Portfolio MFS(R) Research International Portfolio Oppenheimer Capital Appreciation Portfolio PIMCO Inflation Protected Bond Portfolio PIMCO Total Return Portfolio RCM Technology Portfolio T. Rowe Price Mid Cap Growth Portfolio AMERICAN FUNDS INSURANCE SERIES(R)--Class 2 American Funds Bond Fund American Funds Global Small Capitalization Fund American Funds Growth Fund American Funds Growth-Income Fund You may also allocate net premiums to our Fixed Account. Special limits may apply to Fixed Account transfers and withdrawals. You receive Fixed Account performance until 20 days after we apply your initial premium payment to the Policy. Thereafter, we invest the Policy's cash value according to your instructions. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE POLICIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE PORTFOLIO PROSPECTUSES ARE ATTACHED. PLEASE READ THEM AND KEEP THEM FOR REFERENCE. WE DO NOT GUARANTEE HOW ANY OF THE INVESTMENT DIVISIONS OR PORTFOLIOS WILL PERFORM. THE POLICIES AND THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. APRIL 28, 2008 TABLE OF CONTENTS
PAGE ----- SUMMARY OF BENEFITS AND RISKS............................... A-4 Benefits of the Policy................................. A-4 Risks of the Policy.................................... A-5 Risks of the Portfolios................................ A-7 FEE TABLES.................................................. A-7 Transaction Fees....................................... A-7 Periodic Charges Other Than Portfolio Operating Expenses.............................................. A-9 Annual Portfolio Operating Expenses.................... A-12 HOW THE POLICY WORKS........................................ A-15 THE COMPANY, THE SEPARATE ACCOUNT AND THE PORTFOLIOS........ A-16 The Company............................................ A-16 The Separate Account................................... A-16 The Portfolios......................................... A-16 Share Classes of the Portfolios........................ A-19 Certain Payments We Receive with Regard to the Portfolios............................................ A-20 Selection of the Portfolios............................ A-20 Voting Rights.......................................... A-21 Rights Reserved by MetLife............................. A-21 THE POLICIES................................................ A-21 Purchasing a Policy.................................... A-21 Replacing Existing Insurance........................... A-22 Policy Owner and Beneficiary........................... A-22 24 Month Conversion Right.............................. A-22 Exchange Right......................................... A-23 PREMIUMS.................................................... A-23 Flexible Premiums...................................... A-23 Amount Provided for Investment under the Policy........ A-23 Right to Examine Policy................................ A-24 Allocation of Net Premiums............................. A-24 RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE'S DESIGNATED OFFICE......................................... A-25 Payment of Proceeds.................................... A-26 CASH VALUE.................................................. A-26 DEATH BENEFITS.............................................. A-27 Death Proceeds Payable................................. A-28 Change in Death Benefit Option......................... A-28 Increase in Face Amount................................ A-29 Reduction in Face Amount............................... A-29 SURRENDERS AND PARTIAL WITHDRAWALS.......................... A-29 Surrender.............................................. A-29 Partial Withdrawal..................................... A-30
A-2
PAGE ----- TRANSFERS................................................... A-31 Transfer Option........................................ A-31 AUTOMATED INVESTMENT STRATEGIES............................. A-34 LOANS....................................................... A-34 LAPSE AND REINSTATEMENT..................................... A-35 Lapse.................................................. A-35 Reinstatement.......................................... A-36 ADDITIONAL BENEFITS BY RIDER................................ A-37 THE FIXED ACCOUNT........................................... A-37 General Description.................................... A-38 Values and Benefits.................................... A-38 Policy Transactions.................................... A-38 CHARGES..................................................... A-39 Deductions from Premiums............................... A-39 Surrender Charge....................................... A-40 Partial Withdrawal Charge.............................. A-41 Transfer Charge........................................ A-41 Illustration of Benefits Charge........................ A-41 Monthly Deduction from Cash Value...................... A-41 Loan Interest Spread................................... A-43 Charges Against the Portfolios and the Investment Divisions of the Separate Account..................... A-43 TAX CONSIDERATIONS.......................................... A-44 Introduction........................................... A-44 Tax Status of the Policy............................... A-44 Tax Treatment of Policy Benefits....................... A-44 MetLife's Income Taxes................................. A-48 DISTRIBUTION OF THE POLICIES................................ A-49 LEGAL PROCEEDINGS........................................... A-50 RESTRICTIONS ON FINANCIAL TRANSACTIONS...................... A-51 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............... A-51 FINANCIAL STATEMENTS........................................ A-51 GLOSSARY.................................................... A-52 APPENDIX A: GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST......................................... A-53 APPENDIX B: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND CASH SURRENDER VALUES..................................... A-54
A-3 SUMMARY OF BENEFITS AND RISKS This summary describes the Policy's important benefits and risks. The sections in the prospectus following this summary discuss the Policy in more detail. THE GLOSSARY AT THE END OF THE PROSPECTUS DEFINES CERTAIN WORDS AND PHRASES USED IN THIS PROSPECTUS. BENEFITS OF THE POLICY DEATH PROCEEDS. The Policy is designed to provide insurance protection. Upon receipt of satisfactory proof of the death of the insured, we pay death proceeds to the beneficiary of the Policy. Death proceeds generally equal the death benefit on the date of the insured's death plus any additional insurance provided by rider, less any outstanding loan and accrued loan interest. CHOICE OF DEATH BENEFIT OPTION. You may choose among three death benefit options: -- a level death benefit that equals the Policy's face amount, -- a variable death benefit that equals the Policy's face amount plus the Policy's cash value, and -- a combination variable and level death benefit that equals the Policy's face amount plus the Policy's cash value until the insured attains age 65 and equals the Policy's face amount thereafter. The death benefit under any option could increase to satisfy Federal tax law requirements if the cash value reaches certain levels. After the first Policy year you may change your death benefit option, subject to our underwriting rules. A change in death benefit option may have tax consequences. PREMIUM FLEXIBILITY. You can make premium payments based on a schedule you determine, subject to some limits. You may change your payment schedule at any time or make a payment that does not correspond to your schedule. We can, however, limit or prohibit payments in some situations. RIGHT TO EXAMINE THE POLICY. During the first ten days following your receipt of the Policy, you have the right to return the Policy to us. If you exercise this right, we will refund the premiums you paid. INVESTMENT OPTIONS. You can allocate your net premiums and cash value among your choice of sixty-one Investment Divisions in the Separate Account, each of which corresponds to a mutual fund portfolio, or "Portfolio." The Portfolios available under the Policy include several common stock funds, including funds which invest primarily in foreign securities, as well as bond funds, balanced funds, asset allocation funds and funds that invest in exchange-traded funds. You may also allocate premiums and cash value to our Fixed Account which provides guarantees of interest and principal. You may change your allocation of future premiums at any time. PARTIAL WITHDRAWALS. You may withdraw cash surrender value from your Policy at any time after the first Policy anniversary. The minimum amount you may withdraw is $500. We reserve the right to limit partial withdrawals to no more than 90% of the Policy's cash surrender value. We may limit the number of partial withdrawals to 12 per Policy year or impose a processing charge of $25 for each partial withdrawal. Partial withdrawals may have tax consequences. TRANSFERS AND AUTOMATED INVESTMENT STRATEGIES. You may transfer your Policy's cash value among the Investment Divisions or between the Investment Divisions and the Fixed Account. The minimum amount you may transfer is $50, or if less, the total amount in the Investment Division or the Fixed Account. We may limit the number of transfers among the Investment Divisions and the Fixed Account to no more than four per Policy year. We may impose a processing charge of $25 for each transfer. We may also impose restrictions on "market timing" transfers. (See "Transfers" for additional information on such restrictions.) We offer five automated investment strategies that allow you to periodically transfer or reallocate your cash value among the Investment Divisions and the Fixed Account. (See "Automated Investment Strategies.") A-4 LOANS. You may borrow from the cash value of your Policy. The minimum amount you may borrow is $500. The maximum amount you may borrow is an amount equal to the Policy's cash value net of the Surrender Charge, reduced by monthly deductions and interest charges through the next Policy anniversary, increased by interest credits through the next Policy anniversary, less any existing Policy loans. We charge you a maximum annual interest rate of 4.0% for the first ten Policy years and 3.0% thereafter. We credit interest at an annual rate of at least 3.0% on amounts we hold as collateral to support your loan. Loans may have tax consequences. SURRENDERS. You may surrender the Policy for its cash surrender value at any time. Cash surrender value equals the cash value reduced by any Policy loan and accrued loan interest and by any applicable Surrender Charge. A surrender may have tax consequences. TAX BENEFITS. We anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. Accordingly, undistributed increases in cash value should not be taxable to you. As long as your Policy is not a modified endowment contract, partial withdrawals should be non-taxable until you have withdrawn an amount equal to your total investment in the Policy. Death benefits paid to your beneficiary should generally be free of Federal income tax. Death benefits may be subject to estate taxes. CONVERSION RIGHT. During the first two Policy years, you may convert the Policy to fixed benefit coverage by exchanging the Policy for a fixed benefit life insurance policy that we agree to, and that is issued by us or an affiliate that we name. We will make the exchange without evidence of insurability. SUPPLEMENTAL BENEFITS AND RIDERS. We offer a variety of riders that provide supplemental benefits under the Policy. We generally deduct any monthly charges for these riders as part of the Monthly Deduction. Your registered representative can help you determine whether any of these riders are suitable for you. PERSONALIZED ILLUSTRATIONS. You will receive personalized illustrations in connection with the purchase of this Policy that reflect your own particular circumstances. These hypothetical illustrations may help you to understand the long-term effects of different levels of investment performance, the possibility of lapse, and the charges and deductions under the Policy. They will also help you to compare this Policy to other life insurance policies. The personalized illustrations are based on hypothetical rates of return and are not a representation or guarantee of investment returns or cash value. RISKS OF THE POLICY INVESTMENT RISK. If you invest your Policy's cash value in one or more of the Investment Divisions, then you will be subject to the risk that investment performance will be unfavorable and that your cash value will decrease. In addition, we deduct Policy fees and charges from your Policy's cash value, which can significantly reduce your Policy's cash value. During times of poor investment performance, this deduction will have an even greater impact on your Policy's cash value. It is possible to lose your full investment and your Policy could lapse without value, unless you pay additional premium. If you allocate cash value to the Fixed Account, then we credit such cash value with a declared rate of interest. You assume the risk that the rate may decrease, although it will never be lower than the guaranteed minimum annual effective rate of 3%. SURRENDER AND WITHDRAWAL RISKS. The Policies are designed to provide lifetime insurance protection. They are not offered primarily as an investment, and should not be used as a short-term savings vehicle. If you surrender the Policy within the first ten Policy years (or within the first ten Policy years following a face amount increase), you will be subject to a Surrender Charge as well as income tax on any gain that is distributed or deemed to be distributed from the Policy. You will also be subject to a Surrender Charge if you make a partial withdrawal from the Policy within the first ten Policy years (or the first ten Policy years following the face amount increase) if the partial withdrawal reduces the face amount (or the face amount increase). If you surrender the Policy in the first Policy year (or in the first year following a face amount increase) we will also deduct an amount equal to the remaining first year Coverage Expense Charges. You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the Policy's cash value in the near future. Even if you do not ask to surrender your Policy, surrender charges may play a role in determining whether A-5 your Policy will lapse (terminate without value), because surrender charges determine the cash surrender value, which is a measure we use to determine whether your Policy will enter the grace period (and possibly lapse). RISK OF LAPSE. Your Policy may lapse if you have paid an insufficient amount of premiums or if the investment experience of the Investment Divisions is poor. If your cash surrender value is not enough to pay the monthly deduction, your Policy may enter a 62-day grace period. We will notify you that the Policy will lapse unless you make a sufficient payment of additional premium during the grace period. Your Policy generally will not lapse if you pay certain required premium amounts and you are therefore protected by a Guaranteed Minimum Death Benefit. If your Policy does lapse, your insurance coverage will terminate, although you will be given an opportunity to reinstate it. Lapse of a Policy on which there is an outstanding loan may have adverse tax consequences. TAX RISKS. We anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. However, the rules are not entirely clear if your Policy is issued on a substandard basis. The death benefit under the Policy will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. If your Policy is not treated as a life insurance contract under Federal tax law, increases in the Policy's cash value will be taxed currently. Even if your Policy is treated as a life insurance contract for Federal tax purposes, it may become a modified endowment contract due to the payment of excess premiums or unnecessary premiums, due to a material change or due to a reduction in your death benefit. If your Policy becomes a modified endowment contract, surrenders, partial withdrawals and loans will be treated as a distribution of the earnings in the Policy and will be taxable as ordinary income to the extent thereof. In addition, if the Policy Owner is under age 59 1/2 at the time of the surrender, partial withdrawal or loan, the amount that is included in income will generally be subject to a 10% penalty tax. If the Policy is not a modified endowment contract, distributions generally will be treated first as a return of basis or investment in the contract and then as taxable income. Moreover, loans will generally not be treated as distributions, although the tax consequences of loans outstanding after the tenth Policy year are uncertain. Finally, neither distributions nor loans from a Policy that is not a modified endowment contract are subject to the 10% penalty tax. See "Tax Considerations." You should consult a qualified tax adviser for assistance in all Policy-related tax matters. LOAN RISKS. A Policy loan, whether or not repaid, will affect the cash value of your Policy over time because we subtract the amount of the loan from the Investment Divisions and/or Fixed Account as collateral, and hold it in our Loan Account. This loan collateral does not participate in the investment experience of the Investment Divisions or receive any higher current interest rate credited to the Fixed Account. We also reduce the amount we pay on the insured's death by the amount of any outstanding loan and accrued loan interest. Your Policy may lapse if your outstanding loan and accrued loan interest reduces the cash surrender value to zero. If you surrender your Policy or your Policy lapses while there is an outstanding loan, there will generally be Federal income tax payable on the amount by which loans and partial withdrawals exceed the premiums paid. Since loans and partial withdrawals reduce your Policy's cash value, any remaining cash value may be insufficient to pay the income tax due. LIMITATIONS ON CASH VALUE IN THE FIXED ACCOUNT. Transfers to and from the Fixed Account must generally be in amounts of $50 or more. Partial withdrawals from the Fixed Account must be in amounts of $500 or more. The total amount of transfers and withdrawals from the Fixed Account in a Policy year may generally not exceed the greater of 25% of the Policy's cash surrender value in the Fixed Account at the beginning of the year, or the maximum transfer amount for the preceding Policy year. We may also limit the number of transfers and partial withdrawals and may impose a processing charge for transfers and partial withdrawals. We are not currently imposing the maximum limit on transfers and withdrawals from the Fixed Account, but we reserve the right to do so. A-6 TAX LAW CHANGES. Tax laws, regulations, and interpretations have often been changed in the past and such changes continue to be proposed. To the extent that you purchase a Policy based on expected tax benefits, relative to other financial or investment products or strategies, there is no certainty that such advantages will always continue to exist. RISKS OF THE PORTFOLIOS A comprehensive discussion of the risks associated with each of the Portfolios can be found in the Portfolio prospectuses attached at the end of this prospectus. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS STATED INVESTMENT OBJECTIVE. FEE TABLES The following tables describe the fees and expenses that a Policy Owner will pay when buying, owning and surrendering the Policy. The first table describes the fees and expenses that a Policy Owner will pay at the time he or she buys the Policy, surrenders the Policy or transfers cash value among accounts. If the amount of a charge varies depending on the Policy Owner's or the insured's individual characteristics (such as age, sex, or risk class), the tables below show the minimum and maximum charges we assess under the Policy across the range of all possible individual characteristics, as well as the charges for a specified typical Policy Owner or insured. THESE CHARGES MAY NOT BE REPRESENTATIVE OF THE CHARGES YOU WILL ACTUALLY PAY UNDER THE POLICY. Your Policy's specifications page will indicate these charges as applicable to your Policy, and more detailed information concerning your charges is available on request from our Designated Office. Also, before you purchase the Policy, we will provide you personalized illustrations of your future benefits under the Policy based on the insured's age and risk class, the death benefit option, face amount, planned periodic premiums and riders requested. TRANSACTION FEES
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Sales Charge Imposed On payment of premium 2.25% of premiums paid 2.25% of each premium on Premiums up to the Target paid Premium per Policy year(1) - --------------------------------------------------------------------------------------------------- Premium Tax Imposed On payment of premium 2.0% in all Policy 2.0% in all Policy years on Premiums years - --------------------------------------------------------------------------------------------------- Federal Tax Imposed On payment of premium 1.25% in all Policy 1.25% in all Policy years on Premiums years - ---------------------------------------------------------------------------------------------------
(1) The target premium varies based on individual characteristics, including the insured's issue age, risk class and except for unisex policies, sex. A-7
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Surrender Charge(1) On surrender, lapse, or face amount reduction in the first ten Policy years (and, with respect to a face amount increase, in the first ten Policy years after the increase) Minimum and Maximum In Policy year 1, $3.75 In Policy year 1, $3.75 Charge to $38.25 per $1,000 of to $38.25 per $1,000 of base Policy face base Policy face amount(2) amount(2) Charge in the first $14.00 per $1,000 of $14.00 per $1,000 of base Policy year for a base Policy face amount Policy face amount male insured, age 35, in the preferred nonsmoker risk class with a base Policy face amount of $300,000 - --------------------------------------------------------------------------------------------------- Transfer Charge(3) On transfer of cash Not currently charged $25 for each transfer value among Investment Divisions and to and from the Fixed Account - --------------------------------------------------------------------------------------------------- Partial Withdrawal On partial withdrawal Not currently charged $25 for each partial Charge of cash value withdrawal(4) - --------------------------------------------------------------------------------------------------- Illustration of On provision of each Not currently charged $25 per illustration Benefits Charge illustration in excess of one per year - ---------------------------------------------------------------------------------------------------
(1) The Surrender Charge varies based on individual characteristics, including the insured's issue age, risk class, sex (except for unisex policies), smoker status, and the Policy's face amount. The Surrender Charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the Surrender Charge and other charges that would apply for a particular insured by contacting your registered representative. (2) No Surrender Charge will apply on up to 10% of cash surrender value withdrawn each year. The Surrender Charge will remain level for one to three Policy years, and will then begin to decline on a monthly basis until it reaches zero in the last month of the tenth Policy year. The Surrender Charge applies to requested face amount reductions as well as to face amount reductions resulting from a change in death benefit option. (3) The Portfolios in which the Investment Divisions invest may impose a redemption fee on shares held for a relatively short period. (4) If imposed, the partial withdrawal charge would be in addition to any Surrender Charge that is imposed. A-8 The next table describes the fees and expenses that a Policy Owner will pay periodically during the time that he or she owns the Policy, not including Portfolio fees and expenses. PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Cost of Insurance(1) Minimum and Maximum Monthly $.01 to $83.33 per $.02 to $83.33 per $1,000 Charge $1,000 of net amount at of net amount at risk(2) risk(2) Charge in the first Monthly $.02 per $1,000 of net $.09 per $1,000 of net Policy year for a amount at risk amount at risk male insured, age 35, in the preferred nonsmoker risk class with a base Policy face amount of $300,000 - --------------------------------------------------------------------------------------------------- Policy Charge(3) Policy face amount Monthly $12 in Policy year 1 $12 in Policy year 1 less than $50,000 $9 in Policy years 2+ $9 in Policy years 2+ Policy face amount Monthly $15 in Policy year 1 $15 in Policy year 1 of $50,000 or $8 in Policy years 2+ $8 in Policy years 2+ greater but less than $250,000 - --------------------------------------------------------------------------------------------------- Mortality and Expense Monthly .60% in Policy years .80% in Policy years 1-10 Risk Charge (annual 1-10 .35% in Policy years rate imposed on cash .35% in Policy years 11-19 value in the Separate 11-19 .20% in Policy years Account)(4) .20% in Policy years 20-29 20-29 .05% in Policy years 30+ .05% in Policy years 30+ - --------------------------------------------------------------------------------------------------- Coverage Expense Charge(5) Minimum and Monthly $.04 to $2.30 per $.04 to $2.30 per $1,000 Maximum Charge $1,000 of base Policy of base Policy face face amount in first amount eight Policy years(6) Charge for a male Monthly $.16 per $1,000 of base $.16 per $1,000 of base insured, age 35, in Policy face amount in Policy face amount the preferred first eight Policy nonsmoker risk class years(6) with a base Policy face amount of $300,000 - --------------------------------------------------------------------------------------------------- Loan Interest Annually (or on loan 1.00% of loan 1.00% of loan collateral Spread(7) termination, if collateral in Policy in Policy years 1-10 earlier) years 1-10 - ---------------------------------------------------------------------------------------------------
(1) The cost of insurance charge varies based on individual characteristics, including the Policy's face amount and the insured's age, risk class and, except for unisex policies, sex. The cost of insurance charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the cost of insurance or other charges that would apply for a particular insured by contacting your registered representative. (2) The net amount at risk is the difference between the death benefit (generally discounted at the monthly equivalent of 3% per year) and the Policy's cash value. (3) No Policy Charge applies to Policies issued with face amounts equal to or greater than $250,000. (4) The Mortality and Expense Risk Charge depends on the Policy's net cash value. The percentages shown in the Current Amount Deducted column apply if the Policy's net cash value is less than an amount equal to five Target Premiums. The percentages decrease as the Policy's net cash value, measured as a multiple of Target Premiums increases. If the Policy's net cash value is equal to or greater than five but less than ten Target Premiums, the charge is 0.55% in Policy years 1-10, 0.30% in Policy years 11-19, 0.15% in Policy years 20-29 and 0.05% thereafter. If the Policy's cash value is equal to or greater than ten but less A-9 than 20 Target Premiums, the charge is 0.30% in Policy years 1-10, 0.15% in Policy years 11-19, 0.10% in Policy years 20-29 and 0.05% thereafter. If the Policy's net cash value is equal to 20 or more Target Premiums, the charge is 0.15% in Policy years 1-10, 0.10% in Policy years 11-19, and 0.05% thereafter. (5) If you surrender the Policy in the first Policy year (or in the first year following a face amount increase) we will deduct from the surrender proceeds an amount equal to the Coverage Expense Charges due for the remainder of the first Policy year (or the first year following the face amount increase). If the Policy's face amount is reduced in the first year following a face amount increase, we will deduct from the cash value an amount equal to the Coverage Expense Charges due for the remainder of the first year following the face amount increase. (6) The Coverage Expense Charge is imposed in Policy years 1-8 and, with respect to a requested face amount increase, during the first eight years following the increase. (7) We charge interest on Policy loans at an effective rate of 4.0% per year in Policy years 1-10 and 3.0% thereafter. Cash value we hold as security for the loan ("loan collateral") earns interest at an effective rate of not less than 3% per year. The loan interest spread is the difference between these interest rates. CHARGES FOR OPTIONAL FEATURES (RIDERS):
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Guaranteed Survivor Income Benefit Rider Minimum and Maximum Monthly $.01 to $1.08 per $.01 to $83.33 per $1,000 Charge $1,000 of Eligible of Eligible Death Benefit Death Benefit Charge for a male Monthly $.02 per $1,000 of $.02 per $1,000 of insured, age 35, in Eligible Death Benefit Eligible Death Benefit the preferred nonsmoker risk class with an Eligible Death Benefit of $300,000 - --------------------------------------------------------------------------------------------------- Children's Term Monthly $.40 per $1,000 of $.40 per $1,000 of rider Insurance Rider rider face amount face amount - --------------------------------------------------------------------------------------------------- Waiver of Monthly Deduction Rider Minimum and Maximum Monthly $.00 to $61.44 per $100 $.00 to $61.44 per $100 Charge of Monthly Deduction of Monthly Deduction Charge in the first Monthly $6.30 per $100 of $6.30 per $100 of Monthly Policy year for a Monthly Deduction Deduction male insured, age 35, in the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Waiver of Specified Premium Rider Minimum and Maximum Monthly $.00 to $21.75 per $100 $.00 to $21.75 per $100 Charge of Specified Premium of Specified Premium Charge in the first Monthly $3.00 per $100 of $3.00 per $100 of Policy year for a Specified Premium Specified Premium male insured, age 35, in the preferred nonsmoker risk class - ---------------------------------------------------------------------------------------------------
A-10
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Options to Purchase Additional Insurance Coverage Rider Minimum and Maximum Monthly $.02 to $.25 per $1,000 $.02 to $.25 per $1,000 Charge of Option amount of Option amount Charge for a male Monthly $.03 per $1,000 of $.03 per $1,000 of Option insured, age 35, in Option amount amount the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Option to Purchase Long Term Care Insurance Rider Minimum and Maximum Monthly $.20 to $1.88 per $10 $.20 to $1.88 per $10 of Charge of initial daily initial daily benefit benefit amount amount Charge for a male Monthly $.37 per $10 of initial $.37 per $10 of initial insured, age 35, in daily benefit amount daily benefit amount the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Accidental Death Benefit Rider Minimum and Maximum Monthly $.00 to $.34 per $1,000 $.00 to $83.33 per $1,000 Charge of rider face amount of rider face amount Charge in the first Monthly $.05 per $1,000 of $.08 per $1,000 of rider Policy year for a rider face amount face amount male insured, age 35, in the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Guaranteed Minimum Death Benefit Rider Minimum and Maximum Monthly $.01 to $.04 per $1,000 $.01 to $83.33 per $1,000 Charge of net amount at risk of net amount at risk Charge for a male Monthly $.01 per $1,000 of net $.01 per $1,000 of net insured, age 35, in amount at risk amount at risk the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Acceleration of At time of benefit Not currently charged One-time fee of $150 Death Benefit Rider payment - --------------------------------------------------------------------------------------------------- Overloan Protection At time of exercise One-time fee of 3.5% of One-time fee of 3.5% of Rider Policy cash value Policy cash value - ---------------------------------------------------------------------------------------------------
A-11 ANNUAL PORTFOLIO OPERATING EXPENSES The next table describes the Portfolio fees and expenses that a Policy Owner may pay periodically during the time that he or she owns the Policy. The table shows the minimum and maximum total operating expenses charged by the Portfolios for the fiscal year ended December 31, 2007. Expenses of the Portfolios may be higher or lower in the future. More detail concerning each Portfolio's fees and expenses is contained in the table that follows and in the prospectus for each Portfolio.
MINIMUM MAXIMUM ------- ------- Total Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets, including management fees, distribution (12b-1) fees and other expenses)......................................... 0.29% 1.09%
The following table describes the annual operating expenses for each Portfolio for the year ended December 31, 2007, before and after any applicable contractual fee waivers and expense reimbursements: ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
ACQUIRED FUND GROSS TOTAL FEE WAIVERS NET TOTAL MANAGEMENT OTHER 12B-1 FEES AND ANNUAL AND EXPENSE ANNUAL FEES EXPENSES FEES EXPENSES(1) EXPENSES REIMBURSEMENTS EXPENSES(2) ---------- -------- ----- ------------------ ----------- -------------- --------------- METROPOLITAN SERIES FUND, INC.--CLASS A BlackRock Aggressive Growth Portfolio.................. 0.71% 0.05% -- -- 0.76% -- 0.76% BlackRock Bond Income Portfolio.................. 0.38% 0.06% -- -- 0.44% 0.01% 0.43%(3) BlackRock Diversified Portfolio.................. 0.44% 0.06% -- -- 0.50% -- 0.50% BlackRock Large Cap Value Portfolio.................. 0.68% 0.06% -- -- 0.74% -- 0.74% BlackRock Legacy Large Cap Growth Portfolio........... 0.73% 0.06% -- -- 0.79% -- 0.79% BlackRock Strategic Value Portfolio.................. 0.82% 0.06% -- -- 0.88% -- 0.88% Davis Venture Value Portfolio.................. 0.69% 0.04% -- -- 0.73% -- 0.73% FI Large Cap Portfolio....... 0.77% 0.07% -- -- 0.84% -- 0.84% FI Mid Cap Opportunities Portfolio.................. 0.68% 0.05% -- -- 0.73% -- 0.73% FI Value Leaders Portfolio... 0.64% 0.07% -- -- 0.71% -- 0.71% Franklin Templeton Small Cap Growth Portfolio........... 0.90% 0.11% -- -- 1.01% -- 1.01% Harris Oakmark Focused Value Portfolio.................. 0.72% 0.04% -- -- 0.76% -- 0.76% Jennison Growth Portfolio.... 0.63% 0.04% -- -- 0.67% -- 0.67% Julius Baer International Stock Portfolio............ 0.84% 0.12% -- -- 0.96% 0.04% 0.92%(4) Lehman Brothers(R) Aggregate Bond Index Portfolio....... 0.25% 0.05% -- -- 0.30% 0.01% 0.29%(5) Loomis Sayles Small Cap Portfolio.................. 0.90% 0.05% -- -- 0.95% 0.05% 0.90%(6) MetLife Mid Cap Stock Index Portfolio.................. 0.25% 0.07% -- 0.01% 0.33% 0.01% 0.32%(7) MetLife Stock Index Portfolio.................. 0.25% 0.04% -- -- 0.29% 0.01% 0.28%(7) MFS(R) Total Return Portfolio.................. 0.53% 0.05% -- -- 0.58% -- 0.58% MFS(R) Value Portfolio....... 0.72% 0.05% -- -- 0.77% 0.07% 0.70%(8) Morgan Stanley EAFE(R) Index Portfolio.................. 0.30% 0.12% -- 0.01% 0.43% 0.01% 0.42%(9) Neuberger Berman Mid Cap Value Portfolio............ 0.64% 0.05% -- -- 0.69% -- 0.69% Oppenheimer Global Equity Portfolio.................. 0.51% 0.10% -- -- 0.61% -- 0.61% Russell 2000(R) Index Portfolio.................. 0.25% 0.07% -- 0.01% 0.33% 0.01% 0.32%(7) T. Rowe Price Large Cap Growth Portfolio........... 0.60% 0.07% -- -- 0.67% -- 0.67% T. Rowe Price Small Cap Growth Portfolio........... 0.51% 0.08% -- -- 0.59% -- 0.59% Western Asset Management Strategic Bond Opportunities Portfolio.... 0.61% 0.05% -- -- 0.66% -- 0.66% Western Asset Management U.S. Government Portfolio....... 0.49% 0.05% -- -- 0.54% -- 0.54% MetLife Conservative Allocation Portfolio....... 0.10% 0.05% -- 0.59% 0.74% 0.05% 0.69%(10)
A-12
ACQUIRED FUND GROSS TOTAL FEE WAIVERS NET TOTAL MANAGEMENT OTHER 12B-1 FEES AND ANNUAL AND EXPENSE ANNUAL FEES EXPENSES FEES EXPENSES(1) EXPENSES REIMBURSEMENTS EXPENSES(2) ---------- -------- ----- ------------------ ----------- -------------- --------------- MetLife Conservative to Moderate Allocation Portfolio.................. 0.10% 0.01% -- 0.64% 0.75% 0.01% 0.74%(10) MetLife Moderate Allocation Portfolio.................. 0.08% 0.01% -- 0.67% 0.76% -- 0.76%(10) MetLife Moderate to Aggressive Allocation Portfolio.................. 0.08% 0.01% -- 0.70% 0.79% -- 0.79%(10) MetLife Aggressive Allocation Portfolio.................. 0.10% 0.04% -- 0.73% 0.87% 0.04% 0.83%(10) MET INVESTORS SERIES TRUST--CLASS A (EXCEPT AS NOTED) American Funds Balanced Allocation Portfolio--Class B.......................... 0.10% 0.15% 0.25% 0.39% 0.89% 0.15% 0.74%(11,12,13) American Funds Growth Allocation Portfolio--Class B.......................... 0.10% 0.19% 0.25% 0.36% 0.90% 0.19% 0.71%(11,12,13) American Funds Moderate Allocation Portfolio--Class B.......................... 0.10% 0.26% 0.25% 0.41% 1.02% 0.26% 0.76%(11,12,13) BlackRock Large Cap Core Portfolio.................. 0.58% 0.07% -- -- 0.65% -- 0.65% Clarion Global Real Estate Portfolio.................. 0.61% 0.04% -- -- 0.65% -- 0.65% Cyclical Growth and Income ETF Portfolio.............. 0.45% 0.10% -- 0.23% 0.78% -- 0.78%(14) Cyclical Growth ETF Portfolio.................. 0.45% 0.09% -- 0.24% 0.78% -- 0.78%(14) Harris Oakmark International Portfolio.................. 0.77% 0.09% -- -- 0.86% -- 0.86% Janus Forty Portfolio........ 0.65% 0.05% -- -- 0.70% -- 0.70% Lazard Mid Cap Portfolio..... 0.69% 0.07% -- -- 0.76% -- 0.76% Legg Mason Partners Aggressive Growth Portfolio.................. 0.62% 0.05% -- -- 0.67% -- 0.67% Legg Mason Value Equity Portfolio.................. 0.63% 0.04% -- -- 0.67% -- 0.67% Lord Abbett Bond Debenture Portfolio.................. 0.49% 0.05% -- -- 0.54% -- 0.54% Met/AIM Small Cap Growth Portfolio.................. 0.86% 0.06% -- -- 0.92% -- 0.92% Met/Franklin Income Portfolio.................. 0.80% 0.29% -- -- 1.09% 0.19% 0.90%(12,15) Met/Franklin Mutual Shares Portfolio.................. 0.80% 0.29% -- -- 1.09% 0.19% 0.90%(12,15) Met/Franklin Templeton Founding Strategy Portfolio.................. 0.05% 0.15% -- 0.87% 1.07% 0.15% 0.92%(12,16) Met/Templeton Growth Portfolio.................. 0.70% 0.34% -- -- 1.04% 0.24% 0.80%(12,17) MFS(R) Research International Portfolio.................. 0.70% 0.09% -- -- 0.79% -- 0.79% Oppenheimer Capital Appreciation Portfolio..... 0.58% 0.04% -- -- 0.62% -- 0.62% PIMCO Inflation Protected Bond Portfolio............. 0.50% 0.05% -- -- 0.55% -- 0.55% PIMCO Total Return Portfolio.................. 0.48% 0.04% -- -- 0.52% -- 0.52%(18) RCM Technology Portfolio..... 0.88% 0.09% -- -- 0.97% -- 0.97% T. Rowe Price Mid Cap Growth Portfolio.................. 0.75% 0.05% -- -- 0.80% -- 0.80% AMERICAN FUNDS INSURANCE SERIES(R)--Class 2 American Funds Bond Fund..... 0.40% 0.01% 0.25% -- 0.66% -- 0.66% American Funds Global Small Capitalization Fund........ 0.70% 0.03% 0.25% -- 0.98% -- 0.98% American Funds Growth Fund... 0.32% 0.01% 0.25% -- 0.58% -- 0.58% American Funds Growth-Income Fund....................... 0.26% 0.01% 0.25% -- 0.52% -- 0.52%
(1) Acquired Fund Fees and Expenses are fees and expenses incurred indirectly by a portfolio as a result of investing in shares of one or more underlying portfolios. (2) Net Total Annual Expenses do not reflect: (1) voluntary waivers of fees or expenses; contractual waivers that are in effect for less than one year from the date of this Prospectus; or (3) expense reductions resulting from custodial fee credits or directed brokerage arrangements. (3) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.325% for the amounts over $1 billion but less than $2 billion. A-13 (4) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.81% for the first $500 million of the Portfolio's average daily net assets and 0.78% for the next $500 million. (5) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to 0.244%. (6) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio by 0.05%. (7) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to 0.243%. (8) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.65% for the first $1.25 billion of the Portfolio's average daily net assets, 0.60% for the next $250 million and 0.50% for amounts over $1.5 billion. (9) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to 0.293%. (10) The Portfolio is a "fund of funds" that invests substantially all of its assets in other portfolios of the Metropolitan Series Fund, Inc. and the Met Investors Series Trust. 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. MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to waive fees or pay all expenses (other than acquired fund fees and expenses, brokerage costs, taxes, interest and any extraordinary expenses) so as to limit the net operating expenses of the Portfolio (other than acquired fund fees and expenses, brokerage costs, taxes, interest and any extraordinary expenses) to 0.10% for the Class A shares, 0.35% for the Class B shares and 0.25% for the Class E shares. (11) The Portfolio is a "fund of funds" that invests substantially all of its assets in portfolios of the American Funds Insurance Series. 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 underlying portfolios, at December 31, 2007. (12) The fees and expenses of the Portfolio are estimated for the year ending December 31, 2008. (13) Met Investors Advisory, LLC has contractually agreed, for the period April 28, 2008 to April 30, 2009, to limit its fee and reimburse expenses to the extent necessary to limit total operating expenses to 0.10%, excluding 12b-1 fees and Acquired Fund Fees and Expenses. (14) The Portfolio primarily invests its assets in other investment companies known as exchange-traded funds ("underlying ETFs"). As an investor in an underlying ETF or other investment company, the Portfolio will bear its pro rata portion of the operating expenses of the underlying ETF or other investment company, including the management fee. (15) Met Investors Advisory, LLC has contractually agreed, for the period April 28, 2008 to April 30, 2009, to limit its fee and reimburse expenses to the extent necessary to limit total operating expenses to 0.90%, excluding 12b-1 fees. (16) 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 portfolios, for the year ending December 31, 2008. Met Investors Advisory, LLC has contractually agreed, for the period April 28, 2008 to April 30, 2009, to limit its fee to and reimburse expenses to the extent necessary to limit total operating expenses to 0.05%, excluding 12b-1 fees and acquired fund fees and expenses. (17) Met Investors Advisory, LLC has contractually agreed, for the period April 28, 2008 to April 30, 2009, to limit its fee and reimburse expenses to the extent necessary to limit total operating expenses to 0.80%, excluding 12b-1 fees. (18) 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. The fee and expense information regarding the Portfolios was provided by those Portfolios. The American Funds Insurance Series is not affiliated with Metropolitan Life Insurance Company. For information concerning compensation paid for the sale of the Policies, see "Distribution of the Policies." A-14 HOW THE POLICY WORKS [FLOW CHART] PREMIUM PAYMENTS - - Flexible - - Planned premium options - - Guaranteed Minimum Death Benefit premium (5-year, 20-year, or to age 65) CHARGES FROM PREMIUM PAYMENTS - - Sales Load: 2.25% up to Target Premium per Policy year; (maximum 2.25% on all premiums) - - Premium Tax Charge: 2.0% - - Charge for Federal Taxes: 1.25% CASH VALUES - - Net premium payments invested in your choice of Portfolio investments (after an initial period in the Fixed Account) or the Fixed Account - - The cash value reflects investment experience, interest, premium payments, policy charges and any distributions from the Policy - - We do not guarantee the cash value invested in the Portfolios - - Any earnings you accumulate are generally free of any current income taxes - - You may change the allocation of future net premiums at any time. You may transfer funds among Investment Divisions (and to the Fixed Account). Currently we do not limit the number of Investment Division transfers you can make in a Policy year (subject to restrictions we impose on "market timing" transfers). - - We reserve the right to impose a $25 charge on each partial withdrawal and on each Investment Division transfer (including a transfer between an Investment Division and the Fixed Account). - - We may limit the amount of transfers from (and in some cases to) the Fixed Account LOANS - - You may borrow your cash value - - Loan interest charge is 4.0% in Policy years 1-10 and 3.0% thereafter. - - We transfer loaned funds out of the Fixed Account and the Investment Divisions into the Loan Account where we credit them with not less than 3.0% interest. RETIREMENT BENEFITS - - Fixed settlement options are available for policy proceeds DEATH BENEFIT - - Level, Variable and combined Level/Variable Death Benefit Options - - Guaranteed not to be less than face amount (less any loan and loan interest) if the Guaranteed Minimum Death Benefit is in effect. - - On or after age 121, under Options A and C, equal to the greater of (1) the face amount of the Policy as of the insured's age 121; and (2) the Policy's cash value. Under Option B, the face amount of the Policy as of the insured's age 121), plus the Policy's cash value. - - Generally income tax free to named beneficiary; may be subject to estate tax. DAILY DEDUCTIONS FROM ASSETS OF THE SEPARATE ACCOUNT - - Investment advisory fees and other expenses are deducted from the Portfolio values BEGINNING OF MONTH CHARGES - - We deduct the cost of insurance protection (reflecting any substandard risk rating) from the cash value each month - - Any Rider Charges - - Policy Charge: $15.00 per month first year and $8.00 per month thereafter for Policies issued with face amounts of $50,000 or greater, but less than $250,000; $12.00 per month first year and $9.00 per month thereafter for Policies issued with face amounts of less than $50,000. - - Coverage Expense Charge: Monthly charge imposed on base Policy face amount that applies during the first eight Policy years or during the first eight years following a face amount increase (in all years on a guaranteed basis). - - Mortality and Expense Risk Charge applied against the cash value in the Separate Account at a maximum annual rate of .80% in Policy years 1-10; .35% in Policy years 11-19; .20% in Policy years 20-29; and .05% thereafter SURRENDER CHARGE - - Applies on lapse, surrender, face amount reduction, or partial withdrawal or change in death benefit option that results in face reduction in first ten Policy years (or in the first ten Policy years following a face amount increase). Maximum charge applies in up to the first three Policy years. Thereafter, the charge decreases on a monthly basis over the remaining years of the surrender charge period. LIVING BENEFITS - - If policyholder has elected and qualified for benefits for disability and becomes totally disabled, we will waive the monthly deduction or a specified amount of monthly premium during the period of disability up to certain limits. - - You may surrender the Policy at any time for its cash surrender value - - Deferred income taxes, including taxes on certain amounts borrowed, become payable upon surrender or lapse - - Grace period for lapsing with no value is 62 days from the first date in which Monthly Deduction was not paid due to insufficient cash value - - Subject to our rules, you may reinstate a lapsed Policy within three years of date of lapse if it has not been surrendered A-15 THE COMPANY, THE SEPARATE ACCOUNT AND THE PORTFOLIOS THE COMPANY Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company. Our principal office is located at 200 Park Avenue, New York, New York 10166. MetLife is licensed to sell life insurance in all states and the District of Columbia, but we only offer the Policies in New York. We are obligated to pay all benefits under the Policies. THE SEPARATE ACCOUNT Metropolitan Life Separate Account UL is the funding vehicle for the Policies and other variable life insurance policies that we issue. Income and realized and unrealized capital gains and losses of the Separate Account are credited to the Separate Account without regard to any of our other income or capital gains or losses. Although we own the assets of the Separate Account, applicable law provides that the portion of the Separate Account assets equal to the reserves and other liabilities of the Separate Account may not be charged with liabilities that arise out of any other business we conduct. This means that the assets of the Separate Account are not available to meet the claims of our general creditors, and may only be used to support the cash values of the variable life insurance policies issued by the Separate Account. Death benefits in excess of Policy cash value are paid from our general account. Death benefits paid from the general account are subject to the claims-paying ability of MetLife. THE PORTFOLIOS Each Investment Division of the Separate Account invests in a corresponding Portfolio. Each Portfolio is part of an open-end management investment company, more commonly known as a mutual fund, that serves as an investment vehicle for variable life insurance and variable annuity separate accounts of various insurance companies. The mutual funds that offer the Portfolios are the Metropolitan Series Fund, Inc., the Met Investors Series Trust and the American Funds Insurance Series. Each of these mutual funds has an investment adviser responsible for overall management of the fund. Some investment advisers have contracted with sub-advisers to make the day-to-day investment decisions for the Portfolios. The adviser, sub-adviser and investment objective of each Portfolio are as follows: METROPOLITAN SERIES FUND, INC. ADVISER: METLIFE ADVISERS, LLC
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- BlackRock Aggressive Growth BlackRock Advisors, Inc. Maximum capital appreciation. Portfolio BlackRock Bond Income BlackRock Advisors, Inc. A competitive total return Portfolio primarily from investing in fixed-income securities. BlackRock Diversified BlackRock Advisors, Inc. High total return while attempting Portfolio to limit investment risk and preserve capital. BlackRock Large Cap Value BlackRock Advisors, Inc. Long-term growth of capital. Portfolio BlackRock Legacy Large Cap BlackRock Advisors, Inc. Long-term growth of capital. Growth Portfolio BlackRock Strategic Value BlackRock Advisors, Inc. High total return, consisting Portfolio principally of capital appreciation. Davis Venture Value Davis Selected Advisers, Growth of capital. Portfolio L.P.(1) FI Large Cap Portfolio Pyramis Global Advisors, LLC Long-term growth of capital.
A-16
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- FI Mid Cap Opportunities Pyramis Global Advisors, LLC Long-term growth of capital. Portfolio FI Value Leaders Portfolio Pyramis Global Advisors, LLC Long-term growth of capital. Franklin Templeton Small Cap Franklin Advisers, Inc. Long-term capital growth. Growth Portfolio Harris Oakmark Focused Value Harris Associates L.P. Long-term capital appreciation. Portfolio Jennison Growth Portfolio Jennison Associates LLC Long-term growth of capital. Julius Baer International Julius Baer Investment Long-term growth of capital. Stock Portfolio Management LLC Lehman Brothers(R) Aggregate MetLife Investment Advisors To equal the performance of the Bond Index Portfolio Company, LLC Lehman Brothers Aggregate Bond Index. Loomis Sayles Small Cap Loomis, Sayles & Company, Long-term capital growth from Portfolio L.P. investments in common stocks or other equity securities. MetLife Mid Cap Stock Index MetLife Investment Advisors To equal the performance of the Portfolio Company, LLC Standard & Poor's MidCap 400 Composite Stock Price Index. MetLife Stock Index MetLife Investment Advisors To equal the performance of the Portfolio Company, LLC Standard & Poor's 500 Composite Stock Price Index. MFS(R) Total Return Massachusetts Financial Favorable total return through Portfolio Services Company investment in a diversified portfolio. MFS(R) Value Portfolio Massachusetts Financial Capital appreciation and Services Company reasonable income. Morgan Stanley EAFE(R) Index MetLife Investment Advisors To equal the performance of the Portfolio Company, LLC MSCI EAFE Index. Neuberger Berman Mid Cap Neuberger Berman Management Capital growth. Value Portfolio Inc. Oppenheimer Global Equity OppenheimerFunds, Inc. Capital appreciation. Portfolio Russell 2000(R) Index MetLife Investment Advisors To equal the return of the Russell Portfolio Company, LLC 2000 Index. T. Rowe Price Large Cap T. Rowe Price Associates, Long-term growth of capital and, Growth Portfolio Inc. secondarily, dividend income. T. Rowe Price Small Cap T. Rowe Price Associates, Long-term capital growth. Growth Portfolio Inc. Western Asset Management Western Asset Management To maximize total return Strategic Bond Company consistent with preservation of Opportunities Portfolio capital. Western Asset Management Western Asset Management To maximize total return U.S. Government Portfolio Company consistent with preservation of capital and maintenance of liquidity. MetLife Conservative N/A A high level of current income, Allocation Portfolio with growth of capital as a secondary objective.
A-17
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- MetLife Conservative to N/A A high total return in the form of Moderate Allocation income and growth of capital, with Portfolio a greater emphasis on income. MetLife Moderate Allocation N/A A balance between a high level of Portfolio current income and growth of capital, with a greater emphasis on growth of capital. MetLife Moderate to N/A Growth of capital. Aggressive Allocation Portfolio MetLife Aggressive N/A Growth of capital. Allocation Portfolio
MET INVESTORS SERIES TRUST ADVISER: MET INVESTORS ADVISORY, LLC
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- American Funds Balanced Met Investors Advisory, LLC A balance between a high level of Allocation Portfolio current income and growth of capital, with a greater emphasis on growth of capital. American Funds Growth Met Investors Advisory, LLC Growth of capital. Allocation Portfolio American Funds Moderate Met Investors Advisory, LLC A high total return in the form of Allocation Portfolio income and growth of capital, with a greater emphasis on income. BlackRock Large Cap Core BlackRock Advisors, Inc. Long-term capital growth. Portfolio Clarion Global Real Estate ING Clarion Real Estate Total return through investment in Portfolio Securities, L.P. real estate securities, emphasizing both capital appreciation and current income. Cyclical Growth and Income Gallatin Asset Management, Growth of capital and income. ETF Portfolio Inc. Cyclical Growth ETF Gallatin Asset Management, Growth of capital. Portfolio Inc. Harris Oakmark International Harris Associates L.P. Long-term capital appreciation. Portfolio Janus Forty Portfolio Janus Capital Management LLC Capital appreciation. Lazard Mid Cap Portfolio Lazard Asset Management LLC Long-term capital appreciation. Legg Mason Partners ClearBridge Advisors, LLC Capital appreciation. Aggressive Growth Portfolio Legg Mason Value Equity Legg Mason Capital Long-term growth of capital. Portfolio Management, Inc. Lord Abbett Bond Debenture Lord, Abbett & Co. LLC High current income and the Portfolio opportunity for capital appreciation to produce a high total return. Met/AIM Small Cap Growth Invesco Aim Capital Long-term growth of capital. Portfolio Management, Inc. Met/Franklin Income Franklin Advisers, Inc. To maximize income while Portfolio maintaining prospects for capital appreciation.
A-18
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- Met/Franklin Mutual Shares Franklin Mutual Advisers, Capital appreciation, which may Portfolio LLC occasionally be short-term. The Portfolio's secondary investment objective is income. Met/Franklin Templeton Met Investors Advisory, LLC Primary seeks capital appreciation Founding Strategy and secondarily seeks income. Portfolio Met/Templeton Growth Templeton Global Advisors Long-term capital growth. Portfolio Limited MFS(R) Research Massachusetts Financial Capital appreciation. International Portfolio Services Company Oppenheimer Capital OppenheimerFunds, Inc. Capital appreciation. Appreciation Portfolio PIMCO Inflation Protected Pacific Investment Maximum real return, consistent Bond Portfolio Management Company LLC with preservation of capital and prudent investment management. PIMCO Total Return Portfolio Pacific Investment Maximum total return, consistent Management Company LLC with the preservation of capital and prudent investment management. RCM Technology Portfolio RCM Capital Management LLC Capital appreciation; no consideration is given to income. T. Rowe Price Mid Cap Growth T. Rowe Price Associates, Long-term growth of capital. Portfolio Inc.
AMERICAN FUNDS INSURANCE SERIES(R) ADVISER: CAPITAL RESEARCH AND MANAGEMENT COMPANY
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- American Funds Bond Fund N/A Maximize current income and preserve capital by investing primarily in fixed-income securities. American Funds Global Small N/A Capital appreciation through Capitalization Fund stocks. American Funds Growth Fund N/A Capital appreciation through stocks. American Funds Growth-Income N/A Capital appreciation and income. Fund
- --------------- (1) Davis Selected Advisers, L.P. may also delegate any of its responsibilities to Davis Selected Advisers--NY, Inc., a wholly-owned subsidiary. FOR MORE INFORMATION REGARDING THE PORTFOLIOS AND THEIR INVESTMENT ADVISERS AND SUB-ADVISERS, SEE THE PORTFOLIO PROSPECTUSES ATTACHED AT THE END OF THIS PROSPECTUS AND THEIR STATEMENTS OF ADDITIONAL INFORMATION. The Portfolios' investment objectives may not be met. The investment objectives and policies of certain Portfolios are similar to the investment objectives and policies of other funds that may be managed by the same investment adviser or sub-adviser. The investment results of the Portfolios may be higher or lower than the results of these funds. There is no assurance, and no representation is made, that the investment results of any of the Portfolios will be comparable to the investment results of any other fund. SHARE CLASSES OF THE PORTFOLIOS The Portfolios offer various classes of shares, each of which has a different level of expenses. Attached prospectuses for the Portfolios may provide information for share classes that are not available through the Policy. A-19 When you consult the attached prospectus for any Portfolio, you should be careful to refer to only the information regarding the class of shares that is available through the Policy. For the Metropolitan Series Fund, Inc. we offer Class A shares only; for the Met Investors Series Trust, we offer Class A and Class B shares; and for the American Funds Insurance Series, we offer Class 2 shares only. CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS An investment adviser (other than our affiliates MetLife Advisers, LLC; and Met Investors Advisory, LLC) or subadviser of a Portfolio, or its affiliates, may make payments to us and/or certain of our affiliates. These payments may be used for a variety of purposes, including payment for expenses for certain administrative, marketing and support services with respect to the Policies and, in our role as intermediary, with respect to the Portfolios. We and our affiliates may profit from these payments. These payments may be derived, in whole or in part, from the advisory fee deducted from Portfolio assets. Policy Owners, through their indirect investment in the Portfolios, bear the costs of these advisory fees (see the Portfolio prospectuses for more information). The amount of the payments we receive is based on a percentage of assets of the Portfolio attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some advisers or subadvisers (or other affiliates) may pay us more than others. These percentages currently range up to 0.50%. Additionally, an investment adviser or subadviser of a Portfolio or its affiliates may provide us with wholesaling services that assist in the distribution of the Policies 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 their affiliate) with increased access to persons involved in the distribution of the Policies. 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 Portfolios. We will benefit accordingly from assets allocated to the Portfolios to the extent they result in profits to the advisers. (See "Fee Tables--Annual Portfolio Operating Expenses" for information on the management fees paid by the Portfolios and the Statement of Additional Information for the Portfolios for information on the management fees paid by the advisers to the subadvisers.) Certain Portfolios have adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. A Portfolio's 12b-1 Plan, if any, is described in more detail in the Portfolio's prospectus. (See "Fee Tables--Annual Portfolio Expenses" and "Distribution of the Policies.") Any payments we receive pursuant to those 12b-1 Plans are paid to us or our Distributor. Payments under a Portfolio's 12b-1 Plan decrease the Portfolio's investment return. SELECTION OF THE PORTFOLIOS We select the Portfolios offered through the Policy 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 Portfolio's adviser or subadviser is one of our affiliates or whether the Portfolio, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates. For additional information on these arrangements, see "Certain Payments We Receive with Regard to the Portfolios" above. 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 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 Portfolios periodically and may remove a Portfolio or limit its availability to new premium payments and/or transfers of cash value if we determine that the Portfolio no longer meets one or more of the selection criteria, and/or if the Portfolio has not attracted significant allocations from Policy owners. We may include Portfolios based on recommendations from selling firms. In some cases, the selling firms may receive payments from the Portfolios they recommend and may benefit accordingly from the allocation of cash value to such Portfolios. A-20 WE DO NOT PROVIDE ANY INVESTMENT ADVICE AND DO NOT RECOMMEND OR ENDORSE ANY PARTICULAR PORTFOLIO. YOU BEAR THE RISK OF ANY DECLINE IN THE CASH VALUE OF YOUR POLICY RESULTING FROM THE PERFORMANCE OF THE PORTFOLIOS YOU HAVE CHOSEN. We make certain payments to American Funds Distributors, Inc., principal underwriter for the American Funds Insurance Series. (See "Distribution of the Policies.") VOTING RIGHTS We own the Portfolio shares held in the Separate Account and have the right to vote those shares at meetings of the Portfolio shareholders. However, to the extent required by Federal securities law, we will give you, as Policy Owner, the right to instruct us how to vote the shares that are attributable to your Policy. We will determine, as of the record date, if you are entitled to give voting instructions and the number of shares to which you have a right of instruction. If we do not receive timely instructions from you, we will vote your shares for, against, or withhold from voting on, any proposition in the same proportion as the shares held in that Investment Division for all policies for which we have received voting instructions. The effect of this proportional voting is that a small number of Policy Owners may control the outcome of a vote. We will vote Portfolio shares held by our general account (or any unregistered separate account for which voting privileges were not extended) in the same proportion as the total of (i) shares for which voting instructions were received and (ii) shares that are voted in proportion to such voting instructions. We may disregard voting instructions for changes in the investment policy, investment adviser or principal underwriter of a Portfolio if required by state insurance law, or if we (i) reasonably disapprove of the changes and (ii) in the case of a change in investment policy or investment adviser, make a good faith determination that the proposed change is prohibited by state authorities or inconsistent with an Investment Division's investment objectives. If we do disregard voting instructions, the next semi-annual report to Policy Owners will include a summary of that action and the reasons for it. RIGHTS RESERVED BY METLIFE We and our affiliates may change the voting procedures and vote Portfolio shares without Policy Owner instructions, if the securities laws change. We also reserve the right: (1) to add Investment Divisions; (2) to combine Investment Divisions; (3) to substitute shares of another registered open-end management investment company, which may have different fees and expenses, for shares of a Portfolio; (4) to substitute or close an Investment Division to allocations of premium payments or cash value or both, and to existing investments or the investment of future premiums, or both, for any class of Policy or Policy Owner, at any time in our sole discretion; (5) to operate the Separate Account as a management investment company under the Investment Company Act of 1940 or in any other form; (6) to deregister the Separate Account under the Investment Company Act of 1940; (7) to combine it with other Separate Accounts; and (8) to transfer assets supporting the Policies from one Investment Division to another or from the Separate Account to other Separate Accounts, or to transfer assets to our general account as permitted by applicable law. We will exercise these rights in accordance with applicable law, including approval of Policy Owners if required. We will notify you if exercise of any of these rights would result in a material change in the Separate Account or its investments. We will not make any changes without receiving any necessary approval of the SEC and the New York Insurance Department. We will notify you of any changes. THE POLICIES PURCHASING A POLICY To purchase a Policy, you must submit a completed application and an initial premium to us at our Designated Office. (See "Receipt of Communications and Payments at MetLife's Designated Office.") The minimum face amount for the base Policy is $50,000 unless we consent to a lower amount. For Policies acquired through a pension A-21 or profit sharing plan qualified under Section 401 of the Internal Revenue Code of 1986, the minimum face amount is $25,000. The Policies are available for insureds age 85 or younger. We can provide you with details as to our underwriting standards when you apply for a Policy. We reserve the right to modify our minimum face amount and underwriting requirements at any time. We must receive evidence of insurability that satisfies our underwriting standards before we will issue a Policy. We reserve the right to reject an application for any reason permitted by law. We offer other variable life insurance policies that have different death benefits, policy features, and optional programs. However, these other policies also have different charges that would affect your Investment Division performance and cash values. To obtain more information about these other policies, contact our Designated Office or your registered representative. REPLACING EXISTING INSURANCE It may not be in your best interest to surrender, lapse, change, or borrow from existing life insurance policies or annuity contracts in connection with the purchase of the Policy. You should compare your existing insurance and the Policy carefully. You should replace your existing insurance only when you determine that the Policy is better for you. You may have to pay a surrender charge on your existing insurance, and the Policy will impose a new surrender charge period. You should talk to your financial professional or tax adviser to make sure the exchange will be tax-free. If you surrender your existing policy for cash and then buy the Policy, you may have to pay a tax, including possibly a penalty tax, on the surrender. Because we may not issue the Policy until we have received an initial premium from your existing insurance company, the issuance of the Policy may be delayed. POLICY OWNER AND BENEFICIARY The Policy Owner is named in the application but may be changed from time to time. While the insured is living and the Policy is in force, the Policy Owner may exercise all the rights and options described in the Policy, subject to the terms of any beneficiary designation or assignment of the Policy. These rights include selecting and changing the beneficiary, changing the owner, changing the face amount of the Policy and assigning the Policy. At the death of the Policy Owner who is not the insured, his or her estate will become the Policy Owner unless a successor Policy Owner has been named. The Policy Owner's rights (except for rights to payment of benefits) terminate at the death of the insured. The beneficiary is also named in the application. You may change the beneficiary at any time before the death of the insured, unless the beneficiary designation is irrevocable. The beneficiary has no rights under the Policy until the death of the insured and must survive the insured in order to receive the death proceeds. If no named beneficiary survives the insured, we pay proceeds to the Policy Owner. A change of Policy Owner or beneficiary is subject to all payments made and actions taken by us under the Policy before we receive a signed change form. You can contact your registered representative or our Designated Office for the procedure to follow. You may assign (transfer) your rights in the Policy to someone else. An absolute assignment of the Policy is a change of Policy Owner and beneficiary to the assignee. A collateral assignment of the Policy does not change the Policy Owner or beneficiary, but their rights will be subject to the terms of the assignment. Assignments are subject to all payments made and actions taken by us under the Policy before we receive a signed copy of the assignment form. We are not responsible for determining whether or not an assignment is valid. Changing the Policy Owner or assigning the Policy may have tax consequences. (See "Tax Considerations" below.) 24 MONTH CONVERSION RIGHT GENERAL RIGHT. Generally, during the first two Policy years, or in the event of a material change in the investment policy of the Separate Account, you may convert the Policy to fixed benefit coverage by exchanging the Policy for a fixed benefit life insurance policy agreed to by us and issued by us or an affiliate that we name provided that you repay any Policy loans and loan interest, and the Policy has not lapsed. We make the exchange without A-22 evidence of insurability. The new policy will have the same base Policy face amount as that being exchanged. The new policy will have the same issue age, risk class and Policy Date as the variable life Policy had. Contact our Designated Office or your registered representative for more specific information about the 24 Month Conversion Right. The exchange may result in a cost or credit to you. On the exchange, you may need to make an immediate premium payment on the new policy in order to keep it in force. EXCHANGE RIGHT At least once each year you have the option to transfer all of your cash value to the Fixed Account and apply the cash surrender value to a new policy issued by us or an affiliate which provides paid-up insurance. Paid-up insurance is permanent insurance with no further premiums due. The face amount of the new policy of paid-up insurance may be less than the face amount of the Policy. PREMIUMS FLEXIBLE PREMIUMS Subject to the limits described below, you choose the amount and frequency of premium payments. You select a Planned Premium schedule, which consists of a first-year premium amount and an amount for subsequent premium payments. This schedule appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY KEEP YOUR POLICY IN FORCE. You may skip Planned Premium payments or make additional payments. Additional payments could be subject to underwriting. No payment can be less than $50, except with our consent. You can pay Planned Premiums on an annual, semi-annual or quarterly schedule, or on a monthly schedule if payments are drawn directly from your checking account under our pre-authorized checking arrangement. We will send premium notices for annual, semi-annual or quarterly Planned Premiums. You may make payments by check or through our pre-authorized checking arrangement. You can change your Planned Premium schedule by sending your request to us at our Designated Office. You may not make premium payments on or after the Policy anniversary when the insured reaches age 121, except for premiums required during the grace period. If any payments under the Policy exceed the "7-pay limit" under Federal tax law, your Policy will become a modified endowment contract and you may have more adverse tax consequences with respect to certain distributions than would otherwise be the case if premium payments did not exceed the "7-pay limit." The amount of your "7-pay limit" is shown in your Policy illustration and in your annual Policy statement. If you make a payment that exceeds the "7-pay limit" we will notify you and give you an opportunity to receive a refund of the excess premium to prevent your Policy from becoming a modified endowment contract. (See "Tax Considerations.") In addition, if you have selected the guideline premium test, Federal tax law limits the amount of premiums that you can pay under the Policy. You need our consent if, because of tax law requirements, a payment would increase the Policy's death benefit by more than it would increase cash value. We may require evidence of insurability before accepting the payment. We allocate net payments to your Policy's Investment Divisions as of the date we receive the payments at our Designated Office (or at our Administrative Office in Tampa, Florida), if they are received before the close of regular trading on the New York Stock Exchange. Payments received after that time, or on a day that the New York Stock Exchange is not open, will be allocated to your Policy's Investment Divisions on the next day that the New York Stock Exchange is open. (See "Receipt of Communications and Payments at MetLife's Designated Office.") Under our current processing, we treat any payment received by us as a premium payment unless it is clearly marked as a loan repayment. AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY INVESTMENT START DATE. Your initial net premium is credited with Fixed Account interest as of the investment start date. The investment start date is the later of the Policy Date and the date we first receive a premium payment for the Policy at our Designated Office. (See "Receipt of Communications and Payments at MetLife's Designated Office.") A-23 PREMIUM WITH APPLICATION. If you make a premium payment with the application, unless you request otherwise, the Policy Date is the date the policy application is approved. Monthly Deductions begin on the Policy Date. You may only make one premium payment with the application. The minimum amount you must pay is set forth in the application. If we decline an application, we refund the premium payment made. If you make a premium payment with the application, we will cover the insured under a temporary insurance agreement beginning on the later of the date the application is signed or on the date of any required medical examination. (See "Death Benefits.") PREMIUM ON DELIVERY. If you pay the initial premium upon delivery of the Policy, unless you request otherwise, the Policy Date and the investment start date are the date your premium payment is received at our Designated Office. Monthly Deductions begin on the Policy Date. BACKDATING. We may sometimes backdate a Policy, if you request, by assigning a Policy Date earlier than the date the Policy application is approved. You may wish to backdate so that you can obtain lower cost of insurance rates, based on a younger insurance age. For a backdated Policy, you must also pay the minimum premiums due for the period between the Policy Date and the investment start date. As of the investment start date, we allocate the net premiums to the Policy, adjusted for monthly Policy charges. RIGHT TO EXAMINE POLICY You may cancel the Policy within ten days after you receive it. You may return the Policy to our Designated Office (see "Receipt of Communications and Payments at MetLife's Designated Office") or your registered representative. Insurance coverage ends as soon as you return the Policy (determined by postmark, if the Policy is mailed). If you cancel the Policy, we refund any premiums paid. ALLOCATION OF NET PREMIUMS We allocate your initial net premium to the Fixed Account as of the investment start date. We will hold your initial net premium in the Fixed Account for twenty days, and then we make the allocation among the Investment Divisions as you choose. You may allocate any whole percentage to an Investment Division. You make the initial premium allocation when you apply for a Policy. You can change the allocation of future premiums at any time thereafter. The change will be effective for premiums applied on or after the date when we receive your request. You may request the change by telephone, by written request (which may be telecopied to us) or over the Internet. (See "Receipt of Communications and Payments at MetLife's Designated Office.") When we allocate net premiums to your Policy's Investment Divisions, we convert them into accumulation units of the Investment Divisions. We determine the number of accumulation units by dividing the dollar amount of the net premium by the accumulation unit value. For your initial premium, we use the accumulation unit value on the investment start date. For subsequent premiums, we use the accumulation unit value next determined after receipt of the payment. (See "Cash Value.") A-24 RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE'S DESIGNATED OFFICE We will treat your request for a Policy transaction, or your submission of a payment, as received by us if we receive a request conforming to our administrative procedures or a payment at our Designated Office before the close of regular trading on the New York Stock Exchange on that day (usually 4:00 p.m. Eastern Time). If we receive it after that time, or if the New York Stock Exchange is not open that day, then we will treat it as received on the next day when the New York Stock Exchange is open. These rules apply regardless of the reason we did not receive your request by the close of regular trading on the New York Stock Exchange--even if due to our delay (such as a delay in answering your telephone call). The Designated Office for various Policy transactions is as follows: Premium Payments MetLife P.O. Box 371351 Pittsburgh, PA 15250-7351 Payment Inquiries and MetLife Correspondence P.O. Box 30375 Tampa, FL 33630-3375 Beneficiary and Ownership MetLife Changes P.O. Box 541 Warwick, RI 02887-0541 Surrenders, Loans, MetLife Withdrawals and P.O. Box 543 Investment Division Transfers Warwick, RI 02887-0543 Cancellations (Right to Examine MetLife Policy Period) Free Look Unit 500 Schoolhouse Road Johnstown, PA 15904 Death Claims MetLife P.O. Box 353 Warwick, RI 02887-0353 Investment Division Transfers and (800) 638-5000 Other Telephone Transactions and Inquiries
You may request a cash value transfer or reallocation of future premiums by written request (which may be telecopied) to us, by telephoning us or over the Internet (subject to our restrictions on "market timing" transfers). To request a transfer or reallocation by telephone, you should contact your registered representative or contact us at 1-800-638-5000. To request a transfer over the Internet, you may log on to our website at www.metlife.com. We use reasonable procedures to confirm that instructions communicated by telephone, facsimile or Internet are genuine. Any telephone, facsimile or Internet instructions that we reasonably believe to be genuine are your responsibility, including losses arising from any errors in the communication of instructions. However, because telephone and Internet transactions may be available to anyone who provides certain information about you and your Policy, you should protect that information. We may not be able to verify that you are the person providing telephone or Internet instructions, or that you have authorized any such person to act for you. Telephone, facsimile, and computer systems (including the Internet) may not always be available. Any telephone, facsimile or computer system, whether it is yours, your service provider's, your registered representative'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 are experiencing problems, you should make your request by writing to our Designated Office. A-25 If you send your premium payments or transaction requests to an address other than the one we have designated for receipt of such payments or requests, we may return the premium payment to you, or there may be a delay in applying the premium payment or transaction to your Policy. PAYMENT OF PROCEEDS We ordinarily pay any cash surrender value, loan value or death benefit proceeds from the Investment Divisions within seven days after we receive a request, or satisfactory proof of death of the insured (and any other information we need to pay the death proceeds). (See "Receipt of Communications and Payments at MetLife's Designated Office.") However, we may delay payment (except when a loan is made to pay a premium to us) or transfers from the Investment Divisions: (i) if the New York Stock Exchange is closed for other than weekends or holidays, or if trading on the New York Stock Exchange is restricted as determined by the SEC, (ii) if the SEC by order permits postponement or determines that an emergency exists that makes payments or Investment Division transfers impractical, or (iii) at any other time when the Portfolios or the Separate Account have the legal right to suspend payment. We may withhold payment of surrender, withdrawal or loan proceeds if any portion of those proceeds would be derived from a Policy Owner's check that has not yet cleared (i.e., that could still be dishonored by your banking institution). We may use telephone, facsimile, Internet or other means of communications to verify that payment from the Policy 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. Policy 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. Unless otherwise requested, we may apply the Policy's death proceeds to our Total Control Account. We establish a Total Control Account at a banking institution at the time for payment. The Total Control Account is an interest-bearing checking account through which you have convenient and complete access to the proceeds, which are maintained in our general account or that of an affiliate. Interest is credited at an effective rate of 3% per year. CASH VALUE Your Policy's total cash value includes its cash value in the Separate Account and in the Fixed Account. If you have a Policy loan, the cash value also includes the amount we hold in the Loan Account as a result of the loan. The cash value reflects: -- net premium payments -- the net investment experience of the Policy's Investment Divisions -- interest credited to cash value in the Fixed Account -- interest credited to amounts held in the Loan Account for a Policy loan -- the death benefit option you choose -- Policy charges -- partial withdrawals -- transfers among the Investment Divisions and the Fixed Account. The Policy's total cash value in the Separate Account equals the number of accumulation units credited in each Investment Division multiplied by that Investment Division's accumulation unit value. We convert any premium, interest earned on loan cash value, or cash value allocated to an Investment Division into accumulation units of the Investment Division. Surrenders, partial withdrawals, Policy loans, transfers and charges deducted from the cash value reduce the number of accumulation units credited in an Investment Division. We determine the number of accumulation units by dividing the dollar amount of the transaction by the Investment Division's accumulation unit value next determined following the transaction. (In the case of an initial premium, we use the accumulation unit value on the investment start date). The accumulation unit value of an Investment Division depends on the net investment experience of its corresponding Portfolio and reflects fees and expenses of the Portfolio. We determine the accumulation unit value as A-26 of the close of regular trading on the New York Stock Exchange on each day that the Exchange is open for trading by multiplying the most recent accumulation unit value by the net investment factor ("NIF") for that day (see below). The NIF for an Investment Division reflects: -- the change in net asset value per share of the corresponding Portfolio (as of the close of regular trading on the Exchange) from its last value, -- the amount of dividends or other distributions from the Portfolio since the last determination of net asset value per share, and -- any deductions for taxes that we make from the Separate Account. The NIF can be greater or less than one. DEATH BENEFITS If the insured dies while the Policy is in force, we pay a death benefit to the beneficiary. Coverage under the Policy generally begins when you pay the initial premium. If you make a premium payment with the application, we will cover the insured under a temporary insurance agreement for a limited time that begins on the later of the date we receive the premium payment or the date of any required medical examination. Temporary coverage is not available for proposed insureds who have received medical treatment for, or been diagnosed as having, certain conditions or diseases specified in the temporary insurance agreement. The maximum temporary coverage is the lesser of the amount of insurance applied for and $1,000,000. DEATH BENEFIT OPTIONS. When you apply for a Policy, you must choose among three death benefit options. If you fail to select a death benefit option in the application, we will seek the required information from you. The Option A death benefit is equal to the face amount of the Policy. The Option A death benefit is fixed, subject to increases required by the Internal Revenue Code of 1986 (the "Code"). The Option B death benefit is equal to the face amount of the Policy, plus the Policy's cash value, if any. The Option B death benefit is also subject to increases required by the Code. The Option C death benefit (available if the insured is age 60 or younger) is equal to the face amount of the Policy plus the Policy's cash value until the insured attains age 65, at which time we will increase the Policy's face amount by the amount of the Policy's cash value and thereafter the death benefit will remain level, at the increased face amount, subject to increases required by the Code. CHOICE OF TAX TEST. The Internal Revenue Code requires the Policy's death benefit to be not less than an amount defined in the Code. As a result, if the cash value grows to certain levels, the death benefit increases to satisfy tax law requirements. When you apply for your Policy, you select which tax test will apply to the death benefit. You will choose between: (1) the guideline premium test, and (2) the cash value accumulation test. The test you choose at issue cannot be changed. Under the GUIDELINE PREMIUM TEST, the death benefit will not be less than the cash value times the guideline premium factor. See Appendix A. Under the CASH VALUE ACCUMULATION TEST, the death benefit will not be less than the cash value times the net single premium factor set by the Code. Net single premium factors are based on the age, smoking status, risk class and sex of the insured at the time of the calculation. Sample net single premium factors appear in Appendix A. If cash value growth in the later Policy years is your main objective, the guideline premium test may be the appropriate choice because it does not require as high a death benefit as the cash value accumulation test, and therefore cost of insurance charges may be lower once the Policy's death benefit is subject to increases required by the Code. If you select the cash value accumulation test, you can generally make a higher amount of premium payments for any given face amount, and a higher death benefit may result in the long term. If cash value growth in the early Policy years is your main objective, the cash value accumulation test may be the appropriate choice because it allows you to invest more premiums in the Policy for each dollar of death benefit. A-27 AGE 121. The death benefit payable under Option A or Option C on or after the insured's attained age 121 will be the greater of: -- the cash value on the date of death, or -- the face amount of the base Policy on the Policy anniversary at the insured's attained age 121. The death benefit payable under Option B on or after the insured's attained age 121 will be the face amount of the base Policy on the Policy anniversary at the insured's attained age 121, plus the cash value on the date of death. The tax consequences of keeping the Policy in force beyond the insured's attained age 121 are unclear. DEATH PROCEEDS PAYABLE The death proceeds we pay are equal to the death benefit on the date of the insured's death, reduced by any outstanding loan and accrued loan interest on that date. If death occurs during the grace period, we reduce the proceeds by the amount of unpaid Monthly Deductions. (See "Lapse and Reinstatement.") We increase the death proceeds (1) by any rider benefits payable and (2) by any cost of insurance charge made for a period beyond the date of death. Riders that can have an effect on the amount of death proceeds payable are the Accelerated Death Benefit Rider, the Accidental Death Benefit Rider and the Options to Purchase Additional Insurance Coverage Rider. (See "Additional Benefits by Rider.") We may adjust the death proceeds if the insured's age or sex was misstated in the application, if death results from the insured's suicide within two years from the Policy's date of issue, or if a rider limits the death benefit. SUICIDE. If the insured commits suicide within two years from the date of issue, the death benefit will be limited to premiums paid less any partial withdrawals, less any loan and loan interest outstanding on the date of death. If the insured commits suicide within two years after the effective date of an increase in face amount, the death benefit for such increase will be limited to the Monthly Deductions for the increase. CHANGE IN DEATH BENEFIT OPTION After the first Policy year you may change your death benefit option, subject to our underwriting rules, by written request to our Designated Office. The change will be effective on the monthly anniversary on or following the date we approve your request. We may require proof of insurability. A change in death benefit option may have tax consequences. If you change from Option A (or from Option C after the insured's attained age 65) to Option B (or to Option C on or before the insured's attained age 60), we reduce the Policy's face amount if necessary so that the death benefit is the same immediately before and after the change. A face amount reduction below $50,000 requires our consent. If we reduce the face amount, we will first reduce any prior increases in face amount that you applied for, in the reverse order in which the increases occurred, then any remaining initial face amount, and then any increase in face amount from a prior change in death benefit option, but not below the Policy minimum. A partial withdrawal of cash value may be necessary to meet Federal tax law limits on the amount of premiums that you can pay into the Policy. A Surrender Charge may apply to a Policy face amount reduction or partial withdrawal that reduces the face amount on a change from Option A (or from Option C after the insured's attained age 65) to Option B (or to Option C on or before the insured's attained age 60). (See "Surrender Charge.") In addition, if the face amount reduction occurs within 12 months after a face amount increase, we will deduct a proportionate part of the Coverage Expense Charges due with respect to the face amount increase for the remainder of the 12-month period. If you change from Option B (or from Option C on or before the insured's attained age 65) to Option A, we increase the Policy's face amount, if necessary, so that the death benefit is the same immediately before and after the change. The increase in face amount is not subject to the Coverage Expense Charge and will not be subject to any Surrender Charge. A-28 INCREASE IN FACE AMOUNT You may increase the Policy's face amount. We require satisfactory evidence of insurability, and the insured's attained age must be 85 or less. The minimum amount of increase permitted is $5,000. The increase is effective on the monthly anniversary on or next following our approval of your request. Requests for face amount increases should be submitted to our Designated Office. An increase in face amount may have tax consequences. The face amount increase will have its own Target Premium, as well as its own Surrender Charge, current cost of insurance rates, Coverage Expense Charge, and Right to Examine Policy and suicide and contestability periods as if it were a new Policy. (See "Surrender Charge", "Monthly Deduction from Cash Value", "Partial Withdrawal" and "Reduction in Face Amount.") When calculating the monthly cost of insurance charge, we attribute the Policy's cash value first to any remaining initial face amount (including any increase in face amount from a prior change in death benefit option), then to any face amount increases in the order in which they were issued, for purposes of determining the net amount at risk. We reserve the right to (i) restrict certain Policy changes, such as death benefit increases, or (ii) require the issuance of a new Policy in connection with such Policy changes if we deem it administratively necessary or prudent to do so in order to comply with applicable law, including applicable Federal income tax law. REDUCTION IN FACE AMOUNT After the first Policy year, you may reduce the face amount of your Policy without receiving a distribution of any Policy cash value. If you reduce the face amount of your Policy, we deduct any Surrender Charge that applies from the Policy's cash value in proportion to the amount of the face amount reduction. If the face amount of your Policy is reduced in the first year following a face amount increase, we will also deduct a proportionate part of the Coverage Expense Charges due for the remainder of the first year following the face amount increase. A face amount reduction will decrease the Policy's death benefit unless we are increasing the death benefit to satisfy Federal income tax laws, in which case a face amount reduction will not decrease the death benefit unless we deduct a Surrender Charge from the cash value. A reduction in face amount in this situation may not be advisable. The amount of any face reduction must be at least $5,000, and the face amount remaining after a reduction must meet our minimum face amount requirements for issue, except with our consent. If you choose to reduce your Policy's face amount, unless you request otherwise, we will first decrease any prior increases in base Policy face amount that you applied for, in the reverse order in which the increases occurred, then any remaining initial base Policy face amount, and then any increase in face amount from a prior change in death benefit option. A reduction in face amount reduces the Federal tax law limits on the amount of premiums that you can pay under the Policy under the guideline premium test. In these cases, a portion of the Policy's cash value may have to be paid to you to comply with Federal tax law. A face amount reduction takes effect on the monthly anniversary on or next following the date we receive your request. You can contact your registered representative or the Designated Office for information on face amount reduction procedures. A reduction in the face amount of a Policy may create a modified endowment contract or have other adverse tax consequences. If you are contemplating a reduction in face amount, you should consult your tax adviser regarding the tax consequences of the transaction. (See "Tax Considerations.") SURRENDERS AND PARTIAL WITHDRAWALS SURRENDER You may surrender the Policy for its cash surrender value at any time while the insured is living. We determine the cash surrender value as of the date when we receive the surrender request. (See "Receipt of Communications and Payments at MetLife's Designated Office.") The cash surrender value equals the cash value reduced by any A-29 Policy loan and accrued interest and by any applicable Surrender Charge. (See "Surrender Charge.") If you surrender the Policy in the first Policy year (or in the first year following a face amount increase), we will also deduct an amount equal to the remaining first year Coverage Expense Charges. We reserve the right to also deduct an amount equal to the remaining first year Policy Charges. If you surrender the Policy, coverage will terminate on the monthly anniversary on or next following the date of surrender. If the insured dies on or after the surrender date, but before the termination date, we will reverse the surrender and will pay the Policy's death benefit to the beneficiary, but we will deduct from the death proceeds an amount equal to the cash surrender value paid to you. You may apply all or part of the surrender proceeds to a payment option. Once a Policy is surrendered, all coverage and benefits cease and cannot be reinstated. A surrender may result in adverse tax consequences. (See "Tax Considerations" below.) The Policies are designed to be long-term investments. As a result, you should be aware that if you surrender your Policy in the first Policy year, the Surrender Charge is likely to exceed the cash value of your Policy and you will receive no proceeds upon surrender. PARTIAL WITHDRAWAL After the first Policy anniversary you may withdraw a portion of the Policy's cash surrender value. A partial withdrawal reduces the Policy's death benefit and may reduce the Policy's face amount if necessary so that the amount at risk under the Policy will not increase. A partial withdrawal may also reduce rider benefits. The minimum amount of a partial withdrawal request must be $500. We have the right to limit partial withdrawals to no more than 90% of the cash surrender value. In addition, a partial withdrawal will be limited by any restriction that we currently impose on withdrawals from the Fixed Account. (See "The Fixed Account.") Currently, we permit partial withdrawals equal to the lesser of 100% of the Policy's cash surrender value in the Separate Account as of the beginning of the year, or the maximum amount that can be withdrawn without causing the Policy's face amount to fall below the minimum permitted. (However, we may allow the face amount to fall below the minimum if the Policy has been in force for at least 15 years and the insured's attained age is greater than 55.) You may not make a partial withdrawal that would reduce your cash surrender value to less than the amount of two monthly deductions. We have the right to limit partial withdrawals to 12 per Policy year. Currently we do not limit the number of partial withdrawals. We reserve the right to impose a charge of $25 on each partial withdrawal. If a partial withdrawal reduces your Policy's face amount, the amount of the Surrender Charge that will be deducted from your cash value is an amount that is proportional to the amount of the face reduction. The amount deducted will reduce the remaining Surrender Charge payable under the Policy. No Surrender Charge will apply on up to 10% of the cash surrender value withdrawn each year, measured as a percentage of each withdrawal. EXAMPLE. The following example assumes that a Policy Owner withdraws, in the first month of the second Policy year, 20% of the cash surrender value of a Policy. The insured under the Policy is assumed to be the representative insured shown in the fee table on page A-8 of the prospectus. As shown in the fee table, the Surrender Charge for that insured is $14.00 per $1,000 of Policy face amount. The Policy is assumed to have the other characteristics shown below:
Face Amount:......... $ 300,000 Death Benefit Option:............ Option A -- Level Cash Value:.......... $ 11,718 Surrender Charge:.... $ - 4,200 ($14.00 x $300,000/1,000) ----------------- Cash Surrender Value:............. $ 7,518 x 20% ----------------- Withdrawal Amount:... $ 1,504
A-30 The first 10% of cash surrender value, or $752, can be withdrawn free of Surrender Charge. The remaining $752 withdrawn is subject to a portion of the Policy's Surrender Charge -- based on the ratio that such excess withdrawal amount bears to the Policy's face amount less the Surrender Charge, as shown in the formula below:
Withdrawal Amount in Surrender Charge x Excess of Free Withdrawal = Surrender Charge --------------------------------- Face Amount less Surrender Charge On Withdrawal $4,200 x $752 = $11 --------------------------------- $300,000 - $4,200
Because the Policy has a level death benefit, the withdrawal will cause a dollar for dollar reduction in the Policy's face amount, so that the cash value and the face amount will both be reduced by the $1,504 withdrawal and by the $11 Surrender Charge. The effect of the withdrawal on the Policy would be as follows:
Face Amount before Withdrawal............................... $300,000 Withdrawal................................................ - 1,504 Surrender Charge on Withdrawal............................ - 11 -------- Face Amount after Withdrawal................................ $298,485 Surrender Charge before Withdrawal.......................... $ 4,200 Surrender Charge on Withdrawal............................ - 11 -------- Surrender Charge after Withdrawal........................... $ 4,189 Cash Value before Withdrawal................................ $ 11,718 Withdrawal................................................ - 1,504 Surrender Charge on Withdrawal............................ - 11 -------- Cash Value after Withdrawal................................. $ 10,203 Surrender Charge after Withdrawal........................... - 4,189 -------- Cash Surrender Value after Withdrawal....................... $ 6,014
Any face amount reduction resulting from a partial withdrawal will reduce the face amount in the following order: any prior increases in base Policy face amount that you applied for, in the reverse order in which the increases occurred; any remaining initial face amount; and then any face amount increases resulting from a change in death benefit option, down to the required minimum. A partial withdrawal reduces the cash value in the Investment Divisions of the Separate Account and the Fixed Account in the same proportion that the cash value in each bears to the Policy's total unloaned cash value. We determine the amount of cash surrender value paid upon a partial withdrawal as of the date when we receive a request. You can contact your registered representative or our Designated Office for information on partial withdrawal procedures. (See "Receipt of Communications and Payments at MetLife's Designated Office.") A reduction in the death benefit as a result of a partial withdrawal may create a modified endowment contract or have other adverse tax consequences. If you are contemplating a partial withdrawal, you should consult your tax adviser regarding the tax consequences. (See "Tax Considerations.") TRANSFERS TRANSFER OPTION You may transfer your Policy's cash value between and among the Investment Divisions and the Fixed Account. Your right to transfer begins 20 days after we apply your initial premium to the Policy. We reserve the right to limit A-31 transfers to four per Policy year. Currently we do not limit the number of transfers per Policy year. We reserve the right to make a charge of $25 per transfer. We treat all transfer requests made at the same time as a single request. The transfer is effective as of the date when we receive the transfer request, if the request is received before the close of regular trading on the New York Stock Exchange. Transfer requests received after that time, or on a day that the New York Stock Exchange is not open, will be effective on the next day that the New York Stock Exchange is open. (See "Receipt of Communications and Payments at MetLife's Designated Office.") For special rules regarding transfers involving the Fixed Account, see "The Fixed Account". Frequent requests from Policy Owners to transfer cash value may dilute the value of a 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 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 Portfolios, which may in turn adversely affect Policy Owners and other persons who may have an interest in the Policies (e.g., 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 Portfolios (i.e., the BlackRock Strategic Value Portfolio, Franklin Templeton Small Cap Growth Portfolio, Julius Baer International Stock Portfolio, Loomis Sayles Small Cap Portfolio, Morgan Stanley EAFE Index Portfolio, Oppenheimer Global Equity Portfolio, Russell 2000 Index Portfolio, Western Asset Management Strategic Bond Opportunities Portfolio, T. Rowe Price Small Cap Growth Portfolio, Clarion Global Real Estate Portfolio, Harris Oakmark International Portfolio, Lord Abbett Bond Debenture Portfolio, Met/AIM Small Cap Growth Portfolio, Met/Templeton Growth Portfolio, MFS Research International Portfolio, and American Funds Global Small Capitalization Fund--the "Monitored Portfolios") and we monitor transfer activity in those Monitored Portfolios. In addition, as described below, we treat all American Funds Insurance Series portfolios ("American Funds portfolios") as 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 cash value; and (3) two or more "round-trips" involving any Portfolio in 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 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 Portfolios, we rely on the underlying 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 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. AMERICAN FUNDS MONITORING POLICY. As a condition to making their portfolios available in our products, American Funds requires us to treat all American Funds portfolios as Monitored Portfolios under our current market timing and excessive trading policies and procedures. Further, American Funds requires us to impose additional specified monitoring criteria for all American Funds portfolios available under the Policy, regardless of the potential for arbitrage trading. We are required to monitor transfer activity in American Funds portfolios to determine if there were two or more transfers in followed by transfers out, in each case of a certain dollar amount or greater, in any 30- day period. A first violation of the American Funds monitoring policy will result in a written notice of violation; each additional violation will result in the imposition of a six-month restriction, during which period we will require all transfer requests to or from an American Funds portfolio to be submitted with an original signature. Further, as Monitored Portfolios, all American Funds portfolios also will be subject to our current market timing and excessive A-32 trading policies, procedures and restrictions (described below), and transfer restrictions may be imposed upon a violation of either monitoring policy. 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 Policy Owners or other persons who have an interest in the Policies, we require all future transfer requests to or from any Monitored Portfolios or other identified Portfolios under that Policy to be submitted either (i) in writing with an original signature or (ii) by telephone prior to 10:00 a.m. Transfers made under an Automated Investment Strategy 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 Portfolios that we believe are susceptible to arbitrage trading or the determination of the transfer limits. Our ability to detect and/or restrict such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by Policy Owners to avoid such detection. Our ability to restrict such transfer activity also may be limited by provisions of the Policy. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Policy Owners and other persons with interests in the Policies. We do not accommodate market timing in any Portfolio and there are no arrangements in place to permit any Policy Owner to engage in market timing; we apply our policies and procedures without exception, waiver, or special arrangement. The 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, 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 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 Portfolios, we have entered into a written agreement, as required by SEC regulation, with each Portfolio or its principal underwriter that obligates us to provide to the Portfolio promptly upon request certain information about the trading activity of individual Policy Owners, and to execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific Policy Owners who violate the frequent trading policies established by the Portfolio. In addition, Policy Owners and other persons with interests in the Policies should be aware that the purchase and redemption orders received by the Portfolios generally are "omnibus" orders from intermediaries such as retirement plans or separate accounts funding variable insurance products. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable insurance products and/or individual retirement plan participants. The omnibus nature of these orders may limit the 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 Portfolios (and thus Policy Owners) will not be harmed by transfer activity relating to other insurance companies and/or retirement plans that may invest in the Portfolios. If a Portfolio believes that an omnibus order reflects one or more transfer requests from Policy Owners engaged in disruptive trading activity, the 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 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 Policy Owner). You should read the Portfolio prospectuses for more details. A-33 AUTOMATED INVESTMENT STRATEGIES You can choose one of five automated investment strategies. You can change or cancel your choice at any time. EQUITY GENERATOR. The Equity Generator allows you to transfer the interest earned in the Fixed Account to any one of the Investment Divisions on each monthly anniversary. The interest earned in the month must be at least $20 in order for the transfer to take place. If less than $20 is earned, no transfer will occur, and the interest not transferred cannot be counted towards the next month's minimum. ALLOCATOR. The Allocator allows you to systematically transfer cash value from the Fixed Account or any one Investment Division (the "source fund") to any number of Investment Divisions. The transfers will take place on each monthly anniversary. You can choose to transfer a specified dollar amount (1) for a specified number of months, or (2) until the source fund is depleted. In either case, payments must continue for at least a three month period. ENHANCED DOLLAR COST AVERAGER. With the Enhanced Dollar Cost Averager, cash value is transferred from the EDCA fixed account to the Investment Divisions monthly. You elect the EDCA at issue and select the total amount of cash value to be transferred. The cash value earmarked for the strategy is held in the EDCA fixed account where it may be credited with a rate of interest that is higher than the Fixed Account's current crediting rate. The amount transferred each month to the Investment Divisions equals the total amount earmarked for the strategy divided by 12. REBALANCER. The Rebalancer allows your Policy's cash value to be automatically redistributed on a quarterly basis among the Investment Divisions and the Fixed Account in accordance with the allocation percentages you have selected. INDEX SELECTOR. The Index Selector allows you to choose one of five asset allocation models which are designed to correlate to various risk tolerance levels. Based on your selection, we allocate 100% of your cash value among the five Investment Divisions that invest in the five index Portfolios available under the Policy (the Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, MetLife Stock Index, MetLife Mid Cap Stock Index and Russell 2000 Index Portfolios) and the Fixed Account. On a quarterly basis, we will redistribute your cash value among these Investment Divisions and the Fixed Account in order to return your cash value to the original allocation percentages. If you change your allocation of net premiums the Index Selector strategy, including the rebalancing feature, will be terminated. These automated investment strategies allow you to take advantage of investment fluctuations, but none assures a profit nor protects against a loss. Because certain strategies involve continuous investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to continue purchases through periods of fluctuating price levels. We reserve the right to modify or terminate any of the automated investment strategies for any reason, including, without limitation, a change in regulatory requirements applicable to such programs. For more information about the automated investment strategies, please contact your registered representative. LOANS You may borrow from your Policy at any time. The maximum amount you may borrow, calculated as of the date of the loan, is the greater of 75% of the Policy's cash surrender value or: -- the Policy's cash value, less -- any Policy loan balance, less -- loan interest due to the next Policy anniversary, less -- the most recent Monthly Deduction times the number of months to the next Policy anniversary, less -- any Surrender Charge, plus -- interest credited on the cash value at the guaranteed interest rate to the next Policy anniversary. A-34 The minimum loan amount is $500. We make the loan as of the date when we receive a loan request. (See "Receipt of Communications and Payments at MetLife's Designated Office.") You may increase your risk of lapse if you take a loan. You should contact our Designated Office or your registered representative for information on loan procedures. A Policy loan reduces the Policy's cash value in the Investment Divisions by the amount of the loan. A loan repayment increases the cash value in the Investment Divisions by the amount of the repayment. We attribute Policy loans to the Investment Divisions and the Fixed Account in proportion to the cash value in each. We transfer cash value equal to the amount of the loan from the Investment Divisions and the Fixed Account to the Loan Account (which is part of our general account). You may repay all or part of your loan at any time while the insured is still alive. When you make a loan repayment, we transfer an amount of cash value equal to the repayment from the Loan Account to the Divisions of the Separate Account and to the Fixed Account in proportion to the cash value in each. (See "Receipt of Communications and Payments at MetLife's Designated Office.") We guarantee that the interest rate charged on Policy loans will not be more than 4.0% per year in Policy years 1-10 and 3.0% per year thereafter. Policy loan interest is due and payable annually on each Policy anniversary. If not paid when due, we add the interest accrued to the loan amount, and we transfer an amount of cash value equal to the unpaid interest from the Investment Divisions and the Fixed Account to the Loan Account in the same manner as a new loan. Cash value in the Loan Account earns interest at not less than 3.0% per year and is transferred on each Policy anniversary to the Investment Divisions and to the Fixed Account in proportion to the cash value in each. The interest credited will also be transferred: (1) when you take a new loan; (2) when you make a full or partial loan repayment; and (3) when the Policy enters the grace period. The amount taken from the Policy's Investment Divisions as a result of a loan does not participate in the investment experience of the Investment Divisions. Therefore, loans can permanently affect the death benefit and cash value of the Policy, even if repaid. In addition, we reduce any proceeds payable under a Policy by the amount of any outstanding loan plus accrued interest. If a Policy loan is outstanding, it may be better to repay the loan than to pay a premium, because the payment is subject to sales and premium tax charges, and the loan repayment is not subject to charges. (See "Deductions from Premiums.") If you want us to treat a payment as a loan repayment, it should be clearly marked as such. A loan that is taken from, or secured by, a Policy may have tax consequences. Although the issue is not free from doubt, we believe that a loan from or secured by a Policy that is not classified as a modified endowment contract should generally not be treated as a taxable distribution. Nevertheless, the tax consequences associated with loans outstanding after the tenth Policy year are uncertain. A tax adviser should be consulted when considering a loan. LAPSE AND REINSTATEMENT LAPSE In general, in any month that your Policy's cash surrender value is not large enough to cover a Monthly Deduction, your Policy will be in default, and may lapse. However, you can prevent your Policy from lapsing, regardless of the amount of your cash surrender value, if the premiums you pay are sufficient to keep the Guaranteed Minimum Death Benefit ("GMDB") in effect. The base Policy offers, at no additional charge, a five-year GMDB, a 20-year GMDB and a GMDB that lasts until the insured's age 65. For an additional charge, you can add a Policy rider at issue that provides a GMDB to age 85 or a GMDB to age 121. All Policies are issued with a GMDB, which guarantees that the Policy will remain in force for at least five years if the required Guaranteed Minimum Death Benefit Monthly Premiums ("GMDB Monthly Premiums") are paid when due. The five-year GMDB Monthly Premium is set forth in your Policy. It is the minimum initial A-35 periodic premium you can pay into the Policy. Policies will be issued with the 20-year GMDB or the GMDB to age 65 to eligible Policy Owners who elect either of these GMDBs at issue. The GMDB Monthly Premium varies depending on the guarantee period, the insured's age, sex (except for unisex policies), smoking status and risk class, the Policy's face amount and the death benefit option chosen. The GMDB Monthly Premium may change in the event that any of the following events occur: an increase or decrease in the base Policy face amount; adding, deleting or changing a rider; a change in death benefit option or the insured's risk class; or a misstatement of the insured's age or sex in the Policy application. On each monthly anniversary we test the Policy to determine if the cumulative premiums you have paid, less any partial withdrawals or outstanding loans you have taken, equal or exceed the sum of the GMDB Monthly Premiums due to date for the GMDB you selected. If you meet this test, the GMDB you selected will be in effect. However, even if you have not elected the 20-year GMDB or the GMDB to age 65, if the amount of premiums you pay into the Policy for each Policy month since the Policy Date is sufficient to meet the requirements of the 20-year GMDB or the GMDB to age 65, in your third annual statement we will notify you that the applicable GMDB is in effect. Conversely, if you have elected the 20-year GMDB or the GMDB to age 65 and your premium payments are insufficient to satisfy the GMDB Monthly Premium requirements, we will notify you that your GMDB will be reduced to the five-year GMDB, the GMDB to age 65, or the 20-year GMDB, as applicable, unless you pay sufficient premiums within 62 days to meet the requirements of the GMDB you originally selected. If, during the first five Policy years, you fail to pay sufficient premiums to keep the five-year GMDB in effect, we will notify you that the GMDB will terminate within 62 days if you fail to pay the required Monthly Premiums. If the guarantee provided by the GMDB terminates, the Policy will continue in force for as long as there is cash surrender value sufficient to pay the Monthly Deduction. If the GMDB terminates, you may reinstate it within nine months provided the Policy remains in force. In order to reinstate the GMDB, you must pay sufficient premiums to satisfy the cumulative premium requirement for the applicable GMDB (five-year, 20-year or to age 65) at the time of reinstatement. If the GMDB is in effect and the Policy's cash surrender value is insufficient to cover the Monthly Deduction, the Policy will not lapse. We will take the Monthly Deduction from the Policy's cash value until the cash value has been reduced to zero. At that point, future Monthly Deductions will be waived for as long as the GMDB is in effect. If the GMDB is not in effect and the cash surrender value is insufficient to pay the Monthly Deduction, the Policy will enter a 62-day grace period during which you will have an opportunity to pay a premium sufficient to keep the Policy in force. The minimum amount you must pay is the lesser of three Monthly Deductions or, if applicable, the amount necessary to reinstate the GMDB. We will tell you the amount due. If you fail to pay this amount before the end of the grace period, the Policy will terminate. Your Policy may also lapse if Policy loans plus accrued interest exceed the Policy's cash value less the Surrender Charge. Your Policy may be protected against lapse in these circumstances if it has been in force for 15 years, the insured has attained age 75, and the other requirements of the Overloan Protection Rider have been met. If your Policy is not so protected, we will notify you that the Policy is going to terminate. The Policy terminates without value unless you make a sufficient payment within the later of 62 days from the monthly anniversary immediately before the date when the excess loan occurs or 31 days after we mail the notice. If the Policy lapses with a loan outstanding, adverse tax consequences may result. (See "Tax Considerations" below.) REINSTATEMENT If your Policy has lapsed, you may reinstate it within three years after the date of lapse if the insured has not attained age 121. If more than three years have passed, you need our consent to reinstate. Reinstatement in all cases requires payment of certain charges described in the Policy and usually requires evidence of insurability that is satisfactory to us. If the Policy lapses and is reinstated during the first five Policy years, only the five-year GMDB will be reinstated. If the Policy lapses after the first five Policy years, the GMDB will terminate and cannot be reinstated. Under no circumstances can the GMDB provided by Policy rider be reinstated following a Policy lapse. If we deducted a Surrender Charge on lapse, we credit it back to the Policy's cash value on reinstatement. The Surrender Charge on the date of reinstatement is the same as it was on the date of lapse. When we determine the A-36 Surrender Charge and other charges except cost of insurance and the Policy loan interest rate, we do not count the amount of time that a Policy was lapsed. ADDITIONAL BENEFITS BY RIDER You can add additional benefits to the Policy by rider, subject to our underwriting and issuance standards. These additional benefits usually require an additional charge as part of the Monthly Deduction from cash value. The rider benefits available with the Policy provide fixed benefits that do not vary with the investment experience of the Separate Account. There is no limit on the number of riders you can elect to add to your Policy at issue. However, you may not elect both the Option to Purchase Long-Term Care Insurance Rider and the Options to Purchase Additional Insurance Coverage Rider, nor may you elect both the Waiver of Monthly Deduction Rider and the Waiver of Specified Premium Rider. The following riders, some of which have been described previously, are available: CHILDREN'S TERM INSURANCE RIDER, which provides term insurance on the lives of children of the insured. WAIVER OF MONTHLY DEDUCTION RIDER, which provides for waiver of Monthly Deductions in the event of the disability of the insured. WAIVER OF SPECIFIED PREMIUM RIDER, which provides for waiver of a specified amount of monthly premium in the event of the disability of the insured. OPTIONS TO PURCHASE ADDITIONAL INSURANCE COVERAGE RIDER, which allows the Owner to purchase additional coverage on the insured without providing evidence of insurability. OPTION TO PURCHASE LONG-TERM CARE INSURANCE RIDER, which allows the Owner to purchase long-term care coverage on the insured without providing evidence of insurability. (Consult with your registered representative regarding availability.) ACCELERATION OF DEATH BENEFIT RIDER, which allows a Policy Owner to accelerate payment of all or part of the Policy's death benefit if the insured is terminally ill. In calculating the Accelerated Death Benefit, we assume that death occurs one year from the date of claim and we discount the future death benefit using an interest rate not to exceed the greater of (1) the current yield on 90-day Treasury bills, and (2) the maximum policy loan interest rate under the Policy. The Policy Owner must accelerate at least $50,000 (or 25% of the death benefit, if less), but not more than the greater of $250,000 or 10% of the death benefit. As an example, if a Policy Owner accelerated the death benefit of a Policy with a face amount of $1,000,000, the maximum amount that could be accelerated would be $250,000. Assuming an interest rate of 6%, the present value of the benefit would be $235,849. If we exercised our reserved right to impose a $150 processing fee, the benefit payable would be $235,849 less $150, or $235,699. GUARANTEED SURVIVOR INCOME BENEFIT RIDER, which provides the beneficiary with the option of exchanging the Policy's death benefit for enhanced monthly income payments for life. ACCIDENTAL DEATH BENEFIT, which provides for the payment of an additional death benefit in the event of the insured's death by accident. GUARANTEED MINIMUM DEATH BENEFIT RIDER, which provides for a guaranteed death benefit until the insured's age 85 or the insured's age 121. OVERLOAN PROTECTION RIDER, which provides protection from Policy lapse due to an excess Policy loan. Riders in addition to those listed above may be made available. You should consult your registered representative regarding the availability of riders. THE FIXED ACCOUNT You may allocate net premiums and transfer cash value to the Fixed Account, which is part of MetLife's general account. Because of exemptive and exclusionary provisions in the Federal securities laws, interests in the Fixed A-37 Account are not registered under the Securities Act of 1933. Neither the Fixed Account nor the general account is registered as an investment company under the Investment Company Act of 1940. Therefore, neither the Fixed Account, the general account nor any interests therein are generally subject to the provisions of these Acts, and the SEC does not review Fixed Account disclosure. This disclosure may, however, be subject to certain provisions of the Federal securities laws on the accuracy and completeness of prospectuses. GENERAL DESCRIPTION Our general account includes all of our assets except assets in the Separate Account or in our other separate accounts. We decide how to invest our general account assets. Fixed Account allocations do not share in the actual investment experience of the general account. Instead, we guarantee that the Fixed Account will credit interest at an annual effective rate of at least 3%. We may or may not credit interest at a higher rate. We declare the current interest rate for the Fixed Account periodically. The Fixed Account earns interest daily. VALUES AND BENEFITS Cash value in the Fixed Account increases from net premiums allocated and transfers to the Fixed Account and Fixed Account interest, and decreases from loans, partial withdrawals made from the Fixed Account, charges and transfers from the Fixed Account. We deduct charges from the Fixed Account and the Policy's Investment Divisions in proportion to the amount of cash value in each. (See "Monthly Deduction from Cash Value.") A Policy's total cash value includes cash value in the Separate Account, the Fixed Account, and any cash value held in the Loan Account due to a Policy loan. Cash value in the Fixed Account is included in the calculation of the Policy's death benefit in the same manner as the cash value in the Separate Account. (See "Death Benefits.") POLICY TRANSACTIONS Except as described below, the Fixed Account has the same rights and limitations regarding premium allocations, transfers, loans, surrenders and partial withdrawals as the Separate Account. The following special rules apply to the Fixed Account. Twenty days after we apply the initial premium to the Policy you may transfer cash value from the Fixed Account to the Separate Account. The amount of any transfer must be at least $50, unless the balance remaining would be less than $50, in which case you may withdraw or transfer the entire Fixed Account cash value. After the first Policy year you may withdraw cash value from the Fixed Account. The amount of any partial withdrawal, net of applicable Surrender Charges, must be at least $500. No amount may be withdrawn from the Fixed Account that would result in there being insufficient cash value to meet any Surrender Charges that would be payable immediately following the withdrawal upon the surrender of the remaining cash value in the Policy. We reserve the right to only allow transfers and withdrawals from the Fixed Account during the 30-day period that follows the Policy anniversary. The total amount of transfers and withdrawals in a Policy year may not exceed the greater of (a) 25% of the Policy's cash surrender value in the Fixed Account at the beginning of the Policy year, (b) the previous Policy year's maximum allowable withdrawal amount and (c) 100% of the cash surrender value in the Fixed Account if withdrawing the greater of (a) and (b) would result in a Fixed Account balance of $50 or less. We are not currently imposing the maximum limit on transfers and withdrawals from the Fixed Account, but we reserve the right to do so. There is currently no transaction charge for partial withdrawals or transfers. We reserve the right to limit partial withdrawals to 12 and transfers to four in a Policy year and to impose a charge of $25 for each partial withdrawal or transfer. We may revoke or modify the privilege of transferring amounts to or from the Fixed Account at any time. Partial withdrawals will result in the imposition of any applicable Surrender Charges. Unless you request otherwise, a Policy loan reduces the Policy's cash value in the Investment Divisions and the Fixed Account proportionately. We allocate all loan repayments in the same proportion that the cash value in each Investment Division and the Fixed Account bears to the Policy's total unloaned cash value. The amount transferred from the Policy's Investment Divisions and the Fixed Account as a result of a loan earns interest at an effective rate A-38 of at least 3% per year, which we credit to the Policy's cash value in the Investment Divisions and the Fixed Account in proportion to the Policy's cash value in each on the day it is credited. We take partial withdrawals from the Policy's Investment Divisions and the Fixed Account in the same proportion that the cash value in each account bears to the Policy's total unloaned cash value. We can delay transfers, surrenders, withdrawals and Policy loans from the Fixed Account for up to six months. We will not delay loans to pay premiums on policies issued by us. CHARGES We make certain charges and deductions under the Policy. These charges and deductions compensate us for: (1) services and benefits we provide; (2) costs and expenses we incur; and (3) risks we assume. Services and benefits we provide: - the death benefit, cash, and loan benefits under the Policy - investment options, including premium allocations - administration of elective options - the distribution of reports to Policy Owners Costs and expenses we incur: - costs associated with processing and underwriting applications, and with issuing and administering the Policy (including any riders) - overhead and other expenses for providing services and benefits - sales and marketing expenses - other costs of doing business, such as collecting premiums, maintaining records, processing claims, effecting transactions, and paying federal, state, and local premium and other taxes and fees Risks we assume: - that the cost of insurance charges we may deduct are insufficient to meet our actual claims because the insureds die sooner than we estimate - that the cost of providing the services and benefits under the Policies exceed the charges we deduct The amount of a charge may not necessarily correspond to the costs of the services or benefits that are implied by the name of the charge or that are associated with the particular Policy. For example, the sales charge and Surrender Charge may not fully cover all of our sales and distribution expenses, and we may use proceeds from other charges, including the Mortality and Expense Risk Charge and the cost of insurance charge, to help cover those expenses. We may profit from certain Policy charges. DEDUCTIONS FROM PREMIUMS Prior to the allocation of a premium, we deduct a percentage of your premium payment. We credit the remaining amount (the net premium) to your cash value according to your allocation instructions. The deductions we make from each premium payment are the sales charge, the premium tax charge, and the federal tax charge. SALES CHARGE. We deduct a 2.25% sales charge from each premium payment. Currently, the sales charge is only deducted from premium payments that are less than or equal to the Target Premium. PREMIUM TAX CHARGE. We deduct 2.0% from each premium for premium taxes and administrative expenses. Premium taxes vary from state to state, but we deduct a flat 2.0%, which is based on an average of such taxes. Administrative expenses covered by this charge include those related to premium tax and certain other state filings. A-39 FEDERAL TAX CHARGE. We deduct 1.25% from each premium for our Federal income tax liability related to premiums. EXAMPLE: The following chart shows the net amount that we would allocate to the Policy assuming a premium payment of $4,000 (and a Target Premium of $2,000).
NET PREMIUM PREMIUM - ------- ------- $4,000 $4,000 - 175 (5.5% X $2,000) + (3.25% x $2,000) = total sales, premium ------- tax and Federal tax charges $3,825 Net Premium
SURRENDER CHARGE If, during the first ten Policy years, or during the first ten Policy years following a face amount increase, you surrender or lapse your Policy, reduce the face amount, or make a partial withdrawal or change in death benefit option that reduces the face amount, then we will deduct a Surrender Charge from the cash value. The maximum Surrender Charge is shown in your Policy. No Surrender Charge will apply on up to 10% of the cash surrender value withdrawn each year. The Surrender Charge depends on the face amount of your Policy and the issue age, sex (except for unisex policies), risk class and smoker status of the insured. The Surrender Charge will remain level for up to three Policy years, or for up to three years after a face amount increase, and will then decline on a monthly basis until it reaches zero at the end of the tenth Policy year (or the tenth year following the face amount increase). The table below shows the maximum Surrender Charge that applies if the lapse, surrender or face amount reduction occurs at any time in the first Policy year, and in the last month of each Policy year thereafter.
FOR POLICIES WHICH THE MAXIMUM ARE SURRENDERED, SURRENDER CHARGE LAPSED OR PER $1,000 OF BASE REDUCED DURING POLICY FACE AMOUNT ------------------ ------------------ Entire Policy Year 1 $38.25 Last Month of Policy Year 2 35.81 3 32.56 4 31.74 5 29.84 6 27.13 7 24.42 8 18.99 9 9.50 10 0.00
In the case of a face amount reduction or a partial withdrawal or change in death benefit option that results in a face amount reduction, we deduct any Surrender Charge that applies from the Policy's remaining cash value in an amount that is proportional to the amount of the Policy's face amount surrendered. (See "Reduction in Face Amount," "Partial Withdrawal" and "Change in Death Benefit Option.") If you surrender the Policy (or a face amount increase) in the first Policy year (or in the first year following the face amount increase) we will deduct from the surrender proceeds an amount equal to the remaining first year Coverage Expense Charges. We reserve the right to also deduct an amount equal to the remaining first year Policy Charges. If you reduce the face amount of your Policy in the first year following a face amount increase, we will deduct from your cash value a proportionate amount of the remaining first year Coverage Expense Charges, based on the ratio of the face amount reduction to the Policy's original face amount. A-40 The Surrender Charge reduces the Policy's cash value in the Investment Divisions and the Fixed Account in proportion to the amount of the Policy's cash value in each. However, if you designate the accounts from which a partial withdrawal is to be taken, the charge will be deducted proportionately from the cash value of the designated accounts. PARTIAL WITHDRAWAL CHARGE We reserve the right to impose a processing charge on each partial withdrawal. If imposed, this charge would compensate us for administrative costs in generating the withdrawn payment and in making all calculations that may be required because of the partial withdrawal. TRANSFER CHARGE We reserve the right to impose a processing charge on each transfer between Investment Divisions or between an Investment Division and the Fixed Account to compensate us for the costs of processing these transfers. Transfers under one of our Automated Investment Strategies do not count as transfers for the purpose of assessing this charge. ILLUSTRATION OF BENEFITS CHARGE We reserve the right to impose a charge for each illustration of Policy benefits that you request in excess of one per year. If imposed, this charge would compensate us for the cost of preparing and delivering the illustration to you. MONTHLY DEDUCTION FROM CASH VALUE On the first day of each Policy month, starting with the Policy Date, we deduct the "Monthly Deduction" from your cash value. -- If your Policy is protected against lapse by a Guaranteed Minimum Death Benefit, we make the Monthly Deduction each month regardless of the amount of your cash surrender value. If your cash surrender value is insufficient to pay the Monthly Deduction in any month, your Policy will not lapse, but the shortfall will, in effect, cause your cash surrender value to have a negative balance. (See "Lapse and Reinstatement.") -- If a Guaranteed Minimum Death Benefit is not in effect, and the cash surrender value is not large enough to cover the entire Monthly Deduction, we will make the deduction to the extent cash value is available, but the Policy will be in default, and it may lapse. (See "Lapse and Reinstatement.") There is no Monthly Deduction on or after the Policy anniversary when the insured attains age 121. The Monthly Deduction reduces the cash value in each Investment Division and in the Fixed Account in proportion to the cash value in each. However, you may request that we charge the Monthly Deduction to a specific Investment Division or to the Fixed Account. If, in any month, the designated account has insufficient cash value to cover the Monthly Deduction, we will first reduce the designated account cash value to zero and then charge the remaining Monthly Deduction to all Investment Divisions and, if applicable, the Fixed Account, in proportion to the cash value in each. The Monthly Deduction includes the following charges: POLICY CHARGE. The Policy Charge is equal to $15.00 per month in the first Policy year and $8.00 per month thereafter. The Policy Charge is $12 per month in the first Policy year and $9 per month thereafter for Policies issued with face amounts of less than $50,000. No Policy Charge applies to Policies issued with face amounts equal to or greater than $250,000. The Policy Charge compensates us for administrative costs such as record keeping, processing death benefit claims and policy changes, preparing and mailing reports, and overhead costs. COVERAGE EXPENSE CHARGE. We impose a monthly charge for the costs of underwriting, issuing (including sales commissions), and administering the Policy or the face amount increase. The monthly charge is imposed on the base Policy face amount and varies by the base Policy's face amount and duration, and by the insured's issue age, smoking status, risk class (at the time the Policy or a face amount increase is issued), and, except for unisex A-41 Policies, the insured's sex. Currently, we only impose the Coverage Expense Charge during the first eight Policy years, and during the first eight Policy years following a requested face amount increase. MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of providing insurance protection under your Policy. The cost of insurance charge for a Policy month is equal to the "amount at risk" under the Policy, multiplied by the cost of insurance rate for that Policy month. We determine the amount at risk on the first day of the Policy month. The amount at risk is the amount by which the death benefit (generally discounted at the monthly equivalent of 3% per year) exceeds the Policy's cash value. The amount at risk is affected by investment performance, loans, premium payments, fees and charges, partial withdrawals and face amount reductions. The guaranteed cost of insurance rates for a Policy depend on the insured's -- smoking status -- risk class -- attained age -- sex (if the Policy is sex-based). The current cost of insurance rates will depend on the above factors, plus -- the insured's age at issue (and at the time of any face amount increase) -- the Policy year (and the year of any face amount increase) -- the Policy's face amount. We guarantee that the rates for underwritten Policies will not be higher than rates based on -- the 2001 Commissioners Standard Ordinary Mortality Tables (the "2001 CSO Tables") with smoker/nonsmoker modifications, for Policies issued on non-juvenile insureds (age 18 and above at issue), adjusted for substandard ratings or flat extras, if applicable -- the 2001 CSO Aggregate Tables (Nonsmoker Tables for attained age 16 and older), for Policies issued on juvenile insureds (below age 18 at issue). The actual rates we use may be lower than the maximum rates, depending on our expectations about our future mortality and expense experience, lapse rates, taxes and investment earnings. We review the adequacy of our cost of insurance rates and other non-guaranteed charges periodically and may adjust them. Any change will apply prospectively. The risk classes we use are -- for Policies issued on non-juvenile insureds: preferred smoker, standard smoker, rated smoker, elite nonsmoker, preferred nonsmoker, standard nonsmoker, and rated nonsmoker. -- for Policies issued on juvenile insureds: standard and rated (with our consent). Rated Policies have higher cost of insurance deductions. We base the guaranteed maximum mortality charges for substandard ratings on multiples of the 2001 CSO Tables. The following standard or better smoker and non-smoker classes are available for underwritten Policies: -- elite nonsmoker for Policies with face amounts of $250,000 or more where the issue age is 18 through 80; -- preferred smoker and preferred nonsmoker for Policies with face amounts of $100,000 or more where the issue age is 18 through 80; -- standard smoker and standard nonsmoker for Policies with face amounts of $50,000 or more ($25,000 for pension plans) where the issue age is 18 through 85. The elite nonsmoker class generally offers the best current cost of insurance rates, and the preferred classes generally offer better current cost of insurance rates than the standard classes. A-42 Cost of insurance rates are generally lower for nonsmokers than for smokers and generally lower for females than for males. Within a given risk class, cost of insurance rates are generally lower for insureds with lower issue ages. For Policies sold in connection with some employee benefit plans, cost of insurance rates (and Policy values and benefits) do not vary based on the sex of the insured. CHARGES FOR ADDITIONAL BENEFITS. We charge for the cost of any additional rider benefits as described in the rider form. MORTALITY AND EXPENSE RISK CHARGE. We impose a monthly charge for our mortality and expense risks. The mortality risk we assume is that insureds may live for shorter periods of time than we estimated. The expense risk is that our costs of issuing and administering the Policies may be more than we estimated. The charge is imposed on the cash value in the Separate Account, but the rate we charge is determined by the cash value in the Separate Account and the Fixed Account. The rate is determined on each monthly anniversary and varies based on the Policy year and the Policy's net cash value in relation to the Policy's Target Premium. As shown in the table below, the rate declines as the Policy's net cash value and the Policy years increase. The charge is guaranteed not to exceed 0.80% in Policy years 1-10, 0.35% in Policy years 11-19, 0.20% in Policy years 20-29 and 0.05% thereafter.
- -------------------------------------------------------------------------------------------- CHARGE APPLIED TO CASH VALUE IN POLICY YEAR NET CASH VALUE SEPARATE ACCOUNT - -------------------------------------------------------------------------------------------- less than 5 target premiums 0.60% 5 but less than 10 target premiums 0.55% 1 - 10 10 but less than 20 target premiums 0.30% 20 target premiums or more 0.15% - -------------------------------------------------------------------------------------------- less than 5 target premiums 0.35% 5 but less than 10 target premiums 0.30% 11 - 19 10 but less than 20 target premiums 0.15% 20 target premiums or more 0.10% - -------------------------------------------------------------------------------------------- less than 5 target premiums 0.20% 5 but less than 10 target premiums 0.15% 20 - 29 10 but less than 20 target premiums 0.10% 20 target premiums or more 0.05% - -------------------------------------------------------------------------------------------- 30+ 0.05% - --------------------------------------------------------------------------------------------
LOAN INTEREST SPREAD We charge you interest on a loan at a maximum effective rate of 4.0% per year in Policy years 1-10 and 3.0% per year thereafter, compounded daily. We also credit interest on the amount we take from the Policy's accounts as a result of the loan at a minimum annual effective rate of 3% per year, compounded daily. As a result, the loan interest spread will never be more than 1.00%. CHARGES AGAINST THE PORTFOLIOS AND THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT CHARGES FOR INCOME TAXES. We currently do not charge the Separate Account for income taxes, but in the future we may make such a charge, if appropriate. We have the right to make a charge for any taxes imposed on the Policies in the future. (See "MetLife's Income Taxes.") PORTFOLIO EXPENSES. There are daily charges against the Portfolio assets for investment advisory services and fund operating expenses. These are described in the Fee Table as well as in the attached Portfolio prospectuses. A-43 TAX CONSIDERATIONS INTRODUCTION The following summary provides a general description of the Federal income tax considerations associated with the Policy and does not purport to be complete or to cover all tax situations. This discussion is not intended as tax advice. Counsel or other competent tax advisers should be consulted for more complete information. This discussion is based upon our understanding of the present Federal income tax laws. No representation is made as to the likelihood of continuation of the present Federal income tax laws or as to how they may be interpreted by the Internal Revenue Service. IRS CIRCULAR 230 NOTICE: The tax information contained herein is not intended to (and cannot) be used by anyone to avoid IRS penalties. It is intended to support the sale of the Policy. The Policy Owner should seek tax advice based on the Policy Owner's particular circumstances from an independent tax adviser. TAX STATUS OF THE POLICY In order to qualify as a life insurance contract for Federal income tax purposes and to receive the tax treatment normally accorded life insurance contracts under Federal tax law, a Policy must satisfy certain requirements which are set forth in the Internal Revenue Code. Guidance as to how these requirements are to be applied is limited. Nevertheless, we anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. However, if your Policy is issued on a substandard basis, there is additional uncertainty. Moreover, if you elect the Acceleration of Death Benefit Rider, the tax qualification consequences associated with continuing the Policy after a distribution is made under the rider are unclear. We may take appropriate steps to bring the Policy into compliance with applicable requirements, and we reserve the right to restrict Policy transactions in order to do so. The insurance proceeds payable on the death of the insured will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. In some circumstances, owners of variable contracts who retain excessive control over the investment of the underlying separate account assets may be treated as the owners of those assets. Although published guidance in this area does not address certain aspects of the Policies, we believe that the Owner of a Policy should not be treated as the owner of the Separate Account assets. We reserve the right to modify the Policies to bring them into conformity with applicable standards should such modification be necessary to prevent Owners of the Policies from being treated as the owners of the underlying Separate Account assets. In addition, the Code requires that the investments of the Separate Account be "adequately diversified" in order for the Policies to be treated as life insurance contracts for Federal income tax purposes. It is intended that the Separate Account, through the Portfolios, will satisfy these diversification requirements. If Portfolio shares are sold directly to either non-qualified plans or to tax-qualified retirement plans that later lose their tax qualified status, separate accounts investing in the Portfolios may fail the diversification requirements of Section 817(h) of the Internal Revenue Code of 1986. This could have adverse tax consequences for variable life insurance owners, including losing the benefit of tax deferral. The following discussion assumes that the Policy will qualify as a life insurance contract for Federal income tax purposes. TAX TREATMENT OF POLICY BENEFITS IN GENERAL. We believe that the death benefit under a Policy should generally be excludible from the gross income of the beneficiary. Federal, state and local transfer, and other tax consequences of ownership or receipt of Policy proceeds depend on the circumstances of each Policy Owner or beneficiary. A tax adviser should be consulted on these consequences. A-44 In the case of employer-owned life insurance as defined in Section 101(j), the amount of the death benefit excludable from gross income is limited to premiums paid unless the Policy falls within certain specified exceptions and a notice and consent requirement is satisfied before the Policy is issued. Certain specified exceptions are based on the status of an employee as highly compensated or recently employed. There are also exceptions for Policy proceeds paid to an employee's heirs. These exceptions only apply if proper notice is given to the insured employee and consent is received from the insured employee before the issuance of the Policy. These rules apply to Policies issued August 18, 2006 and later and also apply to policies issued before August 18, 2006 after a material increase in the death benefit or other material change. An IRS reporting requirement applies to employer-owned life insurance subject to these rules. Because these rules are complex and will affect the tax treatment of death benefits, it is advisable to consult tax counsel. The death benefit will also be taxable in the case of a transfer-for-value unless certain exceptions apply. Generally, the Policy Owner will not be deemed to be in constructive receipt of the Policy cash value until there is a distribution or a deemed distribution. When distributions from a Policy occur, or when loans are taken from or secured by a Policy, the tax consequences depend on whether the Policy is classified as a modified endowment contract ("MEC"). MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life insurance contracts are classified as modified endowment contracts, with less favorable income tax treatment than other life insurance contracts. Due to the Policy's flexibility with respect to premium payments and benefits, each Policy's circumstances will determine whether the Policy is a MEC. In general a Policy will be classified as a modified endowment contract if the amount of premiums paid into the Policy causes the Policy to fail the "7-pay test." A Policy will fail the 7-pay test if at any time in the first seven Policy years, the amount paid into the Policy exceeds the sum of the level premiums that would have been paid at that point under a Policy that provided for paid-up future benefits after the payment of seven level annual payments. If there is a reduction in the benefits under the Policy during the first seven Policy years, for example, as a result of a partial withdrawal, the 7-pay test will have to be reapplied as if the Policy had originally been issued at the reduced face amount. If there is a "material change" in the Policy's benefits or other terms, even after the first seven Policy years, the Policy may have to be retested as if it were a newly issued Policy. A material change can occur, for example, when there is an increase in the death benefit which is due to the payment of an unnecessary premium. Unnecessary premiums are premiums paid into the Policy which are not needed in order to provide a death benefit equal to the lowest death benefit that was payable in the first seven Policy years. To prevent your Policy from becoming a modified endowment contract, it may be necessary to limit premium payments or to limit reductions in benefits. A current or prospective Policy Owner should consult a tax adviser to determine whether a Policy transaction will cause the Policy to be classified as a modified endowment contract. DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as modified endowment contracts are subject to the following tax rules: (1) All distributions other than death benefits, including distributions upon surrender and withdrawals, from a modified endowment contract will be treated first as distributions of gain taxable as ordinary income and as tax-free recovery of the Policy Owner's investment in the Policy only after all gain has been distributed. (2) Loans taken from or secured by a Policy classified as a modified endowment contract are treated as distributions and taxed accordingly. (3) A 10 percent additional income tax is imposed on the amount subject to tax except where the distribution or loan is made when the Policy Owner has attained age 59 1/2 or is disabled, or where the distribution is part of a series of substantially equal periodic payments for the life (or life expectancy) of the Policy Owner or the joint lives (or joint life expectancies) of the Policy Owner and the Policy Owner's beneficiary or designated beneficiary. If a Policy becomes a modified endowment contract, distributions will be taxed as distributions from a modified endowment contract. In addition, distributions from a Policy within two years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a Policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. A-45 DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS. Distributions other than death benefits from a Policy that is not classified as a modified endowment contract are generally treated first as a recovery of the Policy Owner's investment in the Policy and only after the recovery of all investment in the Policy as taxable income. However, certain distributions which must be made in order to enable the Policy to continue to qualify as a life insurance contract for Federal income tax purposes if Policy benefits are reduced during the first 15 Policy years may be treated in whole or in part as ordinary income subject to tax. Loans from or secured by a Policy that is not a modified endowment contract are generally not treated as distributions. However, the tax consequences associated with Policy loans that are outstanding after the first ten Policy years are less clear and a tax adviser should be consulted about such loans. Finally, neither distributions from nor loans from or secured by a Policy that is not a modified endowment contract are subject to the 10 percent additional income tax. INVESTMENT IN THE POLICY. Your investment in the Policy is generally your aggregate premiums. When a distribution is taken from the Policy, your investment in the Policy is reduced by the amount of the distribution that is tax-free. POLICY LOANS. In general, interest on a Policy loan will not be deductible. If a Policy loan is outstanding when a Policy is canceled or lapses, the amount of the outstanding indebtedness will be added to the amount distributed and will be taxed accordingly. A loan may also be taxed when a Policy is exchanged. Before taking out a Policy loan, you should consult a tax adviser as to the tax consequences. MULTIPLE POLICIES. All modified endowment contracts that are issued by MetLife (or its affiliates) to the same Policy Owner during any calendar year are treated as one modified endowment contract for purposes of determining the amount includible in the Policy Owner's income when a taxable distribution occurs. WITHHOLDING. To the extent that Policy distributions are taxable, they 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. LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS. Policy Owners that are not U.S. citizens or residents will generally be subject to U.S. Federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, Policy Owners may be subject to state and/or municipal taxes and taxes that may be imposed by the Policy Owner's country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding taxation with respect to a purchase of the Policy. ACCELERATION OF DEATH BENEFIT RIDER. We believe that payments received under the Acceleration of Death Benefit Rider should be fully excludable from the gross income of the beneficiary except in certain business contexts. However, you should consult a qualified tax adviser about the consequences of adding this rider to a Policy or requesting payment under this rider. OVERLOAN PROTECTION RIDER. If you are contemplating the purchase of the Policy with the Overloan Protection Rider, you should be aware that the tax consequences of the Overloan Protection Rider have not been ruled on by the IRS or the courts. It is possible that the IRS could assert that the outstanding loan balance should be treated as a taxable distribution when the Overloan Protection Rider causes the Policy to be converted into a fixed Policy. You should consult a tax adviser as to the tax risks associated with the Overloan Protection Rider. ESTATE, GIFT AND GENERATION-SKIPPING TRANSFER TAXES. The transfer of the Policy or the designation of a beneficiary may have Federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes. When the insured dies, the death proceeds will generally be includable in the Policy Owner's estate for purposes of the Federal estate tax if the Policy Owner was the insured. If the Policy Owner was not the insured, the fair market value of the Policy would be included in the Policy Owner's estate upon the Policy Owner's death. The Policy would not be includable in the insured's estate if the insured neither retained incidents of ownership at death nor had given up ownership within three years before death. A-46 Moreover, under certain circumstances, the Internal Revenue Code may impose a "generation-skipping transfer tax" when all or part of a life insurance policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Policy Owner. Regulations issued under the Internal Revenue Code may require us to deduct the tax from your Policy, or from any applicable payment, and pay it directly to the IRS. Qualified tax advisers should be consulted concerning the estate and gift tax consequences of Policy ownership and distributions under Federal, state and local law. The individual situation of each Policy Owner or beneficiary will determine the extent, if any, to which Federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of Policy proceeds will be treated for purposes of Federal, state and local estate, inheritance, generation-skipping and other taxes. The Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") repeals the Federal estate tax and replaces it with a carryover basis income tax regime effective for estates of decedents dying after December 31, 2009. EGTRRA also repeals the generation-skipping transfer tax, but not the gift tax, for transfers made after December 31, 2009. EGTRRA contains a sunset provision, which essentially returns the Federal estate, gift and generation-skipping transfer taxes to their pre-EGTRRA form, beginning in 2011. Congress may or may not enact permanent repeal between now and then. During the period prior to 2010, EGTRRA provides for periodic decreases in the maximum estate tax rate coupled with periodic increases in the estate tax exemption. For 2008-2009, the maximum estate tax rate is 45%. The estate tax exemption is $2,000,000 for 2008 and $3,500,000 in 2009. The complexity of the new tax law, along with uncertainty as to how it might be modified in coming years, underscores the importance of seeking guidance from a qualified adviser to help ensure that your estate plan adequately addresses your needs and those of your beneficiaries under all possible scenarios. OTHER POLICY OWNER TAX MATTERS. The tax consequences of continuing the Policy beyond the insured's attained age 121 are unclear. You should consult a tax adviser if you intend to keep the Policy in force beyond the insured's attained age 121. If a trustee under a pension or profit-sharing plan, or similar deferred compensation arrangement, owns a Policy, the Federal, state and estate tax consequences could differ. The amounts of life insurance that may be purchased on behalf of a participant in a pension or profit-sharing plan are limited. Providing excessive life insurance coverage in a retirement plan will have adverse tax consequences. The inclusion of riders, such as waiver of premium riders, may also have adverse tax consequences. Therefore, it is important to discuss with your tax adviser the suitability of the Policy, including the suitability of coverage amounts and Policy riders, before any purchase by a retirement plan. Any proposed distribution or sale of a Policy by a retirement plan will also need to be discussed with a tax adviser. The current cost of insurance for the net amount at risk is treated as a "current fringe benefit" and must be included annually in the plan participant's gross income. If the plan participant dies while covered by the plan and the Policy proceeds are paid to the participant's beneficiary, then the excess of the death benefit over the cash value is not income taxable. However, the cash value will generally be taxable to the extent it exceeds the participant's cost basis in the Policy. Policies owned under these types of plans may be subject to restrictions under the Employee Retirement Income Security Act of 1974 ("ERISA"). You should consult a qualified adviser regarding ERISA. Department of Labor ("DOL") regulations impose requirements for participant loans under retirement plans covered by ERISA. Plan loans must also satisfy tax requirements to be treated as nontaxable. Plan loan requirements and provisions may differ from the Policy loan provisions. Failure of plan loans to comply with the requirements and provisions of the DOL regulations and of tax law may result in adverse tax consequences and/or adverse consequences under ERISA. Plan fiduciaries and participants should consult a qualified adviser before requesting a loan under a Policy held in connection with a retirement plan. Businesses can use the Policies in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. If you are purchasing the Policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser. In recent years, moreover, A-47 Congress has adopted new rules relating to life insurance owned by businesses. Any business contemplating the purchase of a new Policy or a change in an existing Policy should consult a tax adviser. Ownership of the Policy by a corporation, trust or other non-natural person could jeopardize some (or all) of such entity's interest deduction under Internal Revenue Code Section 264, even where such entity's indebtedness is in no way connected to the Policy. In addition, under Section 264(f)(5), if a business (other than a sole proprietorship) is directly or indirectly a beneficiary of the Policy, the Policy could be treated as held by the business for purposes of the Section 264(f) entity-holder rules. Therefore, it would be advisable to consult with a qualified tax adviser before any non-natural person is made an owner or holder of the Policy, or before a business (other than a sole proprietorship) is made a beneficiary of the Policy. GUIDANCE ON SPLIT DOLLAR PLANS. The IRS has issued guidance on split dollar insurance plans. A tax adviser should be consulted with respect to this guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. If your Policy is part of an equity split dollar arrangement taxed under the economic benefit regime, there is a risk that some portion of the Policy cash value may be taxed prior to any Policy distribution. If your split dollar plan provides deferred compensation, recently enacted rules governing deferred compensation arrangements may apply. Failure to adhere to these rules will result in adverse tax consequences. Consult a tax adviser. In addition, the Sarbanes-Oxley Act of 2002 (the "Act"), which was signed into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on U.S. exchanges, from extending, directly or indirectly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted to apply to split-dollar life insurance arrangements for directors and executive officers of such companies, since such arrangements can arguably be viewed as involving a loan from the employer for at least some purposes. Any affected business contemplating the payment of a premium on an existing Policy or the purchase of a new Policy in connection with a split-dollar life insurance arrangement should consult legal counsel. ALTERNATIVE MINIMUM TAX. There may also be an indirect tax upon the income in the Policy or the proceeds of a Policy under the Federal corporate alternative minimum tax, if the Policy Owner is subject to that tax. POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Policy could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the Policy. FOREIGN TAX CREDITS. To the extent permitted under Federal tax law, we may claim the benefit of certain foreign tax credits attributable to taxes paid by certain Portfolios to foreign jurisdictions. METLIFE'S INCOME TAXES Under current Federal income tax law, MetLife is not taxed on the Separate Account's operations. Thus, currently we do not deduct a charge from the Separate Account for Federal income taxes. We reserve the right to charge the Separate Account for any future Federal income taxes we may incur. Under current laws in several states, we may incur state and local taxes (in addition to premium taxes). These taxes are not now significant and we are not currently charging for them. If they increase, we may deduct charges for such taxes. A-48 DISTRIBUTION OF THE POLICIES We have entered into a distribution agreement with our affiliate, MetLife Investors Distribution Company ("Distributor"), for the distribution of the Policies. We and Distributor have entered into selling agreements with other affiliated and unaffiliated broker-dealers ("selling firms") for the sale of the Policies through their registered representatives. Our affiliated broker-dealers are MetLife Securities, Inc. ("MSI"), New England Securities Corporation ("NES"), Tower Square Securities, Inc. and Walnut Street Securities, Inc. Distributor, MSI, NES and our other affiliated selling firms are registered with the SEC as broker-dealers under the Securities Exchange Act of 1934 and are members of the Financial Industry Regulatory Authority ("FINRA"). An investor brochure that includes information describing FINRA's Public Disclosure 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. All selling firms receive commissions. The portion of the commission payments that selling firms pass on to their sales representatives is determined in accordance with their internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. MSI and NES sales representatives receive cash payments for the products they sell and service based on a "gross dealer concession" model. The cash payment is equal to a percentage of the gross dealer concession amount described below. The percentage is determined based on a formula that takes into consideration the amount of proprietary products the sales representative sells and services. Proprietary products are products issued by us or an affiliate. Because sales of proprietary products are a factor in determining the percentage of the gross dealer concession amount to which MSI and NES sales representative are entitled, these sales representatives have an incentive to favor sale of the Policy over similar products issued by non-affiliates. In the first Policy year, the gross dealer concession amount for the Policies is 117% of premiums paid up to the Commissionable Target Premium, and 5% of premiums paid in excess of the Commissionable Target Premium. In Policy years 2 through 10, the gross dealer concession amount is 8.0% of all premiums paid, and in Policy years 11 and thereafter the gross dealer concession amount is 2.0% of all premiums. Commissionable Target Premium is generally the Target Premium as defined in the Glossary, excluding the portions associated with flat extras and certain riders, and is generally equal to or less than the Target Premium. Sales representatives of affiliated selling firms and their managers may be eligible for various cash benefits that we may provide jointly with affiliated selling firms. Ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your purchase of the Policy. Sales representatives of our affiliates and their Managers may also be eligible for cash compensation such as bonuses, equity awards (for example, stock options), training allowances, supplemental salary, payments based on a percentage of the Policy's cash value, financing arrangements, marketing support, medical and retirement benefits and other insurance and non-insurance benefits. The amount of this cash compensation is based primarily on the amount of proprietary products sold. Proprietary products are products issued by us and our affiliates. Sales representatives of certain affiliates must meet a minimum level of sales of proprietary products in order to maintain their agent status with the company and in order to be eligible for most of the cash compensation listed above. Managers may be eligible for additional cash compensation based on the performance (with emphasis on the sale of proprietary products) of the sales representatives that the Manager supervises. Managers may pay a portion of their cash compensation to their sales representatives. Receipt of the cash compensation described above may provide our sales representatives and their Managers, and the sales representatives and Managers of our affiliates, with an incentive to favor the sale of the Policies over similar products issued by non-affiliates. Sales representatives and their Managers (and the sales representatives and managers of our affiliates) are also eligible for various non-cash compensation programs that we offer such as conferences, trips, prizes, and awards. Other payments may be made for other services that do not directly involve the sale of the Policies. These services may include the recruitment and training of personnel, production of promotional literature, and similar services. We and Distributor may enter into preferred distribution arrangements with selected selling firms under which we pay additional compensation, including marketing allowances, introduction fees, persistency payments, preferred A-49 status fees and industry conference fees. Marketing allowances are periodic payments to certain selling firms based on cumulative periodic (usually quarterly) sales of these variable insurance products. Introduction fees are payments to selling firms in connection with the addition of these variable 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 these products. Persistency payments are periodic payments based on account and/or cash values of these variable insurance products. Preferred status fees are paid to obtain preferred treatment of these products 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. These preferred distribution arrangements 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. Distributor has entered into preferred distribution arrangements with our affiliated broker-dealers, Walnut Street Securities Inc. and Tower Square Securities, Inc. and with the unaffiliated selling firms listed in the Statement of Additional Information. We and Distributor may enter into similar arrangements with our other affiliates, MetLife Securities, Inc. and New England Securities Corporation. The prospect of receiving, or the receipt of, additional compensation as described above may provide selling firms or their representatives with an incentive to favor sales of the Policies over other variable insurance policies (or other investments) with respect to which the 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 Policies. For more information about any such arrangements, ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your purchase of a Policy. 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 Distributor's management team, advertising expenses, and other expenses of distributing the Policies. Distributor's management team may also 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 similar items. We pay American Funds Distributors, Inc., principal underwriter for the American Funds Insurance Series, a percentage of all premiums allocated to the American Funds Bond Fund, the American Funds Global Small Capitalization Fund, the American Funds Growth Fund, and the American Funds Growth-Income Fund, for the services it provides in marketing the Funds' shares in connection with the Policies. Each of these Funds makes payments to Distributor under their distribution plans in consideration of services provided and expenses incurred by Distributor in distributing their shares. These payments currently equal 0.25% of Separate Account assets invested in the particular Portfolio. (See "Fee Tables--Annual Portfolio Operating Expenses" and the Portfolio prospectuses.) Commissions and other incentives or payments described above are not charged directly to Policy Owners or the Separate Account. We intend to recoup commissions and other sales expenses through fees and charges deducted under the Policy. The Statement of Additional Information contains additional information about the compensation paid for the sale of the Policies. LEGAL PROCEEDINGS In the ordinary course of business, MetLife, 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 A-50 certainty the ultimate outcome of any pending legal proceeding or regulatory action. However, MetLife 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 to meet its obligations under the Policies. RESTRICTIONS ON FINANCIAL TRANSACTIONS Applicable laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to reject a premium payment and/or block or "freeze" your Policy. If these laws apply in a particular situation, we would not be allowed to process any request for withdrawals, surrenders, loans or death benefits, make transfers, or continue making payments under your death benefit option until instructions are received from the appropriate regulator. We also may be required to provide additional information about you or your Policy to government regulators. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The financial statements of each of the Investment Divisions of Metropolitan Life Separate Account UL included in this prospectus have been audited by Deloitte & Touche LLP, an independent public accounting firm, as stated in their report included herein, 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. FINANCIAL STATEMENTS You may find the financial statements of MetLife in the Statement of Additional Information. MetLife's financial statements should be considered only as bearing on our ability to meet our obligations under the Policies. They should not be considered as bearing on the investment performance of the assets held in the Separate Account. A-51 GLOSSARY AGE. The age of an insured refers to the insured's age at his or her nearest birthday. ATTAINED AGE. The insured's issue age plus the number of completed Policy years. BASE POLICY. The Policy without riders. CASH SURRENDER VALUE. The amount you receive if you surrender the Policy. It is equal to the Policy's cash value reduced by any Surrender Charge that would apply on surrender and by any outstanding Policy loan and accrued interest. CASH VALUE. A Policy's cash value includes the amount of its cash value held in the Separate Account, the amount held in the Fixed Account and, if there is an outstanding Policy loan, the amount of its cash value held in the Loan Account. FIXED ACCOUNT. The Fixed Account is a part of our general account to which you may allocate net premiums. It provides guarantees of principal and interest. INVESTMENT DIVISION. A sub-account of the Separate Account that invests in shares of an open-ended management investment company or other pools of investment assets. INVESTMENT START DATE. This is the later of the Policy Date and the date we first receive a premium payment for the Policy. ISSUE AGE. The age of the insured as of his or her birthday nearest to the Policy Date. LOAN ACCOUNT. The account to which cash value from the Separate and/or Fixed Accounts is transferred when a Policy loan is taken. NET CASH VALUE. The Policy's cash value less any outstanding loans and accrued loan interest. PLANNED PREMIUM. The Planned Premium is the premium payment schedule you choose to help meet your future goals under the Policy. The Planned Premium consists of a first-year premium amount and an amount for premium payments in subsequent Policy years. It is subject to certain limits under the Policy. POLICY DATE. The date on which coverage under the Policy and Monthly Deductions begin. If you make a premium payment with the application, unless you request otherwise, the Policy Date is generally the date the Policy application is approved. If you choose to pay the initial premium upon delivery of the Policy, unless you request otherwise, the Policy Date is generally the date on which we receive your initial payment. PREMIUMS. Premiums include all payments under the Policy, whether a Planned Premium or an unscheduled payment. SEPARATE ACCOUNT. Metropolitan Life Separate Account UL, a separate account established by MetLife to receive and invest premiums paid under the Policies and certain other variable life insurance policies, and to provide variable benefits. TARGET PREMIUM. We use the Target Premium to determine the amount of Mortality and Expense Risk Charge imposed on the Separate Account and the amount of Sales Charge imposed on premium payments. The Target Premium varies by issue age, sex, smoking status and any flat extras and substandard rating of the insured, and the Policy's base face amount, with additional amounts for most riders. YOU. "You" refers to the Policy Owner. A-52 APPENDIX A GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST In order to meet the Internal Revenue Code's definition of life insurance, the Policies provide that the death benefit will not be less than what is required by the "guideline premium test" under Section 7702(a)(2) of the Internal Revenue Code, or the "cash value accumulation test" under Section 7702(a)(1) of the Internal Revenue Code, as selected by you when the Policy is issued. The test you choose at issue will be used for the life of the Policy. (See "Death Benefits.") For the guideline premium test, the table below shows the percentage of the Policy's cash value that is used to determine the death benefit.
AGE OF AGE OF INSURED AT START OF PERCENTAGE OF INSURED AT START OF PERCENTAGE OF THE POLICY YEAR CASH VALUE THE POLICY YEAR CASH VALUE - ------------------- ------------- ------------------- ------------- 0 through 40 250 61 128 41 243 62 126 42 236 63 124 43 229 64 122 44 222 65 120 45 215 66 119 46 209 67 118 47 203 68 117 48 197 69 116 49 191 70 115 50 185 71 113 51 178 72 111 52 171 73 109 53 164 74 107 54 157 75 through 90 105 55 150 91 104 56 146 92 103 57 142 93 102 58 138 94 through 121 101 59 134 60 130
For the cash value accumulation test, sample net single premium factors for selected ages of male and female insureds, in a standard or better nonsmoker risk class, are listed below.
NET SINGLE PREMIUM FACTOR ------------------- AGE MALE FEMALE - --- -------- -------- 30.......................................................... 5.82979 6.59918 40.......................................................... 4.11359 4.63373 50.......................................................... 2.93292 3.28706 60.......................................................... 2.14246 2.40697 70.......................................................... 1.64028 1.82665 80.......................................................... 1.32530 1.44515 90.......................................................... 1.15724 1.22113 100......................................................... 1.08417 1.10646 120......................................................... 1.02597 1.02597
A-53 APPENDIX B ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND CASH SURRENDER VALUES The tables in Appendix B illustrate the way the Policies work, based on assumptions about investment returns and the insured's characteristics. They show how the death benefit, cash surrender value and cash value could vary over an extended period of time assuming hypothetical gross rates of return (i.e., investment income and capital gains and losses, realized or unrealized) for the Separate Account equal to constant after tax annual rates of 0%, 6% and 10%. The tables are based on a face amount of $300,000 for a male aged 35. The insured is assumed to be in the preferred nonsmoker risk class. The tables assume no rider benefits and assume that no allocations are made to the Fixed Account. Values are first given based on current Policy charges and then based on guaranteed Policy charges. (See "Charges.") Illustrations show the Option A death benefit. Policy values would be different (either higher or lower) from the illustrated amounts in certain circumstances. For example, illustrated amounts would be different where actual gross rates of return averaged 0%, 6% or 10%, but: (i) the rates of return varied above and below these averages during the period, (ii) premiums were paid in other amounts or at other than annual intervals, or (iii) cash values were allocated differently among individual Investment Divisions with varying rates of return. They would also differ if a Policy loan or partial withdrawal were made during the period of time illustrated, if the insured were female or in another risk classification, or if the Policies were issued at unisex rates. For example, as a result of variations in actual returns, additional premium payments beyond those illustrated may be necessary to maintain the Policy in force for the periods shown or to realize the Policy values shown, even if the average rate of return is achieved. The death benefits, cash surrender values and cash values shown in the tables reflect: (i) deductions from premiums for the sales charge, premium tax and federal tax charge; and (ii) a Monthly Deduction (consisting of a Coverage Expense Charge, a Mortality and Expense Risk Charge, and a charge for the cost of insurance) from the cash value on the first day of each Policy month. The cash surrender values reflect a Surrender Charge deducted from the cash value upon surrender, face reduction or lapse during the first ten Policy years. (See "Charges.") The illustrations reflect an arithmetic average of the gross investment advisory fees and operating expenses of the Portfolios, at an annual rate of .73% of the average daily net assets of the Portfolios. This average does not reflect expense subsidies by the investment advisers of certain Portfolios. The gross rates of return used in the illustrations do not reflect the deductions of the fees and expenses of the Portfolios. Taking account of the average investment advisory fee and operating expenses of the Portfolios, the gross annual rates of return of 0%, 6% and 10% correspond to net investment experience at constant annual rates of -.73%, 5.23% and 9.20%, respectively. If you request, we will furnish a personalized illustration reflecting the proposed insured's age, sex, risk class, and the face amount or premium payment schedule requested. Because these and other assumptions will differ, the values shown in the personalized illustrations can differ very substantially from those shown in the tables. Therefore, you should carefully review the information that accompanies any personalized illustration. That information will disclose all the assumptions on which the personalized illustration is based. Where applicable, we will also furnish on request a personalized illustration for a Policy which is not affected by the sex of the insured. You should contact your registered representative to request a personalized illustration. A-54 MALE ISSUE AGE 35 $1,620 ANNUAL PREMIUM FOR PREFERRED NONSMOKER RISK CLASS $300,000 FACE AMOUNT OPTION A DEATH BENEFIT THE ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL END OF GROSS ANNUAL RATE OF RETURN OF GROSS ANNUAL RATE OF RETURN OF GROSS ANNUAL RATE OF RETURN OF POLICY -------------------------------- -------------------------------- -------------------------------- YEAR 0% 6% 10% 0% 6% 10% 0% 6% 10% - ------ -- -- --- -- -- --- -- -- --- 1 $300,000 $300,000 $ 300,000 $ 0 $ 0 $ 0 $ 861 $ 931 $ 977 2 300,000 300,000 300,000 0 0 0 1,684 1,877 2,011 3 300,000 300,000 300,000 0 0 0 2,470 2,840 3,104 4 300,000 300,000 300,000 0 177 622 3,217 3,818 4,262 5 300,000 300,000 300,000 843 1,728 2,406 3,923 4,809 5,487 6 300,000 300,000 300,000 1,785 3,010 3,980 4,586 5,810 6,780 7 300,000 300,000 300,000 2,682 4,300 5,626 5,202 6,820 8,146 8 300,000 300,000 300,000 3,815 5,880 7,632 5,775 7,840 9,592 9 300,000 300,000 300,000 5,916 8,501 10,768 6,896 9,481 11,748 10 300,000 300,000 300,000 7,968 11,164 14,056 7,968 11,164 14,056 15 300,000 300,000 300,000 13,001 20,814 29,061 13,001 20,814 29,061 20 300,000 300,000 300,000 17,143 32,501 51,737 17,143 32,501 51,737 25 300,000 300,000 300,000 19,782 46,293 85,878 19,782 46,293 85,878 30 300,000 300,000 300,000 19,748 61,696 137,354 19,748 61,696 137,354 35 300,000 300,000 300,000 15,292 77,840 216,445 15,292 77,840 216,445 40 300,000 300,000 366,098 4,580 94,234 342,148 4,580 94,234 342,148 45 300,000 563,885 105,666 537,033 105,666 537,033 50 300,000 873,766 93,965 832,158 93,965 832,158 55 300,000 1,332,847 4,715 1,269,378 4,715 1,269,378 60 1,954,848 1,935,493 1,935,493 65 3,007,339 2,977,564 2,977,564 70 4,613,633 4,567,954 4,567,954 75 7,050,561 6,980,753 6,980,753 80 10,704,350 10,598,366 10,598,366 85 16,093,362 15,934,022 15,934,022 86 17,450,608 17,277,830 17,277,830
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S INVESTMENT DIVISIONS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY METLIFE OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. A-55 MALE ISSUE AGE 35 $1,620 ANNUAL PREMIUM FOR PREFERRED NONSMOKER RISK CLASS $300,000 FACE AMOUNT OPTION A DEATH BENEFIT THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE END OF ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL POLICY GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL YEAR RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF - ------ ------------------------------ -------------------------- -------------------------- 0% 6% 10% 0% 6% 10% 0% 6% 10% -- -- --- -- -- --- -- -- --- 1 $300,000 $300,000 $300,000 $ 0 $ 0 $ 0 $ 597 $ 658 $ 700 2 300,000 300,000 300,000 0 0 0 1,168 1,328 1,439 3 300,000 300,000 300,000 0 0 0 1,716 2,013 2,226 4 300,000 300,000 300,000 0 0 0 2,230 2,701 3,052 5 300,000 300,000 300,000 0 316 842 2,713 3,396 3,923 6 300,000 300,000 300,000 363 1,296 2,039 3,163 4,096 4,840 7 300,000 300,000 300,000 1,052 2,271 3,278 3,572 4,791 5,798 8 300,000 300,000 300,000 1,971 3,513 4,831 3,931 5,473 6,791 9 300,000 300,000 300,000 3,255 5,154 6,838 4,236 6,135 7,818 10 300,000 300,000 300,000 4,477 6,767 8,871 4,477 6,767 8,871 15 300,000 300,000 300,000 4,846 9,605 14,918 4,846 9,605 14,918 20 300,000 300,000 300,000 3,347 11,195 22,100 3,347 11,195 22,100 25 300,000 300,000 8,775 28,760 8,775 28,760 30 300,000 31,855 31,855 35 300,000 24,240 24,240 40 45 50 55 60 65 70 75 80 85 86
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S INVESTMENT DIVISIONS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY METLIFE OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. A-56 Additional information about the Policy and the Separate Account can be found in the Statement of Additional Information, which is available online at our website www.metlife.com. You may also obtain a copy of the Statement of Additional Information, without charge, by calling our TeleService Center at 1-800-638-5000. You may also obtain, without charge, a personalized illustration of death benefits, cash surrender values and cash values by calling your registered representative. For Investment Division transfers and premium reallocations, for current information about your Policy values, to change or update Policy information such as your billing address, billing mode, beneficiary or ownership, for information about other Policy transactions, and to ask questions about your Policy, you may call us at 1-800-638-5000. This prospectus incorporates by reference all of the information contained in the Statement of Additional Information, which is legally part of this prospectus. Information about the Policy and the Separate Account, including the Statement of Additional Information, is available for viewing and copying at the SEC's Public Reference Room in Washington, D.C. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. The Statement of Additional Information, reports and other information about the Separate Account are available on the SEC Internet site at www.sec.gov. Copies of this information may be obtained upon payment of a duplicating fee, by writing to the SEC's Public Reference Section at 100 F Street, NE, Washington, DC 20549-0102. File No. 811-06025 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Policy Owners of Metropolitan Life Separate Account UL and the Board of Directors of Metropolitan Life Insurance Company: We have audited the accompanying statements of assets and liabilities of the Metropolitan Life Separate Account UL (the "Separate Account") of Metropolitan Life Insurance Company (the "Company") comprising each of the individual Investment Divisions listed in Appendix A as of December 31, 2007, and the related statements of operations and changes in net assets for each of the periods in the three years then ended. We have also audited the statements of operations and changes in net assets for each of the periods presented in the three years ended December 31, 2007, for each of the individual Investment Divisions 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 Investment Divisions constituting the Separate Account of the Company as of December 31, 2007, and the results of their operations and changes in net assets for each of the periods presented in the three 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 MSF BlackRock Diversified Investment Division MSF BlackRock Aggressive Growth Investment Division MSF MetLife Stock Index Investment Division MSF FI International Stock Investment Division MSF FI Mid Cap Opportunities Investment Division MSF T. Rowe Price Small Cap Growth Investment Division MSF Oppenheimer Global Equity Investment Division MSF Harris Oakmark Large Cap Value Investment Division MSF Neuberger Berman Mid Cap Value Investment Division MSF T. Rowe Price Large Cap Growth Investment Division MSF Lehman Brothers Aggregate Bond Index Investment Division MSF Morgan Stanley EAFE Index Investment Division MSF Russell 2000 Index Investment Division MSF Jennison Growth Investment Division MSF BlackRock Strategic Value Investment Division MSF MetLife Mid Cap Stock Index Investment Division MSF Franklin Templeton Small Cap Growth Investment Division MSF BlackRock Large Cap Value Investment Division MSF Davis Venture Value Investment Division MSF Loomis Sayles Small Cap Investment Division MSF BlackRock Legacy Large Cap Growth Investment Division MSF BlackRock Bond Income Investment Division MSF FI Value Leaders Investment Division MSF Harris Oakmark Focused Value Investment Division MSF Western Asset Management Strategic Bond Opportunities Investment Division MSF Western Asset Management U.S. Government Investment Division MSF BlackRock Money Market Investment Division MSF MFS Total Return Investment Division MSF MetLife Conservative Allocation Investment Division MSF MetLife Conservative to Moderate Allocation Investment Division MSF MetLife Moderate Allocation Investment Division MSF MetLife Moderate to Aggressive Allocation Investment Division MSF MetLife Aggressive Allocation Investment Division MSF FI Large Cap Investment Division MSF Capital Guardian U.S. Equity Investment Division Janus Aspen Large Cap Growth Investment Division Janus Aspen Balanced Investment Division Janus Aspen Forty Investment Division AIM V.I. Global Real Estate Investment Division Franklin Templeton Foreign Securities Investment Division Franklin Mutual Discovery Securities Investment Division AllianceBernstein Global Technology Investment Division Fidelity VIP Contrafund Investment Division Fidelity VIP Asset Manager: Growth Investment Division Fidelity VIP Investment Grade Bond Investment Division Fidelity VIP Equity-Income Investment Division American Funds Growth Investment Division American Funds Growth-Income Investment Division American Funds Global Small Capitalization Investment Division American Funds Bond Investment Division MIST T. Rowe Price Mid-Cap Growth Investment Division MIST MFS Research International Investment Division MIST PIMCO Total Return Investment Division APPENDIX A (CONTINUED) MIST RCM Technology Investment Division MIST Lord Abbett Bond Debenture Investment Division MIST Lazard Mid-Cap Investment Division MIST Met/AIM Small Cap Growth Investment Division MIST Harris Oakmark International Investment Division MIST Legg Mason Partners Aggressive Growth Investment Division MIST Lord Abbett Growth and Income Investment Division MIST Neuberger Berman Real Estate Investment Division MIST Van Kampen Mid Cap Growth Investment Division MIST Lord Abbett Mid-Cap Value Investment Division MIST Third Avenue Small Cap Value Investment Division MIST Oppenheimer Capital Appreciation Investment Division MIST Legg Mason Value Equity Investment Division MIST Cyclical Growth ETF Investment Division MIST Cyclical Growth and Income ETF Investment Division MIST PIMCO Inflation Protected Bond Investment Division MIST BlackRock Large-Cap Core Investment Division MIST Janus Forty Investment Division American Century VP Vista Investment Division Delaware VIP Small Cap Value Investment Division Dreyfus MidCap Stock Index Investment Division Dreyfus International Value Investment Division Goldman Sachs Mid Cap Value Investment Division Goldman Sachs Structured Small Cap Equity Investment Division MFS High Income Investment Division MFS Global Equity Investment Division MFS New Discovery Investment Division MFS Value Investment Division Van Kampen Government Investment Division Wells Fargo VT Total Return Bond Investment Division Wells Fargo VT Money Market Investment Division APPENDIX B MSF BlackRock Large Cap Investment Division AIM V.I. Government Securities Investment Division Dreyfus Emerging Leaders Investment Division Wells Fargo VT Asset Allocation Investment Division Wells Fargo VT Large Company Growth Investment Division Wells Fargo VT Equity Income Investment Division [THIS PAGE INTENTIONALLY LEFT BLANK] 1 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2007
MSF BLACKROCK MSF BLACKROCK MSF METLIFE MSF FI DIVERSIFIED AGGRESSIVE GROWTH STOCK INDEX INTERNATIONAL STOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 334,233,382 $ 260,053,399 $ 748,073,006 $ 72,781,181 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... 12,054 8,416 -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 334,245,436 260,061,815 748,073,006 72,781,181 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- 4,518 76,472 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- 4,518 76,472 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 334,245,436 $ 260,061,815 $ 748,068,488 $ 72,704,709 ================ ================ ================ ================ Units outstanding................. 12,715,624 10,673,487 34,637,993 3,371,026 Unit value (accumulation)......... $15.43 - $38.69 $18.84 - $26.64 $13.47 - $39.67 $17.46 - $23.95
The accompanying notes are an integral part of these financial statements. 2
MSF FI MID CAP MSF T. ROWE PRICE MSF OPPENHEIMER MSF HARRIS OAKMARK MSF NEUBERGER BERMAN MSF T. ROWE PRICE OPPORTUNITIES SMALL CAP GROWTH GLOBAL EQUITY LARGE CAP VALUE MID CAP VALUE LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- ------------------- ------------------- -------------------- ------------------- $ 283,109,072 $ 85,699,400 $ 52,072,899 $ 61,863,832 $ 82,114,153 $ 52,795,733 -- -- -- -- -- -- -- 46,787 -- 62,833 -- 15,508 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 283,109,072 85,746,187 52,072,899 61,926,665 82,114,153 52,811,241 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 31,220 -- 190 -- 108,780 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 31,220 -- 190 -- 108,780 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 283,077,852 $ 85,746,187 $ 52,072,709 $ 61,926,665 $ 82,005,373 $ 52,811,241 ================ ================ ================ ================ ================ ================ 13,843,071 4,692,085 2,347,437 4,115,566 3,292,329 3,529,093 $8.63 - $24.16 $17.16 - $19.47 $21.71 - $24.18 $14.14 - $17.54 $21.27 - $30.68 $11.53 - $17.60
The accompanying notes are an integral part of these financial statements. 3 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MSF LEHMAN BROTHERS MSF MORGAN STANLEY MSF RUSSELL MSF JENNISON AGGREGATE BOND INDEX EAFE INDEX 2000 INDEX GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION -------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 104,938,369 $ 71,605,228 $ 56,246,569 $ 15,728,934 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- 30,702 -- 12,782 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 104,938,369 71,635,930 56,246,569 15,741,716 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... 10,106 -- 1,969 -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 10,106 -- 1,969 -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 104,928,263 $ 71,635,930 $ 56,244,600 $ 15,741,716 ================ ================ ================ ================ Units outstanding................. 6,582,200 4,186,312 2,975,863 1,203,057 Unit value (accumulation)......... $14.56 - $16.17 $14.30 - $19.58 $14.83 - $20.87 $6.48 - $13.98
The accompanying notes are an integral part of these financial statements. 4
MSF BLACKROCK MSF METLIFE MSF FRANKLIN TEMPLETON MSF BLACKROCK MSF DAVIS MSF LOOMIS STRATEGIC VALUE MID CAP STOCK INDEX SMALL CAP GROWTH LARGE CAP VALUE VENTURE VALUE SAYLES SMALL CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- ---------------------- ------------------- ------------------- ------------------- $ 100,643,223 $ 63,960,422 $ 7,040,049 $ 12,275,048 $ 58,550,469 $ 15,771,472 -- -- -- -- -- -- 65,142 -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- 100,708,365 63,960,422 7,040,049 12,275,048 58,550,469 15,771,472 ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- -- -- -- -- -- -- -- 1,219 -- -- 225 -- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- -- 1,219 -- -- 225 -- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- $ 100,708,365 $ 63,959,203 $ 7,040,049 $ 12,275,048 $ 58,550,244 $ 15,771,472 ================ ================ ================ ================ ================ ================= 4,450,536 3,466,871 569,953 770,111 1,479,707 98,083 $20.94 - $22.86 $17.07 - $18.75 $11.73 - $12.46 $15.30 - $16.10 $14.53 - $42.17 $15.07 - $333.74
The accompanying notes are an integral part of these financial statements. 5 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MSF BLACKROCK MSF BLACKROCK MSF FI MSF HARRIS OAKMARK LEGACY LARGE CAP GROWTH BOND INCOME VALUE LEADERS FOCUSED VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value. $ 3,830,011 $ 92,438,849 $ 6,742,766 $ 54,129,720 Other receivables......... -- -- -- -- Due from Metropolitan Life Insurance Company....... -- -- -- -- ---------------- ---------------- ---------------- ------------------ Total Assets.......... 3,830,011 92,438,849 6,742,766 54,129,720 ---------------- ---------------- ---------------- ------------------ LIABILITIES: Other payables............ -- -- -- -- Due to Metropolitan Life Insurance Company....... 5,461 2,491 2 -- ---------------- ---------------- ---------------- ------------------ Total Liabilities..... 5,461 2,491 2 -- ---------------- ---------------- ---------------- ------------------ NET ASSETS................. $ 3,824,550 $ 92,436,358 $ 6,742,764 $ 54,129,720 ================ ================ ================ ================== Units outstanding......... 265,094 4,467,585 440,904 191,591 Unit value (accumulation). $9.85 - $14.78 $15.30 - $31.06 $12.29 - $15.50 $268.52 - $285.05
The accompanying notes are an integral part of these financial statements. 6
MSF WESTERN MSF WESTERN ASSET MANAGEMENT ASSET MANAGEMENT MSF BLACKROCK MSF MFS MSF METLIFE STRATEGIC BOND OPPORTUNITIES U.S. GOVERNMENT MONEY MARKET TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ---------------------------- ------------------- ------------------- ------------------- ----------------------- $ 18,372,006 $ 15,797,381 $ 63,436,704 $ 5,549,551 $ 784,035 -- -- -- -- -- -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- 18,372,006 15,797,381 63,436,704 5,549,551 784,035 ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 38,647 41 -- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- 38,647 41 -- ---------------- ---------------- ---------------- ---------------- ---------------- $ 18,372,006 $ 15,797,381 $ 63,398,057 $ 5,549,510 $ 784,035 ================ ================ ================ ================ ================ 1,117,386 1,066,735 3,638,086 418,473 66,558 $15.63 - $16.60 $14.08 - $14.95 $17.41 - $17.57 $12.90 - $13.33 $11.53 - $11.81
MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION INVESTMENT DIVISION - ------------------- $ 2,977,400 -- -- ---------------- 2,977,400 ---------------- -- -- ---------------- -- ---------------- $ 2,977,400 ================ 244,254 $11.98 - $12.27
The accompanying notes are an integral part of these financial statements. 7 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MSF METLIFE MSF METLIFE MODERATE TO MSF METLIFE MSF FI MODERATE ALLOCATION AGGRESSIVE ALLOCATION AGGRESSIVE ALLOCATION LARGE CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- --------------------- --------------------- ------------------- ASSETS: Investments at fair value......... $ 18,395,945 $ 32,935,899 $ 8,191,098 $ 304,229 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 18,395,945 32,935,899 8,191,098 304,229 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 18,395,945 $ 32,935,899 $ 8,191,098 $ 304,229 ================ ================ ================ ================ Units outstanding................. 1,452,241 2,499,351 608,756 28,739 Unit value (accumulation)......... $12.44 - $12.74 $12.92 - $13.23 $13.22 - $13.54 $10.47 - $10.63
The accompanying notes are an integral part of these financial statements. 8
MSF CAPITAL GUARDIAN JANUS ASPEN JANUS ASPEN JANUS ASPEN AIM V.I. FRANKLIN TEMPLETON U.S. EQUITY LARGE CAP GROWTH BALANCED FORTY GLOBAL REAL ESTATE FOREIGN SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 447,428 $ 7,225,357 $ 80,038 $ 518,929 $ 2,752,181 $ 9,384,258 -- -- -- -- -- -- 69,103 -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 516,531 7,225,357 80,038 518,929 2,752,181 9,384,258 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 5,472 3 2 180,915 20,634 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 5,472 3 2 180,915 20,634 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 516,531 $ 7,219,885 $ 80,035 $ 518,927 $ 2,571,266 $ 9,363,624 ================ ================ ================ ================ ================ ================ 33,111 643,417 5,625 27,126 74,508 504,436 $15.60 $11.22 $14.23 $19.13 $34.51 $18.56
The accompanying notes are an integral part of these financial statements. 9 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
FRANKLIN ALLIANCEBERNSTEIN FIDELITY VIP FIDELITY VIP MUTUAL DISCOVERY SECURITIES GLOBAL TECHNOLOGY CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ------------------- ------------------- --------------------- ASSETS: Investments at fair value. $ 1,706,089 $ 53,105 $ 3,052,773 $ 1,263,804 Other receivables......... -- -- -- -- Due from Metropolitan Life Insurance Company....... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.......... 1,706,089 53,105 3,052,773 1,263,804 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables............ -- -- -- -- Due to Metropolitan Life Insurance Company....... 27 8 150,455 4,414 ---------------- ---------------- ---------------- ---------------- Total Liabilities..... 27 8 150,455 4,414 ---------------- ---------------- ---------------- ---------------- NET ASSETS................. $ 1,706,062 $ 53,097 $ 2,902,318 $ 1,259,390 ================ ================ ================ ================ Units outstanding......... 93,103 8,261 188,529 112,746 Unit value (accumulation). $18.32 $6.43 $15.39 $11.17
The accompanying notes are an integral part of these financial statements. 10
FIDELITY VIP FIDELITY VIP AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS INVESTMENT GRADE BOND EQUITY-INCOME GROWTH GROWTH-INCOME GLOBAL SMALL CAPITALIZATION BOND INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - --------------------- ------------------- ------------------- ------------------- --------------------------- ------------------- $ 852,371 $ 1,245,130 $ 121,273,017 $ 75,370,228 $ 67,615,279 $ 3,182,415 -- -- -- -- -- -- 1 -- -- -- -- -- ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- 852,372 1,245,130 121,273,017 75,370,228 67,615,279 3,182,415 ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 28,466 -- -- -- -- ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- -- 28,466 -- -- -- -- ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- $ 852,372 $ 1,216,664 $ 121,273,017 $ 75,370,228 $ 67,615,279 $ 3,182,415 ================ ================ ================= ================ ================ ================ 73,675 87,700 1,218,654 1,381,044 1,945,062 291,647 $11.57 $13.87 $94.52 - $100.35 $51.88 - $55.07 $33.16 - $35.20 $10.78 - $10.95
The accompanying notes are an integral part of these financial statements. 11 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MIST T. ROWE PRICE MIST MFS RESEARCH MIST PIMCO MIST RCM MID-CAP GROWTH INTERNATIONAL TOTAL RETURN TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 17,384,201 $ 13,633,086 $ 32,210,481 $ 13,231,277 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 17,384,201 13,633,086 32,210,481 13,231,277 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... 2 3,162 -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 2 3,162 -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 17,384,199 $ 13,629,924 $ 32,210,481 $ 13,231,277 ================ ================ ================ ================ Units outstanding................. 1,587,296 695,827 2,175,489 1,867,295 Unit value (accumulation)......... $10.32 - $16.38 $17.33 - $20.03 $14.07 - $14.94 $6.74 - $7.15
The accompanying notes are an integral part of these financial statements. 12
MIST LORD ABBETT MIST LAZARD MIST MET/AIM MIST HARRIS OAKMARK MIST LEGG MASON MIST LORD ABBETT BOND DEBENTURE MID-CAP SMALL CAP GROWTH INTERNATIONAL PARTNERS AGGRESSIVE GROWTH GROWTH AND INCOME INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- ------------------- ------------------- -------------------------- ------------------- $ 22,265,656 $ 5,084,696 $ 3,233,323 $ 26,700,786 $ 7,804,601 $ 6,283,426 -- -- -- -- -- -- -- -- -- -- -- 5,960 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 22,265,656 5,084,696 3,233,323 26,700,786 7,804,601 6,289,386 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 3,277 -- 1 -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,277 -- 1 -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 22,262,379 $ 5,084,696 $ 3,233,322 $ 26,700,786 $ 7,804,601 $ 6,289,386 ================ ================ ================ ================ ================ ================ 1,249,287 340,316 208,985 1,335,770 893,124 539,972 $16.02 - $19.29 $13.14 - $15.10 $14.84 - $15.62 $19.20 - $20.20 $7.54 - $8.82 $11.65
The accompanying notes are an integral part of these financial statements. 13 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MIST NEUBERGER MIST VAN KAMPEN MIST LORD ABBETT MIST THIRD AVENUE BERMAN REAL ESTATE MID CAP GROWTH MID-CAP VALUE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 18,432,894 $ 31,371 $ 66,501 $ 381,063 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... 9 -- -- 1 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 18,432,903 31,371 66,501 381,064 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- 1 -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- 1 -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 18,432,903 $ 31,371 $ 66,500 $ 381,064 ================ ================ ================ ================ Units outstanding................. 1,071,638 2,000 4,638 24,943 Unit value (accumulation)......... $16.76 - $17.32 $15.69 $14.34 $15.28
The accompanying notes are an integral part of these financial statements. 14
MIST CYCLICAL MIST OPPENHEIMER MIST LEGG MASON MIST CYCLICAL GROWTH AND MIST PIMCO INFLATION MIST BLACKROCK CAPITAL APPRECIATION VALUE EQUITY GROWTH ETF INCOME ETF PROTECTED BOND LARGE-CAP CORE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------- ------------------- ------------------- ------------------- -------------------- ------------------- $ 955,427 $ 5,413,855 $ 639,459 $ 345,473 $ 911,539 $ 437,008,305 -- -- -- -- -- -- -- 22,047 -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 955,427 5,435,902 639,459 345,473 911,539 437,008,305 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- -- -- -- -- 32,623 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- 32,623 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 955,427 $ 5,435,902 $ 639,459 $ 345,473 $ 911,539 $ 436,975,682 ================ ================ ================ ================ ================ ================ 70,634 511,093 56,164 30,551 80,592 15,352,126 $13.27 - $13.59 $10.02 - $11.42 $11.24 - $11.41 $11.18 - $11.35 $11.16 - $11.33 $10.08 - $44.64
The accompanying notes are an integral part of these financial statements. 15 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
AMERICAN CENTURY DELAWARE VIP DREYFUS MIST JANUS FORTY VP VISTA SMALL CAP VALUE MIDCAP STOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 3,487,948 $ 29,135 $ 1,015,070 $ 305,775 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- 10,774 15,811 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 3,487,948 29,135 1,025,844 321,586 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- 2 -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- 2 -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 3,487,948 $ 29,133 $ 1,025,844 $ 321,586 ================ ================ ================ ================ Units outstanding................. 281,380 1,642 67,044 23,628 Unit value (accumulation)......... $12.33 - $12.40 $17.75 $15.30 $13.61
The accompanying notes are an integral part of these financial statements. 16
DREYFUS GOLDMAN SACHS GOLDMAN SACHS MFS MFS MFS INTERNATIONAL VALUE MID CAP VALUE STRUCTURED SMALL CAP EQUITY HIGH INCOME GLOBAL EQUITY NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- --------------------------- ------------------- ------------------- ------------------- $ 669,987 $ 1,259,838 $ 136,082 $ 21,944 $ 64,570 $ 3,269 -- -- -- -- -- -- 31,106 -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 701,093 1,259,838 136,082 21,944 64,570 3,269 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 48,917 1,555 -- 1 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 48,917 1,555 -- 1 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 701,093 $ 1,210,921 $ 134,527 $ 21,944 $ 64,569 $ 3,269 ================ ================ ================ ================ ================ ================ 42,550 84,789 12,264 1,776 3,948 253 $16.48 $14.28 $10.97 $12.36 $16.35 $12.89
The accompanying notes are an integral part of these financial statements. 17 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONCLUDED) DECEMBER 31, 2007
MFS VAN KAMPEN WELLS FARGO VT WELLS FARGO VT VALUE GOVERNMENT TOTAL RETURN BOND MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 45,933 $ 22,716 $ 113,458 $ 2,051,425 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- 21 309 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 45,933 22,716 113,479 2,051,734 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 45,933 $ 22,716 $ 113,479 $ 2,051,734 ================ ================ ================ ================ Units outstanding................. 2,966 1,920 9,697 181,995 Unit value (accumulation)......... $15.48 $11.83 $11.70 $11.27
The accompanying notes are an integral part of these financial statements. 18 [THIS PAGE INTENTIONALLY LEFT BLANK] 19 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK LARGE CAP INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 6,785,253 $ 5,365,248 $ 4,375,931 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 1,252,435 3,616,837 3,470,220 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 1,252,435 3,616,837 3,470,220 ---------------- ---------------- ---------------- Net investment income (loss)......................... 5,532,818 1,748,411 905,711 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 34,926,873 1,910,880 834,521 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 34,926,873 1,910,880 834,521 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (18,412,208) 47,641,145 8,704,485 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 16,514,665 49,552,025 9,539,006 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 22,047,483 $ 51,300,436 $ 10,444,717 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 20
MSF BLACKROCK MSF BLACKROCK DIVERSIFIED AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 8,526,571 $ 7,880,854 $ 4,998,633 $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,933,494 2,787,484 2,728,213 2,172,462 1,968,385 1,824,382 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,933,494 2,787,484 2,728,213 2,172,462 1,968,385 1,824,382 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,593,077 5,093,370 2,270,420 (2,172,462) (1,968,385) (1,824,382) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 3,011,483 2,697,730 655,141 1,382,763 (1,521,325) (2,231,885) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,011,483 2,697,730 655,141 1,382,763 (1,521,325) (2,231,885) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 7,614,036 21,697,213 3,822,631 44,452,957 16,167,405 23,892,825 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 10,625,519 24,394,943 4,477,772 45,835,720 14,646,080 21,660,940 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 16,218,596 $ 29,488,313 $ 6,748,192 $ 43,663,258 $ 12,677,695 $ 19,836,558 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 21 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE STOCK INDEX INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 7,661,035 $ 12,777,493 $ 8,971,609 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 6,053,181 5,268,088 4,641,173 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 6,053,181 5,268,088 4,641,173 ---------------- ---------------- ---------------- Net investment income (loss)......................... 1,607,854 7,509,405 4,330,436 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 14,892,115 21,804,470 -- Realized gains (losses) on sale of investments....... 7,438,301 6,189,767 3,573,660 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 22,330,416 27,994,237 3,573,660 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 7,171,409 53,741,400 14,173,789 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 29,501,825 81,735,637 17,747,449 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 31,109,679 $ 89,245,042 $ 22,077,885 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 22
MSF FI MSF FI INTERNATIONAL STOCK MID CAP OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 757,552 $ 881,159 $ 317,306 $ 384,517 $ 14,072 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 610,034 530,605 427,240 2,541,446 2,242,728 2,011,441 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 610,034 530,605 427,240 2,541,446 2,242,728 2,011,441 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 147,518 350,554 (109,934) (2,156,929) (2,228,656) (2,011,441) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,680,153 -- -- -- -- -- 1,481,666 832,502 237,027 (3,610,711) (4,482,428) (1,015,121) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,161,819 832,502 237,027 (3,610,711) (4,482,428) (1,015,121) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,044,733 7,805,567 8,151,109 25,889,645 33,489,573 17,191,699 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 6,206,552 8,638,069 8,388,136 22,278,934 29,007,145 16,176,578 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 6,354,070 $ 8,988,623 $ 8,278,202 $ 20,122,005 $ 26,778,489 $ 14,165,137 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 23 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF T. ROWE PRICE SMALL CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 695,384 661,143 595,465 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 695,384 661,143 595,465 ---------------- ---------------- ---------------- Net investment income (loss)......................... (695,384) (661,143) (595,465) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 1,678,195 842,686 37,997 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,678,195 842,686 37,997 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 6,321,798 2,138,730 7,936,747 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 7,999,993 2,981,416 7,974,744 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 7,304,609 $ 2,320,273 $ 7,379,279 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 24
MSF OPPENHEIMER MSF HARRIS OAKMARK GLOBAL EQUITY LARGE CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 569,763 $ 1,114,393 $ 209,625 $ 515,161 $ 447,049 $ 367,539 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 418,432 361,328 299,169 543,267 478,172 429,104 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 418,432 361,328 299,169 543,267 478,172 429,104 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 151,331 753,065 (89,544) (28,106) (31,123) (61,565) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 743,295 861,246 -- 1,800,935 -- -- 716,979 571,820 270,279 1,197,838 835,096 398,007 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,460,274 1,433,066 270,279 2,998,773 835,096 398,007 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,125,527 4,443,736 5,277,659 (5,878,800) 8,574,081 (1,475,339) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,585,801 5,876,802 5,547,938 (2,880,027) 9,409,177 (1,077,332) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 2,737,132 $ 6,629,867 $ 5,458,394 $ (2,908,133) $ 9,378,054 $ (1,138,897) ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 25 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF NEUBERGER BERMAN MID CAP VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 454,135 $ 340,446 $ 157,412 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 715,283 602,710 468,169 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 715,283 602,710 468,169 ---------------- ---------------- ---------------- Net investment income (loss)......................... (261,148) (262,264) (310,757) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,444,204 6,150,111 4,520,673 Realized gains (losses) on sale of investments....... 1,469,284 895,063 557,751 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 3,913,488 7,045,174 5,078,424 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (1,796,392) 382,304 1,374,494 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,117,096 7,427,478 6,452,918 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 1,855,948 $ 7,165,214 $ 6,142,161 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 26
MSF T. ROWE PRICE MSF LEHMAN BROTHERS LARGE CAP GROWTH AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 236,325 $ 147,322 $ 212,638 $ 4,412,510 $ 3,647,493 $ 2,790,273 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 435,556 370,484 319,250 729,528 616,266 528,874 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 435,556 370,484 319,250 729,528 616,266 528,874 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (199,231) (223,162) (106,612) 3,682,982 3,031,227 2,261,399 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 469,367 2,175 -- -- -- -- 1,613,290 505,143 187,894 192,840 (57,852) 113,726 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,082,657 507,318 187,894 192,840 (57,852) 113,726 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,367,516 5,044,250 2,209,286 2,133,669 (71,436) (1,403,001) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 4,450,173 5,551,568 2,397,180 2,326,509 (129,288) (1,289,275) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 4,250,942 $ 5,328,406 $ 2,290,568 $ 6,009,491 $ 2,901,939 $ 972,124 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 27 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF MORGAN STANLEY EAFE INDEX INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends.............................................. $ 1,286,968 $ 843,327 $ 597,805 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 561,411 419,647 312,106 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 561,411 419,647 312,106 ---------------- ---------------- ---------------- Net investment income (loss)......................... 725,557 423,680 285,699 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 686,383 -- -- Realized gains (losses) on sale of investments....... 1,572,951 984,685 590,734 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 2,259,334 984,685 590,734 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 2,980,876 9,577,488 3,753,078 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 5,240,210 10,562,173 4,343,812 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 5,965,767 $ 10,985,853 $ 4,629,511 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 28
MSF MSF JENNISON RUSSELL 2000 INDEX GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- -------- $ 526,533 $ 397,966 $ 293,721 $ 62,722 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 476,230 402,879 320,327 127,403 113,119 67,101 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 476,230 402,879 320,327 127,403 113,119 67,101 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 50,303 (4,913) (26,606) (64,681) (113,119) (67,101) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 4,308,974 1,842,549 1,438,122 525,988 11,909 -- 1,194,459 793,645 811,342 217,837 116,022 36,398 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,503,433 2,636,194 2,249,464 743,825 127,931 36,398 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (6,890,836) 5,025,107 (613,275) 832,560 269,709 2,206,440 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (1,387,403) 7,661,301 1,636,189 1,576,385 397,640 2,242,838 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (1,337,100) $ 7,656,388 $ 1,609,583 $ 1,511,704 $ 284,521 $ 2,175,737 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 29 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK STRATEGIC VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 321,242 $ 298,959 $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 923,234 828,876 714,689 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 923,234 828,876 714,689 ---------------- ---------------- ---------------- Net investment income (loss)......................... (601,992) (529,917) (714,689) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 12,338,055 17,677,150 5,489,850 Realized gains (losses) on sale of investments....... 644,889 1,173,096 647,742 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 12,982,944 18,850,246 6,137,592 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (16,875,056) (4,073,024) (2,502,234) ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (3,892,112) 14,777,222 3,635,358 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (4,494,104) $ 14,247,305 $ 2,920,669 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 30
MSF METLIFE MSF FRANKLIN TEMPLETON MID CAP STOCK INDEX SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 463,568 $ 617,181 $ 278,096 $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 517,186 431,166 340,784 60,634 50,288 39,601 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 517,186 431,166 340,784 60,634 50,288 39,601 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (53,618) 186,015 (62,688) (60,634) (50,288) (39,601) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,483,952 3,502,918 2,036,561 476,487 286,106 154,763 1,219,996 660,796 682,809 249,458 136,411 129,715 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,703,948 4,163,714 2,719,370 725,945 422,517 284,478 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 158,945 201,865 1,900,535 (436,173) 106,882 (56,267) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,862,893 4,365,579 4,619,905 289,772 529,399 228,211 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 3,809,275 $ 4,551,594 $ 4,557,217 $ 229,138 $ 479,111 $ 188,610 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 31 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK LARGE CAP VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 112,942 $ 79,434 $ 37,063 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 99,096 57,120 34,801 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 99,096 57,120 34,801 ---------------- ---------------- ---------------- Net investment income (loss)......................... 13,846 22,314 2,262 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 429,497 389,137 39,914 Realized gains (losses) on sale of investments....... 332,037 121,354 81,656 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 761,534 510,491 121,570 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (536,165) 656,059 110,740 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 225,369 1,166,550 232,310 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 239,215 $ 1,188,864 $ 234,572 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 32
MSF MSF LOOMIS SAYLES DAVIS VENTURE VALUE SMALL CAP INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 429,495 $ 403,990 $ 244,019 $ 11,412 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 478,766 384,612 290,656 124,817 90,220 60,646 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 478,766 384,612 290,656 124,817 90,220 60,646 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (49,271) 19,378 (46,637) (113,405) (90,220) (60,646) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 1,567,864 848,702 83,073 581,875 2,307,728 226,016 234,076 208,239 74,135 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 581,875 2,307,728 226,016 1,801,940 1,056,941 157,208 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,282,046 3,652,646 3,304,528 (305,465) 425,449 365,753 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,863,921 5,960,374 3,530,544 1,496,475 1,482,390 522,961 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,814,650 $ 5,979,752 $ 3,483,907 $ 1,383,070 $ 1,392,170 $ 462,315 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 33 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK LEGACY LARGE CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 - ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 5,522 $ 12,152 $ 32,623 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 25,444 38,586 43,887 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 25,444 38,586 43,887 ---------------- ---------------- ---------------- Net investment income (loss)......................... (19,922) (26,434) (11,264) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 64,255 954,600 84,949 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 64,255 954,600 84,949 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 437,029 (1,121,566) 498,307 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 501,284 (166,966) 583,256 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 481,362 $ (193,400) $ 571,992 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 34
MSF BLACKROCK MSF FI BOND INCOME VALUE LEADERS INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 2,988,878 $ 5,391,669 $ 3,611,102 $ 58,988 $ 45,870 $ 23,066 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 742,928 735,582 716,223 55,755 39,722 19,333 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 742,928 735,582 716,223 55,755 39,722 19,333 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,245,950 4,656,087 2,894,879 3,233 6,148 3,733 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 92,238 1,043,295 558,447 105,940 -- 86,411 (260,701) 98,977 116,557 71,567 80,493 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 86,411 (168,463) 1,142,272 675,004 177,507 80,493 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,574,419 (1,188,505) (2,577,646) (503,196) 304,366 177,601 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,660,830 (1,356,968) (1,435,374) 171,808 481,873 258,094 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 4,906,780 $ 3,299,119 $ 1,459,505 $ 175,041 $ 488,021 $ 261,827 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 35 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF HARRIS OAKMARK FOCUSED VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 328,815 $ 158,000 $ 17,995 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 513,319 447,521 369,999 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 513,319 447,521 369,999 ---------------- ---------------- ---------------- Net investment income (loss)......................... (184,504) (289,521) (352,004) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,250,319 4,875,177 432,350 Realized gains (losses) on sale of investments....... 896,818 862,876 647,285 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 8,147,137 5,738,053 1,079,635 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (12,430,441) 467,020 3,071,366 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (4,283,304) 6,205,073 4,151,001 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (4,467,808) $ 5,915,552 $ 3,798,997 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 36
MSF WESTERN ASSET MANAGEMENT MSF WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES U.S. GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 459,233 $ 685,459 $ 322,307 $ 398,651 $ 423,016 $ 143,164 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 143,832 118,623 90,184 124,642 106,778 88,576 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 143,832 118,623 90,184 124,642 106,778 88,576 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 315,401 566,836 232,123 274,009 316,238 54,588 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 15,836 109,245 198,820 -- -- 195,299 29,149 44,303 55,156 988 (10,510) (2,681) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 44,985 153,548 253,976 988 (10,510) 192,618 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 187,688 (101,864) (261,648) 246,140 127,750 (152,454) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 232,673 51,684 (7,672) 247,128 117,240 40,164 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 548,074 $ 618,520 $ 224,451 $ 521,137 $ 433,478 $ 94,752 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 37 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MONEY MARKET INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 3,017,412 $ 1,804,658 $ 795,483 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 294,683 207,469 167,153 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 294,683 207,469 167,153 ---------------- ---------------- ---------------- Net investment income (loss)......................... 2,722,729 1,597,189 628,330 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... -- -- -- ---------------- ---------------- ---------------- Net realized gains (losses)...................... -- -- -- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... -- -- -- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ -- -- -- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,722,729 $ 1,597,189 $ 628,330 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 38
MSF MFS MSF METLIFE TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- -------- $ 93,266 $ 93,810 $ 23,976 $ -- $ 10,638 $ 372 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,006 27,494 13,447 5,884 3,484 348 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,006 27,494 13,447 5,884 3,484 348 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 53,260 66,316 10,529 (5,884) 7,154 24 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 141,980 58,740 15,212 413 4,082 99 25,643 5,870 18,142 23,983 (1,845) 271 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 167,623 64,610 33,354 24,396 2,237 370 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (104,370) 205,638 (3,131) 12,074 19,393 554 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 63,253 270,248 30,223 36,470 21,630 924 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 116,513 $ 336,564 $ 40,752 $ 30,586 $ 28,784 $ 948 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 39 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 (B) ---- ---- -------- INVESTMENT INCOME: Dividends............................................ $ -- $ 30,389 $ 2,224 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 21,161 11,718 1,984 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 21,161 11,718 1,984 ---------------- ---------------- ---------------- Net investment income (loss)......................... (21,161) 18,671 240 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 3,872 20,839 108 Realized gains (losses) on sale of investments....... 26,078 12,097 1,644 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 29,950 32,936 1,752 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 79,599 73,219 9,258 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 109,549 106,155 11,010 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 88,388 $ 124,826 $ 11,250 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 40
MSF METLIFE MSF METLIFE MODERATE ALLOCATION MODERATE TO AGGRESSIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 (B) 2007 2006 2005 (B) ---- ---- -------- ---- ---- -------- $ 27,294 $ 76,104 $ 5,987 $ 45,711 $ 77,374 $ 9,012 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 125,074 45,704 3,787 215,858 65,099 6,087 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 125,074 45,704 3,787 215,858 65,099 6,087 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (97,780) 30,400 2,200 (170,147) 12,275 2,925 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 18,896 106,419 133 26,120 196,911 210 170,037 48,706 3,556 96,319 14,344 4,752 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 188,933 155,125 3,689 122,439 211,255 4,962 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 262,197 474,841 25,822 371,705 870,757 64,564 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 451,130 629,966 29,511 494,144 1,082,012 69,526 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 353,350 $ 660,366 $ 31,711 $ 323,997 $ 1,094,287 $ 72,451 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 41 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE AGGRESSIVE ALLOCATION INVESTMENT DIVISION -------------------------------------------- 2007 2006 2005 (B) ---- ---- -------- INVESTMENT INCOME: Dividends.................................................................... $ 12,813 $ 9,703 $ 1,642 -------------- -------------- -------------- EXPENSES: Mortality and expense risk charges........................................... 52,966 13,592 1,181 Administrative charges....................................................... -- -- -- -------------- -------------- -------------- Total expenses............................................................. 52,966 13,592 1,181 -------------- -------------- -------------- Net investment income (loss)................................................. (40,153) (3,889) 461 -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.................................................. 8,186 40,723 1,242 Realized gains (losses) on sale of investments............................... 93,620 (41,990) 1,894 -------------- -------------- -------------- Net realized gains (losses).............................................. 101,806 (1,267) 3,136 -------------- -------------- -------------- Change in unrealized gains (losses) on investments........................... (95,922) 225,674 10,725 -------------- -------------- -------------- Net realized and unrealized gains (losses) on investments.................... 5,884 224,407 13,861 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations.............. $ (34,269) $ 220,518 $ 14,322 ============== ============== ==============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 42
MSF FI MSF CAPITAL GUARDIAN JANUS ASPEN LARGE CAP U.S. EQUITY LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------- ----------------------------- -------------------------------------------- 2007 2006 (C) 2007 2006 (C) 2007 2006 2005 ---- -------- ---- -------- ---- ---- ---- $ 221 $ -- $ -- $ 1,689 $ 48,004 $ 25,478 $ 15,028 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 1,641 246 2,206 1,107 31,075 24,818 21,214 -- -- -- -- -- -- -- - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 1,641 246 2,206 1,107 31,075 24,818 21,214 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- (1,420) (246) (2,206) 582 16,929 660 (6,186) - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 9,165 -- -- -- -- -- -- 2,290 21 50,654 40 60,269 80,063 (62,709) - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 11,455 21 50,654 40 60,269 80,063 (62,709) - -------------- -------------- -------------- -------------- -------------- -------------- -------------- (8,523) 4,291 (50,293) 25,383 750,675 477,638 263,241 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 2,932 4,312 361 25,423 810,944 557,701 200,532 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- $ 1,512 $ 4,066 $ (1,845) $ 26,005 $ 827,873 $ 558,361 $ 194,346 ============== ============== ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 43 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
JANUS ASPEN BALANCED INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 1,879 $ 44 $ 25 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 256 7 1 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 256 7 1 ---------------- ---------------- ---------------- Net investment income (loss)......................... 1,623 37 24 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 747 33 1 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 747 33 1 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 2,101 147 1 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,848 180 2 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 4,471 $ 217 $ 26 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 44
JANUS ASPEN AIM V.I. FORTY GOVERNMENT SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- $ 676 $ 152 $ -- $ -- $ 280 $ 239 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,060 383 -- 3 32 46 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,060 383 -- 3 32 46 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (384) (231) -- (3) 248 193 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 6,298 (26) -- (141) (8) 107 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 6,298 (26) -- (141) (8) 107 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 82,907 8,113 -- 165 (28) (117) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 89,205 8,087 -- 24 (36) (10) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 88,821 $ 7,856 $ -- $ 21 $ 212 $ 183 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 45 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AIM V.I. GLOBAL REAL ESTATE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 166,720 $ 25,329 $ 18,091 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 13,977 10,103 6,839 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 13,977 10,103 6,839 ---------------- ---------------- ---------------- Net investment income (loss)......................... 152,743 15,226 11,252 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 397,922 87,476 64,792 Realized gains (losses) on sale of investments....... 172,588 329,460 148,313 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 570,510 416,936 213,105 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (881,479) 328,141 7,005 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (310,969) 745,077 220,110 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (158,226) $ 760,303 $ 231,362 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 46
FRANKLIN TEMPLETON FRANKLIN MUTUAL FOREIGN SECURITIES DISCOVERY SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 176,501 $ 91,823 $ 71,641 $ 21,726 $ 5,569 $ 814 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,650 31,977 26,380 6,018 2,376 268 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,650 31,977 26,380 6,018 2,376 268 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 135,851 59,846 45,261 15,708 3,193 546 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 365,468 -- -- 17,873 19,692 -- 366,226 553,100 259,867 71,623 7,128 132 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 731,694 553,100 259,867 89,496 26,820 132 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 305,602 743,656 264,624 8,690 90,251 8,764 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,037,296 1,296,756 524,491 98,186 117,071 8,896 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,173,147 $ 1,356,602 $ 569,752 $ 113,894 $ 120,264 $ 9,442 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 47 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 334 169 135 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 334 169 135 ---------------- ---------------- ---------------- Net investment income (loss)......................... (334) (169) (135) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 13,926 2,596 255 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 13,926 2,596 255 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (1,759) 2,024 1,638 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 12,167 4,620 1,893 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 11,833 $ 4,451 $ 1,758 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 48
FIDELITY VIP FIDELITY VIP CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 24,439 $ 18,557 $ 1,816 $ 47,327 $ 16,581 $ 18,249 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 12,994 7,808 3,729 5,479 4,218 3,454 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 12,994 7,808 3,729 5,479 4,218 3,454 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 11,445 10,749 (1,913) 41,848 12,363 14,795 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 728,457 161,683 165 -- -- -- 133,390 69,614 170,001 14,373 3,099 38,662 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 861,847 231,297 170,166 14,373 3,099 38,662 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (453,602) (100,652) (22,158) 140,304 39,972 (29,733) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 408,245 130,645 148,008 154,677 43,071 8,929 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 419,690 $ 141,394 $ 146,095 $ 196,525 $ 55,434 $ 23,724 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 49 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
FIDELITY VIP INVESTMENT GRADE BOND INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 1,370 $ 1,506 $ 548 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 497 147 80 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 497 147 80 ---------------- ---------------- ---------------- Net investment income (loss)......................... 873 1,359 468 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 92 335 Realized gains (losses) on sale of investments....... 1,728 (928) (59) ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,728 (836) 276 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 6,849 767 (370) ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 8,577 (69) (94) ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 9,450 $ 1,290 $ 374 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 50
FIDELITY VIP AMERICAN FUNDS EQUITY-INCOME GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 21,939 $ 8,458 $ 187 $ 910,466 $ 727,425 $ 437,807 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,725 885 259 963,168 728,495 489,519 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,725 885 259 963,168 728,495 489,519 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 19,214 7,573 (72) (52,702) (1,070) (51,712) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 103,323 35,411 431 7,520,494 522,218 -- 17,259 3,265 (5,940) 893,765 399,390 115,149 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 120,582 38,676 (5,509) 8,414,259 921,608 115,149 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (137,717) 1,802 605 3,035,574 6,751,062 8,793,861 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (17,135) 40,478 (4,904) 11,449,833 7,672,670 8,909,010 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 2,079 $ 48,051 $ (4,976) $ 11,397,131 $ 7,671,600 $ 8,857,298 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 51 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN FUNDS GROWTH-INCOME INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 1,142,855 $ 918,542 $ 587,451 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 619,745 467,194 343,213 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 619,745 467,194 343,213 ---------------- ---------------- ---------------- Net investment income (loss)......................... 523,110 451,348 244,238 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,332,094 1,285,086 163,244 Realized gains (losses) on sale of investments....... 792,717 194,098 116,683 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 3,124,811 1,479,184 279,927 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (1,027,655) 5,509,333 1,688,136 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,097,156 6,988,517 1,968,063 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,620,266 $ 7,439,865 $ 2,212,301 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 52
AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION BOND INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- --------------------------------- 2007 2006 2005 2007 2006 (C) ---- ---- ---- ---- -------- $ 1,729,457 $ 162,359 $ 167,221 $ 185,659 $ 2,483 - ---------------- ---------------- ---------------- ---------------- ---------------- 498,593 306,582 151,245 15,059 1,499 -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- 498,593 306,582 151,245 15,059 1,499 - ---------------- ---------------- ---------------- ---------------- ---------------- 1,230,864 (144,223) 15,976 170,600 984 - ---------------- ---------------- ---------------- ---------------- ---------------- 4,252,758 1,814,506 -- -- -- 1,739,097 1,195,131 669,665 13,076 (909) - ---------------- ---------------- ---------------- ---------------- ---------------- 5,991,855 3,009,637 669,665 13,076 (909) - ---------------- ---------------- ---------------- ---------------- ---------------- 1,948,016 4,197,799 3,507,811 (143,419) 13,837 - ---------------- ---------------- ---------------- ---------------- ---------------- 7,939,871 7,207,436 4,177,476 (130,343) 12,928 - ---------------- ---------------- ---------------- ---------------- ---------------- $ 9,170,735 $ 7,063,213 $ 4,193,452 $ 40,257 $ 13,912 ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 53 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST T. ROWE PRICE MID-CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 32,087 $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 119,212 91,448 62,726 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 119,212 91,448 62,726 ---------------- ---------------- ---------------- Net investment income (loss)......................... (87,125) (91,448) (62,726) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 624,268 373,372 206,008 Realized gains (losses) on sale of investments....... 750,188 524,517 102,486 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,374,456 897,889 308,494 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 843,627 (173,792) 895,073 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,218,083 724,097 1,203,567 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,130,958 $ 632,649 $ 1,140,841 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 54
MIST MFS MIST PIMCO RESEARCH INTERNATIONAL TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 175,461 $ 107,793 $ 21,589 $ 1,037,985 $ 719,124 $ 13,007 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 103,179 56,798 27,070 249,561 217,239 180,282 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 103,179 56,798 27,070 249,561 217,239 180,282 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 72,282 50,995 (5,481) 788,424 501,885 (167,275) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,709,535 423,780 184,503 -- 10,617 154,127 462,480 81,019 80,066 88,836 74,726 52,949 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,172,015 504,799 264,569 88,836 85,343 207,076 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (879,168) 963,904 280,569 1,198,111 469,783 311,680 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,292,847 1,468,703 545,138 1,286,947 555,126 518,756 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,365,129 $ 1,519,698 $ 539,657 $ 2,075,371 $ 1,057,011 $ 351,481 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 55 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST RCM TECHNOLOGY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 78,918 61,070 50,588 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 78,918 61,070 50,588 ---------------- ---------------- ---------------- Net investment income (loss)......................... (78,918) (61,070) (50,588) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 297,201 -- 46,291 Realized gains (losses) on sale of investments....... 321,209 222,324 194,566 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 618,410 222,324 240,857 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 1,944,863 156,356 445,709 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,563,273 378,680 686,566 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,484,355 $ 317,610 $ 635,978 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 56
MIST LORD ABBETT MIST LAZARD BOND DEBENTURE MID-CAP INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 1,117,160 $ 1,191,085 $ 744,214 $ 32,279 $ 17,856 $ 10,617 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 166,476 139,802 121,860 44,498 29,336 22,544 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 166,476 139,802 121,860 44,498 29,336 22,544 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 950,684 1,051,283 622,354 (12,219) (11,480) (11,927) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 25,764 -- -- 442,382 392,270 320,635 179,522 93,973 255,890 40,395 20,740 96,120 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 205,286 93,973 255,890 482,777 413,010 416,755 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 39,883 324,579 (722,955) (720,263) 56,316 (198,731) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 245,169 418,552 (467,065) (237,486) 469,326 218,024 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,195,853 $ 1,469,835 $ 155,289 $ (249,705) $ 457,846 $ 206,097 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 57 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST MET/AIM SMALL CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 24,194 16,523 11,067 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 24,194 16,523 11,067 ---------------- ---------------- ---------------- Net investment income (loss)......................... (24,194) (16,523) (11,067) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 37,183 267,325 32,434 Realized gains (losses) on sale of investments....... 80,971 18,065 35,790 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 118,154 285,390 68,224 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 135,230 (33,826) 47,188 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 253,384 251,564 115,412 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 229,190 $ 235,041 $ 104,345 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 58
MIST HARRIS OAKMARK MIST LEGG MASON INTERNATIONAL PARTNERS AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 234,443 $ 350,324 $ 11,138 $ 17,148 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 229,276 127,018 55,708 67,790 65,378 52,753 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 229,276 127,018 55,708 67,790 65,378 52,753 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,167 223,306 (44,570) (50,642) (65,378) (52,753) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,011,612 874,510 116,064 718,994 438,536 7,588 713,857 125,443 131,605 207,519 177,119 89,582 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,725,469 999,953 247,669 926,513 615,655 97,170 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (3,512,929) 2,507,928 724,928 (747,047) (742,982) 756,884 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (787,460) 3,507,881 972,597 179,466 (127,327) 854,054 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (782,293) $ 3,731,187 $ 928,027 $ 128,824 $ (192,705) $ 801,301 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 59 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT GROWTH AND INCOME INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 59,988 $ 887 $ 447 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 28,949 22,648 16,835 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 28,949 22,648 16,835 ---------------- ---------------- ---------------- Net investment income (loss)......................... 31,039 (21,761) (16,388) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 259,517 3,901 40,557 Realized gains (losses) on sale of investments....... 36,864 958,803 25,218 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 296,381 962,704 65,775 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (147,617) (295,172) 110,292 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 148,764 667,532 176,067 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 179,803 $ 645,771 $ 159,679 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 60
MIST NEUBERGER BERMAN MIST VAN KAMPEN REAL ESTATE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 222,388 $ 128,299 $ -- $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 177,701 108,818 40,104 24 -- -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 177,701 108,818 40,104 24 -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 44,687 19,481 (40,104) (24) -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,785,543 609,936 8,770 -- -- -- 745,343 210,018 77,734 -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,530,886 819,954 86,504 -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (6,132,457) 3,020,558 660,111 (570) -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (3,601,571) 3,840,512 746,615 (570) -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (3,556,884) $ 3,859,993 $ 706,511 $ (594) $ -- $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 61 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MID-CAP VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 - ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 530 $ 203 $ 139 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 218 184 87 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 218 184 87 ---------------- ---------------- ---------------- Net investment income (loss)......................... 312 19 52 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 11,174 3,482 1,158 Realized gains (losses) on sale of investments....... (1,133) (69) 22 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 10,041 3,413 1,180 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (10,458) 880 85 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (417) 4,293 1,265 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (105) $ 4,312 $ 1,317 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 62
MIST THIRD AVENUE MIST OPPENHEIMER SMALL CAP VALUE CAPITAL APPRECIATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- -------- $ 2,794 $ 133 $ -- $ 618 $ 583 $ 77 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,456 482 51 4,920 1,966 275 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,456 482 51 4,920 1,966 275 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,338 (349) (51) (4,302) (1,383) (198) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 18,350 2,011 77 27,608 1,330 1,100 4,229 1,511 111 9,182 6,117 442 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 22,579 3,522 188 36,790 7,447 1,542 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (41,016) 21,745 1,856 18,908 12,744 2,715 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (18,437) 25,267 2,044 55,698 20,191 4,257 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (17,099) $ 24,918 $ 1,993 $ 51,396 $ 18,808 $ 4,059 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 63 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LEGG MASON MIST CYCLICAL VALUE EQUITY GROWTH ETF INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------------- 2007 2006 (C) 2007 2006 (C) ---- -------- ---- -------- INVESTMENT INCOME: Dividends.............................. $ 190 $ 7,771 $ -- $ 1,841 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges..... 54,485 28,159 3,337 279 Administrative charges................. -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total expenses....................... 54,485 28,159 3,337 279 ---------------- ---------------- ---------------- ---------------- Net investment income (loss)........... (54,295) (20,388) (3,337) 1,562 ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions............ 6,404 103,047 -- 385 Realized gains (losses) on sale of investments.......................... 31,337 (4,060) 10,329 1,385 ---------------- ---------------- ---------------- ---------------- Net realized gains (losses)........ 37,741 98,987 10,329 1,770 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments.......................... (371,535) 306,184 (2,639) 4,607 ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments.............. (333,794) 405,171 7,690 6,377 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations............ $ (388,089) $ 384,783 $ 4,353 $ 7,939 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 64
MIST CYCLICAL MIST PIMCO INFLATION MIST BLACKROCK MIST JANUS GROWTH AND INCOME ETF PROTECTED BOND LARGE-CAP CORE FORTY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - --------------------------------- --------------------------------- ------------------- ------------------- 2007 2006 (C) 2007 2006 (C) 2007 (D) 2007 (D) ---- -------- ---- -------- -------- -------- $ 1 $ 1,529 $ 5,472 $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,341 230 3,681 463 2,431,291 4,282 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,341 230 3,681 463 2,431,291 4,282 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (2,340) 1,299 1,791 (463) (2,431,291) (4,282) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 15 -- -- -- -- -- 9,148 1,197 4,018 1,472 181,462 23,570 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 9,163 1,197 4,018 1,472 181,462 23,570 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (2,024) 2,231 50,303 (1,429) 4,642,363 188,079 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 7,139 3,428 54,321 43 4,823,825 211,649 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 4,799 $ 4,727 $ 56,112 $ (420) $ 2,392,534 $ 207,367 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 65 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN CENTURY VP VISTA INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 93 81 47 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 93 81 47 ---------------- ---------------- ---------------- Net investment income (loss)......................... (93) (81) (47) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 52 -- Realized gains (losses) on sale of investments....... 1,950 66 6 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,950 118 6 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 4,790 1,653 961 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 6,740 1,771 967 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 6,647 $ 1,690 $ 920 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 66
DELAWARE VIP DREYFUS SMALL CAP VALUE MIDCAP STOCK INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 1,797 $ 87 $ 181 $ 665 $ 189 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,812 1,667 539 941 337 -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,812 1,667 539 941 337 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (2,015) (1,580) (358) (276) (148) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 53,893 23,651 8,183 25,997 17,011 -- 765 3,801 45 (4,230) (525) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 54,658 27,452 8,228 21,767 16,486 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (146,882) 21,618 2,540 (17,400) (13,109) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (92,224) 49,070 10,768 4,367 3,377 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (94,239) $ 47,490 $ 10,410 $ 4,091 $ 3,229 $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 67 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
DREYFUS EMERGING LEADERS INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 21 70 47 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 21 70 47 ---------------- ---------------- ---------------- Net investment income (loss)......................... (21) (70) (47) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 5,189 1,695 562 Realized gains (losses) on sale of investments....... (6,198) (33) 251 ---------------- ---------------- ---------------- Net realized gains (losses)...................... (1,009) 1,662 813 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 1,014 (791) 711 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 5 871 1,524 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (16) $ 801 $ 1,477 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 68
DREYFUS GOLDMAN SACHS INTERNATIONAL VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 11,153 $ 2,040 $ -- $ 10,129 $ 2,401 $ 267 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,245 1,650 850 3,838 502 222 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,245 1,650 850 3,838 502 222 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 7,908 390 (850) 6,291 1,899 45 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 99,784 12,788 3,710 187,441 26,443 4,473 23,384 2,803 (8,588) 15,940 1,291 (3,479) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 123,168 15,591 (4,878) 203,381 27,734 994 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (101,858) 67,169 13,060 (272,066) (2,200) 223 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 21,310 82,760 8,182 (68,685) 25,534 1,217 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 29,218 $ 83,150 $ 7,332 $ (62,394) $ 27,433 $ 1,262 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 69 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 579 $ 576 $ 114 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 510 319 20 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 510 319 20 ---------------- ---------------- ---------------- Net investment income (loss)......................... 69 257 94 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 15,009 6,284 4,217 Realized gains (losses) on sale of investments....... (448) (124) 1 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 14,561 6,160 4,218 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (37,975) 1,891 (5,644) ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (23,414) 8,051 (1,426) ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (23,345) $ 8,308 $ (1,332) ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 70
MFS MFS HIGH INCOME GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 4,038 $ 4,418 $ 3,911 $ 796 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 175 372 279 184 38 -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 175 372 279 184 38 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,863 4,046 3,632 612 (38) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 2,587 -- -- 1,517 1,254 128 2,926 100 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,517 1,254 128 5,513 100 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (3,019) 2,298 (2,862) (2,915) 2,944 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (1,502) 3,552 (2,734) 2,598 3,044 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 2,361 $ 7,598 $ 898 $ 3,210 $ 3,006 $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 71 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MFS NEW DISCOVERY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 13 -- -- Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 13 -- -- ---------------- ---------------- ---------------- Net investment income (loss)......................... (13) -- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 243 -- -- Realized gains (losses) on sale of investments....... (4) -- -- ---------------- ---------------- ---------------- Net realized gains (losses)...................... 239 -- -- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (349) -- -- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (110) -- -- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (123) $ -- $ -- ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 72
MFS VAN KAMPEN VALUE GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ -- $ -- $ -- $ 863 $ 621 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 78 -- -- 68 54 12 -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 78 -- -- 68 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (78) -- -- 795 567 (12) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 2,376 -- -- 38 (329) (1) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,376 -- -- 38 (329) (1) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (1,846) -- -- 35 121 124 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 530 -- -- 73 (208) 123 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 452 $ -- $ -- $ 868 $ 359 $ 111 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 73 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
WELLS FARGO VT TOTAL RETURN BOND INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 4,429 $ 1,616 $ 263 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 393 138 15 Administrative charges............................... -- ---------------- ---------------- ---------------- Total expenses..................................... 393 ---------------- ---------------- ---------------- Net investment income (loss)......................... 4,036 1,478 248 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 482 (203) 238 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 482 (203) 238 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 726 969 16 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 1,208 766 254 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 5,244 $ 2,244 $ 502 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 74
WELLS FARGO VT WELLS FARGO VT MONEY MARKET ASSET ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- $ 56,709 $ 17,272 $ -- $ -- $ 112 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,004 1,399 -- 8 13 -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,004 8 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 51,705 15,873 -- (8) 99 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- -- -- 729 293 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 729 293 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- (432) 432 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 297 725 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 51,705 $ 15,873 $ -- $ 289 $ 824 $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 75 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
WELLS FARGO VT LARGE COMPANY GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ 15 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 138 243 31 Administrative charges............................... -- ---------------- ---------------- ---------------- Total expenses..................................... 138 ---------------- ---------------- ---------------- Net investment income (loss)......................... (138) (243) (16) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 22,636 5,393 (5) ---------------- ---------------- ---------------- Net realized gains (losses)...................... 22,636 5,393 (5) ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (10,940) 10,126 797 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 11,696 15,519 792 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 11,558 $ 15,276 $ 776 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 76
WELLS FARGO VT EQUITY INCOME INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- $ -- $ 130 $ 113 ---------------- ---------------- ---------------- 3 34 31 -- ---------------- ---------------- ---------------- 3 ---------------- ---------------- ---------------- (3) 96 82 ---------------- ---------------- ---------------- -- 19 -- 1,600 85 25 ---------------- ---------------- ---------------- 1,600 104 25 ---------------- ---------------- ---------------- (1,507) 1,202 301 ---------------- ---------------- ---------------- 93 1,306 326 ---------------- ---------------- ---------------- $ 90 $ 1,402 $ 408 ================ ================ ================
The accompanying notes are an integral part of these financial statements. 77 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MSF BLACKROCK LARGE CAP DIVERSIFIED INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ----------------------------------------- 2007 (A) 2006 2005 2007 2006 2005 -------- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)............... $ 5,532,818 $ 1,748,411 $ 905,711 $ 5,593,077 $ 5,093,370 $ 2,270,420 Net realized gains (losses)............. 34,926,873 1,910,880 834,521 3,011,483 2,697,730 655,141 Change in unrealized gains (losses) on investments.......... (18,412,208) 47,641,145 8,704,485 7,614,036 21,697,213 3,822,631 -------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations......... 22,047,483 51,300,436 10,444,717 16,218,596 29,488,313 6,748,192 -------------- ------------- ------------- ------------- ------------- ------------- POLICY TRANSACTIONS: Premium payments received from policy owners............... 15,638,404 51,976,132 57,155,216 40,003,652 43,210,333 48,752,996 Net transfers (including fixed account)............. (454,139,374) (12,663,855) (10,123,918) (6,583,051) (14,585,173) (4,525,462) Policy charges......... (9,520,648) (29,312,981) (30,084,463) (24,846,715) (25,567,832) (26,339,933) Transfers for policy benefits and terminations......... (9,922,680) (26,960,197) (25,650,785) (21,979,765) (20,863,345) (20,062,099) -------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from policy transactions......... (457,944,298) (16,960,901) (8,703,950) (13,405,879) (17,806,017) (2,174,498) -------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets........ (435,896,815) 34,339,535 1,740,767 2,812,717 11,682,296 4,573,694 NET ASSETS: Beginning of period.... 435,896,815 401,557,280 399,816,513 331,432,719 319,750,423 315,176,729 -------------- ------------- ------------- ------------- ------------- ------------- End of period.......... $ -- $ 435,896,815 $ 401,557,280 $ 334,245,436 $ 331,432,719 $ 319,750,423 ============== ============= ============= ============= ============= =============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 78
MSF BLACKROCK MSF METLIFE MSF FI AGGRESSIVE GROWTH STOCK INDEX INTERNATIONAL STOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------------- ----------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (2,172,462) $ (1,968,385) $ (1,824,382) $ 1,607,854 $ 7,509,405 $ 4,330,436 $ 147,518 $ 350,554 $ (109,934) 1,382,763 (1,521,325) (2,231,885) 22,330,416 27,994,237 3,573,660 5,161,819 832,502 237,027 44,452,957 16,167,405 23,892,825 7,171,409 53,741,400 14,173,789 1,044,733 7,805,567 8,151,109 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ 43,663,258 12,677,695 19,836,558 31,109,679 89,245,042 22,077,885 6,354,070 8,988,623 8,278,202 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ 24,166,939 26,442,113 29,002,147 108,420,954 97,155,710 113,017,163 7,358,066 7,377,673 7,207,636 (6,084,428) (4,120,591) (6,037,385) (8,388,405) (16,861,291) (5,222,960) 338,266 2,367,896 (102,719) (14,515,068) (14,565,748) (14,759,838) (45,320,834) (44,010,383) (42,744,650) (4,047,380) (3,898,913) (3,489,856) (15,886,481) (13,935,844) (13,570,874) (45,317,699) (23,533,626) (29,733,875) (4,807,457) (4,181,849) (3,112,473) - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ (12,319,038) (6,180,070) (5,365,950) 9,394,016 12,750,410 35,315,678 (1,158,505) 1,664,807 502,588 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ 31,344,220 6,497,625 14,470,608 40,503,695 101,995,452 57,393,563 5,195,565 10,653,430 8,780,790 228,717,595 222,219,970 207,749,362 707,564,793 605,569,341 548,175,778 67,509,144 56,855,714 48,074,924 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ $ 260,061,815 $ 228,717,595 $ 222,219,970 $ 748,068,488 $ 707,564,793 $ 605,569,341 $ 72,704,709 $ 67,509,144 $ 56,855,714 ============= ============= ============= ============= ============= ============= ============ ============ ============
The accompanying notes are an integral part of these financial statements. 79 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF FI MSF T. ROWE PRICE MID CAP OPPORTUNITIES SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..................... $ (2,156,929) $ (2,228,656) $ (2,011,441) $ (695,384) $ (661,143) $ (595,465) Net realized gains (losses)................... (3,610,711) (4,482,428) (1,015,121) 1,678,195 842,686 37,997 Change in unrealized gains (losses) on investments................ 25,889,645 33,489,573 17,191,699 6,321,798 2,138,730 7,936,747 ------------- ------------- ------------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations.......... 20,122,005 26,778,489 14,165,137 7,304,609 2,320,273 7,379,279 ------------- ------------- ------------- ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners......... 35,873,638 38,876,326 43,356,457 9,360,936 10,038,924 11,374,021 Net transfers (including fixed account)............. (7,434,397) (8,221,054) (7,897,866) (3,254,756) (2,086,001) (1,830,915) Policy charges............... (17,322,434) (17,360,725) (17,604,754) (4,451,023) (4,682,277) (4,751,769) Transfers for policy benefits and terminations........... (19,624,632) (16,355,336) (13,599,210) (5,026,325) (4,410,219) (3,572,604) ------------- ------------- ------------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions........ (8,507,825) (3,060,789) 4,254,627 (3,371,168) (1,139,573) 1,218,733 ------------- ------------- ------------- ------------ ------------ ------------ Net increase (decrease) in net assets................. 11,614,180 23,717,700 18,419,764 3,933,441 1,180,700 8,598,012 NET ASSETS: Beginning of period.......... 271,463,672 247,745,972 229,326,208 81,812,746 80,632,046 72,034,034 ------------- ------------- ------------- ------------ ------------ ------------ End of period................ $ 283,077,852 $ 271,463,672 $ 247,745,972 $ 85,746,187 $ 81,812,746 $ 80,632,046 ============= ============= ============= ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 80
MSF OPPENHEIMER MSF HARRIS OAKMARK MSF NEUBERGER BERMAN GLOBAL EQUITY LARGE CAP VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 151,331 $ 753,065 $ (89,544) $ (28,106) $ (31,123) $ (61,565) $ (261,148) $ (262,264) $ (310,757) 1,460,274 1,433,066 270,279 2,998,773 835,096 398,007 3,913,488 7,045,174 5,078,424 1,125,527 4,443,736 5,277,659 (5,878,800) 8,574,081 (1,475,339) (1,796,392) 382,304 1,374,494 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 2,737,132 6,629,867 5,458,394 (2,908,133) 9,378,054 (1,138,897) 1,855,948 7,165,214 6,142,161 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 5,517,581 5,350,913 5,253,047 10,581,263 11,305,507 12,688,012 13,273,938 13,072,820 11,535,409 265,706 346,998 942,030 (1,429,602) (3,330,328) (1,524,510) (503,917) 3,378,877 5,790,659 (2,601,520) (2,495,915) (2,293,721) (4,317,588) (4,238,848) (4,202,871) (5,570,345) (5,310,344) (4,534,051) (2,790,725) (2,492,124) (1,937,431) (4,292,114) (3,266,980) (2,509,452) (4,785,600) (3,723,613) (2,997,044) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 391,042 709,872 1,963,925 541,959 469,351 4,451,179 2,414,076 7,417,740 9,794,973 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 3,128,174 7,339,739 7,422,319 (2,366,174) 9,847,405 3,312,282 4,270,024 14,582,954 15,937,134 48,944,535 41,604,796 34,182,477 64,292,839 54,445,434 51,133,152 77,735,349 63,152,395 47,215,261 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 52,072,709 $ 48,944,535 $ 41,604,796 $ 61,926,665 $ 64,292,839 $ 54,445,434 $ 82,005,373 $ 77,735,349 $ 63,152,395 ============ ============ ============ ============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 81 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF T. ROWE PRICE MSF LEHMAN BROTHERS LARGE CAP GROWTH AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ (199,231) $ (223,162) $ (106,612) $ 3,682,982 $ 3,031,227 $ 2,261,399 Net realized gains (losses)... 2,082,657 507,318 187,894 192,840 (57,852) 113,726 Change in unrealized gains (losses) on investments..... 2,367,516 5,044,250 2,209,286 2,133,669 (71,436) (1,403,001) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations................ 4,250,942 5,328,406 2,290,568 6,009,491 2,901,939 972,124 ------------ ------------ ------------ ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners.......... 7,257,794 7,320,586 7,692,933 17,877,600 17,471,563 16,818,608 Net transfers (including fixed account).................... (2,228,506) 264,173 (171,639) 3,276,682 387,397 4,909,390 Policy charges................ (3,216,395) (3,041,779) (2,932,312) (7,537,250) (6,943,571) (6,449,298) Transfers for policy benefits and terminations............ (2,568,167) (2,505,832) (1,892,610) (5,115,587) (3,947,414) (3,413,219) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions................ (755,274) 2,037,148 2,696,372 8,501,445 6,967,975 11,865,481 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets...................... 3,495,668 7,365,554 4,986,940 14,510,936 9,869,914 12,837,605 NET ASSETS: Beginning of period........... 49,315,573 41,950,019 36,963,079 90,417,327 80,547,413 67,709,808 ------------ ------------ ------------ ------------ ------------ ------------ End of period................. $ 52,811,241 $ 49,315,573 $ 41,950,019 $104,928,263 $ 90,417,327 $ 80,547,413 ============ ============ ============ ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 82
MSF MORGAN STANLEY MSF MSF EAFE INDEX RUSSELL 2000 INDEX JENNISON GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- -------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- ---- ---- ---- -------- $ 725,557 $ 423,680 $ 285,699 $ 50,303 $ (4,913) $ (26,606) $ (64,681) $ (113,119) $ (67,101) 2,259,334 984,685 590,734 5,503,433 2,636,194 2,249,464 743,825 127,931 36,398 2,980,876 9,577,488 3,753,078 (6,890,836) 5,025,107 (613,275) 832,560 269,709 2,206,440 - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 5,965,767 10,985,853 4,629,511 (1,337,100) 7,656,388 1,609,583 1,511,704 284,521 2,175,737 - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 11,289,849 9,956,199 8,982,849 8,728,900 9,061,617 8,761,720 2,217,875 2,455,072 1,741,473 4,399,093 1,802,577 1,409,687 182,391 1,828,304 216,481 (414,141) (87,387) 10,052,349 (4,672,031) (3,911,321) (3,289,298) (3,451,476) (3,270,510) (3,007,292) (905,170) (914,319) (846,907) (3,748,512) (2,889,103) (1,826,769) (3,167,104) (2,623,656) (2,029,407) (767,811) (722,873) (38,407) - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 7,268,399 4,958,352 5,276,469 2,292,711 4,995,755 3,941,502 130,753 730,493 10,908,508 - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 13,234,166 15,944,205 9,905,980 955,611 12,652,143 5,551,085 1,642,457 1,015,014 13,084,245 58,401,764 42,457,559 32,551,579 55,288,989 42,636,846 37,085,761 14,099,259 13,084,245 -- - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- $ 71,635,930 $ 58,401,764 $ 42,457,559 $ 56,244,600 $ 55,288,989 $ 42,636,846 $15,741,716 $14,099,259 $13,084,245 ============ ============ ============ ============ ============ ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 83 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MSF METLIFE STRATEGIC VALUE MID CAP STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ (601,992) $ (529,917) $ (714,689) $ (53,618) $ 186,015 $ (62,688) Net realized gains (losses)... 12,982,944 18,850,246 6,137,592 3,703,948 4,163,714 2,719,370 Change in unrealized gains (losses) on investments..... (16,875,056) (4,073,024) (2,502,234) 158,945 201,865 1,900,535 ------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations................ (4,494,104) 14,247,305 2,920,669 3,809,275 4,551,594 4,557,217 ------------- ------------ ------------ ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners.......... 15,755,463 17,326,197 18,598,115 10,058,472 9,822,002 9,146,889 Net transfers (including fixed account).................... (2,527,871) (3,858,623) (376,162) 1,446,934 1,873,265 1,259,495 Policy charges................ (6,814,895) (6,990,567) (6,932,168) (4,088,802) (3,798,648) (3,403,753) Transfers for policy benefits and terminations............ (6,624,745) (5,432,706) (4,429,182) (3,356,812) (2,881,354) (1,921,955) ------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions................ (212,048) 1,044,301 6,860,603 4,059,792 5,015,265 5,080,676 ------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets...................... (4,706,152) 15,291,606 9,781,272 7,869,067 9,566,859 9,637,893 NET ASSETS: Beginning of period........... 105,414,517 90,122,911 80,341,639 56,090,136 46,523,277 36,885,384 ------------- ------------ ------------ ------------ ------------ ------------ End of period................. $ 100,708,365 $105,414,517 $ 90,122,911 $ 63,959,203 $ 56,090,136 $ 46,523,277 ============= ============ ============ ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 84
MSF FRANKLIN TEMPLETON MSF BLACKROCK MSF SMALL CAP GROWTH LARGE CAP VALUE DAVIS VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (60,634) $ (50,288) $ (39,601) $ 13,846 $ 22,314 $ 2,262 $ (49,271) $ 19,378 $ (46,637) 725,945 422,517 282,478 761,534 510,491 121,570 581,875 2,307,728 226,016 (436,173) 106,882 (56,267) (536,165) 656,059 110,740 1,282,046 3,652,646 3,304,528 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 229,138 479,111 188,610 239,215 1,188,864 234,572 1,814,650 5,979,752 3,483,907 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 1,295,669 1,209,783 1,166,638 2,853,366 1,723,914 1,318,222 10,865,750 9,665,122 10,136,134 (34,464) 321,633 (104,904) 1,496,583 2,275,636 925,771 3,012,023 (4,035,297) 4,047,247 (461,653) (432,712) (397,275) (997,837) (637,550) (449,586) (4,001,496) (3,767,671) (3,216,813) (356,935) (317,572) (272,450) (713,538) (290,749) (212,728) (3,000,396) (1,975,307) (1,831,698) - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 442,617 781,132 392,009 2,638,574 3,071,251 1,581,679 6,875,881 (113,153) 9,134,870 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 671,755 1,260,243 580,619 2,877,789 4,260,115 1,816,251 8,690,531 5,866,599 12,618,777 6,368,294 5,108,051 4,527,432 9,397,259 5,137,144 3,320,893 49,859,713 43,993,114 31,374,337 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ $ 7,040,049 $ 6,368,294 $ 5,108,051 $12,275,048 $ 9,397,259 $ 5,137,144 $ 58,550,244 $ 49,859,713 $ 43,993,114 =========== =========== =========== =========== =========== =========== ============ ============ ============
The accompanying notes are an integral part of these financial statements. 85 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF LOOMIS SAYLES MSF BLACKROCK SMALL CAP LEGACY LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (113,405) $ (90,220) $ (60,646) $ (19,922) $ (26,434) $ (11,264) Net realized gains (losses)...... 1,801,940 1,056,941 157,208 64,255 954,600 84,949 Change in unrealized gains (losses) on investments........ (305,465) 425,449 365,753 437,029 (1,121,566) 498,307 ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in net assets resulting from operations................... 1,383,070 1,392,170 462,315 481,362 (193,400) 571,992 ----------- ----------- ----------- ----------- ------------ ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 2,609,684 2,123,062 1,717,028 860,589 579,414 3,105,072 Net transfers (including fixed account)....................... 1,184,072 2,032,759 500,932 621,856 (7,570,628) 801,381 Policy charges................... (976,939) (791,339) (595,826) (303,215) (483,151) (694,288) Transfers for policy benefits and terminations................... (762,075) (537,409) (376,507) (105,375) (171,948) (132,635) ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in net assets resulting from policy transactions................... 2,054,742 2,827,073 1,245,627 1,073,855 (7,646,313) 3,079,530 ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in net assets......................... 3,437,812 4,219,243 1,707,942 1,555,217 (7,839,713) 3,651,522 NET ASSETS: Beginning of period.............. 12,333,660 8,114,417 6,406,475 2,269,333 10,109,046 6,457,524 ----------- ----------- ----------- ----------- ------------ ----------- End of period.................... $15,771,472 $12,333,660 $ 8,114,417 $ 3,824,550 $ 2,269,333 $10,109,046 =========== =========== =========== =========== ============ ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 86
MSF BLACKROCK MSF FI MSF HARRIS OAKMARK BOND INCOME VALUE LEADERS FOCUSED VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- ----------------------------------- --------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 2,245,950 $ 4,656,087 $ 2,894,879 $ 3,233 $ 6,148 $ 3,733 $ (184,504) $ (289,521) $ (352,004) 86,411 (168,463) 1,142,272 675,004 177,507 80,493 8,147,137 5,738,053 1,079,635 2,574,419 (1,188,505) (2,577,646) (503,196) 304,366 177,601 (12,430,441) 467,020 3,071,366 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ 4,906,780 3,299,119 1,459,505 175,041 488,021 261,827 (4,467,808) 5,915,552 3,798,997 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ 12,386,608 13,105,607 17,949,210 1,529,707 1,367,655 766,467 10,174,883 10,865,790 10,775,287 (1,778,536) (6,953,279) (1,273,740) 104,032 1,301,345 1,396,629 (2,660,752) (1,374,110) 2,872,307 (6,382,704) (6,810,300) (7,133,185) (556,747) (460,789) (245,354) (4,002,257) (4,090,493) (3,827,784) (9,006,967) (5,023,099) (5,482,744) (288,167) (180,208) (107,252) (3,090,850) (2,391,996) (2,211,779) - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ (4,781,599) (5,681,071) 4,059,541 788,825 2,028,003 1,810,490 421,024 3,009,191 7,608,031 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ 125,181 (2,381,952) 5,519,046 963,866 2,516,024 2,072,317 (4,046,784) 8,924,743 11,407,028 92,311,177 94,693,129 89,174,083 5,778,898 3,262,874 1,190,557 58,176,504 49,251,761 37,844,733 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ $ 92,436,358 $ 92,311,177 $ 94,693,129 $ 6,742,764 $ 5,778,898 $ 3,262,874 $ 54,129,720 $ 58,176,504 $ 49,251,761 ============ ============ ============ =========== =========== =========== ============= ============ ============
The accompanying notes are an integral part of these financial statements. 87 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF WESTERN ASSET MANAGEMENT MSF WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES U.S. GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)......................... $ 315,401 $ 566,836 $ 232,123 $ 274,009 $ 316,238 $ 54,588 Net realized gains (losses)...... 44,985 153,548 253,976 988 (10,510) 192,618 Change in unrealized gains (losses) on investments........ 187,688 (101,864) (261,648) 246,140 127,750 (152,454) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations................... 548,074 618,520 224,451 521,137 433,478 94,752 ------------ ------------ ------------ ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners............. 3,898,365 4,045,076 3,710,450 3,196,989 3,383,683 3,487,915 Net transfers (including fixed account)....................... 466,692 608,234 1,981,025 65,805 68,005 764,728 Policy charges................... (1,437,856) (1,458,611) (1,301,209) (1,262,963) (1,263,500) (1,227,554) Transfers for policy benefits and terminations............... (905,402) (719,792) (648,558) (773,977) (585,585) (583,670) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions................... 2,021,799 2,474,907 3,741,708 1,225,854 1,602,603 2,441,419 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets......................... 2,569,873 3,093,427 3,966,159 1,746,991 2,036,081 2,536,171 NET ASSETS: Beginning of period.............. 15,802,133 12,708,706 8,742,547 14,050,390 12,014,309 9,478,138 ------------ ------------ ------------ ------------ ------------ ------------ End of period.................... $ 18,372,006 $ 15,802,133 $ 12,708,706 $ 15,797,381 $ 14,050,390 $ 12,014,309 ============ ============ ============ ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 88
MSF BLACKROCK MSF MFS MSF METLIFE MONEY MARKET TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- ---- ---- ---- -------- $ 2,722,729 $ 1,597,189 $ 628,330 $ 53,260 $ 66,316 $ 25,741 $ (5,884) $ 7,154 $ 24 -- -- -- 167,623 64,610 18,142 24,396 2,237 370 -- -- -- (104,370) 205,638 (3,131) 12,074 19,393 554 - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 2,722,729 1,597,189 628,330 116,513 336,564 40,752 30,586 28,784 948 - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 5,145,397 5,160,393 3,943,073 1,181,286 1,268,749 657,976 157,209 60,249 11,888 (71,102) 28,142,059 (3,511,345) 1,133,382 560,665 970,499 218,409 382,425 113,429 (3,180,663) (1,921,201) (1,364,379) (457,695) (455,108) (250,392) (89,575) (39,164) (4,001) (547,125) (1,677,592) (829,829) (205,897) (86,159) (28,552) (24,846) (58,267) (4,039) - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 1,346,507 29,703,659 (1,762,480) 1,651,076 1,288,147 1,349,531 261,197 345,243 117,277 - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 4,069,236 31,300,848 (1,134,150) 1,767,589 1,624,711 1,390,283 291,783 374,027 118,225 59,328,821 28,027,973 29,162,123 3,781,921 2,157,210 766,927 492,252 118,225 -- - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- $ 63,398,057 $ 59,328,821 $ 28,027,973 $ 5,549,510 $ 3,781,921 $ 2,157,210 $ 784,035 $ 492,252 $ 118,225 ============ ============ ============ =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 89 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 (B) 2007 2006 2005 (B) ---- ---- -------- ---- ---- -------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (21,161) $ 18,671 $ 240 $ (97,780) $ 30,400 $ 2,200 Net realized gains (losses)...... 29,950 32,936 1,752 188,933 155,125 3,689 Change in unrealized gains (losses) on investments........ 79,599 73,219 9,258 262,197 474,841 25,822 ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 88,388 124,826 11,250 353,350 660,366 31,711 ----------- ----------- ----------- ------------ ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 793,665 351,209 49,524 4,870,486 2,581,867 246,532 Net transfers (including fixed account)....................... 772,317 1,104,702 566,129 6,540,248 5,712,018 1,278,986 Policy charges................... (367,535) (201,780) (34,259) (1,921,467) (821,648) (93,673) Transfers for policy benefits and terminations................... (193,487) (73,416) (14,133) (852,946) (175,764) (14,121) ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 1,004,960 1,180,715 567,261 8,636,321 7,296,473 1,417,724 ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets......................... 1,093,348 1,305,541 578,511 8,989,671 7,956,839 1,449,435 NET ASSETS: Beginning of period.............. 1,884,052 578,511 -- 9,406,274 1,449,435 -- ----------- ----------- ----------- ------------ ----------- ----------- End of period.................... $ 2,977,400 $ 1,884,052 $ 578,511 $ 18,395,945 $ 9,406,274 $ 1,449,435 =========== =========== =========== ============ =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 90
MSF METLIFE MSF METLIFE MSF FI MSF CAPITAL GUARDIAN MODERATE TO AGGRESSIVE ALLOCATION AGGRESSIVE ALLOCATION LARGE CAP U.S. EQUITY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------------------------- ---------------------------------- ---------------------- ----------------------- 2007 2006 2005 (B) 2007 2006 2005 (B) 2007 2006 (C) 2007 2006 (C) ---- ---- -------- ---- ---- -------- ---- -------- ---- -------- $ (170,147) $ 12,275 $ 2,925 $ (40,153) $ (3,889) $ 461 $ (1,420) $ (246) $ (2,206) $ 582 122,439 211,255 4,962 101,806 (1,267) 3,136 11,455 21 50,654 40 371,705 870,757 64,564 (95,922) 225,674 10,725 (8,523) 4,291 (50,293) 25,383 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 323,997 1,094,287 72,451 (34,269) 220,518 14,322 1,512 4,066 (1,845) 26,005 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 11,490,456 3,660,525 350,076 2,720,243 769,602 77,484 51,455 13,027 78,786 48,952 12,371,719 8,417,200 2,046,335 3,811,580 1,804,040 381,966 217,615 64,888 60,667 245,401 (3,994,239) (1,282,528) (107,687) (899,415) (265,591) (23,230) (22,401) (4,862) (6,117) (2,972) (1,174,499) (320,422) (11,772) (341,600) (46,683) 2,131 (5,637) (15,434) 197 67,457 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 18,693,437 10,474,775 2,276,952 5,290,808 2,261,368 438,351 241,032 57,619 133,533 358,838 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 19,017,434 11,569,062 2,349,403 5,256,539 2,481,886 452,673 242,544 61,685 131,688 384,843 13,918,465 2,349,403 -- 2,934,559 452,673 -- 61,685 -- 384,843 -- - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- $ 32,935,899 $ 13,918,465 $ 2,349,403 $ 8,191,098 $ 2,934,559 $ 452,673 $ 304,229 $ 61,685 $ 516,531 $ 384,843 ============ ============ =========== =========== =========== ========== ========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 91 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
JANUS ASPEN JANUS ASPEN LARGE CAP GROWTH BALANCED INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 16,929 $ 660 $ (6,186) $ 1,623 $ 37 $ 24 Net realized gains (losses)...... 60,269 80,063 (62,709) 747 33 -- Change in unrealized gains (losses) on investments........ 750,675 477,638 263,241 2,101 147 4 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 827,873 558,361 194,346 4,471 217 28 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 704,439 729,644 743,854 34,534 234 234 Net transfers (including fixed account)....................... 57,292 (237,146) (38,037) 41,177 -- 1,745 Policy charges................... (191,669) (178,843) (174,801) (3,275) (328) (63) Transfers for policy benefits and terminations................... 20,341 (4,481) (67,923) 817 -- 7 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 590,403 309,174 463,093 73,253 (94) 1,923 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 1,418,276 867,535 657,439 77,724 123 1,951 NET ASSETS: Beginning of period.............. 5,801,609 4,934,074 4,276,635 2,311 2,188 237 ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 7,219,885 $ 5,801,609 $ 4,934,074 $ 80,035 $ 2,311 $ 2,188 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 92
JANUS ASPEN AIM V.I. AIM V.I. FORTY GOVERNMENT SECURITIES GLOBAL REAL ESTATE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 (A) 2006 2005 2007 2006 2005 ---- ---- ---- -------- ---- ---- ---- ---- ---- $ (384) $ (231) $ -- $ (3) $ 248 $ 193 $ 152,743 $ 15,226 $ 11,252 6,298 (26) -- (141) (8) 107 570,510 416,936 213,105 82,907 8,113 -- 165 (28) (117) (881,479) 328,141 7,005 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 88,821 7,856 -- 21 212 183 (158,226) 760,303 231,362 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 216,674 -- -- -- -- 4,439 118,444 86,308 128,022 107,905 107,014 -- -- -- 6,772 155,185 198,270 149,537 (5,310) (3,469) -- (68) (818) (1,010) (75,484) (59,455) (45,421) (525) (39) -- (7,610) 8 (6,439) (231,266) 29,368 (23,737) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 318,744 103,506 -- (7,678) (810) 3,762 (33,121) 254,491 208,401 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 407,565 111,362 -- (7,657) (598) 3,945 (191,347) 1,014,794 439,763 111,362 -- -- 7,657 8,255 4,310 2,762,613 1,747,819 1,308,056 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 518,927 $ 111,362 $ -- $ -- $ 7,657 $ 8,255 $ 2,571,266 $ 2,762,613 $ 1,747,819 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 93 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
FRANKLIN TEMPLETON FRANKLIN MUTUAL FOREIGN SECURITIES DISCOVERY SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 135,851 $ 59,846 $ 45,261 $ 15,708 $ 3,193 $ 546 Net realized gains (losses)...... 731,694 553,100 259,867 89,496 26,820 132 Change in unrealized gains (losses) on investments........ 305,602 743,656 264,624 8,690 90,251 8,764 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 1,173,147 1,356,602 569,752 113,894 120,264 9,442 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 1,046,007 763,068 695,341 388,710 81,841 3,124 Net transfers (including fixed account)....................... (11,614) (517,563) 355,482 341,064 596,967 110,323 Policy charges................... (294,839) (285,443) (268,301) (29,330) (17,388) (1,434) Transfers for policy benefits and terminations................... (115,394) (188,427) (213,877) (7,385) (4,239) 209 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 624,160 (228,365) 568,645 693,059 657,181 112,222 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 1,797,307 1,128,237 1,138,397 806,953 777,445 121,664 NET ASSETS: Beginning of period.............. 7,566,317 6,438,080 5,299,683 899,109 121,664 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 9,363,624 $ 7,566,317 $ 6,438,080 $ 1,706,062 $ 899,109 $ 121,664 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 94
ALLIANCEBERNSTEIN FIDELITY VIP FIDELITY VIP GLOBAL TECHNOLOGY CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (334) $ (169) $ (135) $ 11,445 $ 10,749 $ (1,913) $ 41,848 $ 12,363 $ 14,795 13,926 2,596 255 861,847 231,297 170,166 14,373 3,099 38,662 (1,759) 2,024 1,638 (453,602) (100,652) (22,158) 140,304 39,972 (29,733) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 11,833 4,451 1,758 419,690 141,394 146,095 196,525 55,434 23,724 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,465 17,259 6,941 608,723 311,963 159,311 166,685 206,112 202,315 (9,577) (346) 13,706 115,952 978,906 112,842 19,124 26,719 (157,813) (2,740) (1,156) (657) (106,944) (71,195) (35,260) (37,503) (32,847) (32,503) (17,975) 575 (76) (226,422) (190,863) (280,766) (43,517) (5,743) (31,699) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (21,827) 16,332 19,914 391,309 1,028,811 (43,873) 104,789 194,241 (19,700) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (9,994) 20,783 21,672 810,999 1,170,205 102,222 301,314 249,675 4,024 63,091 42,308 20,636 2,091,319 921,114 818,892 958,076 708,401 704,377 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 53,097 $ 63,091 $ 42,308 $ 2,902,318 $ 2,091,319 $ 921,114 $ 1,259,390 $ 958,076 $ 708,401 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 95 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
FIDELITY VIP FIDELITY VIP INVESTMENT GRADE BOND EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 873 $ 1,359 $ 468 $ 19,214 $ 7,573 $ (72) Net realized gains (losses)...... 1,728 (836) 276 120,582 38,676 (5,509) Change in unrealized gains (losses) on investments........ 6,849 767 (370) (137,717) 1,802 605 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 9,450 1,290 374 2,079 48,051 (4,976) ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 13,197 6,033 8,457 252,674 100,155 5,510 Net transfers (including fixed account)....................... 806,070 (2,639) 12,839 593,876 268,439 158,037 Policy charges................... (4,182) (1,496) (1,325) (17,750) (8,287) (3,758) Transfers for policy benefits and terminations................... (9,141) 306 18 (47,391) (590) (139,515) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 805,944 2,204 19,989 781,409 359,717 20,274 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 815,394 3,494 20,363 783,488 407,768 15,298 NET ASSETS: Beginning of period.............. 36,978 33,484 13,121 433,176 25,408 10,110 ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 852,372 $ 36,978 $ 33,484 $ 1,216,664 $ 433,176 $ 25,408 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 96
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH GROWTH-INCOME GLOBAL SMALL CAPITALIZATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (52,702) $ (1,070) $ (51,712) $ 523,110 $ 451,348 $ 245,238 $ 1,230,864 $ (144,223) $ 15,976 8,414,259 921,608 115,149 3,124,811 1,479,184 279,927 5,991,855 3,009,637 669,665 3,035,574 6,751,062 8,793,861 (1,027,655) 5,509,333 1,688,136 1,948,016 4,197,799 3,507,811 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 11,397,131 7,671,600 8,857,298 2,620,266 7,439,865 2,212,301 9,170,735 7,063,213 4,193,452 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 21,780,214 20,408,448 17,644,031 14,383,389 13,556,781 12,314,898 10,006,735 7,823,334 5,167,339 5,478,471 7,977,297 8,768,204 4,796,374 3,888,560 3,766,503 11,624,893 8,047,794 6,080,729 (8,331,204) (7,453,637) (5,986,064) (5,606,686) (5,046,973) (4,287,121) (3,980,217) (2,891,945) (1,731,213) (6,086,335) (3,900,210) (2,523,999) (4,721,206) (2,734,867) (1,913,559) (2,849,609) (1,630,844) (1,006,984) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 12,841,146 17,031,898 17,902,172 8,851,871 9,663,501 9,880,721 14,801,802 11,348,339 8,509,871 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 24,238,277 24,703,498 26,759,470 11,472,137 17,103,366 12,093,022 23,972,537 18,411,552 12,703,323 97,034,740 72,331,242 45,571,772 63,898,091 46,794,725 34,701,703 43,642,742 25,231,190 12,527,867 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $121,273,017 $ 97,034,740 $ 72,331,242 $ 75,370,228 $ 63,898,091 $ 46,794,725 $ 67,615,279 $ 43,642,742 $ 25,231,190 ============ ============ ============ ============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 97 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN FUNDS MIST T. ROWE PRICE BOND MID-CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------- ------------------------------------ 2007 2006 (C) 2007 2006 2005 ---- -------- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ 170,600 $ 984 $ (87,125) $ (91,448) $ (62,726) Net realized gains (losses)....................... 13,076 (909) 1,374,456 897,889 308,494 Change in unrealized gains (losses) on investments..................................... (143,419) 13,837 843,627 (173,792) 895,073 ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations............................... 40,257 13,912 2,130,958 632,649 1,140,841 ----------- ----------- ------------ ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.......................................... 628,735 89,127 2,924,293 2,471,595 2,046,729 Net transfers (including fixed account)........... 2,131,106 574,222 2,016,463 1,091,785 1,212,270 Policy charges.................................... (207,007) (24,950) (1,027,788) (896,982) (711,938) Transfers for policy benefits and terminations.... (54,852) (8,135) (1,061,019) (715,557) (345,287) ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions........................ 2,497,982 630,264 2,851,949 1,950,841 2,201,774 ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets............. 2,538,239 644,176 4,982,907 2,583,490 3,342,615 NET ASSETS: Beginning of period............................... 644,176 -- 12,401,292 9,817,802 6,475,187 ----------- ----------- ------------ ----------- ----------- End of period..................................... $ 3,182,415 $ 644,176 $ 17,384,199 $12,401,292 $ 9,817,802 =========== =========== ============ =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 98
MIST MFS MIST PIMCO MIST RCM RESEARCH INTERNATIONAL TOTAL RETURN TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------------------------ -------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 72,282 $ 50,995 $ (5,481) $ 788,424 $ 501,885 $ (167,275) $ (78,918) $ (61,070) $ (50,588) 2,172,015 504,799 264,569 88,836 85,343 207,076 618,410 222,324 240,857 (879,168) 963,904 280,569 1,198,111 469,783 311,680 1,944,863 156,356 445,709 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 1,365,129 1,519,698 539,657 2,075,371 1,057,011 351,481 2,484,355 317,610 635,978 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 2,129,890 1,296,474 893,225 6,177,463 6,639,135 6,481,179 1,463,874 1,514,309 1,643,816 2,358,045 3,802,566 262,049 (29,170) (231,899) 1,715,784 2,934,006 (174,207) (451,962) (783,344) (479,047) (285,176) (2,306,501) (2,326,888) (2,233,771) (611,502) (544,205) (524,891) (1,243,321) (394,238) (132,515) (1,722,935) (1,385,066) (1,070,572) (563,025) (414,629) (327,410) - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 2,461,270 4,225,755 737,583 2,118,857 2,695,282 4,892,620 3,223,353 381,268 339,553 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 3,826,399 5,745,453 1,277,240 4,194,228 3,752,293 5,244,101 5,707,708 698,878 975,531 9,803,525 4,058,072 2,780,832 28,016,253 24,263,960 19,019,859 7,523,569 6,824,691 5,849,160 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- $ 13,629,924 $ 9,803,525 $ 4,058,072 $ 32,210,481 $ 28,016,253 $ 24,263,960 $13,231,277 $ 7,523,569 $ 6,824,691 ============ =========== =========== ============ ============ ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 99 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MIST BOND DEBENTURE LAZARD MID-CAP INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 950,684 $ 1,051,283 $ 622,354 $ (12,219) $ (11,480) $ (11,927) Net realized gains (losses)...... 205,286 93,973 255,890 482,777 413,010 416,755 Change in unrealized gains (losses) on investments........ 39,883 324,579 (722,955) (720,263) 56,316 (198,731) ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 1,195,853 1,469,835 155,289 (249,705) 457,846 206,097 ------------ ------------ ------------ ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners............. 3,554,382 3,396,611 3,151,962 1,149,737 908,370 900,458 Net transfers (including fixed account)....................... 500,659 251,738 360,705 838,156 136,080 189,141 Policy charges................... (1,363,634) (1,319,485) (1,241,179) (393,479) (318,175) (290,148) Transfers for policy benefits and terminations................... (993,295) (961,494) (1,037,292) (280,900) (197,498) (95,681) ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 1,698,112 1,367,370 1,234,196 1,313,514 528,777 703,770 ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in net assets......................... 2,893,965 2,837,205 1,389,485 1,063,809 986,623 909,867 NET ASSETS: Beginning of period.............. 19,368,414 16,531,209 15,141,724 4,020,887 3,034,264 2,124,397 ------------ ------------ ------------ ----------- ----------- ----------- End of period.................... $ 22,262,379 $ 19,368,414 $ 16,531,209 $ 5,084,696 $ 4,020,887 $ 3,034,264 ============ ============ ============ =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 100
MIST MET/AIM MIST HARRIS OAKMARK MIST LEGG MASON SMALL CAP GROWTH INTERNATIONAL PARTNERS AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (24,194) $ (16,523) $ (11,067) $ 5,167 $ 223,306 $ (44,570) $ (50,642) $ (65,378) $ (52,753) 118,154 285,390 68,224 2,725,469 999,953 247,669 926,513 615,655 97,170 135,230 (33,826) 47,188 (3,512,929) 2,507,928 724,928 (747,047) (742,982) 756,884 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 229,190 235,041 104,345 (782,293) 3,731,187 928,027 128,824 (192,705) 801,301 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 601,183 582,851 446,774 5,746,134 3,829,877 2,085,109 1,456,917 1,626,695 1,636,045 354,513 239,798 77,613 3,549,633 5,611,008 3,959,003 (281,052) (19,816) 62,227 (197,171) (173,327) (132,549) (1,935,617) (1,281,424) (668,044) (539,471) (581,499) (541,547) (131,197) (94,796) (52,304) (1,288,608) (452,967) (293,448) (705,050) (411,238) (292,483) - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 627,328 554,526 339,534 6,071,542 7,706,494 5,082,620 (68,656) 614,142 864,242 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 856,518 789,567 443,879 5,289,249 11,437,681 6,010,647 60,168 421,437 1,665,543 2,376,804 1,587,237 1,143,358 21,411,537 9,973,856 3,963,209 7,744,433 7,322,996 5,657,453 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- $ 3,233,322 $ 2,376,804 $ 1,587,237 $ 26,700,786 $ 21,411,537 $ 9,973,856 $ 7,804,601 $ 7,744,433 $ 7,322,996 =========== =========== =========== ============ ============ =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 101 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MIST NEUBERGER BERMAN GROWTH AND INCOME REAL ESTATE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...... $ 31,039 $ (21,761) $ (16,388) $ 44,687 $ 19,481 $ (40,104) Net realized gains (losses)....... 296,381 962,704 65,775 2,530,886 819,954 86,504 Change in unrealized gains (losses) on investments......... (147,617) (295,172) 110,292 (6,132,457) 3,020,558 660,111 ----------- ----------- ----------- ------------ ------------ ----------- Net increase (decrease ) in net assets resulting from operations.................... 179,803 645,771 159,679 (3,556,884) 3,859,993 706,511 ----------- ----------- ----------- ------------ ------------ ----------- POLICY TRANSACTIONS: Premium payments received from policy owners................... 510,985 975,882 908,127 5,237,292 3,735,060 2,008,005 Net transfers (including fixed account)........................ (145,041) 189,576 (24,320) 710,529 5,998,130 3,582,147 Policy charges.................... (120,041) (112,856) (102,306) (1,829,684) (1,362,713) (695,428) Transfers for policy benefits and terminations.................... 2,312 2,408 (35,225) (1,115,544) (638,267) (170,997) ----------- ----------- ----------- ------------ ------------ ----------- Net increase (decrease) in net assets resulting from policy transactions.................... 248,215 1,055,010 746,276 3,002,593 7,732,210 4,723,727 ----------- ----------- ----------- ------------ ------------ ----------- Net increase (decrease) in net assets.......................... 428,018 1,700,781 905,955 (554,291) 11,592,203 5,430,238 NET ASSETS: Beginning of period............... 5,861,368 4,160,587 3,254,632 18,987,194 7,394,991 1,964,753 ----------- ----------- ----------- ------------ ------------ ----------- End of period..................... $ 6,289,386 $ 5,861,368 $ 4,160,587 $ 18,432,903 $ 18,987,194 $ 7,394,991 =========== =========== =========== ============ ============ ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 102
MIST VAN KAMPEN MIST LORD ABBETT MIST THIRD AVENUE MID CAP GROWTH MID-CAP VALUE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (24) $ -- $ -- $ 312 $ 19 $ 52 $ 1,338 $ (349) $ (51) -- -- -- 10,041 3,413 1,180 22,579 3,522 188 (570) -- -- (10,458) 880 85 (41,016) 21,745 1,856 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (594) -- -- (105) 4,312 1,317 (17,099) 24,918 1,993 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -- -- -- 13,650 3,267 1,127 129,727 55,993 7,110 32,025 -- -- 12,564 5,000 30,132 12,080 172,022 16,509 (33) -- -- (2,281) (1,756) (567) (9,900) (4,612) (1,175) (27) -- -- 92 (547) 49 (9,328) (1,597) 16 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 31,965 -- -- 24,025 5,964 30,741 122,579 221,806 22,460 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 31,371 -- -- 23,920 10,276 32,058 105,480 246,724 24,453 -- -- -- 42,580 32,304 246 275,584 28,860 4,407 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 31,371 $ -- $ -- $ 66,500 $ 42,580 $ 32,304 $ 381,064 $ 275,584 $ 28,860 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 103 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST OPPENHEIMER MIST LEGG MASON CAPITAL APPRECIATION VALUE EQUITY INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------- --------------------- 2007 2006 2005 (B) 2007 2006 (C) ---- ---- -------- ---- -------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)........................... $ (4,302) $ (1,383) $ (199) $ (54,295) $ (20,388) Net realized gains (losses)............................ 36,790 7,447 1,542 37,741 98,987 Change in unrealized gains (losses) on investments..... 18,908 12,744 2,715 (371,535) 306,184 ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations......................................... 51,396 18,808 4,058 (388,089) 384,783 POLICY TRANSACTIONS: Premium payments received from policy owners........... 205,021 117,398 12,067 1,048,842 765,241 Net transfers (including fixed account)................ 461,399 123,969 108,334 (45,958) 4,793,005 Policy charges......................................... (68,093) (39,578) (6,115) (411,469) (378,446) Transfers for policy benefits and terminations......... (23,596) (7,607) (2,034) (305,084) (26,923) ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from policy transactions.................................. 574,731 194,182 112,252 286,331 5,152,877 ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets.................. 626,127 212,990 116,310 (101,758) 5,537,660 NET ASSETS: Beginning of period.................................... 329,300 116,310 -- 5,537,660 -- ---------- ---------- ---------- ---------- ---------- End of period.......................................... $ 955,427 $ 329,300 $ 116,310 $5,435,902 $5,537,660 ========== ========== ========== ========== ==========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 104
MIST CYCLICAL MIST CYCLICAL MIST PIMCO MIST BLACKROCK MIST JANUS GROWTH ETF GROWTH AND INCOME ETF INFLATION PROTECTED BOND LARGE-CAP CORE FORTY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - --------------------- --------------------- ------------------------ ------------------- ------------------- 2007 2006 (C) 2007 2006 (C) 2007 2006 (C) 2007 (D) 2007 (D) ---- -------- ---- -------- ---- -------- -------- -------- $ (3,337) $ 1,562 $ (2,340) $ 1,299 $ 1,791 $ (463) $ (2,431,291) $ (4,282) 10,329 1,770 9,163 1,197 4,018 1,472 181,462 23,570 (2,639) 4,607 (2,024) 2,231 50,303 (1,429) 4,642,363 188,079 - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- 4,353 7,939 4,799 4,727 56,112 (420) 2,392,534 207,367 89,074 9,903 139,370 6,299 100,106 30,639 31,838,356 150,350 415,367 162,517 115,257 108,357 716,990 134,189 442,192,771 3,200,586 (30,535) (3,804) (28,375) (2,470) (37,516) (6,678) (19,369,800) (32,750) (15,115) (240) (2,126) (365) (53,881) (28,002) (20,078,179) (37,605) - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- 458,791 168,376 224,126 111,821 725,699 130,148 434,583,148 3,280,581 - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- 463,144 176,315 228,925 116,548 781,811 129,728 436,975,682 3,487,948 176,315 -- 116,548 -- 129,728 -- -- -- - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- $ 639,459 $ 176,315 $ 345,473 $ 116,548 $ 911,539 $ 129,728 $ 436,975,682 $3,487,948 ========== ========== ========== ========== ========== ========== ============= ==========
The accompanying notes are an integral part of these financial statements. 105 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN CENTURY DELAWARE VIP VP VISTA SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (93) $ (81) $ (47) $ (2,015) $ (1,580) $ (358) Net realized gains (losses)...... 1,950 118 6 54,658 27,452 8,228 Change in unrealized gains (losses) on investments........ 4,790 1,653 961 (146,882) 21,618 2,540 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 6,647 1,690 920 (94,239) 47,490 10,410 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 7,595 -- -- 340,918 5,729 6,852 Net transfers (including fixed account)....................... 953 9,705 14,262 290,002 342,518 121,033 Policy charges................... (1,106) (536) (428) (15,765) (10,021) (2,409) Transfers for policy benefits and terminations................... (9,883) (515) (171) (19,176) (1,578) 4,080 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... (2,441) 8,654 13,663 595,979 336,648 129,556 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 4,206 10,344 14,583 501,740 384,138 139,966 NET ASSETS: Beginning of period.............. 24,927 14,583 -- 524,104 139,966 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 29,133 $ 24,927 $ 14,583 $ 1,025,844 $ 524,104 $ 139,966 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 106
DREYFUS DREYFUS DREYFUS INTERNATIONAL MIDCAP STOCK EMERGING LEADERS VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 (A) 2006 2005 2007 2006 2005 ---- ---- ---- -------- ---- ---- ---- ---- ---- $ (276) $ (148) $ -- $ (21) $ (70) $ (47) $ 7,908 $ 390 $ (850) 21,767 16,486 -- (1,009) 1,662 813 123,168 15,591 (4,878) (17,400) (13,109) -- 1,014 (791) 711 (101,858) 67,169 13,060 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 4,091 3,229 -- (16) 801 1,477 29,218 83,150 7,332 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 214,800 -- -- 2,929 511 -- 185,615 66,631 19,214 -- 107,014 -- (15,389) -- 11,018 (194,916) 383,627 243,471 (4,153) (3,047) -- (181) (275) (5,197) (14,159) (8,030) (1,203) 16,080 (16,428) -- 779 20 3,523 (21,097) 2,577 (95,877) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 226,727 87,539 -- (11,862) 256 9,344 (44,557) 444,805 165,605 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 230,818 90,768 -- (11,878) 1,057 10,821 (15,339) 527,955 172,937 90,768 -- -- 11,878 10,821 -- 716,432 188,477 15,540 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 321,586 $ 90,768 $ -- $ -- $ 11,878 $ 10,821 $ 701,093 $ 716,432 $ 188,477 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 107 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
GOLDMAN SACHS GOLDMAN SACHS MID CAP VALUE STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...... $ 6,291 $ 1,899 $ 45 $ 69 $ 257 $ 94 Net realized gains (losses)....... 203,381 27,734 994 14,561 6,160 4,218 Change in unrealized gains (losses) on investments......... (272,066) (2,200) 223 (37,975) 1,891 (5,644) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease ) in net assets resulting from operations.................... (62,394) 27,433 1,262 (23,345) 8,308 (1,332) ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners................... 105,410 35,499 3,107 26,101 19,548 -- Net transfers (including fixed account)........................ 978,190 156,680 107,030 47,326 13,395 51,421 Policy charges.................... (16,541) (3,580) (2,368) (2,711) (1,623) (41) Transfers for policy benefits and terminations.................... (57,710) 1,288 (74,661) (2,434) (204) 118 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions.................... 1,009,349 189,887 33,108 68,282 31,116 51,498 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets.......................... 946,955 217,320 34,370 44,937 39,424 50,166 NET ASSETS: Beginning of period............... 263,966 46,646 12,276 89,590 50,166 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period..................... $ 1,210,921 $ 263,966 $ 46,646 $ 134,527 $ 89,590 $ 50,166 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 108
MFS MFS MFS HIGH INCOME GLOBAL EQUITY NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 3,863 $ 4,046 $ 3,632 $ 612 $ (38) $ -- $ (13) $ -- $ -- 1,517 1,254 128 5,513 100 -- 239 -- -- (3,019) 2,298 (2,862) (2,915) 2,944 -- (349) -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 2,361 7,598 898 3,210 3,006 -- (123) -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,591 14,794 2,055 24,545 11,259 -- -- -- -- (64,551) (7,401) 16,844 12,209 13,359 -- 3,357 -- -- (846) (2,093) (1,694) (2,386) (793) -- (78) -- -- (2,622) 86 (42) 135 25 -- 113 -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (62,428) 5,386 17,163 34,503 23,850 -- 3,392 -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (60,067) 12,984 18,061 37,713 26,856 -- 3,269 -- -- 82,011 69,027 50,966 26,856 -- -- -- -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 21,944 $ 82,011 $ 69,027 $ 64,569 $ 26,856 $ -- $ 3,269 $ -- $ -- =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 109 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MFS VAN KAMPEN VALUE GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (78) $ -- $ -- $ 795 $ 567 $ (12) Net realized gains (losses)...... 2,376 -- -- 38 (329) (1) Change in unrealized gains (losses) on investments........ (1,846) -- -- 35 121 124 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 452 -- -- 868 359 111 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 5,064 -- -- 9,025 4,438 2,678 Net transfers (including fixed account)....................... 42,062 -- -- -- (3,528) 10,908 Policy charges................... (1,514) -- -- (171) (346) (79) Transfers for policy benefits and terminations................... (131) -- -- (1,839) 274 18 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 45,481 -- -- 7,015 838 13,525 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 45,933 -- -- 7,883 1,197 13,636 NET ASSETS: Beginning of period.............. -- -- -- 14,833 13,636 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 45,933 $ -- $ -- $ 22,716 $ 14,833 $ 13,636 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 110
WELLS FARGO VT WELLS FARGO VT WELLS FARGO VT TOTAL RETURN BOND MONEY MARKET ASSET ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- ---- ---- ---- -------- ---- ---- $ 4,036 $ 1,478 $ 248 $ 51,705 $ 15,873 $ -- $ (8) $ 99 $ -- 482 (203) 238 -- -- -- 729 293 -- 726 969 16 -- -- -- (432) 432 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,244 2,244 502 51,705 15,873 -- 289 824 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 21,305 5,794 3,570 764,383 465,461 -- 806 4,896 -- 30,954 36,582 13,581 319,843 527,851 -- (12,353) 5,994 -- (2,836) (1,105) (95) (68,591) (27,417) -- (94) (185) -- (2,379) 477 (359) 2,280 346 -- (194) 17 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 47,044 41,748 16,697 1,017,915 966,241 -- (11,835) 10,722 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 52,288 43,992 17,199 1,069,620 982,114 -- (11,546) 11,546 -- 61,191 17,199 -- 982,114 -- -- 11,546 -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 113,479 $ 61,191 $ 17,199 $ 2,051,734 $ 982,114 $ -- $ -- $ 11,546 $ -- =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 111 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
WELLS FARGO VT WELLS FARGO VT LARGE COMPANY GROWTH EQUITY INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 (A) 2006 2005 2007 (A) 2006 2005 -------- ---- ---- -------- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (138) $ (243) $ (16) $ (3) $ 96 $ 82 Net realized gains (losses)...... 22,636 5,393 (5) 1,600 104 25 Change in unrealized gains (losses) on investments........ (10,940) 10,126 797 (1,507) 1,202 301 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 11,558 15,276 776 90 1,402 408 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 12,093 73,440 4,434 -- -- 4,436 Net transfers (including fixed account)....................... (210,108) 106,314 (49) -- -- 110 Policy charges................... (1,535) (3,644) (995) (78) (865) (998) Transfers for policy benefits and terminations................... (12,728) 823 10 (8,825) (6) (15) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... (212,278) 176,933 3,400 (8,903) (871) 3,533 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... (200,720) 192,209 4,176 (8,813) 531 3,941 NET ASSETS: Beginning of period.............. 200,720 8,511 4,335 8,813 8,282 4,341 ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ -- $ 200,720 $ 8,511 $ -- $ 8,813 $ 8,282 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 112 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS 1. ORGANIZATION Metropolitan Life Separate Account UL (the "Separate Account"), a separate account of Metropolitan Life Insurance Company (the "Company"), was established by the Company's Board of Directors on December 13, 1988 to support operations of the Company with respect to certain variable life insurance policies (the "Policies"). 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 New York Department of Insurance. The Separate Account is divided into Investment Divisions, each of which is treated as an individual accounting entity for financial reporting purposes. Each Investment Division 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: Metropolitan Series Fund, Inc. ("MSF") Janus Aspen Series ("Janus Aspen") AIM Variable Insurance Funds ("AIM V.I.") Franklin Templeton Variable Insurance Products Trust ("FTVIPT") AllianceBernstein Variable Products Series Fund, Inc. ("AllianceBernstein") Fidelity Variable Insurance Products Fund ("Fidelity VIP") American Funds Insurance Series ("American Funds") Met Investors Series Trust ("MIST") American Century Variable Portfolios, Inc. ("American Century VP") Delaware VIP Trust ("Delaware VIP") Dreyfus Investment Portfolios ("Dreyfus") Dreyfus Variable Investment Fund ("Dreyfus VIF") Goldman Sachs Variable Insurance Trust ("Goldman Sachs") MFS Variable Insurance Trust ("MFS") Van Kampen Life Investment Trust ("Van Kampen") Wells Fargo Variable Trust ("Wells Fargo VT") 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 Policies is not chargeable with liabilities arising out of any other business the Company may conduct. Premium payments applied to the Separate Account are invested in one or more Investment Divisions in accordance with the selection made by the policy owner. The following Investment Divisions were available for investment as of December 31, 2007: MSF BlackRock Diversified Investment Division MSF BlackRock Aggressive Growth Investment Division MSF MetLife Stock Index Investment Division MSF FI International Stock Investment Division MSF FI Mid Cap Opportunities Investment Division MSF T. Rowe Price Small Cap Growth Investment Division* MSF Oppenheimer Global Equity Investment Division MSF Harris Oakmark Large Cap Value Investment Division MSF Neuberger Berman Mid Cap Value Investment Division MSF T. Rowe Price Large Cap Growth Investment Division MSF Lehman Brothers Aggregate Bond Index Investment Division MSF Morgan Stanley EAFE Index Investment Division MSF Russell 2000 Index Investment Division 113 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONTINUED) MSF Jennison Growth Investment Division MSF BlackRock Strategic Value Investment Division MSF MetLife Mid Cap Stock Index Investment Division MSF Franklin Templeton Small Cap Growth Investment Division MSF BlackRock Large Cap Value Investment Division MSF Davis Venture Value Investment Division MSF Loomis Sayles Small Cap Investment Division MSF BlackRock Legacy Large Cap Growth Investment Division MSF BlackRock Bond Income Investment Division MSF FI Value Leaders Investment Division MSF Harris Oakmark Focused Value Investment Division MSF Western Asset Management Strategic Bond Opportunities Investment Division MSF Western Asset Management U.S. Government Investment Division MSF BlackRock Money Market Investment Division MSF MFS Total Return Investment Division* MSF MetLife Conservative Allocation Investment Division MSF MetLife Conservative to Moderate Allocation Investment Division MSF MetLife Moderate Allocation Investment Division MSF MetLife Moderate to Aggressive Allocation Investment Division MSF MetLife Aggressive Allocation Investment Division MSF FI Large Cap Investment Division MSF Capital Guardian U.S. Equity Investment Division Janus Aspen Large Cap Growth Investment Division Janus Aspen Balanced Investment Division Janus Aspen Forty Investment Division AIM V.I. Global Real Estate Investment Division Franklin Templeton Foreign Securities Investment Division Franklin Mutual Discovery Securities Investment Division AllianceBernstein Global Technology Investment Division AllianceBernstein U.S. Government/High Grade Securities Investment Division** Fidelity VIP Contrafund Investment Division Fidelity VIP Asset Manager: Growth Investment Division Fidelity VIP Investment Grade Bond Investment Division Fidelity VIP Equity-Income Investment Division American Funds Growth Investment Division American Funds Growth-Income Investment Division American Funds Global Small Capitalization Investment Division American Funds Bond Investment Division MIST T. Rowe Price Mid-Cap Growth Investment Division* MIST MFS Research International Investment Division MIST PIMCO Total Return Investment Division MIST RCM Technology Investment Division MIST Lord Abbett Bond Debenture Investment Division MIST Lazard Mid-Cap Investment Division* MIST Met/AIM Small Cap Growth Investment Division MIST Harris Oakmark International Investment Division MIST Legg Mason Partners Aggressive Growth Investment Division* MIST Lord Abbett Growth and Income Investment Division 114 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONTINUED) MIST Neuberger Berman Real Estate Investment Division* MIST Van Kampen Mid Cap Growth Investment Division MIST Lord Abbett Mid-Cap Value Investment Division MIST Third Avenue Small Cap Value Investment Division MIST Oppenheimer Capital Appreciation Investment Division MIST Legg Mason Value Equity Investment Division MIST Cyclical Growth ETF Investment Division MIST Cyclical Growth and Income ETF Investment Division MIST PIMCO Inflation Protected Bond Investment Division MIST BlackRock Large-Cap Core Investment Division MIST Janus Forty Investment Division American Century VP Vista Investment Division Delaware VIP Small Cap Value Investment Division Dreyfus MidCap Stock Investment Division Dreyfus VIF International Value Investment Division Goldman Sachs Mid Cap Value Investment Division Goldman Sachs Structured Small Cap Equity Investment Division MFS High Income Investment Division MFS Global Equity Investment Division MFS New Discovery Investment Division MFS Value Investment Division Van Kampen Government Investment Division Wells Fargo VT Total Return Bond Investment Division Wells Fargo VT Money Market Investment Division * This Investment Division invests in two or more share classes within the underlying portfolio, series, or fund of the Trusts that may assess 12b-1 fees. **These investment divisions had no net assets as of December 31, 2007. The following Investment Division ceased operations during the year ended December 31, 2007: MSF BlackRock Large Cap Investment Division AIM V.I. Core Equity Investment Division AIM V.I. Government Securities Investment Division Dreyfus Emerging Leaders Investment Division Wells Fargo VT Asset Allocation Investment Division Wells Fargo VT Large Company Growth Investment Division Wells Fargo VT Large Company Core Investment Division Wells Fargo VT Equity Income Investment Division The operations of the Investment Divisions 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 115 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONCLUDED) MERGERS: Old Name New Name - -------- -------- BlackRock Large Cap Portfolio BlackRock Large Cap Core Portfolio SUBSTITUTIONS: Old Name New Name - -------- -------- AIM V.I. Core Equity Fund Capital Guardian U.S. Equity Portfolio LIQUIDATIONS: Dreyfus Emerging Leaders Portfolio This report is prepared for the general information of policy 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 life separate accounts registered as unit investment trusts. 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 Policies. 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 Policies. PREMIUM PAYMENTS The Company deducts a sales charge, a state premium tax charge, and a federal income tax charge from premiums before amounts are allocated to the Separate Account. In the case of certain Policies, the Company also deducts an administrative charge before amounts are allocated to the Separate Account. The federal income 116 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONCLUDED) tax charge is imposed in connection with certain Policies to recover a portion of the federal income tax adjustment attributable to policy acquisition expenses. Net premiums are credited as accumulation units as of the end of the valuation period in which received, as provided in the prospectus. NET TRANSFERS The policy owner has the opportunity to transfer funds between Investment Divisions 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 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. CHANGE IN BASIS OF PRESENTATION In prior year Statements of changes in net assets, the Separate Account reported cost of insurance ("COI") in the financial statement line item "Transfers for policy benefits and terminations." COI has been reclassified and now appears separately in the line item "Policy charges." This reclassification presents COI more consistent with the intent of what COI charges represent. The reclassification had no effect on the net assets of the Investment Division or unit values of the Policies. 3. EXPENSES AND RELATED PARTY TRANSACTIONS The following annual Separate Account charge is an asset-based charge and assessed through a daily reduction in unit values which is recorded as an expense in the accompanying statements of operations: 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 an aggregate amount of death benefits greater than anticipated. The expense risk assumed is where expenses incurred in issuing and administering the Policies will exceed the amounts realized from the administrative charges assessed against the Policies. 117 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 3. EXPENSES AND RELATED PARTY TRANSACTIONS -- (CONCLUDED) The table below represents the range of effective annual rates for the respective charge for the year ended December 31, 2007: Mortality and Expense Risk 0.45% - 0.90%
The above referenced charge 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 policy. For some Policies, the Mortality and Expense Risk charge which ranges from .30% to .60% is assessed on a monthly basis and recorded as Mortality and Expense Risk Charges in the statements of operations. Other policy charges generally include: COI charges, administrative charges, a policy fee, and charges for benefits provided by rider. The COI charge is the primary charge under the policy for the death benefit provided by the Company. Administrative charges range from $0 to $35 and are assessed monthly. For some Policies, a surrender charge is imposed if the policy is partially or fully surrendered within the specified surrender charge period that ranges from $1 to $45 for every $1,000 of the policy face amount. Surrender charges for other Policies is equal to the lesser of the maximum surrender charge premium or the premiums actually paid in the first two policy years. In the first policy year, the maximum surrender charge premium is 75% of the smoker federal guideline premium for the policy, assuming a level death benefit for the policy and any riders; and in the second and later policy years, it is 100% of the smoker federal guideline premium for the policy, again assuming a level death benefit for the policy and any riders. The surrender charge cannot exceed 100% of the cumulative premiums paid in the first two policy years. If the policy is surrendered in the first two policy years, the Company will deduct 100% of the surrender charge, determined as described above. After the second policy year, the percentage the Company deducts declines until it reaches 0% at the end of the 15th policy year. These charges are assessed through the redemption of units and are recorded as policy transactions in the accompanying statements of changes in net assets. Certain investments in the various portfolios, series or funds of the MIST and MSF Trusts hold shares which are managed by Met Investors Advisory, LLC and MetLife Advisers, LLC, respectively. Both act in the capacity of investment advisor and are indirect affiliates of the Company. 118 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. STATEMENT OF INVESTMENTS
FOR THE YEAR ENDED AS OF DECEMBER 31, 2007 DECEMBER 31, 2007 ---------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ---------- ----------- ------------- -------------- MSF BlackRock Large Cap Investment Division (a)............................ -- -- 8,636,325 461,078,250 MSF BlackRock Diversified Investment Division................................ 18,384,675 301,100,943 15,938,795 23,752,223 MSF BlackRock Aggressive Growth Investment Division................................ 9,001,503 208,043,675 3,671,605 18,164,401 MSF MetLife Stock Index Investment Division................................ 20,218,189 638,683,765 61,923,502 36,029,246 MSF FI International Stock Investment Division................................ 4,537,480 53,677,713 8,264,530 5,588,161 MSF FI Mid Cap Opportunities Investment Division................................ 13,392,104 236,422,200 6,041,508 16,703,836 MSF T. Rowe Price Small Cap Growth Investment Division..................... 4,962,425 60,940,790 2,454,173 6,524,919 MSF Oppenheimer Global Equity Investment Division................................ 2,975,594 36,804,177 3,973,807 2,721,982 MSF Harris Oakmark Large Cap Value Investment Division..................... 4,338,277 52,337,596 7,342,545 5,025,329 MSF Neuberger Berman Mid Cap Value Investment Division..................... 3,862,378 69,563,781 9,138,539 4,537,785 MSF T. Rowe Price Large Cap Growth Investment Division..................... 3,203,625 38,358,068 4,827,247 5,313,688 MSF Lehman Brothers Aggregate Bond Index Investment Division..................... 9,565,941 102,450,836 17,699,371 5,514,482 MSF Morgan Stanley EAFE Index Investment Division................................ 4,165,516 47,048,510 12,138,883 3,461,505 MSF Russell 2000 Index Investment Division 3,966,613 48,701,321 10,226,111 3,618,430 MSF Jennison Growth Investment Division... 1,154,841 12,420,225 1,545,868 961,871 MSF BlackRock Strategic Value Investment Division................................ 6,634,359 102,711,853 16,697,685 5,171,409 MSF MetLife Mid Cap Stock Index Investment Division................................ 4,255,517 53,080,493 9,553,247 3,063,026 MSF Franklin Templeton Small Cap Growth Investment Division..................... 659,798 6,479,325 1,443,987 585,512 MSF BlackRock Large Cap Value Investment Division................................ 901,914 11,661,660 4,597,804 1,515,883 MSF Davis Venture Value Investment Division................................ 1,606,764 44,516,443 8,721,686 1,895,067 MSF Loomis Sayles Small Cap Investment Division................................ 63,682 13,867,310 4,499,823 990,620 MSF BlackRock Legacy Large Cap Growth Investment Division..................... 143,232 3,270,617 1,454,912 400,109 MSF BlackRock Bond Income Investment Division................................ 827,490 89,582,308 9,139,472 11,675,101
119 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 ($) --------- ---------- ------------- -------------- MSF FI Value Leaders Investment Division........ 34,372 6,606,158 1,932,958 582,448 MSF Harris Oakmark Focused Value Investment Division...................................... 246,672 55,346,093 11,604,381 4,117,553 MSF Western Asset Management Strategic Bond Opportunities Investment Division............. 1,444,340 18,030,068 3,147,112 794,074 MSF Western Asset Management U.S. Government Investment Division........................... 1,264,802 15,479,811 2,429,662 929,799 MSF BlackRock Money Market Investment Division...................................... 634,367 63,436,726 12,024,367 7,916,542 MSF MFS Total Return Investment Division........ 35,941 5,412,222 2,819,039 972,688 MSF MetLife Conservative Allocation Investment Division...................................... 70,128 752,013 565,991 310,266 MSF MetLife Conservative to Moderate Allocation Investment Division........................... 256,451 2,815,324 1,365,481 377,816 MSF MetLife Moderate Allocation Investment Division...................................... 1,532,995 17,633,085 10,687,941 2,130,508 MSF MetLife Moderate to Aggressive Allocation Investment Division........................... 2,649,710 31,628,872 19,208,532 659,122 MSF MetLife Aggressive Allocation Investment Division...................................... 647,006 8,050,621 5,909,758 650,920 MSF FI Large Cap Investment Division............ 20,753 308,461 273,438 24,666 MSF Capital Guardian U.S. Equity Investment Division...................................... 35,967 472,338 509,356 379,380 Janus Aspen Large Cap Growth Investment Division...................................... 273,481 5,144,840 827,470 219,403 Janus Aspen Balanced Investment Division........ 2,575 77,786 135,165 60,286 Janus Aspen Forty Investment Division........... 12,719 427,910 354,300 35,936 AIM V.I. Government Securities Investment Division (a).................................. -- -- 256 7,683 AIM V.I. Global Real Estate Investment Division. 125,785 3,048,522 1,133,311 421,526 Franklin Templeton Foreign Securities Investment Division...................................... 455,989 6,990,724 1,949,736 821,253 Franklin Mutual Discovery Securities Investment Division...................................... 72,017 1,598,385 1,102,924 376,271 AllianceBernstein Global Technology Investment Division...................................... 2,615 47,056 55,948 78,103 Fidelity VIP Contrafund Investment Division..... 109,812 3,473,036 2,177,760 889,855 Fidelity VIP Asset Manager: Growth Investment Division...................................... 82,012 1,056,434 255,311 107,956 Fidelity VIP Investment Grade Bond Investment Division...................................... 67,275 845,113 1,361,278 554,463 Fidelity VIP Equity-Income Investment Division.. 52,272 1,380,440 1,139,399 206,863 American Funds Growth Investment Division....... 1,817,641 94,636,809 22,998,117 2,689,172
120 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 ($) FROM SALES ($) ---------- ----------- ------------- -------------- American Funds Growth-Income Investment Division.................................. 1,783,489 63,810,239 13,922,630 2,215,555 American Funds Global Small Capitalization Investment Division....................... 2,508,916 55,087,173 23,415,533 3,130,106 American Funds Bond Investment Division..... 288,524 3,311,997 3,193,049 524,467 MIST T. Rowe Price Mid-Cap Growth Investment Division....................... 1,769,246 14,536,286 5,066,206 1,677,121 MIST MFS Research International Investment Division.................................. 944,774 12,901,200 6,742,872 2,497,568 MIST PIMCO Total Return Investment Division.................................. 2,620,869 30,439,455 4,798,407 1,891,119 MIST RCM Technology Investment Division..... 1,940,070 10,273,189 4,564,449 1,122,814 MIST Lord Abbett Bond Debenture Investment Division.................................. 1,762,918 21,058,492 4,077,483 1,439,226 MIST Lazard Mid-Cap Investment Division..... 417,823 5,712,724 2,663,683 920,016 MIST Met/AIM Small Cap Growth Investment Division.................................. 217,586 2,969,178 1,084,437 444,114 MIST Harris Oakmark International Investment Division.................................. 1,546,079 26,520,683 10,416,302 2,327,983 MIST Legg Mason Partners Aggressive Growth Investment Division....................... 1,035,639 7,444,052 1,475,411 875,714 MIST Lord Abbett Growth and Income Investment Division....................... 217,495 5,976,641 932,967 394,436 MIST Neuberger Berman Real Estate Investment Division.................................. 1,309,239 20,759,878 8,075,872 3,243,062 MIST Van Kampen Mid-Cap Growth Investment Division.................................. 2,716 31,941 31,979 38 MIST Lord Abbett Mid-Cap Value Investment Division.................................. 3,414 75,984 87,963 52,452 MIST Third Avenue Small Cap Value Investment Division....................... 24,303 398,532 194,299 52,021 MIST Oppenheimer Capital Appreciation Investment Division....................... 96,120 921,061 697,378 99,350 MIST Legg Mason Value Equity Investment Division.................................. 515,605 5,479,207 713,351 473,581 MIST Cyclical Growth ETF Investment Division.................................. 52,979 637,491 568,884 113,433 MIST Cyclical Growth and Income ETF Investment Division....................... 29,352 345,266 382,345 160,544 MIST PIMCO Inflation Protected Bond Investment Division....................... 83,170 862,665 932,938 205,451 MIST BlackRock Large-Cap Core Investment Division (b).............................. 39,228,753 432,365,942 454,188,789 22,004,306 MIST Janus Forty Investment Division (b).... 41,617 3,299,869 3,462,963 186,665
121 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 ($) --------- --------- ------------- -------------- American Century VP Vista Investment Division.. 1,324 21,730 8,512 11,044 Delaware VIP Small Cap Value Investment Division..................................... 35,529 1,137,795 887,344 238,710 Dreyfus Mid Cap Stock Investment Division...... 19,791 336,284 241,837 22,280 Dreyfus Emerging Leaders Investment Division (a)................................. -- -- 47,238 53,932 Dreyfus International Value Investment Division 38,527 691,616 387,371 325,410 Goldman Sachs Mid Cap Value Investment Division..................................... 89,860 1,534,343 1,432,227 181,762 Goldman Sachs Structured Small Cap Equity Investment Division.......................... 12,706 177,810 88,117 3,203 MFS High Income Investment Division............ 2,317 22,375 14,164 72,731 MFS Global Equity Investment Division.......... 4,174 64,541 54,734 17,032 MFS New Discovery Investment Division.......... 200 3,618 3,704 82 MFS Value Investment Division.................. 3,038 47,779 148,133 102,731 Van Kampen Government Investment Division...... 2,389 22,436 17,428 9,619 Wells Fargo VT Total Return Bond Investment Division..................................... 11,414 111,746 81,798 30,732 Wells Fargo VT Money Market Investment Division..................................... 2,051,425 2,051,425 1,194,161 124,938 Wells Fargo VT Asset Allocation Investment Division (a)................................. -- -- 13,354 25,198 Wells Fargo VT Large Company Growth Investment Division (a)................................. -- -- 203,677 416,092 Wells Fargo VT Equity Income Investment Division (a)................................. -- -- -- 8,906
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 122 [THIS PAGE INTENTIONALLY LEFT BLANK] 123 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MSF BLACKROCK LARGE CAP DIVERSIFIED INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 (A) 2006 2005 2007 2006 2005 -------- ---- ---- ---- ---- ---- Units beginning of year.......... 16,009,494 16,488,159 16,507,025 13,096,726 13,638,816 13,455,017 Units issued and transferred from other funding options.......... 13,723 5,827,504 3,207,492 1,576,102 5,196,699 2,906,692 Units redeemed and transferred to other funding options....... (16,023,217) (6,306,169) (3,226,358) (1,957,204) (5,738,789) (2,722,893) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ -- 16,009,494 16,488,159 12,715,624 13,096,726 13,638,816 ============ =========== =========== =========== =========== =========== MSF FI MSF FI MID CAP INTERNATIONAL STOCK OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 3,412,213 3,294,341 3,241,370 14,298,595 14,520,500 14,284,163 Units issued and transferred from other funding options.......... 449,737 1,366,842 681,133 1,586,888 5,633,860 3,117,992 Units redeemed and transferred to other funding options....... (490,924) (1,248,970) (628,162) (2,042,412) (5,855,765) (2,881,655) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ 3,371,026 3,412,213 3,294,341 13,843,071 14,298,595 14,520,500 ============ =========== =========== =========== =========== =========== MSF HARRIS OAKMARK MSF NEUBERGER BERMAN LARGE CAP VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 4,099,325 4,085,993 3,767,330 3,225,765 2,912,765 2,435,399 Units issued and transferred from other funding options.......... 706,700 2,271,700 1,297,280 609,119 2,211,103 1,131,537 Units redeemed and transferred to other funding options....... (690,459) (2,258,368) (978,617) (542,555) (1,898,103) (654,171) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ 4,115,566 4,099,325 4,085,993 3,292,329 3,225,765 2,912,765 ============ =========== =========== =========== =========== =========== MSF MORGAN STANLEY MSF RUSSELL EAFE INDEX 2000 INDEX INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 3,792,545 3,464,106 3,014,776 2,884,744 2,619,288 2,380,540 Units issued and transferred from other funding options.......... 1,009,072 2,413,387 1,268,548 550,789 1,598,139 809,404 Units redeemed and transferred to other funding options....... (615,305) (2,084,948) (819,218) (459,670) (1,332,683) (570,656) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ 4,186,312 3,792,545 3,464,106 2,975,863 2,884,744 2,619,288 ============ =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 124
MSF BLACKROCK MSF METLIFE AGGRESSIVE GROWTH STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 11,198,297 11,502,614 11,775,258 33,607,228 32,156,989 29,475,869 1,043,072 3,534,643 1,944,636 5,684,335 14,883,687 8,538,465 (1,567,882) (3,838,960) (2,217,280) (4,653,570) (13,433,448) (5,857,345) ----------- ----------- ----------- ----------- ------------ ----------- 10,673,487 11,198,297 11,502,614 34,637,993 33,607,228 32,156,989 =========== =========== =========== =========== ============ =========== MSF T. ROWE PRICE MSF OPPENHEIMER SMALL CAP GROWTH GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 4,913,291 5,103,342 5,056,605 2,344,938 2,314,718 2,201,362 490,842 1,690,078 928,886 280,327 882,876 507,092 (712,048) (1,880,129) (882,149) (277,828) (852,656) (393,736) ----------- ----------- ----------- ----------- ------------ ----------- 4,692,085 4,913,291 5,103,342 2,347,437 2,344,938 2,314,718 =========== =========== =========== =========== ============ =========== MSF T. ROWE PRICE MSF LEHMAN BROTHERS LARGE CAP GROWTH AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 3,620,946 3,547,628 3,354,772 6,058,549 5,619,973 4,812,639 579,434 1,740,365 992,846 1,388,135 3,458,933 1,885,856 (671,287) (1,667,047) (799,990) (864,484) (3,020,357) (1,078,522) ----------- ----------- ----------- ----------- ------------ ----------- 3,529,093 3,620,946 3,547,628 6,582,200 6,058,549 5,619,973 =========== =========== =========== =========== ============ =========== MSF JENNISON MSF BLACKROCK GROWTH STRATEGIC VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 1,356,790 1,297,642 -- 4,494,782 4,485,936 4,164,014 166,465 1,435,002 1,299,954 646,818 2,369,030 1,327,411 (320,198) (1,375,854) (2,312) (691,064) (2,360,184) (1,005,489) ----------- ----------- ----------- ----------- ------------ ----------- 1,203,057 1,356,790 1,297,642 4,450,536 4,494,782 4,485,936 =========== =========== =========== =========== ============ ===========
125 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE MID MSF FRANKLIN TEMPLETON CAP STOCK INDEX SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 3,270,208 2,985,941 2,658,110 538,941 474,966 440,124 Units issued and transferred from other funding options.......... 702,937 1,900,659 949,998 110,335 358,131 163,769 Units redeemed and transferred to other funding options.......... (506,274) (1,616,392) (622,167) (79,323) (294,156) (128,927) --------- ----------- --------- --------- ----------- --------- Units end of year................ 3,466,871 3,270,208 2,985,941 569,953 538,941 474,966 ========= =========== ========= ========= =========== ========= MSF LOOMIS SAYLES MSF BLACKROCK SMALL CAP LEGACY LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 78,273 39,978 37,547 190,308 1,201,181 851,014 Units issued and transferred from other funding options.......... 30,647 62,838 13,626 112,767 396,179 506,273 Units redeemed and transferred to other funding options.......... (10,837) (24,543) (11,195) (37,981) (1,407,052) (156,106) --------- ----------- --------- --------- ----------- --------- Units end of year................ 98,083 78,273 39,978 265,094 190,308 1,201,181 ========= =========== ========= ========= =========== ========= MSF HARRIS OAKMARK MSF WESTERN ASSET MANAGEMENT FOCUSED VALUE STRATEGIC BOND OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 191,529 182,165 153,755 998,939 843,296 595,935 Units issued and transferred from other funding options.......... 32,899 130,546 71,513 270,755 946,567 474,609 Units redeemed and transferred to other funding options.......... (32,837) (121,182) (43,103) (152,308) (790,924) (227,248) --------- ----------- --------- --------- ----------- --------- Units end of year................ 191,591 191,529 182,165 1,117,386 998,939 843,296 ========= =========== ========= ========= =========== ========= MSF MFS MSF METLIFE TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 297,430 190,293 69,569 44,128 53,570 -- Units issued and transferred from other funding options.......... 187,982 495,889 201,331 46,280 137,937 53,570 Units redeemed and transferred to other funding options.......... (66,939) (388,752) (80,607) (23,850) (147,379) -- --------- ----------- --------- --------- ----------- --------- Units end of year................ 418,473 297,430 190,293 66,558 44,128 53,570 ========= =========== ========= ========= =========== =========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 126
MSF BLACKROCK MSF DAVIS LARGE CAP VALUE VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 608,908 396,107 271,012 1,301,427 1,739,984 1,365,956 293,309 614,025 238,963 357,240 934,602 643,359 (132,106) (401,224) (113,868) (178,960) (1,373,159) (269,331) --------- ----------- --------- --------- ----------- --------- 770,111 608,908 396,107 1,479,707 1,301,427 1,739,984 ========= =========== ========= ========= =========== ========= MSF BLACKROCK MSF FI BOND INCOME VALUE LEADERS INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 4,668,001 5,010,744 4,716,266 393,835 248,972 101,071 708,428 2,023,116 1,284,065 120,346 471,583 221,903 (908,844) (2,365,859) (989,587) (73,277) (326,720) (74,002) --------- ----------- --------- --------- ----------- --------- 4,467,585 4,668,001 5,010,744 440,904 393,835 248,972 ========= =========== ========= ========= =========== ========= MSF WESTERN ASSET MANAGEMENT MSF BLACKROCK U.S. GOVERNMENT MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 988,756 879,572 705,185 3,575,759 1,760,759 1,880,485 236,483 760,575 399,842 494,785 2,526,901 380,493 (158,504) (651,391) (225,455) (432,458) (711,901) (500,219) --------- ----------- --------- --------- ----------- --------- 1,066,735 988,756 879,572 3,638,086 3,575,759 1,760,759 ========= =========== ========= ========= =========== ========= MSF METLIFE MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 161,903 65,370 -- 775,138 165,720 -- 121,294 243,072 65,370 935,987 1,073,164 165,720 (38,943) (146,539) -- (258,884) (463,746) -- --------- ----------- --------- --------- ----------- --------- 244,254 161,903 65,370 1,452,241 775,138 165,720 ========= =========== ========= ========= =========== =========
127 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION AGGRESSIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,098,433 249,839 -- 225,274 49,908 -- Units issued and transferred from other funding options.......... 1,608,801 1,395,647 249,839 441,487 388,486 49,908 Units redeemed and transferred to other funding options.......... (207,883) (547,053) -- (58,005) (213,120) -- --------- --------- -------- -------- --------- -------- Units end of year................ 2,499,351 1,098,433 249,839 608,756 225,274 49,908 ========= ========= ======== ======== ========= ======== JANUS ASPEN JANUS ASPEN LARGE CAP GROWTH BALANCED INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 595,051 563,653 509,009 179 187 22 Units issued and transferred from other funding options.......... 69,313 80,037 87,782 7,946 20 171 Units redeemed and transferred to other funding options.......... (20,947) (48,639) (33,138) (2,500) (28) (6) --------- --------- -------- -------- --------- -------- Units end of year................ 643,417 595,051 563,653 5,625 179 187 ========= ========= ======== ======== ========= ======== AIM V.I. GLOBAL FRANKLIN TEMPLETON REAL ESTATE FOREIGN SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 70,179 63,997 54,709 471,719 488,477 444,204 Units issued and transferred from other funding options.......... 13,540 11,212 25,913 84,038 66,725 97,898 Units redeemed and transferred to other funding options.......... (9,211) (5,030) (16,625) (51,321) (83,483) (53,625) --------- --------- -------- -------- --------- -------- Units end of year................ 74,508 70,179 63,997 504,436 471,719 488,477 ========= ========= ======== ======== ========= ======== FIDELITY VIP FIDELITY VIP CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 151,404 74,414 77,301 102,160 80,752 83,331 Units issued and transferred from other funding options.......... 81,153 104,221 24,890 22,228 26,178 24,061 Units redeemed and transferred to other funding options.......... (44,028) (27,231) (27,777) (11,642) (4,770) (26,640) --------- --------- -------- -------- --------- -------- Units end of year................ 188,529 151,404 74,414 112,746 102,160 80,752 ========= ========= ======== ======== ========= ========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 128
MSF FI MSF CAPITAL GUARDIAN LARGE CAP U.S. EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 6,047 -- -- 25,159 -- -- 26,099 11,244 -- 35,341 25,387 -- (3,407) (5,197) -- (27,389) (228) -- -------- ------- ----- -------- ------- -------- 28,739 6,047 -- 33,111 25,159 -- ======== ======= ===== ======== ======= ======== JANUS ASPEN AIM V.I. FORTY GOVERNMENT SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- 7,954 -- -- 691 769 420 21,485 8,253 -- -- -- 1,092 (2,313) (299) -- (691) (78) (743) -------- ------- ----- -------- ------- -------- 27,126 7,954 -- -- 691 769 ======== ======= ===== ======== ======= ======== FRANKLIN MUTUAL ALLIANCEBERNSTEIN DISCOVERY SECURITIES GLOBAL TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 54,880 9,138 -- 11,769 8,553 4,324 56,645 47,509 9,276 10,367 6,356 4,400 (18,422) (1,767) (138) (13,875) (3,140) (171) -------- ------- ----- -------- ------- -------- 93,103 54,880 9,138 8,261 11,769 8,553 ======== ======= ===== ======== ======= ======== FIDELITY VIP FIDELITY VIP INVESTMENT GRADE BOND EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 3,341 3,156 1,268 30,951 2,190 928 118,771 1,406 2,025 69,741 30,655 19,013 (48,437) (1,221) (137) (12,992) (1,894) (17,751) -------- ------- ----- -------- ------- -------- 73,675 3,341 3,156 87,700 30,951 2,190 ======== ======= ===== ======== ======= ========
129 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN FUNDS AMERICAN FUNDS GROWTH GROWTH-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,094,384 898,134 656,749 1,228,077 1,035,047 811,401 Units issued and transferred from other funding options.......... 276,228 867,857 429,219 321,727 919,357 460,047 Units redeemed and transferred to other funding options.......... (151,958) (671,607) (187,834) (168,760) (726,327) (236,401) --------- --------- --------- --------- --------- --------- Units end of year................ 1,218,654 1,094,384 898,134 1,381,044 1,228,077 1,035,047 ========= ========= ========= ========= ========= ========= MIST T. ROWE PRICE MIST MFS RESEARCH MID-CAP GROWTH INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,338,870 1,132,034 856,351 566,593 294,106 234,897 Units issued and transferred from other funding options.......... 592,655 1,200,709 562,461 256,067 541,071 152,985 Units redeemed and transferred to other funding options.......... (344,229) (993,873) (286,778) (126,833) (268,584) (93,776) --------- --------- --------- --------- --------- --------- Units end of year................ 1,587,296 1,338,870 1,132,034 695,827 566,593 294,106 ========= ========= ========= ========= ========= ========= MIST LORD ABBETT MIST LAZARD BOND DEBENTURE MID-CAP INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,162,806 1,085,144 1,015,708 261,764 226,296 171,772 Units issued and transferred from other funding options.......... 184,166 609,507 328,926 129,129 244,858 136,196 Units redeemed and transferred to other funding options.......... (97,685) (531,845) (259,490) (50,577) (209,390) (81,672) --------- --------- --------- --------- --------- --------- Units end of year................ 1,249,287 1,162,806 1,085,144 340,316 261,764 226,296 ========= ========= ========= ========= ========= ========= MIST LEGG MASON MIST LORD ABBETT PARTNERS AGGRESSIVE GROWTH GROWTH AND INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 908,926 844,525 741,720 523,423 342,402 280,704 Units issued and transferred from other funding options.......... 167,283 564,765 290,526 43,331 529,241 78,527 Units redeemed and transferred to other funding options.......... (183,085) (500,364) (187,721) (26,782) (348,220) (16,829) --------- --------- --------- --------- --------- --------- Units end of year................ 893,124 908,926 844,525 539,972 523,423 342,402 ========= ========= ========= ========= ========= =========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 130
AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION BOND INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 1,521,701 1,088,603 676,191 63,414 -- -- 741,710 1,590,658 728,909 243,689 77,194 -- (318,349) (1,157,560) (316,497) (15,456) (13,780) -- --------- ----------- --------- --------- --------- --------- 1,945,062 1,521,701 1,088,603 291,647 63,414 -- ========= =========== ========= ========= ========= ========= MIST PIMCO MIST RCM TOTAL RETURN TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 2,039,385 1,849,249 1,483,392 1,395,573 1,334,943 1,273,073 459,131 1,580,219 818,646 861,145 1,036,397 518,666 (323,027) (1,390,083) (452,789) (389,423) (975,767) (456,796) --------- ----------- --------- --------- --------- --------- 2,175,489 2,039,385 1,849,249 1,867,295 1,395,573 1,334,943 ========= =========== ========= ========= ========= ========= MIST MET/AIM MIST HARRIS OAKMARK SMALL CAP GROWTH INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 170,794 129,221 101,110 1,060,490 636,793 289,245 87,382 152,658 72,111 501,471 1,213,847 536,478 (49,191) (111,085) (44,000) (226,191) (790,150) (188,930) --------- ----------- --------- --------- --------- --------- 208,985 170,794 129,221 1,335,770 1,060,490 636,793 ========= =========== ========= ========= ========= ========= MIST NEUBERGER BERMAN MIST VAN KAMPEN REAL ESTATE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 939,464 503,432 151,740 -- -- -- 419,170 1,259,740 536,011 2,004 -- -- (286,996) (823,708) (184,319) (4) -- -- --------- ----------- --------- --------- --------- --------- 1,071,638 939,464 503,432 2,000 -- -- ========= =========== ========= ========= ========= =========
131 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MIST THIRD AVENUE MID-CAP VALUE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 2,988 2,543 21 17,494 2,073 366 Units issued and transferred from other funding options.......... 4,172 710 2,575 11,206 16,123 1,821 Units redeemed and transferred to other funding options.......... (2,522) (265) (53) (3,757) (702) (114) -------- ------- -------- ------- ------- ------- Units end of year................ 4,638 2,988 2,543 24,943 17,494 2,073 ======== ======= ======== ======= ======= ======= MIST CYCLICAL MIST CYCLICAL GROWTH ETF GROWTH AND INCOME ETF INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 16,395 -- -- 10,875 -- -- Units issued and transferred from other funding options.......... 43,076 18,885 -- 25,957 12,571 -- Units redeemed and transferred to other funding options.......... (3,307) (2,490) -- (6,281) (1,696) -- -------- ------- -------- ------- ------- ------- Units end of year................ 56,164 16,395 -- 30,551 10,875 -- ======== ======= ======== ======= ======= ======= AMERICAN CENTURY DELAWARE VP VISTA VIP SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,963 1,252 -- 31,911 9,876 -- Units issued and transferred from other funding options.......... 511 761 1,295 43,174 25,950 10,566 Units redeemed and transferred to other funding options.......... (832) (50) (43) (8,041) (3,915) (690) -------- ------- -------- ------- ------- ------- Units end of year................ 1,642 1,963 1,252 67,044 31,911 9,876 ======== ======= ======== ======= ======= ======= DREYFUS GOLDMAN SACHS INTERNATIONAL VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 45,198 14,559 1,371 18,361 3,769 1,123 Units issued and transferred from other funding options.......... 17,418 32,872 25,402 68,111 15,229 9,745 Units redeemed and transferred to other funding options.......... (20,066) (2,233) (12,214) (1,683) (637) (7,099) -------- ------- -------- ------- ------- ------- Units end of year................ 42,550 45,198 14,559 84,789 18,361 3,769 ======== ======= ======== ======= ======= =======
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 132
MIST OPPENHEIMER MIST LEGG MASON CAPITAL APPRECIATION VALUE EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ---------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 27,796 10,588 -- 490,888 -- -- 50,236 48,969 13,476 90,867 548,298 -- (7,398) (31,761) (2,888) (70,662) (57,410) -- ------- -------- ------- -------- -------- ---- 70,634 27,796 10,588 511,093 490,888 -- ======= ======== ======= ======== ======== ====
MIST PIMCO MIST BLACKROCK MIST JANUS INFLATION PROTECTED BOND LARGE-CAP CORE FORTY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------- ------------------- 2007 2006 2005 2007 (B) 2007 (B) ---- ---- ---- -------- -------- 12,722 -- -- -- -- 86,389 33,652 -- 17,523,204 305,557 (18,519) (20,930) -- (2,171,078) (24,177) -------- -------- ---- ----------- -------- 80,592 12,722 -- 15,352,126 281,380 ======== ======== ==== =========== ========
DREYFUS DREYFUS MIDCAP STOCK EMERGING LEADERS INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ------------------------ 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- 7,996 -- -- 931 916 -- 15,966 8,296 -- 1,192 43 940 (334) (300) -- (2,123) (28) (24) ------ ----- ----- ------- ------- ------- 23,628 7,996 -- -- 931 916 ====== ===== ===== ======= ======= ======= GOLDMAN SACHS MFS STRUCTURED SMALL CAP EQUITY HIGH INCOME INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 6,743 4,239 -- 6,738 6,238 4,700 5,781 2,659 4,244 823 8,397 1,719 (260) (155) (5) (5,785) (7,897) (181) ------ ----- ----- ------- ------- ------- 12,264 6,743 4,239 1,776 6,738 6,238 ====== ===== ===== ======= ======= =======
133 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MFS MFS GLOBAL EQUITY NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,789 -- -- -- -- -- Units issued and transferred from other funding options.......... 2,461 1,849 -- 260 -- -- Units redeemed and transferred to other funding options.......... (302) (60) -- (7) -- -- ------- ------- ------- -------- ------- ------- Units end of year................ 3,948 1,789 -- 253 -- -- ======= ======= ======= ======== ======= ======= WELLS FARGO VT WELLS FARGO VT TOTAL RETURN BOND MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 2006 2006 2007 2006 2006 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 5,553 1,620 -- 91,188 -- -- Units issued and transferred from other funding options.......... 5,733 4,733 1,631 105,491 93,909 -- Units redeemed and transferred to other funding options.......... (1,589) (800) (11) (14,684) (2,721) -- ------- ------- ------- -------- ------- ------- Units end of year................ 9,697 5,553 1,620 181,995 91,188 -- ======= ======= ======= ======== ======= ======= WELLS FARGO VT EQUITY INCOME INVESTMENT DIVISION ------------------------ 2007 (A) 2006 2005 -------- ---- ---- Units beginning of year.......... 653 727 402 Units issued and transferred from other funding options.......... -- -- 422 Units redeemed and transferred to other funding options.......... (653) (74) (97) ------- ------- ------- Units end of year................ -- 653 727 ======= ======= =======
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 134
MFS VAN KAMPEN VALUE GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 2006 2005 2007 2006 2006 ---- ---- ---- ---- ---- ---- -- -- -- 1,342 1,272 -- 3069 -- -- 1,425 701 1,280 (103) -- -- (847) (631) (8) ------- ------- ------- -------- ------- ------- 2,966 -- -- 1,920 1,342 1,272 ======= ======= ======= ======== ======= ======= WELLS FARGO VT WELLS FARGO VT ASSET ALLOCATION LARGE COMPANY GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 (A) 2006 2005 2007 (A) 2006 2005 -------- ---- ---- -------- ---- ---- 907 -- -- 17,802 772 416 63 1,099 -- 1,045 18,861 464 (970) (192) -- (18,847) (1,831) (108) ------- ------- ------- -------- ------- ------- -- 907 -- -- 17,802 772 ======= ======= ======= ======== ======= =======
135 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Policies, 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 (%) ---------- ------------- ----------- ------------ --------------- -------------- MSF BlackRock Large Cap 2007 -- -- -- 1.57 0.45 - 0.90 5.66 - 6.56 Investment Division/a/ 2006 16,009,494 13.85 - 42.25 435,896,815 1.30 0.45 - 0.90 12.10 - 14.15 2005 16,488,159 12.13 - 37.35 401,557,280 1.09 0.45 - 0.90 2.67 - 3.59 2004 16,507,025 11.71 - 36.38 399,816,513 0.71 0.45 - 0.90 9.87 - 10.86 2003 16,150,806 10.57 - 33.12 367,087,301 0.83 0.45 - 0.90 29.08 - 30.24 MSF BlackRock Diversified 2007 12,715,624 15.43 - 38.69 334,245,436 2.54 0.45 - 0.90 4.96 - 8.02 Investment Division 2006 13,096,726 14.57 - 36.86 331,432,719 2.44 0.40 - 0.90 7.38 - 10.53 2005 13,638,816 13.18 - 33.65 319,750,423 1.57 0.40 - 0.90 2.13 - 3.05 2004 13,455,017 12.79 - 32.95 315,176,729 1.83 0.40 - 0.90 7.54 - 8.51 2003 12,880,974 11.79 - 30.64 289,033,387 3.73 0.45 - 0.90 19.48 - 20.56 MSF BlackRock Aggressive Growth 2007 10,673,487 18.84 - 26.64 260,061,815 -- 0.45 - 0.90 19.53 - 20.60 Investment Division 2006 11,198,297 15.63 - 22.09 228,717,595 -- 0.40 - 0.90 5.76 - 6.75 2005 11,502,614 14.64 - 20.73 222,219,970 -- 0.40 - 0.90 9.72 - 10.70 2004 11,775,258 13.23 - 18.89 207,749,362 -- 0.40 - 0.90 11.97 - 12.98 2003 11,833,051 11.71 - 16.87 187,268,373 -- 0.45 - 0.90 39.53 - 40.79 MSF MetLife Stock Index 2007 34,637,993 13.47 - 39.67 748,068,488 1.03 0.45 - 0.90 4.28 - 10.73 Investment Division 2006 33,607,228 12.80 - 38.04 707,564,793 1.97 0.40 - 0.90 8.73 - 15.48 2005 32,156,989 11.08 - 33.24 605,569,341 1.56 0.40 - 0.90 3.71 - 4.64 2004 29,475,869 10.59 - 32.05 548,175,778 0.83 0.40 - 0.90 9.55 - 10.53 2003 25,746,955 9.58 - 29.26 457,114,347 1.65 0.45 - 0.90 27.06 - 28.20 MSF FI International Stock 2007 3,371,026 17.46 - 23.95 72,704,709 1.05 0.45 - 0.90 9.36 - 11.35 Investment Division 2006 3,412,213 15.68 - 21.90 67,509,144 1.40 0.40 - 0.90 14.38 - 16.49 2005 3,294,341 13.71 - 18.97 56,855,714 0.60 0.40 - 0.90 16.95 - 18.00 2004 3,241,370 11.67 - 16.22 48,075,000 1.32 0.40 - 0.90 17.14 - 18.19 2003 3,484,064 9.92 - 13.85 43,984,289 0.65 0.45 - 0.90 26.90 - 28.04 MSF FI Mid Cap Opportunities 2007 13,843,071 8.63 - 24.16 283,077,852 0.13 0.45 - 0.90 7.38 - 8.34 Investment Division 2006 14,298,595 7.97 - 22.36 271,463,672 0.01 0.45 - 0.90 10.85 - 28.32 2005 14,520,500 7.12 - 20.08 247,745,972 -- 0.45 - 0.90 5.97 - 6.92 2004 14,284,163 6.66 - 18.87 229,326,208 0.53 0.45 - 0.90 16.15 - 17.19 2003 13,347,672 5.69 - 16.17 184,078,088 -- 0.45 - 0.90 33.38 - 35.10 MSF T. Rowe Price Small Cap Growth 2007 4,692,085 17.16 - 19.47 85,746,187 -- 0.45 - 0.90 8.88 - 9.89 Investment Division 2006 4,913,291 15.76 - 17.80 81,812,746 -- 0.45 - 0.90 2.96 - 3.93 2005 5,103,342 8.20 - 17.21 80,632,046 -- 0.45 - 0.90 10.02 - 11.01 2004 5,056,605 7.41 - 15.57 72,034,034 -- 0.45 - 0.90 9.58 - 11.08 2003 4,901,924 6.76 - 14.08 63,188,807 -- 0.45 - 0.90 37.24 - 40.87 MSF Oppenheimer Global Equity 2007 2,347,437 21.71 - 24.18 52,072,709 1.10 0.45 - 0.90 5.53 - 10.86 Investment Division 2006 2,344,938 20.38 - 22.70 48,944,535 2.49 0.45 - 0.90 11.00 - 16.59 2005 2,314,718 17.48 - 19.47 41,604,796 0.55 0.45 - 0.90 15.19 - 16.22 2004 2,201,362 15.04 - 16.76 34,182,477 1.52 0.45 - 0.90 15.38 - 16.42 2003 2,140,330 12.92 - 14.39 28,695,718 2.04 0.45 - 0.90 29.29 - 30.45
136 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Harris Oakmark Large Cap Value 2007 4,115,566 14.14 - 17.54 61,926,665 0.78 0.45 - 0.90 (4.67) - (3.48) Investment Division 2006 4,099,325 14.65 - 18.40 64,292,839 0.77 0.40 - 0.90 16.70 - 18.14 2005 4,085,993 12.55 - 15.72 54,445,434 0.70 0.40 - 0.90 (2.26) - (1.38) 2004 3,767,330 12.79 - 16.08 51,133,000 0.49 0.40 - 0.90 10.42 - 11.42 2003 3,060,299 11.53 - 14.56 37,503,629 -- 0.45 - 0.90 24.38 - 25.49 MSF Neuberger Berman Mid Cap Value 2007 3,292,329 21.27 - 30.68 82,005,373 0.55 0.90 2.51 - 3.45 Investment Division 2006 3,225,765 20.75 - 29.66 77,735,349 0.48 0.40 - 0.90 10.46 - 11.46 2005 2,912,765 18.79 - 26.61 63,152,395 0.29 0.40 - 0.90 11.27 - 12.27 2004 2,435,399 16.88 - 23.70 47,215,000 0.23 0.40 - 0.90 21.81 - 22.91 2003 1,946,013 13.86 - 19.29 30,945,551 0.32 0.60 - 0.90 35.30 - 36.52 MSF T. Rowe Price Large Cap Growth 2007 3,529,093 11.53 - 17.60 52,811,241 0.45 0.90 8.47 - 9.40 Investment Division 2006 3,620,946 10.63 - 16.09 49,315,573 0.33 0.40 - 0.90 12.21 - 13.23 2005 3,547,628 6.84 - 14.21 41,950,019 0.54 0.40 - 0.90 4.12 - 6.59 2004 3,354,771 6.47 - 13.33 36,962,724 0.21 0.40 - 0.90 2.91 - 9.93 2003 3,337,477 6.27 - 12.13 33,816,692 0.11 0.60 - 0.90 29.64 - 32.78 MSF Lehman Brothers Aggregate Bond 2007 6,582,200 14.56 - 16.17 104,928,263 4.49 0.45 - 0.90 5.89 - 11.27 Index Investment Division 2006 6,058,549 13.75 - 15.13 90,417,327 4.29 0.45 - 0.90 (0.88) - 4.15 2005 5,619,973 13.32 - 14.53 80,547,413 3.76 0.45 - 0.90 1.16 - 2.06 2004 4,812,639 13.17 - 14.23 67,709,808 3.00 0.45 - 0.90 3.17 - 4.10 2003 4,063,920 12.77 - 13.67 54,994,307 5.25 0.45 - 0.90 2.71 - 3.63 MSF Morgan Stanley EAFE Index 2007 4,186,312 14.30 - 19.58 71,635,930 1.94 0.45 - 0.90 9.83 - 13.98 Investment Division 2006 3,792,545 13.02 - 17.67 58,401,764 1.70 0.40 - 0.90 23.03 - 25.75 2005 3,464,106 10.45 - 14.05 42,457,559 1.59 0.40 - 0.90 12.24 - 13.24 2004 3,014,776 9.31 - 12.41 32,551,579 0.71 0.40 - 0.90 18.58 - 19.64 2003 2,675,762 7.85 - 10.37 24,290,177 1.48 0.45 - 0.90 36.41 - 37.70 MSF Russell 2000 Index 2007 2,975,863 14.83 - 20.87 56,244,600 0.91 0.45 - 0.90 (2.43) - 2.72 Investment Division 2006 2,884,744 15.20 - 21.19 55,288,989 0.81 0.45 - 0.90 12.11 - 17.99 2005 2,619,288 13.00 - 17.96 42,636,846 0.74 0.45 - 0.90 3.57 - 4.50 2004 2,380,540 12.55 - 17.19 37,085,761 0.44 0.45 - 0.90 16.71 - 17.77 2003 2,084,869 10.75 - 14.59 27,726,279 0.63 0.45 - 0.90 44.77 - 46.07 MSF Jennison Growth 2007 1,203,057 6.48 - 13.98 15,741,716 0.42 0.90 10.62 - 11.66 Investment Division 2006 1,356,790 5.81 - 12.52 14,099,259 -- 0.40 - 0.90 1.88 - 2.82 2005 1,147,750 5.65 - 12.19 13,084,245 -- 0.40 - 0.90 20.77 - 21.49 MSF BlackRock Strategic Value 2007 4,450,536 20.94 - 22.86 100,708,365 0.30 0.90 (4.30) - (3.41) Investment Division 2006 4,494,782 21.68 - 23.68 105,414,517 0.31 0.40 - 0.90 15.68 - 16.74 2005 4,485,936 18.58 - 20.28 90,122,911 -- 0.40 - 0.90 3.23 - 4.15 2004 4,164,014 17.84 - 19.48 80,342,000 -- 0.40 - 0.90 14.31 - 15.34 2003 3,371,798 15.46 - 16.89 56,539,662 -- 0.60 - 0.90 48.80 - 50.14 MSF MetLife Mid Cap Stock Index 2007 3,466,871 17.07 - 18.75 63,959,203 0.75 0.90 6.83 - 7.82 Investment Division 2006 3,270,208 15.84 - 17.39 56,090,136 1.19 0.48 - 0.90 9.11 - 10.09 2005 2,985,941 14.39 - 15.80 46,523,277 0.67 0.48 - 0.90 11.28 - 12.27 2004 2,658,110 12.82 - 14.07 36,885,384 0.48 0.48 - 0.90 15.01 - 16.05 2003 2,338,101 11.04 - 12.13 27,924,887 0.46 0.60 - 0.90 33.76 - 34.96
137 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Franklin Templeton Small Cap 2007 569,953 11.73 - 12.46 7,040,049 -- 0.90 3.53 - 4.53 Growth Investment Division 2006 538,941 11.33 - 11.92 6,368,294 -- 0.90 9.07 - 10.05 2005 474,966 8.20 - 10.83 5,108,051 -- 0.90 3.72 - 10.71 2004 440,124 10.01 - 10.35 4,527,432 -- 0.90 10.41 - 11.41 2003 328,803 9.07 - 9.29 3,038,000 -- 0.90 43.64 - 44.93 MSF BlackRock Large Cap Value 2007 770,111 15.30 - 16.10 12,275,048 0.98 0.90 2.41 - 3.40 Investment Division 2006 608,908 8.29 - 15.57 9,397,259 1.17 0.90 18.29 - 19.30 2005 396,107 12.63 - 13.05 5,137,144 0.88 0.90 5.04 - 5.98 2004 271,012 12.02 - 12.31 3,320,893 -- 0.90 12.39 - 13.40 2003 102,570 10.70 - 10.86 1,110,128 1.37 0.90 34.47 - 35.68 MSF Davis Venture Value 2007 1,479,707 14.53 - 42.17 58,550,244 0.77 0.90 3.65 - 4.56 Investment Division 2006 1,301,427 13.90 - 40.33 49,859,713 0.85 0.40 - 0.90 13.55 - 14.62 2005 1,739,984 12.13 - 35.19 43,993,114 0.65 0.40 - 0.90 9.32 - 10.30 2004 1,365,956 11.00 - 31.91 31,374,337 0.54 0.40 - 0.90 11.36 - 12.37 2003 1,321,574 9.79 - 28.40 24,429,495 0.37 0.60 - 0.90 29.70 - 30.87 MSF Loomis Sayles Small Cap 2007 98,083 15.07 - 333.74 15,771,472 0.08 0.90 10.90 - 11.90 Investment Division 2006 78,273 13.47 - 298.24 12,333,660 -- 0.40 - 0.90 15.64 - 16.72 2005 39,978 11.54 - 255.61 8,114,417 -- 0.40 - 0.90 6.00 - 6.96 2004 37,547 10.79 - 238.98 6,406,000 -- 0.40 - 0.90 15.31 - 16.35 2003 30,184 9.27 - 205.39 4,422,939 -- 0.60 - 0.90 35.25 - 36.47 MSF BlackRock Legacy Large Cap 2007 265,094 9.85 - 14.78 3,824,550 0.19 0.90 17.60 - 18.77 Growth Investment Division 2006 190,308 8.29 - 12.45 2,269,333 0.16 0.48 - 0.90 3.23 - 4.13 2005 1,201,181 7.96 - 11.96 10,109,046 0.39 0.48 - 0.90 6.05 - 7.00 2004 851,014 7.44 - 11.17 6,457,524 -- 0.48 - 0.90 8.81 - 11.74 2003 721,385 6.84 4,933,432 0.06 0.60 0.35 MSF BlackRock Bond Income 2007 4,467,585 15.30 - 31.06 92,436,358 3.24 0.45 - 0.90 5.36 - 12.31 Investment Division 2006 4,668,001 14.39 - 29.48 92,311,177 5.74 0.40 - 0.90 (2.17) - 4.43 2005 5,010,744 13.78 - 28.49 94,693,129 3.93 0.40 - 0.90 1.50 - 2.41 2004 4,716,266 13.46 - 28.07 89,174,083 4.09 0.40 - 0.90 3.50 - 4.43 2003 5,516,605 12.89 - 27.12 96,719,590 3.06 0.60 - 0.90 4.91 - 5.85 MSF FI Value Leaders 2007 440,904 12.29 - 15.50 6,742,764 0.91 0.90 3.22 - 4.24 Investment Division 2006 393,835 11.79 - 14.87 5,778,898 1.00 0.40 - 0.90 10.97 - 11.91 2005 248,972 10.54 - 13.29 3,262,874 1.04 0.40 - 0.90 9.71 - 10.69 2004 101,071 9.52 - 12.01 1,190,557 1.10 0.40 - 0.90 12.71 - 13.73 2003 48,986 8.37 - 10.56 505,283 0.52 0.60 - 0.90 25.79 - 26.92 MSF Harris Oakmark Focused Value 2007 191,591 268.52 - 285.05 54,129,720 0.56 0.90 (7.67) - (6.84) Investment Division 2006 191,529 290.84 - 305.98 58,176,504 0.30 0.90 11.45 - 12.45 2005 182,165 260.95 - 272.09 49,251,761 0.04 0.90 9.00 - 9.98 2004 153,755 239.40 - 247.40 37,844,733 0.04 0.90 8.95 - 9.93 2003 115,343 219.73 - 225.05 25,865,638 0.12 0.90 31.47 - 32.66 MSF Western Asset Management 2007 1,117,386 15.63 - 16.60 18,372,006 2.67 0.90 3.10 - 4.08 Strategic Bond Opportunities 2006 998,939 15.16 - 15.95 15,802,133 4.79 0.90 3.38 - 4.33 Investment Division 2005 843,296 14.56 - 15.19 12,708,706 3.01 0.90 1.92 - 2.83 2004 595,935 14.29 - 14.77 8,742,547 2.66 0.90 5.66 - 6.61 2003 374,682 13.52 - 13.85 5,163,069 1.70 0.90 11.62 - 12.62
138 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Western Asset Management 2007 1,066,735 14.08 - 14.95 15,797,381 2.66 0.90 3.38 - 4.33 U.S. Government Investment Division 2006 988,756 13.62 - 14.33 14,050,390 3.26 0.90 3.25 - 4.19 2005 879,572 13.19 - 13.75 12,014,309 1.33 0.90 0.82 - 1.72 2004 705,185 13.08 - 13.52 9,478,138 1.25 0.90 2.09 - 3.01 2003 559,100 12.82 - 13.13 7,304,902 0.62 0.90 0.77 - 1.68 MSF BlackRock Money Market 2007 3,638,086 17.41 - 17.57 63,398,057 4.94 0.90 4.15 - 5.07 Investment Division 2006 3,575,759 16.57 - 16.87 59,328,821 4.81 0.40 - 0.90 3.86 - 4.82 2005 1,760,759 12.92 - 16.24 28,027,973 2.78 0.40 - 0.90 1.97 - 2.89 2004 1,880,485 15.36 - 15.93 29,162,123 1.03 0.40 - 0.90 0.08 - 0.99 2003 1,760,371 15.21 - 15.92 27,346,427 0.78 0.60 - 0.90 (0.09) - 0.81 MSF MFS Total Return 2007 418,473 12.90 - 13.33 5,549,510 1.97 0.90 3.45 - 4.39 Investment Division 2006 297,430 12.47 - 12.77 3,781,921 3.21 0.40 - 0.90 11.19 - 12.18 2005 190,293 11.21 - 11.68 2,159,396 1.64 0.40 - 0.90 2.20 - 7.66 2004 69,569 10.85 - 11.04 767,164 -- 0.40 - 0.90 8.52 - 10.39 MSF MetLife Conservative Allocation 2007 66,558 11.53 - 11.81 784,035 -- 0.90 4.82 - 5.73 Investment Division 2006 44,128 11.00 - 11.17 492,252 2.90 0.90 6.27 - 7.27 2005 11,372 10.35 - 10.41 118,225 0.63 0.90 3.51 - 4.13 MSF MetLife Conservative to Moderate 2007 244,254 11.98 - 12.27 2,977,400 -- 0.90 4.08 - 5.05 Allocation Investment Division 2006 161,903 11.51 - 11.68 1,884,052 2.36 0.90 8.80 - 9.74 2005 54,464 10.58 - 10.64 578,511 0.77 0.90 5.80 - 6.43 MSF MetLife Moderate Allocation 2007 1,452,241 12.44 - 12.74 18,395,945 0.19 0.90 3.58 - 4.51 Investment Division 2006 775,138 12.01 - 12.19 9,406,274 1.48 0.90 11.20 - 12.19 2005 133,610 10.80 - 10.87 1,449,435 0.83 0.90 8.02 - 8.66 MSF MetLife Moderate to Aggressive 2007 2,499,351 12.92 - 13.23 32,935,899 0.19 0.90 3.19 - 4.09 Allocation Investment Division 2006 1,098,433 12.52 - 12.71 13,918,465 1.07 0.90 13.54 - 14.57 2005 212,022 11.03 - 11.09 2,349,403 0.77 0.90 10.28 - 10.94 MSF MetLife Aggressive Allocation 2007 608,756 13.22 - 13.54 8,191,098 0.22 0.90 2.56 - 3.52 Investment Division 2006 225,274 12.89 - 13.08 2,934,559 0.67 0.90 15.05 - 16.04 2005 40,224 11.20 - 11.27 452,673 0.73 0.90 12.05 - 12.72 MSF FI Large Cap Investment Division 2007 28,739 10.47 - 10.63 304,229 0.12 0.90 3.05 - 4.01 2006 6,047 10.16 - 10.22 61,685 -- 0.90 1.60 - 2.20 MSF Capital Guardian U.S. Equity 2007 33,111 15.60 516,531 -- 0.00 1.96 Investment Division 2006 25,159 15.30 384,843 0.50 0.48 36.32 Janus Aspen Large Cap Growth 2007 643,417 11.22 7,219,885 0.74 0.00 15.08 Investment Division 2006 595,051 9.75 5,801,609 0.49 0.48 - 0.60 11.38 2005 563,653 8.75 4,934,074 0.33 0.48 - 0.60 4.29 2004 509,009 8.39 4,276,635 0.15 0.48 - 0.60 4.52 2003 435,309 8.03 3,499,893 0.10 0.60 31.73 Janus Aspen Balanced 2007 5,625 14.23 80,035 3.00 0.00 10.31 Investment Division 2006 179 12.90 2,311 1.92 0.48 10.41 2005 187 11.68 2,186 2.07 0.60 7.66 2004 22 10.85 237 3.38 0.60 8.52
139 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 (%) ------- ------------ ---------- ------------ --------------- -------------- Janus Aspen Forty Investment Division 2007 27,126 19.13 518,927 0.25 0.00 36.64 2006 7,954 14.00 111,362 0.14 0.48 9.11 AIM V.I. Government Securities 2007 -- 11.76 -- -- 0.00 6.14 Investment Division/a/ 2006 691 11.08 7,657 3.54 0.40 3.28 2005 769 10.73 8,255 3.80 0.40 4.57 2004 420 10.26 4,310 1.40 0.40 2.60 AIM V.I. Global Real Estate 2007 74,508 34.51 2,571,266 5.97 0.00 (12.34) Investment Division 2006 70,179 39.37 2,762,613 1.18 0.40 - 0.60 42.62 2005 63,997 27.61 1,747,819 1.18 0.40 - 0.60 15.46 2004 54,709 23.91 1,308,000 1.25 0.40 -0.60 34.40 2003 10,108 17.79 178,608 1.49 0.60 38.82 Franklin Templeton Foreign Securities 2007 504,436 18.56 9,363,624 2.07 0.00 15.78 Investment Division 2006 471,719 16.03 7,566,317 1.35 0.48 - 0.60 21.69 2005 488,477 13.17 6,438,080 1.22 0.48 - 0.60 10.48 2004 444,204 11.92 5,300,000 1.12 0.48 - 0.60 18.87 2003 403,047 10.03 4,053,532 1.52 0.60 32.55 Franklin Mutual Discovery Securities 2007 93,103 18.32 1,706,062 1.59 0.00 11.84 Investment Division 2006 54,880 16.38 899,109 0.99 0.40 - 0.48 23.03 2005 9,138 13.31 121,664 1.34 0.40 - 0.48 15.97 AllianceBernstien Global Technology 2007 8,261 6.43 53,097 -- 0.00 19.96 Investment Division 2006 11,768 5.36 63,091 -- 0.40 - 0.60 8.36 2005 8,553 4.95 42,308 -- 0.40 - 0.60 3.65 2004 4,324 4.77 20,636 -- 0.48 - 0.60 5.09 2003 10,005 4.54 45,595 -- 0.60 43.79 Fidelity VIP Contrafund 2007 188,529 15.39 2,902,318 0.91 0.00 11.44 Investment Division 2006 151,404 13.81 2,091,319 1.15 0.40 - 0.60 11.57 2005 74,414 12.38 921,114 0.21 0.40 - 0.60 16.85 2004 77,301 10.59 819 0.21 0.40 - 0.60 15.34 2003 97,404 9.18 894 0.15 0.60 28.35 Fidelity VIP Asset Manager: Growth 2007 112,746 11.17 1,259,390 4.07 0.00 18.83 Investment Division 2006 102,160 9.40 958,076 1.87 0.48 6.89 2005 80,752 8.79 708,401 2.58 0.48 3.79 2004 83,331 8.47 704,000 2.23 0.48 5.85 2003 53,872 8.00 432,629 2.96 0.60 23.15 Fidelity VIP Investment Grade Bond 2007 73,675 11.57 852,372 0.68 0.00 4.23 Investment Division 2006 3,341 11.10 36,978 4.18 0.40 - 0.48 4.28 2005 3,156 10.64 33,484 2.35 0.40 - 0.48 2.08 2004 1,268 10.43 13,121 -- 0.40 4.27 Fidelity VIP Equity-Income 2007 87,700 13.87 1,216,664 3.23 0.00 (0.93) Investment Division 2006 30,951 14.00 433,176 3.96 0.40 - 0.48 20.07 2005 2,190 11.66 25,408 1.05 0.40 - 0.48 5.76 2004 928 11.02 10,110 -- 0.40 10.25
140 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 (%) --------- -------------- ----------- ------------ --------------- --------------- American Funds Growth 2007 1,218,654 94.52 - 100.35 121,273,017 0.82 0.90 11.33 - 12.35 Investment Division 2006 1,094,384 84.90 - 89.32 97,034,740 0.86 0.90 9.24 - 10.22 2005 898,134 77.72 - 81.04 72,331,242 0.74 0.90 15.16 - 16.19 2004 656,749 67.49 - 69.75 45,571,772 0.20 0.90 11.49 - 12.50 2003 417,055 60.53 - 62.00 25,759,940 0.13 0.90 35.59 - 36.81 American Funds Growth-Income 2007 1,381,044 51.88 - 55.07 75,370,228 1.59 0.90 4.11 - 5.04 Investment Division 2006 1,228,077 49.83 - 52.43 63,898,091 1.68 0.90 14.17 - 15.21 2005 1,035,047 43.64 - 45.51 46,794,725 1.44 0.90 4.89 - 5.83 2004 811,401 41.61 - 43.00 34,701,703 1.00 0.90 9.39 - 10.37 2003 524,999 38.04 - 38.96 20,368,911 1.18 0.90 31.25 - 32.43 American Funds Global Small 2007 1,945,062 33.16 - 35.20 67,615,279 3.01 0.90 20.32 - 21.42 Capitalization Investment Division 2006 1,521,701 27.56 - 28.99 43,642,742 0.46 0.90 22.97 - 24.05 2005 1,088,603 22.41 - 23.37 25,231,190 0.89 0.90 24.24 - 25.35 2004 676,191 18.04 - 18.64 12,527,867 -- 0.90 19.80 - 20.88 2003 377,860 15.06 - 15.42 5,800,860 0.49 0.90 52.16 - 53.53 American Funds Bond 2007 291,647 10.78 - 10.95 3,182,415 10.03 0.90 6.52 - 7.56 Investment Division 2006 63,414 10.12 - 10.18 644,176 0.87 0.90 1.20 - 1.80 MIST T. Rowe Price Mid-Cap Growth 2007 1,587,296 10.32 - 16.38 17,384,199 0.21 0.90 16.74 - 17.85 Investment Division 2006 1,338,870 8.84 - 13.92 12,401,292 -- 0.60 - 0.90 5.66 - 6.60 2005 1,132,034 8.37 - 13.11 9,817,802 -- 0.60 - 0.90 13.85 - 14.87 2004 856,351 7.35 - 11.44 6,475,187 -- 0.60 - 0.90 14.40 - 18.15 2003 526,964 6.28 - 6.43 3,375,270 -- 0.90 35.90 - 37.12 MIST MFS Research International 2007 695,827 17.33 - 20.03 13,629,924 1.44 0.90 12.59 - 13.61 Investment Division 2006 566,593 15.30 - 17.63 9,803,525 1.59 0.90 25.80 - 26.90 2005 294,107 12.09 - 13.89 4,058,072 0.63 0.90 6.38 - 16.77 2004 234,898 11.51 - 11.90 2,780,832 -- 0.90 18.65 - 19.72 2003 151,293 9.70 - 9.94 1,497,220 0.97 0.90 31.01 - 32.19 MIST PIMCO Total Return 2007 2,175,489 14.07 - 14.94 32,210,481 3.46 0.90 6.91 - 7.87 Investment Division 2006 2,039,385 13.16 - 13.85 28,016,253 2.73 0.90 3.85 - 4.81 2005 1,849,249 12.67 - 13.21 24,263,960 0.06 0.90 1.55 - 2.46 2004 1,483,392 12.48 - 12.90 19,019,859 7.63 0.90 4.31 - 5.25 2003 1,041,644 11.96 - 12.25 12,697,066 1.48 0.90 3.59 - 4.52 MIST RCM Technology 2007 1,867,295 6.74 - 7.15 13,231,277 -- 0.90 30.62 - 31.68 Investment Division 2006 1,395,573 5.16 - 5.43 7,523,569 -- 0.90 4.51 - 5.47 2005 1,334,943 4.94 - 5.15 6,824,691 -- 0.90 10.36 - 11.35 2004 1,273,073 4.47 - 4.62 5,849,160 -- 0.90 (5.13) - (4.28) 2003 932,206 4.72 - 4.83 4,480,813 -- 0.90 56.44 - 57.84 MIST Lord Abbett Bond Debenture 2007 1,249,287 16.02 - 19.29 22,262,379 5.32 0.45 - 0.90 5.88 - 14.15 Investment Division 2006 1,162,806 14.77 - 18.05 19,368,414 6.71 0.40 - 0.90 1.42 - 9.34 2005 1,085,144 13.96 - 16.51 16,531,209 4.70 0.40 - 0.90 0.90 - 1.81 2004 1,015,708 10.84 - 16.22 15,192,966 3.51 0.40 - 0.90 7.46 - 9.61 2003 963,357 9.21 - 14.95 12,846,410 1.85 0.45 - 0.90 17.17 - 25.04
141 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Lazard Mid-Cap 2007 340,316 13.14 - 15.10 5,084,696 0.63 0.90 (3.37) - (2.45) Investment Division 2006 261,764 14.85 - 15.48 4,020,887 0.52 0.90 6.62 - 14.86 2005 226,296 11.78 - 13.48 3,034,264 0.41 0.90 7.44 - 8.40 2004 171,772 12.14 - 12.43 2,124,397 -- 0.90 13.57 - 14.60 2003 91,521 10.69 - 10.85 988,932 1.35 0.90 25.29 - 26.42 MIST Met/AIM Small Cap Growth 2007 208,985 14.84 - 15.62 3,233,322 -- 0.90 10.42 - 11.41 Investment Division 2006 170,794 13.44 - 14.02 2,376,804 -- 0.90 3.77 - 13.93 2005 129,221 11.71 - 12.31 1,587,237 -- 0.90 7.63 - 10.16 2004 101,110 11.06 - 11.33 1,143,358 -- 0.90 5.78 - 6.73 2003 60,439 10.46 - 10.62 643,451 -- 0.90 37.84 - 39.08 MIST Harris Oakmark International 2007 1,335,770 19.20 - 20.20 26,700,786 0.89 0.90 (1.74) - (0.83) Investment Division 2006 1,060,490 19.54 - 20.37 21,411,537 2.33 0.90 28.05 - 29.18 2005 636,793 15.26 - 15.77 9,973,856 0.16 0.90 13.47 - 14.48 2004 289,245 13.45 - 13.77 3,963,209 0.04 0.90 19.73 - 20.80 2003 71,528 11.23 - 11.40 813,505 1.84 0.90 34.16 - 35.37 MIST Legg Mason Partners Aggressive 2007 893,124 7.54 - 8.82 7,804,601 0.22 0.90 1.71 - 2.56 Growth Investment Division 2006 908,926 7.37 - 8.60 7,744,433 -- 0.48 - 0.90 (2.53) - (1.60) 2005 844,525 7.50 - 8.74 7,322,996 -- 0.48 - 0.90 12.83 - 13.84 2004 741,720 6.60 - 7.68 5,657,453 -- 0.48 - 0.90 7.85 - 8.82 2003 582,357 6.10 - 7.06 4,086,776 -- 0.60 - 0.90 23.37 - 29.93 MIST Lord Abbett Growth and Income 2007 539,972 11.65 6,289,386 1.00 0.00 4.02 Investment Division 2006 523,423 11.20 5,861,368 0.03 0.40 - 0.60 18.05 2005 342,402 9.49 - 12.19 4,160,587 0.10 0.40 - 0.60 3.68 - 4.62 2004 280,704 9.15 - 11.65 3,254,684 0.49 0.40 - 0.60 11.22 - 12.92 2003 199,532 8.10 - 10.47 2,083,614 0.70 0.60 29.15 - 32.18 MIST Neuberger Berman Real Estate 2007 1,071,638 16.76 - 17.32 18,432,903 1.09 0.90 (15.57) - (14.81) Investment Division 2006 939,464 19.85 - 20.33 18,987,194 1.01 0.40 - 0.90 36.70 - 37.93 2005 503,432 14.52 - 14.74 7,394,991 -- 0.40 - 0.90 12.60 - 13.61 2004 151,740 12.90 - 12.97 1,964,753 3.30 0.40 - 0.90 28.97 - 29.74 MIST Van Kampen Mid Cap Growth 2007 2,000 15.69 31,371 -- 0.00 23.52 Investment Division MIST Lord Abbett Mid-Cap Value 2007 4,638 14.34 66,500 0.94 0.00 0.63 Investment Division 2006 2,988 14.25 42,580 0.54 0.48 - 0.60 12.16 2005 2,543 12.71 32,304 0.86 0.48 - 0.60 8.05 2004 21 11.76 246 0.72 0.60 17.59 MIST Third Avenue Small Cap Value 2007 24,943 15.28 381,064 0.85 0.00 (2.98) Investment Division 2006 17,494 15.75 275,584 0.11 0.48 - 0.60 13.11 2005 2,073 13.92 28,860 -- 0.40 - 0.60 15.48 2004 366 12.06 4,407 0.55 0.40 20.58 MIST Oppenheimer Capital Appreciation 2007 70,634 13.27 - 13.59 955,427 0.11 0.90 13.42 - 14.49 Investment Division 2006 27,796 11.70 - 11.87 329,300 0.26 0.90 6.88 - 7.78 2005 10,588 10.95 - 11.01 116,310 0.13 0.90 9.21 - 9.86
142 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 ------------------------------------ UNIT VALUE/1/ LOWEST TO NET UNITS HIGHEST ($) ASSETS ($) ---------- ------------- ----------- MIST Legg Mason Value Equity 2007 511,093 10.02 - 11.42 5,435,902 Investment Division 2006 490,888 10.73 - 12.11 5,537,660 MIST Cyclical Growth ETF 2007 56,164 11.24 - 11.41 639,459 Investment Division 2006 16,395 10.71 - 10.77 176,315 MIST Cyclical Growth and Income ETF 2007 30,551 11.18 - 11.35 345,473 Investment Division 2006 10,875 10.67 - 10.73 116,548 MIST PIMCO Inflation Protected Bond 2007 80,592 11.16 - 11.33 911,539 Investment Division 2006 12,722 10.14 - 10.20 129,728 MIST BlackRock Large-Cap Core 2007 15,352,126 10.08 - 44.64 436,975,682 Investment Division/b/ MIST Janus Forty Investment Division/b/ 2007 281,380 12.33 - 12.40 3,487,948 American Century VP Vista 2007 1,642 17.75 29,133 Investment Division 2006 1,963 12.70 24,927 2005 1,252 11.65 14,583 Delaware VIP Small Cap Value 2007 67,044 15.30 1,025,844 Investment Division 2006 31,911 16.42 524,104 2005 9,876 14.17 139,966 Dreyfus MidCap Stock 2007 23,628 13.61 321,586 Investment Division 2006 7,996 11.35 90,768 Dreyfus Emerging Leaders 2007 -- -- -- Investment Division/a/ 2006 931 12.76 11,878 2005 916 11.81 10,821 Dreyfus International Value 2007 42,550 16.48 701,093 Investment Division 2006 45,198 15.85 716,432 2005 14,559 12.95 188,477 2004 1,371 11.6 15,540 Goldman Sachs Mid Cap Value 2007 84,789 14.28 1,210,921 Investment Division 2006 18,362 14.38 263,966 2005 3,769 12.38 46,646 2004 1,123 10.97 12,276 Goldman Sachs Structured Small Cap 2007 12,264 10.97 134,527 Equity Investment Division 2006 6,743 13.29 89,590 2005 4,239 11.83 50,166 MFS High Income 2007 1,776 12.36 21,944 Investment Division 2006 6,738 12.17 82,011 2005 6,238 11.07 69,027 2004 4,700 10.84 51
FOR THE YEAR ENDED DECEMBER 31 -------------------------------------------- INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ INCOME LOWEST TO LOWEST TO RATIO (%) HIGHEST (%) HIGHEST (%) ------------ --------------- --------------- MIST Legg Mason Value Equity -- 0.90 (6.62) - (5.70) Investment Division 0.16 0.48 - 0.90 7.73 - 27.65 MIST Cyclical Growth ETF -- 0.90 4.95 - 5.94 Investment Division 2.52 0.90 7.10 - 7.70 MIST Cyclical Growth and Income ETF -- 0.90 4.78 - 5.78 Investment Division 3.14 0.90 6.70 - 7.30 MIST PIMCO Inflation Protected Bond 1.27 0.90 10.06 - 11.08 Investment Division -- 0.90 1.40 - 2.00 MIST BlackRock Large-Cap Core -- 0.45 - 0.90 0.80 - 6.77 Investment Division/b/ MIST Janus Forty Investment Division/b/ -- 0.90 23.30 - 24.00 American Century VP Vista -- 0.00 39.76 Investment Division -- 0.40 9.03 -- 0.40 8.13 Delaware VIP Small Cap Value 0.21 0.00 (6.82) Investment Division 0.02 0.48 15.86 0.26 0.48 17.85 Dreyfus MidCap Stock 0.31 0.00 19.91 Investment Division 0.20 0.48 (8.96) Dreyfus Emerging Leaders -- 0.00 4.94 Investment Division/a/ -- 0.60 8.05 -- 0.60 4.75 Dreyfus International Value 1.66 0.00 3.97 Investment Division -- 0.40 - 0.48 22.35 -- 0.40 - 0.48 11.69 -- 0.40 15.99 Goldman Sachs Mid Cap Value 1.16 0.00 (0.70) Investment Division 1.82 0.40 - 0.48 16.17 0.91 0.40 - 0.48 12.83 1.17 0.40 - 0.48 9.71 Goldman Sachs Structured Small Cap 0.51 0.00 (17.46) Equity Investment Division 0.87 0.48 12.30 0.45 0.48 6.07 MFS High Income 9.79 0.00 1.56 Investment Division 5.42 0.40 - 0.48 9.98 11.32 0.40 - 0.48 2.05 -- 0.48 8.43
143 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 (%) ------- ------------ ---------- ------------ --------------- -------------- MFS Global Equity 2007 3,948 16.35 64,569 1.71 0.00 8.93 Investment Division 2006 1,789 15.01 26,856 -- 0.40 - 0.48 24.04 MFS New Discovery 2007 253 12.89 3,269 -- 0.00 2.25 Investment Division MFS Value Investment Division 2007 2,966 15.48 45,933 -- 0.00 7.56 Van Kampen Government 2007 1,920 11.83 22,716 5.06 0.00 6.96 Investment Division 2006 1,342 11.06 14,833 4.52 0.40 3.14 2005 1,272 10.72 13,636 -- 0.40 3.28 Wells Fargo VT Total Return Bond 2007 9,697 11.70 113,479 4.64 0.00 6.17 Investment Division 2006 5,553 11.02 61,191 4.43 0.40 3.79 2005 1,620 10.62 17,199 3.06 0.40 1.90 Wells Fargo VT Money Market 2007 181,995 11.27 2,051,734 4.42 0.00 4.64 Investment Division 2006 91,188 10.77 982,114 2.41 0.40 4.39 Wells Fargo VT Asset Allocation 2007 -- 13.70 -- -- 0.00 7.62 Investment Division/a/ 2006 907 12.73 11,546 0.99 0.40 12.11 Wells Fargo VT Large Company 2007 -- 12.13 -- -- 0.00 7.54 Growth Investment Division/a/ 2006 17,802 11.28 200,720 -- 0.40 2.39 2005 772 11.02 8,511 0.23 0.40 5.70 2004 416 10.42 4,335 -- 0.40 4.23 Wells Fargo VT Equity Income 2007 -- 13.88 -- -- 0.00 2.89 Investment Division/a/ 2006 653 13.49 8,813 1.55 0.40 18.51 2005 727 11.38 8,282 1.79 0.40 5.38 2004 402 10.80 4,341 -- 0.40 8.03
1 The Company sells a number of variable life products, which have unique combinations of features and fees that are charged against the policy 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 Investment Division 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 policy 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 Investment Division is affected by the timing of the declaration of dividends by the underlying portfolio, series, or fund in which the Investment Division invests. 3 These amounts represent the annualized policy 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 policy 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 policy total returns are not within the ranges presented. a For the period January 1, 2007 to April 27, 2007. b For the period April 30, 2007 to December 31, 2007. 144 METROPOLITAN LIFE INSURANCE COMPANY 200 PARK AVENUE NEW YORK, NY 10166 RECEIPT This is to acknowledge receipt of an Equity Advantage VUL Prospectus (Book #252) dated April 28, 2008. This Variable Life Insurance Policy is offered by Metropolitan Life Insurance Company. - ----------------------------------------------------- ----------------------------------------------------- (Date) (Client's Signature)
EQUITY ADVANTAGE VUL Flexible Premium Variable Life Insurance Policies Issued by Metropolitan Life Separate Account UL of Metropolitan Life Insurance Company 200 Park Avenue New York, New York 10166 This prospectus offers individual flexible premium variable life insurance policies (the "Policies") issued by Metropolitan Life Insurance Company ("MetLife"). You allocate net premiums among the Investment Divisions of Metropolitan Life Separate Account UL (the "Separate Account"). Each Investment Division of the Separate Account invests in shares of one of the following "Portfolios": METROPOLITAN SERIES FUND, INC.--Class A BlackRock Aggressive Growth Portfolio BlackRock Large Cap Value Portfolio Davis Venture Value Portfolio FI Value Leaders Portfolio Harris Oakmark Focused Value Portfolio Lehman Brothers(R) Aggregate Bond Index Portfolio Loomis Sayles Small Cap Portfolio MetLife Stock Index Portfolio MFS(R) Total Return Portfolio Neuberger Berman Mid Cap Value Portfolio Oppenheimer Global Equity Portfolio Western Asset Management Strategic Bond Opportunities Portfolio Western Asset Management U.S. Government Portfolio MetLife Conservative Allocation Portfolio MetLife Conservative to Moderate Allocation Portfolio MetLife Moderate Allocation Portfolio MetLife Moderate to Aggressive Allocation Portfolio MetLife Aggressive Allocation Portfolio MET INVESTORS SERIES TRUST--Class A Clarion Global Real Estate Portfolio Dreman Small Cap Value Portfolio Harris Oakmark International Portfolio Janus Forty Portfolio Lazard Mid Cap Portfolio Legg Mason Partners Aggressive Growth Portfolio Legg Mason Value Equity Portfolio Lord Abbett Bond Debenture Portfolio Met/AIM Small Cap Growth Portfolio Met/Franklin Income Portfolio Met/Franklin Mutual Shares Portfolio Met/Franklin Templeton Founding Strategy Portfolio Met/Templeton Growth Portfolio MFS(R) Research International Portfolio PIMCO Inflation Protected Bond Portfolio PIMCO Total Return Portfolio Van Kampen Mid Cap Growth Portfolio AMERICAN FUNDS INSURANCE SERIES(R)--Class 2 American Funds Bond Fund American Funds Global Small Capitalization Fund American Funds Growth Fund American Funds Growth-Income Fund You may also allocate net premiums to our Fixed Account. Special limits may apply to Fixed Account transfers and withdrawals. You receive Fixed Account performance until 20 days after we apply your initial premium payment to the Policy. Thereafter, we invest the Policy's cash value according to your instructions. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE POLICIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. WE DO NOT GUARANTEE HOW ANY OF THE INVESTMENT DIVISIONS OR PORTFOLIOS WILL PERFORM. THE POLICIES AND THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. APRIL 28, 2008 TABLE OF CONTENTS
PAGE ----- SUMMARY OF BENEFITS AND RISKS............................... A-4 Benefits of the Policy................................. A-4 Risks of the Policy.................................... A-5 Risks of the Portfolios................................ A-7 FEE TABLES.................................................. A-7 Transaction Fees....................................... A-7 Periodic Charges Other Than Portfolio Operating Expenses.............................................. A-9 Annual Portfolio Operating Expenses.................... A-12 HOW THE POLICY WORKS........................................ A-14 THE COMPANY, THE SEPARATE ACCOUNT AND THE PORTFOLIOS........ A-15 The Company............................................ A-15 The Separate Account................................... A-15 The Portfolios......................................... A-15 Share Classes of the Portfolios........................ A-17 Certain Payments We Receive with Regard to the Portfolios............................................ A-18 Selection of the Portfolios............................ A-18 Voting Rights.......................................... A-19 Rights Reserved by MetLife............................. A-19 THE POLICIES................................................ A-19 Purchasing a Policy.................................... A-19 Replacing Existing Insurance........................... A-20 Policy Owner and Beneficiary........................... A-20 24 Month Conversion Right.............................. A-20 Exchange Right......................................... A-21 PREMIUMS.................................................... A-21 Flexible Premiums...................................... A-21 Amount Provided for Investment under the Policy........ A-21 Right to Examine Policy................................ A-22 Allocation of Net Premiums............................. A-22 RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE'S DESIGNATED OFFICE......................................... A-23 Payment of Proceeds.................................... A-24 CASH VALUE.................................................. A-24 DEATH BENEFITS.............................................. A-25 Death Proceeds Payable................................. A-26 Change in Death Benefit Option......................... A-26 Increase in Face Amount................................ A-27 Reduction in Face Amount............................... A-27 SURRENDERS AND PARTIAL WITHDRAWALS.......................... A-27 Surrender.............................................. A-27 Partial Withdrawal..................................... A-28
A-2
PAGE ----- TRANSFERS................................................... A-29 Transfer Option........................................ A-29 AUTOMATED INVESTMENT STRATEGIES............................. A-31 LOANS....................................................... A-32 LAPSE AND REINSTATEMENT..................................... A-33 Lapse.................................................. A-33 Reinstatement.......................................... A-34 ADDITIONAL BENEFITS BY RIDER................................ A-34 THE FIXED ACCOUNT........................................... A-35 General Description.................................... A-35 Values and Benefits.................................... A-36 Policy Transactions.................................... A-36 CHARGES..................................................... A-36 Deductions from Premiums............................... A-37 Surrender Charge....................................... A-38 Partial Withdrawal Charge.............................. A-38 Transfer Charge........................................ A-39 Illustration of Benefits Charge........................ A-39 Monthly Deduction from Cash Value...................... A-39 Loan Interest Spread................................... A-41 Charges Against the Portfolios and the Investment Divisions of the Separate Account..................... A-41 TAX CONSIDERATIONS.......................................... A-41 Introduction........................................... A-41 Tax Status of the Policy............................... A-42 Tax Treatment of Policy Benefits....................... A-42 MetLife's Income Taxes................................. A-46 DISTRIBUTION OF THE POLICIES................................ A-46 LEGAL PROCEEDINGS........................................... A-48 RESTRICTIONS ON FINANCIAL TRANSACTIONS...................... A-48 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............... A-48 FINANCIAL STATEMENTS........................................ A-48 GLOSSARY.................................................... A-49 APPENDIX A: GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST......................................... A-50 APPENDIX B: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND CASH SURRENDER VALUES..................................... A-51
A-3 SUMMARY OF BENEFITS AND RISKS This summary describes the Policy's important benefits and risks. The sections in the prospectus following this summary discuss the Policy in more detail. THE GLOSSARY AT THE END OF THE PROSPECTUS DEFINES CERTAIN WORDS AND PHRASES USED IN THIS PROSPECTUS. BENEFITS OF THE POLICY DEATH PROCEEDS. The Policy is designed to provide insurance protection. Upon receipt of satisfactory proof of the death of the insured, we pay death proceeds to the beneficiary of the Policy. Death proceeds generally equal the death benefit on the date of the insured's death plus any additional insurance provided by rider, less any outstanding loan and accrued loan interest. CHOICE OF DEATH BENEFIT OPTION. You may choose among three death benefit options: -- a level death benefit that equals the Policy's face amount, -- a variable death benefit that equals the Policy's face amount plus the Policy's cash value, and -- a combination variable and level death benefit that equals the Policy's face amount plus the Policy's cash value until the insured attains age 65 and equals the Policy's face amount thereafter. The death benefit under any option could increase to satisfy Federal tax law requirements if the cash value reaches certain levels. After the first Policy year you may change your death benefit option, subject to our underwriting rules. A change in death benefit option may have tax consequences. PREMIUM FLEXIBILITY. You can make premium payments based on a schedule you determine, subject to some limits. You may change your payment schedule at any time or make a payment that does not correspond to your schedule. We can, however, limit or prohibit payments in some situations. RIGHT TO EXAMINE THE POLICY. During the first ten days following your receipt of the Policy, you have the right to return the Policy to us. If you exercise this right, we will refund the premiums you paid. INVESTMENT OPTIONS. You can allocate your net premiums and cash value among your choice of thirty-nine Investment Divisions in the Separate Account, each of which corresponds to a mutual fund portfolio, or "Portfolio." The Portfolios available under the Policy include several common stock funds, including funds which invest primarily in foreign securities, as well as bond funds, balanced funds, and asset allocation funds. You may also allocate premiums and cash value to our Fixed Account which provides guarantees of interest and principal. You may change your allocation of future premiums at any time. PARTIAL WITHDRAWALS. You may withdraw cash surrender value from your Policy at any time after the first Policy anniversary. The minimum amount you may withdraw is $500. We reserve the right to limit partial withdrawals to no more than 90% of the Policy's cash surrender value. We may limit the number of partial withdrawals to 12 per Policy year or impose a processing charge of $25 for each partial withdrawal. Partial withdrawals may have tax consequences. TRANSFERS AND AUTOMATED INVESTMENT STRATEGIES. You may transfer your Policy's cash value among the Investment Divisions or between the Investment Divisions and the Fixed Account. The minimum amount you may transfer is $50, or if less, the total amount in the Investment Division or the Fixed Account. We may limit the number of transfers among the Investment Divisions and the Fixed Account to no more than four per Policy year. We may impose a processing charge of $25 for each transfer. We may also impose restrictions on "market timing" transfers. (See "Transfers" for additional information on such restrictions.) We offer four automated investment strategies that allow you to periodically transfer or reallocate your cash value among the Investment Divisions and the Fixed Account. (See "Automated Investment Strategies.") A-4 LOANS. You may borrow from the cash value of your Policy. The minimum amount you may borrow is $500. The maximum amount you may borrow is an amount equal to the Policy's cash value net of the Surrender Charge, reduced by monthly deductions and interest charges through the next Policy anniversary, increased by interest credits through the next Policy anniversary, less any existing Policy loans. We charge you a maximum annual interest rate of 4.0% for the first ten Policy years and 3.0% thereafter. We credit interest at an annual rate of at least 3.0% on amounts we hold as collateral to support your loan. Loans may have tax consequences. SURRENDERS. You may surrender the Policy for its cash surrender value at any time. Cash surrender value equals the cash value reduced by any Policy loan and accrued loan interest and by any applicable Surrender Charge. A surrender may have tax consequences. TAX BENEFITS. We anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. Accordingly, undistributed increases in cash value should not be taxable to you. As long as your Policy is not a modified endowment contract, partial withdrawals should be non-taxable until you have withdrawn an amount equal to your total investment in the Policy. Death benefits paid to your beneficiary should generally be free of Federal income tax. Death benefits may be subject to estate taxes. CONVERSION RIGHT. During the first two Policy years, you may convert the Policy to fixed benefit coverage by exchanging the Policy for a fixed benefit life insurance policy that we agree to, and that is issued by us or an affiliate that we name. We will make the exchange without evidence of insurability. SUPPLEMENTAL BENEFITS AND RIDERS. We offer a variety of riders that provide supplemental benefits under the Policy. We generally deduct any monthly charges for these riders as part of the Monthly Deduction. Your registered representative can help you determine whether any of these riders are suitable for you. PERSONALIZED ILLUSTRATIONS. You will receive personalized illustrations in connection with the purchase of this Policy that reflect your own particular circumstances. These hypothetical illustrations may help you to understand the long-term effects of different levels of investment performance, the possibility of lapse, and the charges and deductions under the Policy. They will also help you to compare this Policy to other life insurance policies. The personalized illustrations are based on hypothetical rates of return and are not a representation or guarantee of investment returns or cash value. RISKS OF THE POLICY INVESTMENT RISK. If you invest your Policy's cash value in one or more of the Investment Divisions, then you will be subject to the risk that investment performance will be unfavorable and that your cash value will decrease. In addition, we deduct Policy fees and charges from your Policy's cash value, which can significantly reduce your Policy's cash value. During times of poor investment performance, this deduction will have an even greater impact on your Policy's cash value. It is possible to lose your full investment and your Policy could lapse without value, unless you pay additional premium. If you allocate cash value to the Fixed Account, then we credit such cash value with a declared rate of interest. You assume the risk that the rate may decrease, although it will never be lower than the guaranteed minimum annual effective rate of 3%. SURRENDER AND WITHDRAWAL RISKS. The Policies are designed to provide lifetime insurance protection. They are not offered primarily as an investment, and should not be used as a short-term savings vehicle. If you surrender the Policy within the first ten Policy years (or within the first ten Policy years following a face amount increase), you will be subject to a Surrender Charge as well as income tax on any gain that is distributed or deemed to be distributed from the Policy. You will also be subject to a Surrender Charge if you make a partial withdrawal from the Policy within the first ten Policy years (or the first ten Policy years following the face amount increase) if the partial withdrawal reduces the face amount (or the face amount increase). If you surrender the Policy in the first Policy year (or in the first year following a face amount increase) we will also deduct an amount equal to the remaining first year Coverage Expense Charges. You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the Policy's cash value in the near future. Even if you do not ask to surrender your Policy, surrender charges may play a role in determining whether A-5 your Policy will lapse (terminate without value), because surrender charges determine the cash surrender value, which is a measure we use to determine whether your Policy will enter the grace period (and possibly lapse). RISK OF LAPSE. Your Policy may lapse if you have paid an insufficient amount of premiums or if the investment experience of the Investment Divisions is poor. If your cash surrender value is not enough to pay the monthly deduction, your Policy may enter a 62-day grace period. We will notify you that the Policy will lapse unless you make a sufficient payment of additional premium during the grace period. Your Policy generally will not lapse if you pay certain required premium amounts and you are therefore protected by a Guaranteed Minimum Death Benefit. If your Policy does lapse, your insurance coverage will terminate, although you will be given an opportunity to reinstate it. Lapse of a Policy on which there is an outstanding loan may have adverse tax consequences. TAX RISKS. We anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. However, the rules are not entirely clear if your Policy is issued on a substandard basis. The death benefit under the Policy will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. If your Policy is not treated as a life insurance contract under Federal tax law, increases in the Policy's cash value will be taxed currently. Even if your Policy is treated as a life insurance contract for Federal tax purposes, it may become a modified endowment contract due to the payment of excess premiums or unnecessary premiums, due to a material change or due to a reduction in your death benefit. If your Policy becomes a modified endowment contract, surrenders, partial withdrawals and loans will be treated as a distribution of the earnings in the Policy and will be taxable as ordinary income to the extent thereof. In addition, if the Policy Owner is under age 59 1/2 at the time of the surrender, partial withdrawal or loan, the amount that is included in income will generally be subject to a 10% penalty tax. If the Policy is not a modified endowment contract, distributions generally will be treated first as a return of basis or investment in the contract and then as taxable income. Moreover, loans will generally not be treated as distributions, although the tax consequences of loans outstanding after the tenth Policy year are uncertain. Finally, neither distributions nor loans from a Policy that is not a modified endowment contract are subject to the 10% penalty tax. See "Tax Considerations." You should consult a qualified tax adviser for assistance in all Policy-related tax matters. LOAN RISKS. A Policy loan, whether or not repaid, will affect the cash value of your Policy over time because we subtract the amount of the loan from the Investment Divisions and/or Fixed Account as collateral, and hold it in our Loan Account. This loan collateral does not participate in the investment experience of the Investment Divisions or receive any higher current interest rate credited to the Fixed Account. We also reduce the amount we pay on the insured's death by the amount of any outstanding loan and accrued loan interest. Your Policy may lapse if your outstanding loan and accrued loan interest reduces the cash surrender value to zero. If you surrender your Policy or your Policy lapses while there is an outstanding loan, there will generally be Federal income tax payable on the amount by which loans and partial withdrawals exceed the premiums paid. Since loans and partial withdrawals reduce your Policy's cash value, any remaining cash value may be insufficient to pay the income tax due. LIMITATIONS ON CASH VALUE IN THE FIXED ACCOUNT. Transfers to and from the Fixed Account must generally be in amounts of $50 or more. Partial withdrawals from the Fixed Account must be in amounts of $500 or more. The total amount of transfers and withdrawals from the Fixed Account in a Policy year may generally not exceed the greater of 25% of the Policy's cash surrender value in the Fixed Account at the beginning of the year, or the maximum transfer amount for the preceding Policy year. We may also limit the number of transfers and partial withdrawals and may impose a processing charge for transfers and partial withdrawals. We are not currently imposing the maximum limit on transfers and withdrawals from the Fixed Account, but we reserve the right to do so. A-6 TAX LAW CHANGES. Tax laws, regulations, and interpretations have often been changed in the past and such changes continue to be proposed. To the extent that you purchase a Policy based on expected tax benefits, relative to other financial or investment products or strategies, there is no certainty that such advantages will always continue to exist. RISKS OF THE PORTFOLIOS A comprehensive discussion of the risks associated with each of the Portfolios can be found in the Portfolio prospectuses. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS STATED INVESTMENT OBJECTIVE. FEE TABLES The following tables describe the fees and expenses that a Policy Owner will pay when buying, owning and surrendering the Policy. The first table describes the fees and expenses that a Policy Owner will pay at the time he or she buys the Policy, surrenders the Policy or transfers cash value among accounts. If the amount of a charge varies depending on the Policy Owner's or the insured's individual characteristics (such as age, sex, or risk class), the tables below show the minimum and maximum charges we assess under the Policy across the range of all possible individual characteristics, as well as the charges for a specified typical Policy Owner or insured. THESE CHARGES MAY NOT BE REPRESENTATIVE OF THE CHARGES YOU WILL ACTUALLY PAY UNDER THE POLICY. Your Policy's specifications page will indicate these charges as applicable to your Policy, and more detailed information concerning your charges is available on request from our Designated Office. Also, before you purchase the Policy, we will provide you personalized illustrations of your future benefits under the Policy based on the insured's age and risk class, the death benefit option, face amount, planned periodic premiums and riders requested. TRANSACTION FEES
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Sales Charge Imposed On payment of premium 2.25% of premiums paid 2.25% of each premium on Premiums up to the Target paid Premium per Policy year(1) - --------------------------------------------------------------------------------------------------- Premium Tax Imposed On payment of premium 2.0% in all Policy 2.0% in all Policy years on Premiums years - --------------------------------------------------------------------------------------------------- Federal Tax Imposed On payment of premium 1.25% in all Policy 1.25% in all Policy years on Premiums years - ---------------------------------------------------------------------------------------------------
(1) The target premium varies based on individual characteristics, including the insured's issue age, risk class and except for unisex policies, sex. A-7
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Surrender Charge(1) On surrender, lapse, or face amount reduction in the first ten Policy years (and, with respect to a face amount increase, in the first ten Policy years after the increase) Minimum and Maximum In Policy year 1, $3.75 In Policy year 1, $3.75 Charge to $38.25 per $1,000 of to $38.25 per $1,000 of base Policy face base Policy face amount(2) amount(2) Charge in the first $14.00 per $1,000 of $14.00 per $1,000 of base Policy year for a base Policy face amount Policy face amount male insured, age 35, in the preferred nonsmoker risk class with a base Policy face amount of $300,000 - --------------------------------------------------------------------------------------------------- Transfer Charge(3) On transfer of cash Not currently charged $25 for each transfer value among Investment Divisions and to and from the Fixed Account - --------------------------------------------------------------------------------------------------- Partial Withdrawal On partial withdrawal Not currently charged $25 for each partial Charge of cash value withdrawal(4) - --------------------------------------------------------------------------------------------------- Illustration of On provision of each Not currently charged $25 per illustration Benefits Charge illustration in excess of one per year - ---------------------------------------------------------------------------------------------------
(1) The Surrender Charge varies based on individual characteristics, including the insured's issue age, risk class, sex (except for unisex policies), smoker status, and the Policy's face amount. The Surrender Charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the Surrender Charge and other charges that would apply for a particular insured by contacting your registered representative. (2) No Surrender Charge will apply on up to 10% of cash surrender value withdrawn each year. The Surrender Charge will remain level for one to three Policy years, and will then begin to decline on a monthly basis until it reaches zero in the last month of the tenth Policy year. The Surrender Charge applies to requested face amount reductions as well as to face amount reductions resulting from a change in death benefit option. (3) The Portfolios in which the Investment Divisions invest may impose a redemption fee on shares held for a relatively short period. (4) If imposed, the partial withdrawal charge would be in addition to any Surrender Charge that is imposed. A-8 The next table describes the fees and expenses that a Policy Owner will pay periodically during the time that he or she owns the Policy, not including Portfolio fees and expenses. PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Cost of Insurance(1) Minimum and Maximum Monthly $.01 to $83.33 per $.02 to $83.33 per $1,000 Charge $1,000 of net amount at of net amount at risk(2) risk(2) Charge in the first Monthly $.02 per $1,000 of net $.09 per $1,000 of net Policy year for a amount at risk amount at risk male insured, age 35, in the preferred nonsmoker risk class with a base Policy face amount of $300,000 - --------------------------------------------------------------------------------------------------- Policy Charge(3) Policy face amount Monthly $12 in Policy year 1 $12 in Policy year 1 less than $50,000 $9 in Policy years 2+ $9 in Policy years 2+ Policy face amount Monthly $15 in Policy year 1 $15 in Policy year 1 of $50,000 or $8 in Policy years 2+ $8 in Policy years 2+ greater but less than $250,000 - --------------------------------------------------------------------------------------------------- Mortality and Expense Monthly .60% in Policy years .80% in Policy years 1-10 Risk Charge (annual 1-10 .35% in Policy years rate imposed on cash .35% in Policy years 11-19 value in the Separate 11-19 .20% in Policy years Account)(4) .20% in Policy years 20-29 20-29 .05% in Policy years 30+ .05% in Policy years 30+ - --------------------------------------------------------------------------------------------------- Coverage Expense Charge(5) Minimum and Monthly $.04 to $2.30 per $.04 to $2.30 per $1,000 Maximum Charge $1,000 of base Policy of base Policy face face amount in first amount eight Policy years(6) Charge for a male Monthly $.16 per $1,000 of base $.16 per $1,000 of base insured, age 35, in Policy face amount in Policy face amount the preferred first eight Policy nonsmoker risk class years(6) with a base Policy face amount of $300,000 - --------------------------------------------------------------------------------------------------- Loan Interest Annually (or on loan 1.00% of loan 1.00% of loan collateral Spread(7) termination, if collateral in Policy in Policy years 1-10 earlier) years 1-10 - ---------------------------------------------------------------------------------------------------
(1) The cost of insurance charge varies based on individual characteristics, including the Policy's face amount and the insured's age, risk class and, except for unisex policies, sex. The cost of insurance charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the cost of insurance or other charges that would apply for a particular insured by contacting your registered representative. (2) The net amount at risk is the difference between the death benefit (generally discounted at the monthly equivalent of 3% per year) and the Policy's cash value. (3) No Policy Charge applies to Policies issued with face amounts equal to or greater than $250,000. (4) The Mortality and Expense Risk Charge depends on the Policy's net cash value. The percentages shown in the Current Amount Deducted column apply if the Policy's net cash value is less than an amount equal to five Target Premiums. The percentages decrease as the Policy's net cash value, measured as a multiple of Target Premiums increases. If the Policy's net cash value is equal to or greater than five but less than ten Target Premiums, the charge is 0.55% in Policy years 1-10, 0.30% in Policy years 11-19, 0.15% in Policy years 20-29 and 0.05% thereafter. If the Policy's cash value is equal to or greater than ten but less A-9 than 20 Target Premiums, the charge is 0.30% in Policy years 1-10, 0.15% in Policy years 11-19, 0.10% in Policy years 20-29 and 0.05% thereafter. If the Policy's net cash value is equal to 20 or more Target Premiums, the charge is 0.15% in Policy years 1-10, 0.10% in Policy years 11-19, and 0.05% thereafter. (5) If you surrender the Policy in the first Policy year (or in the first year following a face amount increase) we will deduct from the surrender proceeds an amount equal to the Coverage Expense Charges due for the remainder of the first Policy year (or the first year following the face amount increase). If the Policy's face amount is reduced in the first year following a face amount increase, we will deduct from the cash value an amount equal to the Coverage Expense Charges due for the remainder of the first year following the face amount increase. (6) The Coverage Expense Charge is imposed in Policy years 1-8 and, with respect to a requested face amount increase, during the first eight years following the increase. (7) We charge interest on Policy loans at an effective rate of 4.0% per year in Policy years 1-10 and 3.0% thereafter. Cash value we hold as security for the loan ("loan collateral") earns interest at an effective rate of not less than 3% per year. The loan interest spread is the difference between these interest rates. CHARGES FOR OPTIONAL FEATURES (RIDERS):
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Guaranteed Survivor Income Benefit Rider Minimum and Maximum Monthly $.01 to $1.08 per $.01 to $83.33 per $1,000 Charge $1,000 of Eligible of Eligible Death Benefit Death Benefit Charge for a male Monthly $.02 per $1,000 of $.02 per $1,000 of insured, age 35, in Eligible Death Benefit Eligible Death Benefit the preferred nonsmoker risk class with an Eligible Death Benefit of $300,000 - --------------------------------------------------------------------------------------------------- Children's Term Monthly $.40 per $1,000 of $.40 per $1,000 of rider Insurance Rider rider face amount face amount - --------------------------------------------------------------------------------------------------- Waiver of Monthly Deduction Rider Minimum and Maximum Monthly $.00 to $61.44 per $100 $.00 to $61.44 per $100 Charge of Monthly Deduction of Monthly Deduction Charge in the first Monthly $6.30 per $100 of $6.30 per $100 of Monthly Policy year for a Monthly Deduction Deduction male insured, age 35, in the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Waiver of Specified Premium Rider Minimum and Maximum Monthly $.00 to $21.75 per $100 $.00 to $21.75 per $100 Charge of Specified Premium of Specified Premium Charge in the first Monthly $3.00 per $100 of $3.00 per $100 of Policy year for a Specified Premium Specified Premium male insured, age 35, in the preferred nonsmoker risk class - ---------------------------------------------------------------------------------------------------
A-10
- --------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE - --------------------------------------------------------------------------------------------------- Options to Purchase Additional Insurance Coverage Rider Minimum and Maximum Monthly $.02 to $.25 per $1,000 $.02 to $.25 per $1,000 Charge of Option amount of Option amount Charge for a male Monthly $.03 per $1,000 of $.03 per $1,000 of Option insured, age 35, in Option amount amount the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Option to Purchase Long Term Care Insurance Rider Minimum and Maximum Monthly $.20 to $1.88 per $10 $.20 to $1.88 per $10 of Charge of initial daily initial daily benefit benefit amount amount Charge for a male Monthly $.37 per $10 of initial $.37 per $10 of initial insured, age 35, in daily benefit amount daily benefit amount the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Accidental Death Benefit Rider Minimum and Maximum Monthly $.00 to $.34 per $1,000 $.00 to $83.33 per $1,000 Charge of rider face amount of rider face amount Charge in the first Monthly $.05 per $1,000 of $.08 per $1,000 of rider Policy year for a rider face amount face amount male insured, age 35, in the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Guaranteed Minimum Death Benefit Rider Minimum and Maximum Monthly $.01 to $.04 per $1,000 $.01 to $83.33 per $1,000 Charge of net amount at risk of net amount at risk Charge for a male Monthly $.01 per $1,000 of net $.01 per $1,000 of net insured, age 35, in amount at risk amount at risk the preferred nonsmoker risk class - --------------------------------------------------------------------------------------------------- Acceleration of At time of benefit Not currently charged One-time fee of $150 Death Benefit Rider payment - --------------------------------------------------------------------------------------------------- Overloan Protection At time of exercise One-time fee of 3.5% of One-time fee of 3.5% of Rider Policy cash value Policy cash value - ---------------------------------------------------------------------------------------------------
A-11 ANNUAL PORTFOLIO OPERATING EXPENSES The next table describes the Portfolio fees and expenses that a Policy Owner may pay periodically during the time that he or she owns the Policy. The table shows the minimum and maximum total operating expenses charged by the Portfolios for the fiscal year ended December 31, 2007. Expenses of the Portfolios may be higher or lower in the future. More detail concerning each Portfolio's fees and expenses is contained in the table that follows and in the prospectus for each Portfolio.
MINIMUM MAXIMUM ------- ------- Total Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets, including management fees, distribution (12b-1) fees and other expenses)......................................... 0.29% 1.09%
The following table describes the annual operating expenses for each Portfolio for the year ended December 31, 2007, before and after any applicable contractual fee waivers and expense reimbursements: ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
ACQUIRED FUND GROSS TOTAL FEE WAIVERS NET TOTAL MANAGEMENT OTHER 12B-1 FEES AND ANNUAL AND EXPENSE ANNUAL FEES EXPENSES FEES EXPENSES(1) EXPENSES REIMBURSEMENTS EXPENSES(2) ---------- -------- ----- ------------------ ----------- -------------- ----------- METROPOLITAN SERIES FUND, INC.--CLASS A BlackRock Aggressive Growth Portfolio...................... 0.71% 0.05% -- -- 0.76% -- 0.76% BlackRock Large Cap Value Portfolio...................... 0.68% 0.06% -- -- 0.74% -- 0.74% Davis Venture Value Portfolio.... 0.69% 0.04% -- -- 0.73% -- 0.73% FI Value Leaders Portfolio....... 0.64% 0.07% -- -- 0.71% -- 0.71% Harris Oakmark Focused Value Portfolio...................... 0.72% 0.04% -- -- 0.76% -- 0.76% Lehman Brothers(R) Aggregate Bond Index Portfolio................ 0.25% 0.05% -- -- 0.30% 0.01% 0.29%(3) Loomis Sayles Small Cap Portfolio...................... 0.90% 0.05% -- -- 0.95% 0.05% 0.90%(4) MetLife Stock Index Portfolio.... 0.25% 0.04% -- -- 0.29% 0.01% 0.28%(5) MFS(R) Total Return Portfolio.... 0.53% 0.05% -- -- 0.58% -- 0.58% Neuberger Berman Mid Cap Value Portfolio...................... 0.64% 0.05% -- -- 0.69% -- 0.69% Oppenheimer Global Equity Portfolio...................... 0.51% 0.10% -- -- 0.61% -- 0.61% Western Asset Management Strategic Bond Opportunities Portfolio...................... 0.61% 0.05% -- -- 0.66% -- 0.66% Western Asset Management U.S. Government Portfolio........... 0.49% 0.05% -- -- 0.54% -- 0.54% MetLife Conservative Allocation Portfolio...................... 0.10% 0.05% -- 0.59% 0.74% 0.05% 0.69%(6) MetLife Conservative to Moderate Allocation Portfolio........... 0.10% 0.01% -- 0.64% 0.75% 0.01% 0.74%(6) MetLife Moderate Allocation Portfolio...................... 0.08% 0.01% -- 0.67% 0.76% -- 0.76%(6) MetLife Moderate to Aggressive Allocation Portfolio........... 0.08% 0.01% -- 0.70% 0.79% -- 0.79%(6) MetLife Aggressive Allocation Portfolio...................... 0.10% 0.04% -- 0.73% 0.87% 0.04% 0.83%(6) MET INVESTORS SERIES TRUST-- CLASS A Clarion Global Real Estate Portfolio...................... 0.61% 0.04% -- -- 0.65% -- 0.65% Dreman Small Cap Value Portfolio...................... 0.79% 0.13% -- -- 0.92% -- 0.92%(7) Harris Oakmark International Portfolio...................... 0.77% 0.09% -- -- 0.86% -- 0.86% Janus Forty Portfolio............ 0.65% 0.05% -- -- 0.70% -- 0.70% Lazard Mid Cap Portfolio......... 0.69% 0.07% -- -- 0.76% -- 0.76% Legg Mason Partners Aggressive Growth Portfolio............... 0.62% 0.05% -- -- 0.67% -- 0.67% Legg Mason Value Equity Portfolio...................... 0.63% 0.04% -- -- 0.67% -- 0.67% Lord Abbett Bond Debenture Portfolio...................... 0.49% 0.05% -- -- 0.54% -- 0.54%
A-12
ACQUIRED FUND GROSS TOTAL FEE WAIVERS NET TOTAL MANAGEMENT OTHER 12B-1 FEES AND ANNUAL AND EXPENSE ANNUAL FEES EXPENSES FEES EXPENSES(1) EXPENSES REIMBURSEMENTS EXPENSES(2) ---------- -------- ----- ------------------ ----------- -------------- ----------- Met/AIM Small Cap Growth Portfolio...................... 0.86% 0.06% -- -- 0.92% -- 0.92% Met/Franklin Income Portfolio.... 0.80% 0.29% -- -- 1.09% 0.19% 0.90%(8,9) Met/Franklin Mutual Shares Portfolio...................... 0.80% 0.29% -- -- 1.09% 0.19% 0.90%(8,9) Met/Franklin Templeton Founding Strategy Portfolio............. 0.05% 0.15% -- 0.87% 1.07% 0.15% 0.92%(8,10) Met/Templeton Growth Portfolio... 0.70% 0.34% -- -- 1.04% 0.24% 0.80%(8,11) MFS(R) Research International Portfolio...................... 0.70% 0.09% -- -- 0.79% -- 0.79% PIMCO Inflation Protected Bond Portfolio...................... 0.50% 0.05% -- -- 0.55% -- 0.55% PIMCO Total Return Portfolio..... 0.48% 0.04% -- -- 0.52% -- 0.52%(7) Van Kampen Mid Cap Growth Portfolio...................... 0.70% 0.17% -- -- 0.87% -- 0.87% AMERICAN FUNDS INSURANCE SERIES(R)--Class 2 American Funds Bond Fund......... 0.40% 0.01% 0.25% -- 0.66% -- 0.66% American Funds Global Small Capitalization Fund............ 0.70% 0.03% 0.25% -- 0.98% -- 0.98% American Funds Growth Fund....... 0.32% 0.01% 0.25% -- 0.58% -- 0.58% American Funds Growth-Income Fund........................... 0.26% 0.01% 0.25% -- 0.52% -- 0.52%
(1) Acquired Fund Fees and Expenses are fees and expenses incurred indirectly by a portfolio as a result of investing in shares of one or more underlying portfolios. (2) Net Total Annual Expenses do not reflect: (1) voluntary waivers of fees or expenses; contractual waivers that are in effect for less than one year from the date of this Prospectus; or (3) expense reductions resulting from custodial fee credits or directed brokerage arrangements. (3) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to 0.244%. (4) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio by 0.05%. (5) MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to reduce the Management Fee for each Class of the Portfolio to 0.243%. (6) The Portfolio is a "fund of funds" that invests substantially all of its assets in other portfolios of the Metropolitan Series Fund, Inc. and the Met Investors Series Trust. 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. MetLife Advisers, LLC has contractually agreed, for the period April 28, 2008 through April 30, 2009, to waive fees or pay all expenses (other than acquired fund fees and expenses, brokerage costs, taxes, interest and any extraordinary expenses) so as to limit the net operating expenses of the Portfolio (other than acquired fund fees and expenses, brokerage costs, taxes, interest and any extraordinary expenses) to 0.10% for the Class A shares, 0.35% for the Class B shares and 0.25% for the Class E shares. (7) 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. (8) The fees and expenses of the Portfolio are estimated for the year ending December 31, 2008. (9) Met Investors Advisory, LLC has contractually agreed, for the period April 28, 2008 to April 30, 2009, to limit its fee and reimburse expenses to the extent necessary to limit total operating expenses to 0.90%, excluding 12b-1 fees. (10) 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 portfolios, for the year ending December 31, 2008. Met Investors Advisory, LLC has contractually agreed, for the period April 28, 2008 to April 30, 2009, to limit its fee to and reimburse expenses to the extent necessary to limit total operating expenses to 0.05%, excluding 12b-1 fees and acquired fund fees and expenses. (11) Met Investors Advisory, LLC has contractually agreed, for the period April 28, 2008 to April 30, 2009, to limit its fee and reimburse expenses to the extent necessary to limit total operating expenses to 0.80%, excluding 12b-1 fees. The fee and expense information regarding the Portfolios was provided by those Portfolios. The American Funds Insurance Series is not affiliated with Metropolitan Life Insurance Company. For information concerning compensation paid for the sale of the Policies, see "Distribution of the Policies." A-13 HOW THE POLICY WORKS [FLOW CHART] PREMIUM PAYMENTS - - Flexible - - Planned premium options - - Guaranteed Minimum Death Benefit premium (5-year, 20-year, or to age 65) CHARGES FROM PREMIUM PAYMENTS - - Sales Load: 2.25% up to Target Premium per Policy year; (maximum 2.25% on all premiums) - - Premium Tax Charge: 2.0% - - Charge for Federal Taxes: 1.25% CASH VALUES - - Net premium payments invested in your choice of Portfolio investments (after an initial period in the Fixed Account) or the Fixed Account - - The cash value reflects investment experience, interest, premium payments, policy charges and any distributions from the Policy - - We do not guarantee the cash value invested in the Portfolios - - Any earnings you accumulate are generally free of any current income taxes - - You may change the allocation of future net premiums at any time. You may transfer funds among Investment Divisions (and to the Fixed Account). Currently we do not limit the number of Investment Division transfers you can make in a Policy year (subject to restrictions we impose on "market timing" transfers). - - We reserve the right to impose a $25 charge on each partial withdrawal and on each Investment Division transfer (including a transfer between an Investment Division and the Fixed Account). - - We may limit the amount of transfers from (and in some cases to) the Fixed Account LOANS - - You may borrow your cash value - - Loan interest charge is 4.0% in Policy years 1-10 and 3.0% thereafter. - - We transfer loaned funds out of the Fixed Account and the Investment Divisions into the Loan Account where we credit them with not less than 3.0% interest. RETIREMENT BENEFITS - - Fixed settlement options are available for policy proceeds DEATH BENEFIT - - Level, Variable and combined Level/Variable Death Benefit Options - - Guaranteed not to be less than face amount (less any loan and loan interest) if the Guaranteed Minimum Death Benefit is in effect. - - On or after age 121, under Options A and C, equal to the greater of (1) the face amount of the Policy as of the insured's age 121; and (2) the Policy's cash value. Under Option B, the face amount of the Policy as of the insured's age 121), plus the Policy's cash value. - - Generally income tax free to named beneficiary; may be subject to estate tax. DAILY DEDUCTIONS FROM ASSETS OF THE SEPARATE ACCOUNT - - Investment advisory fees and other expenses are deducted from the Portfolio values BEGINNING OF MONTH CHARGES - - We deduct the cost of insurance protection (reflecting any substandard risk rating) from the cash value each month - - Any Rider Charges - - Policy Charge: $15.00 per month first year and $8.00 per month thereafter for Policies issued with face amounts of $50,000 or greater, but less than $250,000; $12.00 per month first year and $9.00 per month thereafter for Policies issued with face amounts of less than $50,000. - - Coverage Expense Charge: Monthly charge imposed on base Policy face amount that applies during the first eight Policy years or during the first eight years following a face amount increase (in all years on a guaranteed basis). - - Mortality and Expense Risk Charge applied against the cash value in the Separate Account at a maximum annual rate of .80% in Policy years 1-10; .35% in Policy years 11-19; .20% in Policy years 20-29; and .05% thereafter SURRENDER CHARGE - - Applies on lapse, surrender, face amount reduction, or partial withdrawal or change in death benefit option that results in face reduction in first ten Policy years (or in the first ten Policy years following a face amount increase). Maximum charge applies in up to the first three Policy years. Thereafter, the charge decreases on a monthly basis over the remaining years of the surrender charge period. LIVING BENEFITS - - If policyholder has elected and qualified for benefits for disability and becomes totally disabled, we will waive the monthly deduction or a specified amount of monthly premium during the period of disability up to certain limits. - - You may surrender the Policy at any time for its cash surrender value - - Deferred income taxes, including taxes on certain amounts borrowed, become payable upon surrender or lapse - - Grace period for lapsing with no value is 62 days from the first date in which Monthly Deduction was not paid due to insufficient cash value - - Subject to our rules, you may reinstate a lapsed Policy within three years of date of lapse if it has not been surrendered A-14 THE COMPANY, THE SEPARATE ACCOUNT AND THE PORTFOLIOS THE COMPANY Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company. Our principal office is located at 200 Park Avenue, New York, New York 10166. MetLife is licensed to sell life insurance in all states and the District of Columbia, but we only offer the Policies in New York. We are obligated to pay all benefits under the Policies. THE SEPARATE ACCOUNT Metropolitan Life Separate Account UL is the funding vehicle for the Policies and other variable life insurance policies that we issue. Income and realized and unrealized capital gains and losses of the Separate Account are credited to the Separate Account without regard to any of our other income or capital gains or losses. Although we own the assets of the Separate Account, applicable law provides that the portion of the Separate Account assets equal to the reserves and other liabilities of the Separate Account may not be charged with liabilities that arise out of any other business we conduct. This means that the assets of the Separate Account are not available to meet the claims of our general creditors, and may only be used to support the cash values of the variable life insurance policies issued by the Separate Account. Death benefits in excess of Policy cash value are paid from our general account. Death benefits paid from the general account are subject to the claims-paying ability of MetLife. THE PORTFOLIOS Each Investment Division of the Separate Account invests in a corresponding Portfolio. Each Portfolio is part of an open-end management investment company, more commonly known as a mutual fund, that serves as an investment vehicle for variable life insurance and variable annuity separate accounts of various insurance companies. The mutual funds that offer the Portfolios are the Metropolitan Series Fund, Inc., the Met Investors Series Trust and the American Funds Insurance Series. Each of these mutual funds has an investment adviser responsible for overall management of the fund. Some investment advisers have contracted with sub-advisers to make the day-to-day investment decisions for the Portfolios. The adviser, sub-adviser and investment objective of each Portfolio are as follows: METROPOLITAN SERIES FUND, INC. ADVISER: METLIFE ADVISERS, LLC
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- BlackRock Aggressive Growth BlackRock Advisors, Inc. Maximum capital appreciation. Portfolio BlackRock Large Cap Value BlackRock Advisors, Inc. Long-term growth of capital. Portfolio Davis Venture Value Davis Selected Advisers, Growth of capital. Portfolio L.P.(1) FI Value Leaders Portfolio Pyramis Global Advisors, LLC Long-term growth of capital. Harris Oakmark Focused Value Harris Associates L.P. Long-term capital appreciation. Portfolio Lehman Brothers(R) Aggregate MetLife Investment Advisors To equal the performance of the Bond Index Portfolio Company, LLC Lehman Brothers Aggregate Bond Index. Loomis Sayles Small Cap Loomis, Sayles & Company, Long-term capital growth from Portfolio L.P. investments in common stocks or other equity securities. MetLife Stock Index MetLife Investment Advisors To equal the performance of the Portfolio Company, LLC Standard & Poor's 500 Composite Stock Price Index.
A-15
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- MFS(R) Total Return Massachusetts Financial Favorable total return through Portfolio Services Company investment in a diversified portfolio. Neuberger Berman Mid Cap Neuberger Berman Management Capital growth. Value Portfolio Inc. Oppenheimer Global Equity OppenheimerFunds, Inc. Capital appreciation. Portfolio Western Asset Management Western Asset Management To maximize total return Strategic Bond Company consistent with preservation of Opportunities Portfolio capital. Western Asset Management Western Asset Management To maximize total return U.S. Government Portfolio Company consistent with preservation of capital and maintenance of liquidity. MetLife Conservative N/A A high level of current income, Allocation Portfolio with growth of capital as a secondary objective. MetLife Conservative to N/A A high total return in the form of Moderate Allocation income and growth of capital, with Portfolio a greater emphasis on income. MetLife Moderate Allocation N/A A balance between a high level of Portfolio current income and growth of capital, with a greater emphasis on growth of capital. MetLife Moderate to N/A Growth of capital. Aggressive Allocation Portfolio MetLife Aggressive N/A Growth of capital. Allocation Portfolio
MET INVESTORS SERIES TRUST ADVISER: MET INVESTORS ADVISORY, LLC
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- Clarion Global Real Estate ING Clarion Real Estate Total return through investment in Portfolio Securities, L.P. real estate securities, emphasizing both capital appreciation and current income. Dreman Small Cap Value Dreman Value Management, Capital appreciation. Portfolio L.L.C. Harris Oakmark International Harris Associates L.P. Long-term capital appreciation. Portfolio Janus Forty Portfolio Janus Capital Management LLC Capital appreciation. Lazard Mid Cap Portfolio Lazard Asset Management LLC Long-term capital appreciation. Legg Mason Partners ClearBridge Advisors, LLC Capital appreciation. Aggressive Growth Portfolio Legg Mason Value Equity Legg Mason Capital Long-term growth of capital. Portfolio Management, Inc. Lord Abbett Bond Debenture Lord, Abbett & Co. LLC High current income and the Portfolio opportunity for capital appreciation to produce a high total return. Met/AIM Small Cap Growth Invesco Aim Capital Long-term growth of capital. Portfolio Management, Inc.
A-16
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- Met/Franklin Income Franklin Advisers, Inc. To maximize income while Portfolio maintaining prospects for capital appreciation. Met/Franklin Mutual Shares Franklin Mutual Advisers, Capital appreciation, which may Portfolio LLC occasionally be short-term. The Portfolio's secondary investment objective is income. Met/Franklin Templeton Met Investors Advisory, LLC Primary seeks capital appreciation Founding Strategy and secondarily seeks income. Portfolio Met/Templeton Growth Templeton Global Advisors Long-term capital growth. Portfolio Limited MFS(R) Research Massachusetts Financial Capital appreciation. International Portfolio Services Company PIMCO Inflation Protected Pacific Investment Maximum real return, consistent Bond Portfolio Management Company LLC with preservation of capital and prudent investment management. PIMCO Total Return Portfolio Pacific Investment Maximum total return, consistent Management Company LLC with the preservation of capital and prudent investment management. Van Kampen Mid Cap Growth Morgan Stanley Investment, Capital appreciation. Portfolio Inc. (d/b/a Van Kampen)
AMERICAN FUNDS INSURANCE SERIES(R) ADVISER: CAPITAL RESEARCH AND MANAGEMENT COMPANY
PORTFOLIO SUB-ADVISER INVESTMENT OBJECTIVE - --------- ----------- -------------------- American Funds Bond Fund N/A Maximize current income and preserve capital by investing primarily in fixed-income securities. American Funds Global Small N/A Capital appreciation through Capitalization Fund stocks. American Funds Growth Fund N/A Capital appreciation through stocks. American Funds Growth-Income N/A Capital appreciation and income. Fund
- --------------- (1) Davis Selected Advisers, L.P. may also delegate any of its responsibilities to Davis Selected Advisers--NY, Inc., a wholly-owned subsidiary. FOR MORE INFORMATION REGARDING THE PORTFOLIOS AND THEIR INVESTMENT ADVISERS AND SUB-ADVISERS, SEE THE PORTFOLIO PROSPECTUSES AND THEIR STATEMENTS OF ADDITIONAL INFORMATION. The Portfolios' investment objectives may not be met. The investment objectives and policies of certain Portfolios are similar to the investment objectives and policies of other funds that may be managed by the same investment adviser or sub-adviser. The investment results of the Portfolios may be higher or lower than the results of these funds. There is no assurance, and no representation is made, that the investment results of any of the Portfolios will be comparable to the investment results of any other fund. SHARE CLASSES OF THE PORTFOLIOS The Portfolios offer various classes of shares, each of which has a different level of expenses. The prospectuses for the Portfolios may provide information for share classes that are not available through the Policy. When you consult the prospectus for any Portfolio, you should be careful to refer to only the information regarding the class of shares that is available through the Policy. For the Metropolitan Series Fund, Inc. and the Met Investors A-17 Series Trust, we offer Class A shares only; and for the American Funds Insurance Series, we offer Class 2 shares only. CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS An investment adviser (other than our affiliates MetLife Advisers, LLC; and Met Investors Advisory, LLC) or subadviser of a Portfolio, or its affiliates, may make payments to us and/or certain of our affiliates. These payments may be used for a variety of purposes, including payment for expenses for certain administrative, marketing and support services with respect to the Policies and, in our role as intermediary, with respect to the Portfolios. We and our affiliates may profit from these payments. These payments may be derived, in whole or in part, from the advisory fee deducted from Portfolio assets. Policy Owners, through their indirect investment in the Portfolios, bear the costs of these advisory fees (see the Portfolio prospectuses for more information). The amount of the payments we receive is based on a percentage of assets of the Portfolio attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some advisers or subadvisers (or other affiliates) may pay us more than others. These percentages currently range up to 0.50%. Additionally, an investment adviser or subadviser of a Portfolio or its affiliates may provide us with wholesaling services that assist in the distribution of the Policies 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 their affiliate) with increased access to persons involved in the distribution of the Policies. 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 Portfolios. We will benefit accordingly from assets allocated to the Portfolios to the extent they result in profits to the advisers. (See "Fee Tables--Annual Portfolio Operating Expenses" for information on the management fees paid by the Portfolios and the Statement of Additional Information for the Portfolios for information on the management fees paid by the advisers to the subadvisers.) Certain Portfolios have adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. A Portfolio's 12b-1 Plan, if any, is described in more detail in the Portfolio's prospectus. (See "Fee Tables--Annual Portfolio Expenses" and "Distribution of the Policies.") Any payments we receive pursuant to those 12b-1 Plans are paid to us or our Distributor. Payments under a Portfolio's 12b-1 Plan decrease the Portfolio's investment return. SELECTION OF THE PORTFOLIOS We select the Portfolios offered through the Policy 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 Portfolio's adviser or subadviser is one of our affiliates or whether the Portfolio, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates. For additional information on these arrangements, see "Certain Payments We Receive with Regard to the Portfolios" above. 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 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 Portfolios periodically and may remove a Portfolio or limit its availability to new premium payments and/or transfers of cash value if we determine that the Portfolio no longer meets one or more of the selection criteria, and/or if the Portfolio has not attracted significant allocations from Policy owners. We may include Portfolios based on recommendations from selling firms. In some cases, the selling firms may receive payments from the Portfolios they recommend and may benefit accordingly from the allocation of cash value to such Portfolios. A-18 WE DO NOT PROVIDE ANY INVESTMENT ADVICE AND DO NOT RECOMMEND OR ENDORSE ANY PARTICULAR PORTFOLIO. YOU BEAR THE RISK OF ANY DECLINE IN THE CASH VALUE OF YOUR POLICY RESULTING FROM THE PERFORMANCE OF THE PORTFOLIOS YOU HAVE CHOSEN. We make certain payments to American Funds Distributors, Inc., principal underwriter for the American Funds Insurance Series. (See "Distribution of the Policies.") VOTING RIGHTS We own the Portfolio shares held in the Separate Account and have the right to vote those shares at meetings of the Portfolio shareholders. However, to the extent required by Federal securities law, we will give you, as Policy Owner, the right to instruct us how to vote the shares that are attributable to your Policy. We will determine, as of the record date, if you are entitled to give voting instructions and the number of shares to which you have a right of instruction. If we do not receive timely instructions from you, we will vote your shares for, against, or withhold from voting on, any proposition in the same proportion as the shares held in that Investment Division for all policies for which we have received voting instructions. The effect of this proportional voting is that a small number of Policy Owners may control the outcome of a vote. We will vote Portfolio shares held by our general account (or any unregistered separate account for which voting privileges were not extended) in the same proportion as the total of (i) shares for which voting instructions were received and (ii) shares that are voted in proportion to such voting instructions. We may disregard voting instructions for changes in the investment policy, investment adviser or principal underwriter of a Portfolio if required by state insurance law, or if we (i) reasonably disapprove of the changes and (ii) in the case of a change in investment policy or investment adviser, make a good faith determination that the proposed change is prohibited by state authorities or inconsistent with an Investment Division's investment objectives. If we do disregard voting instructions, the next semi-annual report to Policy Owners will include a summary of that action and the reasons for it. RIGHTS RESERVED BY METLIFE We and our affiliates may change the voting procedures and vote Portfolio shares without Policy Owner instructions, if the securities laws change. We also reserve the right: (1) to add Investment Divisions; (2) to combine Investment Divisions; (3) to substitute shares of another registered open-end management investment company, which may have different fees and expenses, for shares of a Portfolio; (4) to substitute or close an Investment Division to allocations of premium payments or cash value or both, and to existing investments or the investment of future premiums, or both, for any class of Policy or Policy Owner, at any time in our sole discretion; (5) to operate the Separate Account as a management investment company under the Investment Company Act of 1940 or in any other form; (6) to deregister the Separate Account under the Investment Company Act of 1940; (7) to combine it with other Separate Accounts; and (8) to transfer assets supporting the Policies from one Investment Division to another or from the Separate Account to other Separate Accounts, or to transfer assets to our general account as permitted by applicable law. We will exercise these rights in accordance with applicable law, including approval of Policy Owners if required. We will notify you if exercise of any of these rights would result in a material change in the Separate Account or its investments. We will not make any changes without receiving any necessary approval of the SEC and the New York Insurance Department. We will notify you of any changes. THE POLICIES PURCHASING A POLICY To purchase a Policy, you must submit a completed application and an initial premium to us at our Designated Office. (See "Receipt of Communications and Payments at MetLife's Designated Office.") The minimum face amount for the base Policy is $50,000 unless we consent to a lower amount. For Policies acquired through a pension A-19 or profit sharing plan qualified under Section 401 of the Internal Revenue Code of 1986, the minimum face amount is $25,000. The Policies are available for insureds age 85 or younger. We can provide you with details as to our underwriting standards when you apply for a Policy. We reserve the right to modify our minimum face amount and underwriting requirements at any time. We must receive evidence of insurability that satisfies our underwriting standards before we will issue a Policy. We reserve the right to reject an application for any reason permitted by law. We offer other variable life insurance policies that have different death benefits, policy features, and optional programs. However, these other policies also have different charges that would affect your Investment Division performance and cash values. To obtain more information about these other policies, contact our Designated Office or your registered representative. REPLACING EXISTING INSURANCE It may not be in your best interest to surrender, lapse, change, or borrow from existing life insurance policies or annuity contracts in connection with the purchase of the Policy. You should compare your existing insurance and the Policy carefully. You should replace your existing insurance only when you determine that the Policy is better for you. You may have to pay a surrender charge on your existing insurance, and the Policy will impose a new surrender charge period. You should talk to your financial professional or tax adviser to make sure the exchange will be tax-free. If you surrender your existing policy for cash and then buy the Policy, you may have to pay a tax, including possibly a penalty tax, on the surrender. Because we may not issue the Policy until we have received an initial premium from your existing insurance company, the issuance of the Policy may be delayed. POLICY OWNER AND BENEFICIARY The Policy Owner is named in the application but may be changed from time to time. While the insured is living and the Policy is in force, the Policy Owner may exercise all the rights and options described in the Policy, subject to the terms of any beneficiary designation or assignment of the Policy. These rights include selecting and changing the beneficiary, changing the owner, changing the face amount of the Policy and assigning the Policy. At the death of the Policy Owner who is not the insured, his or her estate will become the Policy Owner unless a successor Policy Owner has been named. The Policy Owner's rights (except for rights to payment of benefits) terminate at the death of the insured. The beneficiary is also named in the application. You may change the beneficiary at any time before the death of the insured, unless the beneficiary designation is irrevocable. The beneficiary has no rights under the Policy until the death of the insured and must survive the insured in order to receive the death proceeds. If no named beneficiary survives the insured, we pay proceeds to the Policy Owner. A change of Policy Owner or beneficiary is subject to all payments made and actions taken by us under the Policy before we receive a signed change form. You can contact your registered representative or our Designated Office for the procedure to follow. You may assign (transfer) your rights in the Policy to someone else. An absolute assignment of the Policy is a change of Policy Owner and beneficiary to the assignee. A collateral assignment of the Policy does not change the Policy Owner or beneficiary, but their rights will be subject to the terms of the assignment. Assignments are subject to all payments made and actions taken by us under the Policy before we receive a signed copy of the assignment form. We are not responsible for determining whether or not an assignment is valid. Changing the Policy Owner or assigning the Policy may have tax consequences. (See "Tax Considerations" below.) 24 MONTH CONVERSION RIGHT GENERAL RIGHT. Generally, during the first two Policy years, or in the event of a material change in the investment policy of the Separate Account, you may convert the Policy to fixed benefit coverage by exchanging the Policy for a fixed benefit life insurance policy agreed to by us and issued by us or an affiliate that we name provided that you repay any Policy loans and loan interest, and the Policy has not lapsed. We make the exchange without A-20 evidence of insurability. The new policy will have the same base Policy face amount as that being exchanged. The new policy will have the same issue age, risk class and Policy Date as the variable life Policy had. Contact our Designated Office or your registered representative for more specific information about the 24 Month Conversion Right. The exchange may result in a cost or credit to you. On the exchange, you may need to make an immediate premium payment on the new policy in order to keep it in force. EXCHANGE RIGHT At least once each year you have the option to transfer all of your cash value to the Fixed Account and apply the cash surrender value to a new policy issued by us or an affiliate which provides paid-up insurance. Paid-up insurance is permanent insurance with no further premiums due. The face amount of the new policy of paid-up insurance may be less than the face amount of the Policy. PREMIUMS FLEXIBLE PREMIUMS Subject to the limits described below, you choose the amount and frequency of premium payments. You select a Planned Premium schedule, which consists of a first-year premium amount and an amount for subsequent premium payments. This schedule appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY KEEP YOUR POLICY IN FORCE. You may skip Planned Premium payments or make additional payments. Additional payments could be subject to underwriting. No payment can be less than $50, except with our consent. You can pay Planned Premiums on an annual, semi-annual or quarterly schedule, or on a monthly schedule if payments are drawn directly from your checking account under our pre-authorized checking arrangement. We will send premium notices for annual, semi-annual or quarterly Planned Premiums. You may make payments by check or through our pre-authorized checking arrangement. You can change your Planned Premium schedule by sending your request to us at our Designated Office. You may not make premium payments on or after the Policy anniversary when the insured reaches age 121, except for premiums required during the grace period. If any payments under the Policy exceed the "7-pay limit" under Federal tax law, your Policy will become a modified endowment contract and you may have more adverse tax consequences with respect to certain distributions than would otherwise be the case if premium payments did not exceed the "7-pay limit." The amount of your "7-pay limit" is shown in your Policy illustration and in your annual Policy statement. If you make a payment that exceeds the "7-pay limit" we will notify you and give you an opportunity to receive a refund of the excess premium to prevent your Policy from becoming a modified endowment contract. (See "Tax Considerations.") In addition, if you have selected the guideline premium test, Federal tax law limits the amount of premiums that you can pay under the Policy. You need our consent if, because of tax law requirements, a payment would increase the Policy's death benefit by more than it would increase cash value. We may require evidence of insurability before accepting the payment. We allocate net payments to your Policy's Investment Divisions as of the date we receive the payments at our Designated Office (or at our Administrative Office in Tampa, Florida), if they are received before the close of regular trading on the New York Stock Exchange. Payments received after that time, or on a day that the New York Stock Exchange is not open, will be allocated to your Policy's Investment Divisions on the next day that the New York Stock Exchange is open. (See "Receipt of Communications and Payments at MetLife's Designated Office.") Under our current processing, we treat any payment received by us as a premium payment unless it is clearly marked as a loan repayment. AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY INVESTMENT START DATE. Your initial net premium is credited with Fixed Account interest as of the investment start date. The investment start date is the later of the Policy Date and the date we first receive a premium payment for the Policy at our Designated Office. (See "Receipt of Communications and Payments at MetLife's Designated Office.") A-21 PREMIUM WITH APPLICATION. If you make a premium payment with the application, unless you request otherwise, the Policy Date is the date the policy application is approved. Monthly Deductions begin on the Policy Date. You may only make one premium payment with the application. The minimum amount you must pay is set forth in the application. If we decline an application, we refund the premium payment made. If you make a premium payment with the application, we will cover the insured under a temporary insurance agreement beginning on the later of the date the application is signed or on the date of any required medical examination. (See "Death Benefits.") PREMIUM ON DELIVERY. If you pay the initial premium upon delivery of the Policy, unless you request otherwise, the Policy Date and the investment start date are the date your premium payment is received at our Designated Office. Monthly Deductions begin on the Policy Date. BACKDATING. We may sometimes backdate a Policy, if you request, by assigning a Policy Date earlier than the date the Policy application is approved. You may wish to backdate so that you can obtain lower cost of insurance rates, based on a younger insurance age. For a backdated Policy, you must also pay the minimum premiums due for the period between the Policy Date and the investment start date. As of the investment start date, we allocate the net premiums to the Policy, adjusted for monthly Policy charges. RIGHT TO EXAMINE POLICY You may cancel the Policy within ten days after you receive it. You may return the Policy to our Designated Office (see "Receipt of Communications and Payments at MetLife's Designated Office") or your registered representative. Insurance coverage ends as soon as you return the Policy (determined by postmark, if the Policy is mailed). If you cancel the Policy, we refund any premiums paid. ALLOCATION OF NET PREMIUMS We allocate your initial net premium to the Fixed Account as of the investment start date. We will hold your initial net premium in the Fixed Account for twenty days, and then we make the allocation among the Investment Divisions as you choose. You may allocate any whole percentage to an Investment Division. You make the initial premium allocation when you apply for a Policy. You can change the allocation of future premiums at any time thereafter. The change will be effective for premiums applied on or after the date when we receive your request. You may request the change by telephone, by written request (which may be telecopied to us) or over the Internet. (See "Receipt of Communications and Payments at MetLife's Designated Office.") When we allocate net premiums to your Policy's Investment Divisions, we convert them into accumulation units of the Investment Divisions. We determine the number of accumulation units by dividing the dollar amount of the net premium by the accumulation unit value. For your initial premium, we use the accumulation unit value on the investment start date. For subsequent premiums, we use the accumulation unit value next determined after receipt of the payment. (See "Cash Value.") A-22 RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE'S DESIGNATED OFFICE We will treat your request for a Policy transaction, or your submission of a payment, as received by us if we receive a request conforming to our administrative procedures or a payment at our Designated Office before the close of regular trading on the New York Stock Exchange on that day (usually 4:00 p.m. Eastern Time). If we receive it after that time, or if the New York Stock Exchange is not open that day, then we will treat it as received on the next day when the New York Stock Exchange is open. These rules apply regardless of the reason we did not receive your request by the close of regular trading on the New York Stock Exchange--even if due to our delay (such as a delay in answering your telephone call). The Designated Office for various Policy transactions is as follows: Premium Payments MetLife P.O. Box 371862 Pittsburgh, PA 15250-7862 Payment Inquiries and MetLife Correspondence P.O. Box 990083 Hartford, CT 06199-0083 Beneficiary and Ownership MetLife Changes P.O. Box 990059 Hartford, CT 06199-0059 Surrenders, Loans, MetLife Withdrawals and P.O. Box 990090 Investment Division Transfers Hartford, CT 06199-0090 Cancellations (Right to Examine MetLife Policy Period) Free Look Unit P.O. Box 990018 Hartford, CT 06199-0018 Death Claims MetLife P.O. Box 990090 Hartford, CT 06199-0090 Investment Division Transfers and (800) 638-5000 Other Telephone Transactions and Inquiries
You may request a cash value transfer or reallocation of future premiums by written request (which may be telecopied) to us, by telephoning us or over the Internet (subject to our restrictions on "market timing" transfers). To request a transfer or reallocation by telephone, you should contact your registered representative or contact us at 1-800-638-5000. To request a transfer over the Internet, you may log on to our website at www.metlife.com. We use reasonable procedures to confirm that instructions communicated by telephone, facsimile or Internet are genuine. Any telephone, facsimile or Internet instructions that we reasonably believe to be genuine are your responsibility, including losses arising from any errors in the communication of instructions. However, because telephone and Internet transactions may be available to anyone who provides certain information about you and your Policy, you should protect that information. We may not be able to verify that you are the person providing telephone or Internet instructions, or that you have authorized any such person to act for you. Telephone, facsimile, and computer systems (including the Internet) may not always be available. Any telephone, facsimile or computer system, whether it is yours, your service provider's, your registered representative'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 are experiencing problems, you should make your request by writing to our Designated Office. A-23 If you send your premium payments or transaction requests to an address other than the one we have designated for receipt of such payments or requests, we may return the premium payment to you, or there may be a delay in applying the premium payment or transaction to your Policy. PAYMENT OF PROCEEDS We ordinarily pay any cash surrender value, loan value or death benefit proceeds from the Investment Divisions within seven days after we receive a request, or satisfactory proof of death of the insured (and any other information we need to pay the death proceeds). (See "Receipt of Communications and Payments at MetLife's Designated Office.") However, we may delay payment (except when a loan is made to pay a premium to us) or transfers from the Investment Divisions: (i) if the New York Stock Exchange is closed for other than weekends or holidays, or if trading on the New York Stock Exchange is restricted as determined by the SEC, (ii) if the SEC by order permits postponement or determines that an emergency exists that makes payments or Investment Division transfers impractical, or (iii) at any other time when the Portfolios or the Separate Account have the legal right to suspend payment. We may withhold payment of surrender, withdrawal or loan proceeds if any portion of those proceeds would be derived from a Policy Owner's check that has not yet cleared (i.e., that could still be dishonored by your banking institution). We may use telephone, facsimile, Internet or other means of communications to verify that payment from the Policy 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. Policy 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. Unless otherwise requested, we may apply the Policy's death proceeds to our Total Control Account. We establish a Total Control Account at a banking institution at the time for payment. The Total Control Account is an interest-bearing checking account through which you have convenient and complete access to the proceeds, which are maintained in our general account or that of an affiliate. Interest is credited at an effective rate of 3% per year. CASH VALUE Your Policy's total cash value includes its cash value in the Separate Account and in the Fixed Account. If you have a Policy loan, the cash value also includes the amount we hold in the Loan Account as a result of the loan. The cash value reflects: -- net premium payments -- the net investment experience of the Policy's Investment Divisions -- interest credited to cash value in the Fixed Account -- interest credited to amounts held in the Loan Account for a Policy loan -- the death benefit option you choose -- Policy charges -- partial withdrawals -- transfers among the Investment Divisions and the Fixed Account. The Policy's total cash value in the Separate Account equals the number of accumulation units credited in each Investment Division multiplied by that Investment Division's accumulation unit value. We convert any premium, interest earned on loan cash value, or cash value allocated to an Investment Division into accumulation units of the Investment Division. Surrenders, partial withdrawals, Policy loans, transfers and charges deducted from the cash value reduce the number of accumulation units credited in an Investment Division. We determine the number of accumulation units by dividing the dollar amount of the transaction by the Investment Division's accumulation unit value next determined following the transaction. (In the case of an initial premium, we use the accumulation unit value on the investment start date). The accumulation unit value of an Investment Division depends on the net investment experience of its corresponding Portfolio and reflects fees and expenses of the Portfolio. We determine the accumulation unit value as A-24 of the close of regular trading on the New York Stock Exchange on each day that the Exchange is open for trading by multiplying the most recent accumulation unit value by the net investment factor ("NIF") for that day (see below). The NIF for an Investment Division reflects: -- the change in net asset value per share of the corresponding Portfolio (as of the close of regular trading on the Exchange) from its last value, -- the amount of dividends or other distributions from the Portfolio since the last determination of net asset value per share, and -- any deductions for taxes that we make from the Separate Account. The NIF can be greater or less than one. DEATH BENEFITS If the insured dies while the Policy is in force, we pay a death benefit to the beneficiary. Coverage under the Policy generally begins when you pay the initial premium. If you make a premium payment with the application, we will cover the insured under a temporary insurance agreement for a limited time that begins on the later of the date we receive the premium payment or the date of any required medical examination. Temporary coverage is not available for proposed insureds who have received medical treatment for, or been diagnosed as having, certain conditions or diseases specified in the temporary insurance agreement. The maximum temporary coverage is the lesser of the amount of insurance applied for and $1,000,000. DEATH BENEFIT OPTIONS. When you apply for a Policy, you must choose among three death benefit options. If you fail to select a death benefit option in the application, we will seek the required information from you. The Option A death benefit is equal to the face amount of the Policy. The Option A death benefit is fixed, subject to increases required by the Internal Revenue Code of 1986 (the "Code"). The Option B death benefit is equal to the face amount of the Policy, plus the Policy's cash value, if any. The Option B death benefit is also subject to increases required by the Code. The Option C death benefit (available if the insured is age 60 or younger) is equal to the face amount of the Policy plus the Policy's cash value until the insured attains age 65, at which time we will increase the Policy's face amount by the amount of the Policy's cash value and thereafter the death benefit will remain level, at the increased face amount, subject to increases required by the Code. CHOICE OF TAX TEST. The Internal Revenue Code requires the Policy's death benefit to be not less than an amount defined in the Code. As a result, if the cash value grows to certain levels, the death benefit increases to satisfy tax law requirements. When you apply for your Policy, you select which tax test will apply to the death benefit. You will choose between: (1) the guideline premium test, and (2) the cash value accumulation test. The test you choose at issue cannot be changed. Under the GUIDELINE PREMIUM TEST, the death benefit will not be less than the cash value times the guideline premium factor. See Appendix A. Under the CASH VALUE ACCUMULATION TEST, the death benefit will not be less than the cash value times the net single premium factor set by the Code. Net single premium factors are based on the age, smoking status, risk class and sex of the insured at the time of the calculation. Sample net single premium factors appear in Appendix A. If cash value growth in the later Policy years is your main objective, the guideline premium test may be the appropriate choice because it does not require as high a death benefit as the cash value accumulation test, and therefore cost of insurance charges may be lower once the Policy's death benefit is subject to increases required by the Code. If you select the cash value accumulation test, you can generally make a higher amount of premium payments for any given face amount, and a higher death benefit may result in the long term. If cash value growth in the early Policy years is your main objective, the cash value accumulation test may be the appropriate choice because it allows you to invest more premiums in the Policy for each dollar of death benefit. A-25 AGE 121. The death benefit payable under Option A or Option C on or after the insured's attained age 121 will be the greater of: -- the cash value on the date of death, or -- the face amount of the base Policy on the Policy anniversary at the insured's attained age 121. The death benefit payable under Option B on or after the insured's attained age 121 will be the face amount of the base Policy on the Policy anniversary at the insured's attained age 121, plus the cash value on the date of death. The tax consequences of keeping the Policy in force beyond the insured's attained age 121 are unclear. DEATH PROCEEDS PAYABLE The death proceeds we pay are equal to the death benefit on the date of the insured's death, reduced by any outstanding loan and accrued loan interest on that date. If death occurs during the grace period, we reduce the proceeds by the amount of unpaid Monthly Deductions. (See "Lapse and Reinstatement.") We increase the death proceeds (1) by any rider benefits payable and (2) by any cost of insurance charge made for a period beyond the date of death. Riders that can have an effect on the amount of death proceeds payable are the Accelerated Death Benefit Rider, the Accidental Death Benefit Rider and the Options to Purchase Additional Insurance Coverage Rider. (See "Additional Benefits by Rider.") We may adjust the death proceeds if the insured's age or sex was misstated in the application, if death results from the insured's suicide within two years from the Policy's date of issue, or if a rider limits the death benefit. SUICIDE. If the insured commits suicide within two years from the date of issue, the death benefit will be limited to premiums paid less any partial withdrawals, less any loan and loan interest outstanding on the date of death. If the insured commits suicide within two years after the effective date of an increase in face amount, the death benefit for such increase will be limited to the Monthly Deductions for the increase. CHANGE IN DEATH BENEFIT OPTION After the first Policy year you may change your death benefit option, subject to our underwriting rules, by written request to our Designated Office. The change will be effective on the monthly anniversary on or following the date we approve your request. We may require proof of insurability. A change in death benefit option may have tax consequences. If you change from Option A (or from Option C after the insured's attained age 65) to Option B (or to Option C on or before the insured's attained age 60), we reduce the Policy's face amount if necessary so that the death benefit is the same immediately before and after the change. A face amount reduction below $50,000 requires our consent. If we reduce the face amount, we will first reduce any prior increases in face amount that you applied for, in the reverse order in which the increases occurred, then any remaining initial face amount, and then any increase in face amount from a prior change in death benefit option, but not below the Policy minimum. A partial withdrawal of cash value may be necessary to meet Federal tax law limits on the amount of premiums that you can pay into the Policy. A Surrender Charge may apply to a Policy face amount reduction or partial withdrawal that reduces the face amount on a change from Option A (or from Option C after the insured's attained age 65) to Option B (or to Option C on or before the insured's attained age 60). (See "Surrender Charge.") In addition, if the face amount reduction occurs within 12 months after a face amount increase, we will deduct a proportionate part of the Coverage Expense Charges due with respect to the face amount increase for the remainder of the 12-month period. If you change from Option B (or from Option C on or before the insured's attained age 65) to Option A, we increase the Policy's face amount, if necessary, so that the death benefit is the same immediately before and after the change. The increase in face amount is not subject to the Coverage Expense Charge and will not be subject to any Surrender Charge. A-26 INCREASE IN FACE AMOUNT You may increase the Policy's face amount. We require satisfactory evidence of insurability, and the insured's attained age must be 85 or less. The minimum amount of increase permitted is $5,000. The increase is effective on the monthly anniversary on or next following our approval of your request. Requests for face amount increases should be submitted to our Designated Office. An increase in face amount may have tax consequences. The face amount increase will have its own Target Premium, as well as its own Surrender Charge, current cost of insurance rates, Coverage Expense Charge, and Right to Examine Policy and suicide and contestability periods as if it were a new Policy. (See "Surrender Charge", "Monthly Deduction from Cash Value", "Partial Withdrawal" and "Reduction in Face Amount.") When calculating the monthly cost of insurance charge, we attribute the Policy's cash value first to any remaining initial face amount (including any increase in face amount from a prior change in death benefit option), then to any face amount increases in the order in which they were issued, for purposes of determining the net amount at risk. We reserve the right to (i) restrict certain Policy changes, such as death benefit increases, or (ii) require the issuance of a new Policy in connection with such Policy changes if we deem it administratively necessary or prudent to do so in order to comply with applicable law, including applicable Federal income tax law. REDUCTION IN FACE AMOUNT After the first Policy year, you may reduce the face amount of your Policy without receiving a distribution of any Policy cash value. If you reduce the face amount of your Policy, we deduct any Surrender Charge that applies from the Policy's cash value in proportion to the amount of the face amount reduction. If the face amount of your Policy is reduced in the first year following a face amount increase, we will also deduct a proportionate part of the Coverage Expense Charges due for the remainder of the first year following the face amount increase. A face amount reduction will decrease the Policy's death benefit unless we are increasing the death benefit to satisfy Federal income tax laws, in which case a face amount reduction will not decrease the death benefit unless we deduct a Surrender Charge from the cash value. A reduction in face amount in this situation may not be advisable. The amount of any face reduction must be at least $5,000, and the face amount remaining after a reduction must meet our minimum face amount requirements for issue, except with our consent. If you choose to reduce your Policy's face amount, unless you request otherwise, we will first decrease any prior increases in base Policy face amount that you applied for, in the reverse order in which the increases occurred, then any remaining initial base Policy face amount, and then any increase in face amount from a prior change in death benefit option. A reduction in face amount reduces the Federal tax law limits on the amount of premiums that you can pay under the Policy under the guideline premium test. In these cases, a portion of the Policy's cash value may have to be paid to you to comply with Federal tax law. A face amount reduction takes effect on the monthly anniversary on or next following the date we receive your request. You can contact your registered representative or the Designated Office for information on face amount reduction procedures. A reduction in the face amount of a Policy may create a modified endowment contract or have other adverse tax consequences. If you are contemplating a reduction in face amount, you should consult your tax adviser regarding the tax consequences of the transaction. (See "Tax Considerations.") SURRENDERS AND PARTIAL WITHDRAWALS SURRENDER You may surrender the Policy for its cash surrender value at any time while the insured is living. We determine the cash surrender value as of the date when we receive the surrender request. (See "Receipt of Communications and Payments at MetLife's Designated Office.") The cash surrender value equals the cash value reduced by any A-27 Policy loan and accrued interest and by any applicable Surrender Charge. (See "Surrender Charge.") If you surrender the Policy in the first Policy year (or in the first year following a face amount increase), we will also deduct an amount equal to the remaining first year Coverage Expense Charges. We reserve the right to also deduct an amount equal to the remaining first year Policy Charges. If you surrender the Policy, coverage will terminate on the monthly anniversary on or next following the date of surrender. If the insured dies on or after the surrender date, but before the termination date, we will reverse the surrender and will pay the Policy's death benefit to the beneficiary, but we will deduct from the death proceeds an amount equal to the cash surrender value paid to you. You may apply all or part of the surrender proceeds to a payment option. Once a Policy is surrendered, all coverage and benefits cease and cannot be reinstated. A surrender may result in adverse tax consequences. (See "Tax Considerations" below.) The Policies are designed to be long-term investments. As a result, you should be aware that if you surrender your Policy in the first Policy year, the Surrender Charge is likely to exceed the cash value of your Policy and you will receive no proceeds upon surrender. PARTIAL WITHDRAWAL After the first Policy anniversary you may withdraw a portion of the Policy's cash surrender value. A partial withdrawal reduces the Policy's death benefit and may reduce the Policy's face amount if necessary so that the amount at risk under the Policy will not increase. A partial withdrawal may also reduce rider benefits. The minimum amount of a partial withdrawal request must be $500. We have the right to limit partial withdrawals to no more than 90% of the cash surrender value. In addition, a partial withdrawal will be limited by any restriction that we currently impose on withdrawals from the Fixed Account. (See "The Fixed Account.") Currently, we permit partial withdrawals equal to the lesser of 100% of the Policy's cash surrender value in the Separate Account as of the beginning of the year, or the maximum amount that can be withdrawn without causing the Policy's face amount to fall below the minimum permitted. (However, we may allow the face amount to fall below the minimum if the Policy has been in force for at least 15 years and the insured's attained age is greater than 55.) You may not make a partial withdrawal that would reduce your cash surrender value to less than the amount of two monthly deductions. We have the right to limit partial withdrawals to 12 per Policy year. Currently we do not limit the number of partial withdrawals. We reserve the right to impose a charge of $25 on each partial withdrawal. If a partial withdrawal reduces your Policy's face amount, the amount of the Surrender Charge that will be deducted from your cash value is an amount that is proportional to the amount of the face reduction. The amount deducted will reduce the remaining Surrender Charge payable under the Policy. No Surrender Charge will apply on up to 10% of the cash surrender value withdrawn each year, measured as a percentage of each withdrawal. EXAMPLE. The following example assumes that a Policy Owner withdraws, in the first month of the second Policy year, 20% of the cash surrender value of a Policy. The insured under the Policy is assumed to be the representative insured shown in the fee table on page A-8 of the prospectus. As shown in the fee table, the Surrender Charge for that insured is $14.00 per $1,000 of Policy face amount. The Policy is assumed to have the other characteristics shown below:
Face Amount:......... $ 300,000 Death Benefit Option:............ Option A -- Level Cash Value:.......... $ 11,718 Surrender Charge:.... $ - 4,200 ($14.00 x $300,000 / 1,000) ----------------- Cash Surrender Value:............. $ 7,518 x 20% ----------------- Withdrawal Amount:... $ 1,504
A-28 The first 10% of cash surrender value, or $752, can be withdrawn free of Surrender Charge. The remaining $752 withdrawn is subject to a portion of the Policy's Surrender Charge -- based on the ratio that such excess withdrawal amount bears to the Policy's face amount less the Surrender Charge, as shown in the formula below:
Withdrawal Amount in Surrender Charge x Excess of Free Withdrawal = Surrender Charge --------------------------------- Face Amount less Surrender Charge On Withdrawal $4,200 x $752 = $11 --------------------------------- $300,000 - $4,200
Because the Policy has a level death benefit, the withdrawal will cause a dollar for dollar reduction in the Policy's face amount, so that the cash value and the face amount will both be reduced by the $1,504 withdrawal and by the $11 Surrender Charge. The effect of the withdrawal on the Policy would be as follows:
Face Amount before Withdrawal............................... $300,000 Withdrawal................................................ - 1,504 Surrender Charge on Withdrawal............................ - 11 -------- Face Amount after Withdrawal................................ $298,485 Surrender Charge before Withdrawal.......................... $ 4,200 Surrender Charge on Withdrawal............................ - 11 -------- Surrender Charge after Withdrawal........................... $ 4,189 Cash Value before Withdrawal................................ $ 11,718 Withdrawal................................................ - 1,504 Surrender Charge on Withdrawal............................ - 11 -------- Cash Value after Withdrawal................................. $ 10,203 Surrender Charge after Withdrawal........................... - 4,189 -------- Cash Surrender Value after Withdrawal....................... $ 6,014
Any face amount reduction resulting from a partial withdrawal will reduce the face amount in the following order: any prior increases in base Policy face amount that you applied for, in the reverse order in which the increases occurred; any remaining initial face amount; and then any face amount increases resulting from a change in death benefit option, down to the required minimum. A partial withdrawal reduces the cash value in the Investment Divisions of the Separate Account and the Fixed Account in the same proportion that the cash value in each bears to the Policy's total unloaned cash value. We determine the amount of cash surrender value paid upon a partial withdrawal as of the date when we receive a request. You can contact your registered representative or our Designated Office for information on partial withdrawal procedures. (See "Receipt of Communications and Payments at MetLife's Designated Office.") A reduction in the death benefit as a result of a partial withdrawal may create a modified endowment contract or have other adverse tax consequences. If you are contemplating a partial withdrawal, you should consult your tax adviser regarding the tax consequences. (See "Tax Considerations.") TRANSFERS TRANSFER OPTION You may transfer your Policy's cash value between and among the Investment Divisions and the Fixed Account. Your right to transfer begins 20 days after we apply your initial premium to the Policy. We reserve the right to limit A-29 transfers to four per Policy year. Currently we do not limit the number of transfers per Policy year. We reserve the right to make a charge of $25 per transfer. We treat all transfer requests made at the same time as a single request. The transfer is effective as of the date when we receive the transfer request, if the request is received before the close of regular trading on the New York Stock Exchange. Transfer requests received after that time, or on a day that the New York Stock Exchange is not open, will be effective on the next day that the New York Stock Exchange is open. (See "Receipt of Communications and Payments at MetLife's Designated Office.") For special rules regarding transfers involving the Fixed Account, see "The Fixed Account". Frequent requests from Policy Owners to transfer cash value may dilute the value of a 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 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 Portfolios, which may in turn adversely affect Policy Owners and other persons who may have an interest in the Policies (e.g., 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 Portfolios (i.e., the Loomis Sayles Small Cap Portfolio, Oppenheimer Global Equity Portfolio, Western Asset Management Strategic Bond Opportunities Portfolio, Clarion Global Real Estate Portfolio, Dreman Small Cap Value Portfolio, Harris Oakmark International Portfolio, Lord Abbett Bond Debenture Portfolio, Met/AIM Small Cap Growth Portfolio, Met/Templeton Growth Portfolio, MFS Research International Portfolio, and American Funds Global Small Capitalization Fund--the "Monitored Portfolios") and we monitor transfer activity in those Monitored Portfolios. In addition, as described below, we treat all American Funds Insurance Series portfolios ("American Funds portfolios") as 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 cash value; and (3) two or more "round-trips" involving any Portfolio in 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 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 Portfolios, we rely on the underlying 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 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. AMERICAN FUNDS MONITORING POLICY. As a condition to making their portfolios available in our products, American Funds requires us to treat all American Funds portfolios as Monitored Portfolios under our current market timing and excessive trading policies and procedures. Further, American Funds requires us to impose additional specified monitoring criteria for all American Funds portfolios available under the Policy, regardless of the potential for arbitrage trading. We are required to monitor transfer activity in American Funds portfolios to determine if there were two or more transfers in followed by transfers out, in each case of a certain dollar amount or greater, in any 30- day period. A first violation of the American Funds monitoring policy will result in a written notice of violation; each additional violation will result in the imposition of a six-month restriction, during which period we will require all transfer requests to or from an American Funds portfolio to be submitted with an original signature. Further, as Monitored Portfolios, all American Funds portfolios also will be subject to our current market timing and excessive trading policies, procedures and restrictions (described below), and transfer restrictions may be imposed upon a violation of either monitoring policy. A-30 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 Policy Owners or other persons who have an interest in the Policies, we require all future transfer requests to or from any Monitored Portfolios or other identified Portfolios under that Policy to be submitted either (i) in writing with an original signature or (ii) by telephone prior to 10:00 a.m. Transfers made under an Automated Investment Strategy 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 Portfolios that we believe are susceptible to arbitrage trading or the determination of the transfer limits. Our ability to detect and/or restrict such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by Policy Owners to avoid such detection. Our ability to restrict such transfer activity also may be limited by provisions of the Policy. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Policy Owners and other persons with interests in the Policies. We do not accommodate market timing in any Portfolio and there are no arrangements in place to permit any Policy Owner to engage in market timing; we apply our policies and procedures without exception, waiver, or special arrangement. The 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, 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 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 Portfolios, we have entered into a written agreement, as required by SEC regulation, with each Portfolio or its principal underwriter that obligates us to provide to the Portfolio promptly upon request certain information about the trading activity of individual Policy Owners, and to execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific Policy Owners who violate the frequent trading policies established by the Portfolio. In addition, Policy Owners and other persons with interests in the Policies should be aware that the purchase and redemption orders received by the Portfolios generally are "omnibus" orders from intermediaries such as retirement plans or separate accounts funding variable insurance products. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable insurance products and/or individual retirement plan participants. The omnibus nature of these orders may limit the 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 Portfolios (and thus Policy Owners) will not be harmed by transfer activity relating to other insurance companies and/or retirement plans that may invest in the Portfolios. If a Portfolio believes that an omnibus order reflects one or more transfer requests from Policy Owners engaged in disruptive trading activity, the 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 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 Policy Owner). You should read the Portfolio prospectuses for more details. AUTOMATED INVESTMENT STRATEGIES You can choose one of four automated investment strategies. You can change or cancel your choice at any time. EQUITY GENERATOR. The Equity Generator allows you to transfer the interest earned in the Fixed Account to any one of the Investment Divisions on each monthly anniversary. The interest earned in the month must be at least $20 A-31 in order for the transfer to take place. If less than $20 is earned, no transfer will occur, and the interest not transferred cannot be counted towards the next month's minimum. ALLOCATOR. The Allocator allows you to systematically transfer cash value from the Fixed Account or any one Investment Division (the "source fund") to any number of Investment Divisions. The transfers will take place on each monthly anniversary. You can choose to transfer a specified dollar amount (1) for a specified number of months, or (2) until the source fund is depleted. In either case, payments must continue for at least a three month period. ENHANCED DOLLAR COST AVERAGER. With the Enhanced Dollar Cost Averager, cash value is transferred from the EDCA fixed account to the Investment Divisions monthly. You elect the EDCA at issue and select the total amount of cash value to be transferred. The cash value earmarked for the strategy is held in the EDCA fixed account where it may be credited with a rate of interest that is higher than the Fixed Account's current crediting rate. The amount transferred each month to the Investment Divisions equals the total amount earmarked for the strategy divided by 12. REBALANCER. The Rebalancer allows your Policy's cash value to be automatically redistributed on a quarterly basis among the Investment Divisions and the Fixed Account in accordance with the allocation percentages you have selected. These automated investment strategies allow you to take advantage of investment fluctuations, but none assures a profit nor protects against a loss. Because certain strategies involve continuous investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to continue purchases through periods of fluctuating price levels. We reserve the right to modify or terminate any of the automated investment strategies for any reason, including, without limitation, a change in regulatory requirements applicable to such programs. For more information about the automated investment strategies, please contact your registered representative. LOANS You may borrow from your Policy at any time. The maximum amount you may borrow, calculated as of the date of the loan, is the greater of 75% of the Policy's cash surrender value or: -- the Policy's cash value, less -- any Policy loan balance, less -- loan interest due to the next Policy anniversary, less -- the most recent Monthly Deduction times the number of months to the next Policy anniversary, less -- any Surrender Charge, plus -- interest credited on the cash value at the guaranteed interest rate to the next Policy anniversary. The minimum loan amount is $500. We make the loan as of the date when we receive a loan request. (See "Receipt of Communications and Payments at MetLife's Designated Office.") You may increase your risk of lapse if you take a loan. You should contact our Designated Office or your registered representative for information on loan procedures. A Policy loan reduces the Policy's cash value in the Investment Divisions by the amount of the loan. A loan repayment increases the cash value in the Investment Divisions by the amount of the repayment. We attribute Policy loans to the Investment Divisions and the Fixed Account in proportion to the cash value in each. We transfer cash value equal to the amount of the loan from the Investment Divisions and the Fixed Account to the Loan Account (which is part of our general account). You may repay all or part of your loan at any time while the insured is still alive. When you make a loan repayment, we transfer an amount of cash value equal to the repayment from the Loan Account to the Divisions of the Separate Account and to the Fixed Account in proportion to the cash value in each. (See "Receipt of Communications and Payments at MetLife's Designated Office.") A-32 We guarantee that the interest rate charged on Policy loans will not be more than 4.0% per year in Policy years 1-10 and 3.0% per year thereafter. Policy loan interest is due and payable annually on each Policy anniversary. If not paid when due, we add the interest accrued to the loan amount, and we transfer an amount of cash value equal to the unpaid interest from the Investment Divisions and the Fixed Account to the Loan Account in the same manner as a new loan. Cash value in the Loan Account earns interest at not less than 3.0% per year and is transferred on each Policy anniversary to the Investment Divisions and to the Fixed Account in proportion to the cash value in each. The interest credited will also be transferred: (1) when you take a new loan; (2) when you make a full or partial loan repayment; and (3) when the Policy enters the grace period. The amount taken from the Policy's Investment Divisions as a result of a loan does not participate in the investment experience of the Investment Divisions. Therefore, loans can permanently affect the death benefit and cash value of the Policy, even if repaid. In addition, we reduce any proceeds payable under a Policy by the amount of any outstanding loan plus accrued interest. If a Policy loan is outstanding, it may be better to repay the loan than to pay a premium, because the payment is subject to sales and premium tax charges, and the loan repayment is not subject to charges. (See "Deductions from Premiums.") If you want us to treat a payment as a loan repayment, it should be clearly marked as such. A loan that is taken from, or secured by, a Policy may have tax consequences. Although the issue is not free from doubt, we believe that a loan from or secured by a Policy that is not classified as a modified endowment contract should generally not be treated as a taxable distribution. Nevertheless, the tax consequences associated with loans outstanding after the tenth Policy year are uncertain. A tax adviser should be consulted when considering a loan. LAPSE AND REINSTATEMENT LAPSE In general, in any month that your Policy's cash surrender value is not large enough to cover a Monthly Deduction, your Policy will be in default, and may lapse. However, you can prevent your Policy from lapsing, regardless of the amount of your cash surrender value, if the premiums you pay are sufficient to keep the Guaranteed Minimum Death Benefit ("GMDB") in effect. The base Policy offers, at no additional charge, a five-year GMDB, a 20-year GMDB and a GMDB that lasts until the insured's age 65. For an additional charge, you can add a Policy rider at issue that provides a GMDB to age 85 or a GMDB to age 121. All Policies are issued with a GMDB, which guarantees that the Policy will remain in force for at least five years if the required Guaranteed Minimum Death Benefit Monthly Premiums ("GMDB Monthly Premiums") are paid when due. The five-year GMDB Monthly Premium is set forth in your Policy. It is the minimum initial periodic premium you can pay into the Policy. Policies will be issued with the 20-year GMDB or the GMDB to age 65 to eligible Policy Owners who elect either of these GMDBs at issue. The GMDB Monthly Premium varies depending on the guarantee period, the insured's age, sex (except for unisex policies), smoking status and risk class, the Policy's face amount and the death benefit option chosen. The GMDB Monthly Premium may change in the event that any of the following events occur: an increase or decrease in the base Policy face amount; adding, deleting or changing a rider; a change in death benefit option or the insured's risk class; or a misstatement of the insured's age or sex in the Policy application. On each monthly anniversary we test the Policy to determine if the cumulative premiums you have paid, less any partial withdrawals or outstanding loans you have taken, equal or exceed the sum of the GMDB Monthly Premiums due to date for the GMDB you selected. If you meet this test, the GMDB you selected will be in effect. However, even if you have not elected the 20-year GMDB or the GMDB to age 65, if the amount of premiums you pay into the Policy for each Policy month since the Policy Date is sufficient to meet the requirements of the 20-year GMDB or the GMDB to age 65, in your third annual statement we will notify you that the applicable GMDB is in effect. Conversely, if you have elected the 20-year GMDB or the GMDB to age 65 and your premium payments are A-33 insufficient to satisfy the GMDB Monthly Premium requirements, we will notify you that your GMDB will be reduced to the five-year GMDB, the GMDB to age 65, or the 20-year GMDB, as applicable, unless you pay sufficient premiums within 62 days to meet the requirements of the GMDB you originally selected. If, during the first five Policy years, you fail to pay sufficient premiums to keep the five-year GMDB in effect, we will notify you that the GMDB will terminate within 62 days if you fail to pay the required Monthly Premiums. If the guarantee provided by the GMDB terminates, the Policy will continue in force for as long as there is cash surrender value sufficient to pay the Monthly Deduction. If the GMDB terminates, you may reinstate it within nine months provided the Policy remains in force. In order to reinstate the GMDB, you must pay sufficient premiums to satisfy the cumulative premium requirement for the applicable GMDB (five-year, 20-year or to age 65) at the time of reinstatement. If the GMDB is in effect and the Policy's cash surrender value is insufficient to cover the Monthly Deduction, the Policy will not lapse. We will take the Monthly Deduction from the Policy's cash value until the cash value has been reduced to zero. At that point, future Monthly Deductions will be waived for as long as the GMDB is in effect. If the GMDB is not in effect and the cash surrender value is insufficient to pay the Monthly Deduction, the Policy will enter a 62-day grace period during which you will have an opportunity to pay a premium sufficient to keep the Policy in force. The minimum amount you must pay is the lesser of three Monthly Deductions or, if applicable, the amount necessary to reinstate the GMDB. We will tell you the amount due. If you fail to pay this amount before the end of the grace period, the Policy will terminate. Your Policy may also lapse if Policy loans plus accrued interest exceed the Policy's cash value less the Surrender Charge. Your Policy may be protected against lapse in these circumstances if it has been in force for 15 years, the insured has attained age 75, and the other requirements of the Overloan Protection Rider have been met. If your Policy is not so protected, we will notify you that the Policy is going to terminate. The Policy terminates without value unless you make a sufficient payment within the later of 62 days from the monthly anniversary immediately before the date when the excess loan occurs or 31 days after we mail the notice. If the Policy lapses with a loan outstanding, adverse tax consequences may result. (See "Tax Considerations" below.) REINSTATEMENT If your Policy has lapsed, you may reinstate it within three years after the date of lapse if the insured has not attained age 121. If more than three years have passed, you need our consent to reinstate. Reinstatement in all cases requires payment of certain charges described in the Policy and usually requires evidence of insurability that is satisfactory to us. If the Policy lapses and is reinstated during the first five Policy years, only the five-year GMDB will be reinstated. If the Policy lapses after the first five Policy years, the GMDB will terminate and cannot be reinstated. Under no circumstances can the GMDB provided by Policy rider be reinstated following a Policy lapse. If we deducted a Surrender Charge on lapse, we credit it back to the Policy's cash value on reinstatement. The Surrender Charge on the date of reinstatement is the same as it was on the date of lapse. When we determine the Surrender Charge and other charges except cost of insurance and the Policy loan interest rate, we do not count the amount of time that a Policy was lapsed. ADDITIONAL BENEFITS BY RIDER You can add additional benefits to the Policy by rider, subject to our underwriting and issuance standards. These additional benefits usually require an additional charge as part of the Monthly Deduction from cash value. The rider benefits available with the Policy provide fixed benefits that do not vary with the investment experience of the Separate Account. There is no limit on the number of riders you can elect to add to your Policy at issue. However, you may not elect both the Option to Purchase Long-Term Care Insurance Rider and the Options to Purchase Additional Insurance Coverage Rider, nor may you elect both the Waiver of Monthly Deduction Rider and the Waiver of Specified Premium Rider. A-34 The following riders, some of which have been described previously, are available: CHILDREN'S TERM INSURANCE RIDER, which provides term insurance on the lives of children of the insured. WAIVER OF MONTHLY DEDUCTION RIDER, which provides for waiver of Monthly Deductions in the event of the disability of the insured. WAIVER OF SPECIFIED PREMIUM RIDER, which provides for waiver of a specified amount of monthly premium in the event of the disability of the insured. OPTIONS TO PURCHASE ADDITIONAL INSURANCE COVERAGE RIDER, which allows the Owner to purchase additional coverage on the insured without providing evidence of insurability. OPTION TO PURCHASE LONG-TERM CARE INSURANCE RIDER, which allows the Owner to purchase long-term care coverage on the insured without providing evidence of insurability. (Consult your registered representative regarding availability.) ACCELERATION OF DEATH BENEFIT RIDER, which allows a Policy Owner to accelerate payment of all or part of the Policy's death benefit if the insured is terminally ill. In calculating the Accelerated Death Benefit, we assume that death occurs one year from the date of claim and we discount the future death benefit using an interest rate not to exceed the greater of (1) the current yield on 90-day Treasury bills, and (2) the maximum policy loan interest rate under the Policy. The Policy Owner must accelerate at least $50,000 (or 25% of the death benefit, if less), but not more than the greater of $250,000 or 10% of the death benefit. As an example, if a Policy Owner accelerated the death benefit of a Policy with a face amount of $1,000,000, the maximum amount that could be accelerated would be $250,000. Assuming an interest rate of 6%, the present value of the benefit would be $235,849. If we exercised our reserved right to impose a $150 processing fee, the benefit payable would be $235,849 less $150, or $235,699. GUARANTEED SURVIVOR INCOME BENEFIT RIDER, which provides the beneficiary with the option of exchanging the Policy's death benefit for enhanced monthly income payments for life. ACCIDENTAL DEATH BENEFIT, which provides for the payment of an additional death benefit in the event of the insured's death by accident. GUARANTEED MINIMUM DEATH BENEFIT RIDER, which provides for a guaranteed death benefit until the insured's age 85 or the insured's age 121. OVERLOAN PROTECTION RIDER, which provides protection from Policy lapse due to an excess Policy loan. Riders in addition to those listed above may be made available. You should consult your registered representative regarding the availability of riders. THE FIXED ACCOUNT You may allocate net premiums and transfer cash value to the Fixed Account, which is part of MetLife's general account. Because of exemptive and exclusionary provisions in the Federal securities laws, interests in the Fixed Account are not registered under the Securities Act of 1933. Neither the Fixed Account nor the general account is registered as an investment company under the Investment Company Act of 1940. Therefore, neither the Fixed Account, the general account nor any interests therein are generally subject to the provisions of these Acts, and the SEC does not review Fixed Account disclosure. This disclosure may, however, be subject to certain provisions of the Federal securities laws on the accuracy and completeness of prospectuses. GENERAL DESCRIPTION Our general account includes all of our assets except assets in the Separate Account or in our other separate accounts. We decide how to invest our general account assets. Fixed Account allocations do not share in the actual investment experience of the general account. Instead, we guarantee that the Fixed Account will credit interest at an annual effective rate of at least 3%. We may or may not credit interest at a higher rate. We declare the current interest rate for the Fixed Account periodically. The Fixed Account earns interest daily. A-35 VALUES AND BENEFITS Cash value in the Fixed Account increases from net premiums allocated and transfers to the Fixed Account and Fixed Account interest, and decreases from loans, partial withdrawals made from the Fixed Account, charges and transfers from the Fixed Account. We deduct charges from the Fixed Account and the Policy's Investment Divisions in proportion to the amount of cash value in each. (See "Monthly Deduction from Cash Value.") A Policy's total cash value includes cash value in the Separate Account, the Fixed Account, and any cash value held in the Loan Account due to a Policy loan. Cash value in the Fixed Account is included in the calculation of the Policy's death benefit in the same manner as the cash value in the Separate Account. (See "Death Benefits.") POLICY TRANSACTIONS Except as described below, the Fixed Account has the same rights and limitations regarding premium allocations, transfers, loans, surrenders and partial withdrawals as the Separate Account. The following special rules apply to the Fixed Account. Twenty days after we apply the initial premium to the Policy you may transfer cash value from the Fixed Account to the Separate Account. The amount of any transfer must be at least $50, unless the balance remaining would be less than $50, in which case you may withdraw or transfer the entire Fixed Account cash value. After the first Policy year you may withdraw cash value from the Fixed Account. The amount of any partial withdrawal, net of applicable Surrender Charges, must be at least $500. No amount may be withdrawn from the Fixed Account that would result in there being insufficient cash value to meet any Surrender Charges that would be payable immediately following the withdrawal upon the surrender of the remaining cash value in the Policy. We reserve the right to only allow transfers and withdrawals from the Fixed Account during the 30-day period that follows the Policy anniversary. The total amount of transfers and withdrawals in a Policy year may not exceed the greater of (a) 25% of the Policy's cash surrender value in the Fixed Account at the beginning of the Policy year, (b) the previous Policy year's maximum allowable withdrawal amount and (c) 100% of the cash surrender value in the Fixed Account if withdrawing the greater of (a) and (b) would result in a Fixed Account balance of $50 or less. We are not currently imposing the maximum limit on transfers and withdrawals from the Fixed Account, but we reserve the right to do so. There is currently no transaction charge for partial withdrawals or transfers. We reserve the right to limit partial withdrawals to 12 and transfers to four in a Policy year and to impose a charge of $25 for each partial withdrawal or transfer. We may revoke or modify the privilege of transferring amounts to or from the Fixed Account at any time. Partial withdrawals will result in the imposition of any applicable Surrender Charges. Unless you request otherwise, a Policy loan reduces the Policy's cash value in the Investment Divisions and the Fixed Account proportionately. We allocate all loan repayments in the same proportion that the cash value in each Investment Division and the Fixed Account bears to the Policy's total unloaned cash value. The amount transferred from the Policy's Investment Divisions and the Fixed Account as a result of a loan earns interest at an effective rate of at least 3% per year, which we credit to the Policy's cash value in the Investment Divisions and the Fixed Account in proportion to the Policy's cash value in each on the day it is credited. We take partial withdrawals from the Policy's Investment Divisions and the Fixed Account in the same proportion that the cash value in each account bears to the Policy's total unloaned cash value. We can delay transfers, surrenders, withdrawals and Policy loans from the Fixed Account for up to six months. We will not delay loans to pay premiums on policies issued by us. CHARGES We make certain charges and deductions under the Policy. These charges and deductions compensate us for: (1) services and benefits we provide; (2) costs and expenses we incur; and (3) risks we assume. A-36 Services and benefits we provide: - the death benefit, cash, and loan benefits under the Policy - investment options, including premium allocations - administration of elective options - the distribution of reports to Policy Owners Costs and expenses we incur: - costs associated with processing and underwriting applications, and with issuing and administering the Policy (including any riders) - overhead and other expenses for providing services and benefits - sales and marketing expenses - other costs of doing business, such as collecting premiums, maintaining records, processing claims, effecting transactions, and paying federal, state, and local premium and other taxes and fees Risks we assume: - that the cost of insurance charges we may deduct are insufficient to meet our actual claims because the insureds die sooner than we estimate - that the cost of providing the services and benefits under the Policies exceed the charges we deduct The amount of a charge may not necessarily correspond to the costs of the services or benefits that are implied by the name of the charge or that are associated with the particular Policy. For example, the sales charge and Surrender Charge may not fully cover all of our sales and distribution expenses, and we may use proceeds from other charges, including the Mortality and Expense Risk Charge and the cost of insurance charge, to help cover those expenses. We may profit from certain Policy charges. DEDUCTIONS FROM PREMIUMS Prior to the allocation of a premium, we deduct a percentage of your premium payment. We credit the remaining amount (the net premium) to your cash value according to your allocation instructions. The deductions we make from each premium payment are the sales charge, the premium tax charge, and the federal tax charge. SALES CHARGE. We deduct a 2.25% sales charge from each premium payment. Currently, the sales charge is only deducted from premium payments that are less than or equal to the Target Premium. PREMIUM TAX CHARGE. We deduct 2.0% from each premium for premium taxes and administrative expenses. Premium taxes vary from state to state, but we deduct a flat 2.0%, which is based on an average of such taxes. Administrative expenses covered by this charge include those related to premium tax and certain other state filings. FEDERAL TAX CHARGE. We deduct 1.25% from each premium for our Federal income tax liability related to premiums. EXAMPLE: The following chart shows the net amount that we would allocate to the Policy assuming a premium payment of $4,000 (and a Target Premium of $2,000).
NET PREMIUM PREMIUM - ------- ------- $4,000 $4,000 - 175 (5.5% X $2,000) + (3.25% x $2,000) = total sales, premium ------- tax and Federal tax charges $3,825 Net Premium
A-37 SURRENDER CHARGE If, during the first ten Policy years, or during the first ten Policy years following a face amount increase, you surrender or lapse your Policy, reduce the face amount, or make a partial withdrawal or change in death benefit option that reduces the face amount, then we will deduct a Surrender Charge from the cash value. The maximum Surrender Charge is shown in your Policy. No Surrender Charge will apply on up to 10% of the cash surrender value withdrawn each year. The Surrender Charge depends on the face amount of your Policy and the issue age, sex (except for unisex policies), risk class and smoker status of the insured. The Surrender Charge will remain level for up to three Policy years, or for up to three years after a face amount increase, and will then decline on a monthly basis until it reaches zero at the end of the tenth Policy year (or the tenth year following the face amount increase). The table below shows the maximum Surrender Charge that applies if the lapse, surrender or face amount reduction occurs at any time in the first Policy year, and in the last month of each Policy year thereafter.
FOR POLICIES WHICH THE MAXIMUM ARE SURRENDERED, SURRENDER CHARGE LAPSED OR PER $1,000 OF BASE REDUCED DURING POLICY FACE AMOUNT ------------------ ------------------ Entire Policy Year 1 $38.25 Last Month of Policy Year 2 35.81 3 32.56 4 31.74 5 29.84 6 27.13 7 24.42 8 18.99 9 9.50 10 0.00
In the case of a face amount reduction or a partial withdrawal or change in death benefit option that results in a face amount reduction, we deduct any Surrender Charge that applies from the Policy's remaining cash value in an amount that is proportional to the amount of the Policy's face amount surrendered. (See "Reduction in Face Amount," "Partial Withdrawal" and "Change in Death Benefit Option.") If you surrender the Policy (or a face amount increase) in the first Policy year (or in the first year following the face amount increase) we will deduct from the surrender proceeds an amount equal to the remaining first year Coverage Expense Charges. We reserve the right to also deduct an amount equal to the remaining first year Policy Charges. If you reduce the face amount of your Policy in the first year following a face amount increase, we will deduct from your cash value a proportionate amount of the remaining first year Coverage Expense Charges, based on the ratio of the face amount reduction to the Policy's original face amount. The Surrender Charge reduces the Policy's cash value in the Investment Divisions and the Fixed Account in proportion to the amount of the Policy's cash value in each. However, if you designate the accounts from which a partial withdrawal is to be taken, the charge will be deducted proportionately from the cash value of the designated accounts. PARTIAL WITHDRAWAL CHARGE We reserve the right to impose a processing charge on each partial withdrawal. If imposed, this charge would compensate us for administrative costs in generating the withdrawn payment and in making all calculations that may be required because of the partial withdrawal. A-38 TRANSFER CHARGE We reserve the right to impose a processing charge on each transfer between Investment Divisions or between an Investment Division and the Fixed Account to compensate us for the costs of processing these transfers. Transfers under one of our Automated Investment Strategies do not count as transfers for the purpose of assessing this charge. ILLUSTRATION OF BENEFITS CHARGE We reserve the right to impose a charge for each illustration of Policy benefits that you request in excess of one per year. If imposed, this charge would compensate us for the cost of preparing and delivering the illustration to you. MONTHLY DEDUCTION FROM CASH VALUE On the first day of each Policy month, starting with the Policy Date, we deduct the "Monthly Deduction" from your cash value. -- If your Policy is protected against lapse by a Guaranteed Minimum Death Benefit, we make the Monthly Deduction each month regardless of the amount of your cash surrender value. If your cash surrender value is insufficient to pay the Monthly Deduction in any month, your Policy will not lapse, but the shortfall will, in effect, cause your cash surrender value to have a negative balance. (See "Lapse and Reinstatement.") -- If a Guaranteed Minimum Death Benefit is not in effect, and the cash surrender value is not large enough to cover the entire Monthly Deduction, we will make the deduction to the extent cash value is available, but the Policy will be in default, and it may lapse. (See "Lapse and Reinstatement.") There is no Monthly Deduction on or after the Policy anniversary when the insured attains age 121. The Monthly Deduction reduces the cash value in each Investment Division and in the Fixed Account in proportion to the cash value in each. However, you may request that we charge the Monthly Deduction to a specific Investment Division or to the Fixed Account. If, in any month, the designated account has insufficient cash value to cover the Monthly Deduction, we will first reduce the designated account cash value to zero and then charge the remaining Monthly Deduction to all Investment Divisions and, if applicable, the Fixed Account, in proportion to the cash value in each. The Monthly Deduction includes the following charges: POLICY CHARGE. The Policy Charge is equal to $15.00 per month in the first Policy year and $8.00 per month thereafter. The Policy Charge is $12 per month in the first Policy year and $9 per month thereafter for Policies issued with face amounts of less than $50,000. No Policy Charge applies to Policies issued with face amounts equal to or greater than $250,000. The Policy Charge compensates us for administrative costs such as record keeping, processing death benefit claims and policy changes, preparing and mailing reports, and overhead costs. COVERAGE EXPENSE CHARGE. We impose a monthly charge for the costs of underwriting, issuing (including sales commissions), and administering the Policy or the face amount increase. The monthly charge is imposed on the base Policy face amount and varies by the base Policy's face amount and duration, and by the insured's issue age, smoking status, risk class (at the time the Policy or a face amount increase is issued), and, except for unisex Policies, the insured's sex. Currently, we only impose the Coverage Expense Charge during the first eight Policy years, and during the first eight Policy years following a requested face amount increase. MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of providing insurance protection under your Policy. The cost of insurance charge for a Policy month is equal to the "amount at risk" under the Policy, multiplied by the cost of insurance rate for that Policy month. We determine the amount at risk on the first day of the Policy month. The amount at risk is the amount by which the death benefit (generally discounted at the monthly equivalent of 3% per year) exceeds the Policy's cash value. The amount at risk is affected by investment performance, loans, premium payments, fees and charges, partial withdrawals and face amount reductions. A-39 The guaranteed cost of insurance rates for a Policy depend on the insured's -- smoking status -- risk class -- attained age -- sex (if the Policy is sex-based). The current cost of insurance rates will depend on the above factors, plus -- the insured's age at issue (and at the time of any face amount increase) -- the Policy year (and the year of any face amount increase) -- the Policy's face amount. We guarantee that the rates for underwritten Policies will not be higher than rates based on -- the 2001 Commissioners Standard Ordinary Mortality Tables (the "2001 CSO Tables") with smoker/nonsmoker modifications, for Policies issued on non-juvenile insureds (age 18 and above at issue), adjusted for substandard ratings or flat extras, if applicable -- the 2001 CSO Aggregate Tables (Nonsmoker Tables for attained age 16 and older), for Policies issued on juvenile insureds (below age 18 at issue). The actual rates we use may be lower than the maximum rates, depending on our expectations about our future mortality and expense experience, lapse rates, taxes and investment earnings. We review the adequacy of our cost of insurance rates and other non-guaranteed charges periodically and may adjust them. Any change will apply prospectively. The risk classes we use are -- for Policies issued on non-juvenile insureds: preferred smoker, standard smoker, rated smoker, elite nonsmoker, preferred nonsmoker, standard nonsmoker, and rated nonsmoker. -- for Policies issued on juvenile insureds: standard and rated (with our consent). Rated Policies have higher cost of insurance deductions. We base the guaranteed maximum mortality charges for substandard ratings on multiples of the 2001 CSO Tables. The following standard or better smoker and non-smoker classes are available for underwritten Policies: -- elite nonsmoker for Policies with face amounts of $250,000 or more where the issue age is 18 through 80; -- preferred smoker and preferred nonsmoker for Policies with face amounts of $100,000 or more where the issue age is 18 through 80; -- standard smoker and standard nonsmoker for Policies with face amounts of $50,000 or more ($25,000 for pension plans) where the issue age is 18 through 85. The elite nonsmoker class generally offers the best current cost of insurance rates, and the preferred classes generally offer better current cost of insurance rates than the standard classes. Cost of insurance rates are generally lower for nonsmokers than for smokers and generally lower for females than for males. Within a given risk class, cost of insurance rates are generally lower for insureds with lower issue ages. For Policies sold in connection with some employee benefit plans, cost of insurance rates (and Policy values and benefits) do not vary based on the sex of the insured. CHARGES FOR ADDITIONAL BENEFITS. We charge for the cost of any additional rider benefits as described in the rider form. MORTALITY AND EXPENSE RISK CHARGE. We impose a monthly charge for our mortality and expense risks. A-40 The mortality risk we assume is that insureds may live for shorter periods of time than we estimated. The expense risk is that our costs of issuing and administering the Policies may be more than we estimated. The charge is imposed on the cash value in the Separate Account, but the rate we charge is determined by the cash value in the Separate Account and the Fixed Account. The rate is determined on each monthly anniversary and varies based on the Policy year and the Policy's net cash value in relation to the Policy's Target Premium. As shown in the table below, the rate declines as the Policy's net cash value and the Policy years increase. The charge is guaranteed not to exceed 0.80% in Policy years 1-10, 0.35% in Policy years 11-19, 0.20% in Policy years 20-29 and 0.05% thereafter.
- -------------------------------------------------------------------------------------------- CHARGE APPLIED TO CASH VALUE IN POLICY YEAR NET CASH VALUE SEPARATE ACCOUNT - -------------------------------------------------------------------------------------------- less than 5 target premiums 0.60% 5 but less than 10 target premiums 0.55% 1 - 10 10 but less than 20 target premiums 0.30% 20 target premiums or more 0.15% - -------------------------------------------------------------------------------------------- less than 5 target premiums 0.35% 5 but less than 10 target premiums 0.30% 11 - 19 10 but less than 20 target premiums 0.15% 20 target premiums or more 0.10% - -------------------------------------------------------------------------------------------- less than 5 target premiums 0.20% 5 but less than 10 target premiums 0.15% 20 - 29 10 but less than 20 target premiums 0.10% 20 target premiums or more 0.05% - -------------------------------------------------------------------------------------------- 30+ 0.05% - --------------------------------------------------------------------------------------------
LOAN INTEREST SPREAD We charge you interest on a loan at a maximum effective rate of 4.0% per year in Policy years 1-10 and 3.0% per year thereafter, compounded daily. We also credit interest on the amount we take from the Policy's accounts as a result of the loan at a minimum annual effective rate of 3% per year, compounded daily. As a result, the loan interest spread will never be more than 1.00%. CHARGES AGAINST THE PORTFOLIOS AND THE INVESTMENT DIVISIONS OF THE SEPARATE ACCOUNT CHARGES FOR INCOME TAXES. We currently do not charge the Separate Account for income taxes, but in the future we may make such a charge, if appropriate. We have the right to make a charge for any taxes imposed on the Policies in the future. (See "MetLife's Income Taxes.") PORTFOLIO EXPENSES. There are daily charges against the Portfolio assets for investment advisory services and fund operating expenses. These are described in the Fee Table as well as in the Portfolio prospectuses. TAX CONSIDERATIONS INTRODUCTION The following summary provides a general description of the Federal income tax considerations associated with the Policy and does not purport to be complete or to cover all tax situations. This discussion is not intended as tax advice. Counsel or other competent tax advisers should be consulted for more complete information. This discussion is based upon our understanding of the present Federal income tax laws. No representation is made as to the likelihood of continuation of the present Federal income tax laws or as to how they may be interpreted by the Internal Revenue Service. IRS CIRCULAR 230 NOTICE: The tax information contained herein is not intended to (and cannot) be used by anyone to avoid IRS penalties. It is intended to support the sale of the Policy. The Policy Owner should seek tax advice based on the Policy Owner's particular circumstances from an independent tax adviser. A-41 TAX STATUS OF THE POLICY In order to qualify as a life insurance contract for Federal income tax purposes and to receive the tax treatment normally accorded life insurance contracts under Federal tax law, a Policy must satisfy certain requirements which are set forth in the Internal Revenue Code. Guidance as to how these requirements are to be applied is limited. Nevertheless, we anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. However, if your Policy is issued on a substandard basis, there is additional uncertainty. Moreover, if you elect the Acceleration of Death Benefit Rider, the tax qualification consequences associated with continuing the Policy after a distribution is made under the rider are unclear. We may take appropriate steps to bring the Policy into compliance with applicable requirements, and we reserve the right to restrict Policy transactions in order to do so. The insurance proceeds payable on the death of the insured will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. In some circumstances, owners of variable contracts who retain excessive control over the investment of the underlying separate account assets may be treated as the owners of those assets. Although published guidance in this area does not address certain aspects of the Policies, we believe that the Owner of a Policy should not be treated as the owner of the Separate Account assets. We reserve the right to modify the Policies to bring them into conformity with applicable standards should such modification be necessary to prevent Owners of the Policies from being treated as the owners of the underlying Separate Account assets. In addition, the Code requires that the investments of the Separate Account be "adequately diversified" in order for the Policies to be treated as life insurance contracts for Federal income tax purposes. It is intended that the Separate Account, through the Portfolios, will satisfy these diversification requirements. If Portfolio shares are sold directly to either non-qualified plans or to tax-qualified retirement plans that later lose their tax qualified status, separate accounts investing in the Portfolios may fail the diversification requirements of Section 817(h) of the Internal Revenue Code of 1986. This could have adverse tax consequences for variable life insurance owners, including losing the benefit of tax deferral. The following discussion assumes that the Policy will qualify as a life insurance contract for Federal income tax purposes. TAX TREATMENT OF POLICY BENEFITS IN GENERAL. We believe that the death benefit under a Policy should generally be excludible from the gross income of the beneficiary. Federal, state and local transfer, and other tax consequences of ownership or receipt of Policy proceeds depend on the circumstances of each Policy Owner or beneficiary. A tax adviser should be consulted on these consequences. In the case of employer-owned life insurance as defined in Section 101(j), the amount of the death benefit excludable from gross income is limited to premiums paid unless the Policy falls within certain specified exceptions and a notice and consent requirement is satisfied before the Policy is issued. Certain specified exceptions are based on the status of an employee as highly compensated or recently employed. There are also exceptions for Policy proceeds paid to an employee's heirs. These exceptions only apply if proper notice is given to the insured employee and consent is received from the insured employee before the issuance of the Policy. These rules apply to Policies issued August 18, 2006 and later and also apply to policies issued before August 18, 2006 after a material increase in the death benefit or other material change. An IRS reporting requirement applies to employer-owned life insurance subject to these rules. Because these rules are complex and will affect the tax treatment of death benefits, it is advisable to consult tax counsel. The death benefit will also be taxable in the case of a transfer-for-value unless certain exceptions apply. Generally, the Policy Owner will not be deemed to be in constructive receipt of the Policy cash value until there is a distribution or a deemed distribution. When distributions from a Policy occur, or when loans are taken from or secured by a Policy, the tax consequences depend on whether the Policy is classified as a modified endowment contract ("MEC"). A-42 MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life insurance contracts are classified as modified endowment contracts, with less favorable income tax treatment than other life insurance contracts. Due to the Policy's flexibility with respect to premium payments and benefits, each Policy's circumstances will determine whether the Policy is a MEC. In general a Policy will be classified as a modified endowment contract if the amount of premiums paid into the Policy causes the Policy to fail the "7-pay test." A Policy will fail the 7-pay test if at any time in the first seven Policy years, the amount paid into the Policy exceeds the sum of the level premiums that would have been paid at that point under a Policy that provided for paid-up future benefits after the payment of seven level annual payments. If there is a reduction in the benefits under the Policy during the first seven Policy years, for example, as a result of a partial withdrawal, the 7-pay test will have to be reapplied as if the Policy had originally been issued at the reduced face amount. If there is a "material change" in the Policy's benefits or other terms, even after the first seven Policy years, the Policy may have to be retested as if it were a newly issued Policy. A material change can occur, for example, when there is an increase in the death benefit which is due to the payment of an unnecessary premium. Unnecessary premiums are premiums paid into the Policy which are not needed in order to provide a death benefit equal to the lowest death benefit that was payable in the first seven Policy years. To prevent your Policy from becoming a modified endowment contract, it may be necessary to limit premium payments or to limit reductions in benefits. A current or prospective Policy Owner should consult a tax adviser to determine whether a Policy transaction will cause the Policy to be classified as a modified endowment contract. DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as modified endowment contracts are subject to the following tax rules: (1) All distributions other than death benefits, including distributions upon surrender and withdrawals, from a modified endowment contract will be treated first as distributions of gain taxable as ordinary income and as tax-free recovery of the Policy Owner's investment in the Policy only after all gain has been distributed. (2) Loans taken from or secured by a Policy classified as a modified endowment contract are treated as distributions and taxed accordingly. (3) A 10 percent additional income tax is imposed on the amount subject to tax except where the distribution or loan is made when the Policy Owner has attained age 59 1/2 or is disabled, or where the distribution is part of a series of substantially equal periodic payments for the life (or life expectancy) of the Policy Owner or the joint lives (or joint life expectancies) of the Policy Owner and the Policy Owner's beneficiary or designated beneficiary. If a Policy becomes a modified endowment contract, distributions will be taxed as distributions from a modified endowment contract. In addition, distributions from a Policy within two years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a Policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS. Distributions other than death benefits from a Policy that is not classified as a modified endowment contract are generally treated first as a recovery of the Policy Owner's investment in the Policy and only after the recovery of all investment in the Policy as taxable income. However, certain distributions which must be made in order to enable the Policy to continue to qualify as a life insurance contract for Federal income tax purposes if Policy benefits are reduced during the first 15 Policy years may be treated in whole or in part as ordinary income subject to tax. Loans from or secured by a Policy that is not a modified endowment contract are generally not treated as distributions. However, the tax consequences associated with Policy loans that are outstanding after the first ten Policy years are less clear and a tax adviser should be consulted about such loans. Finally, neither distributions from nor loans from or secured by a Policy that is not a modified endowment contract are subject to the 10 percent additional income tax. INVESTMENT IN THE POLICY. Your investment in the Policy is generally your aggregate premiums. When a distribution is taken from the Policy, your investment in the Policy is reduced by the amount of the distribution that is tax-free. A-43 POLICY LOANS. In general, interest on a Policy loan will not be deductible. If a Policy loan is outstanding when a Policy is canceled or lapses, the amount of the outstanding indebtedness will be added to the amount distributed and will be taxed accordingly. A loan may also be taxed when a Policy is exchanged. Before taking out a Policy loan, you should consult a tax adviser as to the tax consequences. MULTIPLE POLICIES. All modified endowment contracts that are issued by MetLife (or its affiliates) to the same Policy Owner during any calendar year are treated as one modified endowment contract for purposes of determining the amount includible in the Policy Owner's income when a taxable distribution occurs. WITHHOLDING. To the extent that Policy distributions are taxable, they 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. LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS. Policy Owners that are not U.S. citizens or residents will generally be subject to U.S. Federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, Policy Owners may be subject to state and/or municipal taxes and taxes that may be imposed by the Policy Owner's country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding taxation with respect to a purchase of the Policy. ACCELERATION OF DEATH BENEFIT RIDER. We believe that payments received under the Acceleration of Death Benefit Rider should be fully excludable from the gross income of the beneficiary except in certain business contexts. However, you should consult a qualified tax adviser about the consequences of adding this rider to a Policy or requesting payment under this rider. OVERLOAN PROTECTION RIDER. If you are contemplating the purchase of the Policy with the Overloan Protection Rider, you should be aware that the tax consequences of the Overloan Protection Rider have not been ruled on by the IRS or the courts. It is possible that the IRS could assert that the outstanding loan balance should be treated as a taxable distribution when the Overloan Protection Rider causes the Policy to be converted into a fixed Policy. You should consult a tax adviser as to the tax risks associated with the Overloan Protection Rider. ESTATE, GIFT AND GENERATION-SKIPPING TRANSFER TAXES. The transfer of the Policy or the designation of a beneficiary may have Federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes. When the insured dies, the death proceeds will generally be includable in the Policy Owner's estate for purposes of the Federal estate tax if the Policy Owner was the insured. If the Policy Owner was not the insured, the fair market value of the Policy would be included in the Policy Owner's estate upon the Policy Owner's death. The Policy would not be includable in the insured's estate if the insured neither retained incidents of ownership at death nor had given up ownership within three years before death. Moreover, under certain circumstances, the Internal Revenue Code may impose a "generation-skipping transfer tax" when all or part of a life insurance policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Policy Owner. Regulations issued under the Internal Revenue Code may require us to deduct the tax from your Policy, or from any applicable payment, and pay it directly to the IRS. Qualified tax advisers should be consulted concerning the estate and gift tax consequences of Policy ownership and distributions under Federal, state and local law. The individual situation of each Policy Owner or beneficiary will determine the extent, if any, to which Federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of Policy proceeds will be treated for purposes of Federal, state and local estate, inheritance, generation-skipping and other taxes. The Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") repeals the Federal estate tax and replaces it with a carryover basis income tax regime effective for estates of decedents dying after December 31, 2009. EGTRRA also repeals the generation-skipping transfer tax, but not the gift tax, for transfers made after December 31, 2009. EGTRRA contains a sunset provision, which essentially returns the Federal estate, gift and generation-skipping transfer taxes to their pre-EGTRRA form, beginning in 2011. Congress may or may not enact permanent repeal between now and then. A-44 During the period prior to 2010, EGTRRA provides for periodic decreases in the maximum estate tax rate coupled with periodic increases in the estate tax exemption. For 2008-2009, the maximum estate tax rate is 45%. The estate tax exemption is $2,000,000 for 2008 and $3,500,000 in 2009. The complexity of the new tax law, along with uncertainty as to how it might be modified in coming years, underscores the importance of seeking guidance from a qualified adviser to help ensure that your estate plan adequately addresses your needs and those of your beneficiaries under all possible scenarios. OTHER POLICY OWNER TAX MATTERS. The tax consequences of continuing the Policy beyond the insured's attained age 121 are unclear. You should consult a tax adviser if you intend to keep the Policy in force beyond the insured's attained age 121. If a trustee under a pension or profit-sharing plan, or similar deferred compensation arrangement, owns a Policy, the Federal, state and estate tax consequences could differ. The amounts of life insurance that may be purchased on behalf of a participant in a pension or profit-sharing plan are limited. Providing excessive life insurance coverage in a retirement plan will have adverse tax consequences. The inclusion of riders, such as waiver of premium riders, may also have adverse tax consequences. Therefore, it is important to discuss with your tax adviser the suitability of the Policy, including the suitability of coverage amounts and Policy riders, before any purchase by a retirement plan. Any proposed distribution or sale of a Policy by a retirement plan will also need to be discussed with a tax adviser. The current cost of insurance for the net amount at risk is treated as a "current fringe benefit" and must be included annually in the plan participant's gross income. If the plan participant dies while covered by the plan and the Policy proceeds are paid to the participant's beneficiary, then the excess of the death benefit over the cash value is not income taxable. However, the cash value will generally be taxable to the extent it exceeds the participant's cost basis in the Policy. Policies owned under these types of plans may be subject to restrictions under the Employee Retirement Income Security Act of 1974 ("ERISA"). You should consult a qualified adviser regarding ERISA. Department of Labor ("DOL") regulations impose requirements for participant loans under retirement plans covered by ERISA. Plan loans must also satisfy tax requirements to be treated as nontaxable. Plan loan requirements and provisions may differ from the Policy loan provisions. Failure of plan loans to comply with the requirements and provisions of the DOL regulations and of tax law may result in adverse tax consequences and/or adverse consequences under ERISA. Plan fiduciaries and participants should consult a qualified adviser before requesting a loan under a Policy held in connection with a retirement plan. Businesses can use the Policies in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. If you are purchasing the Policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser. In recent years, moreover, Congress has adopted new rules relating to life insurance owned by businesses. Any business contemplating the purchase of a new Policy or a change in an existing Policy should consult a tax adviser. Ownership of the Policy by a corporation, trust or other non-natural person could jeopardize some (or all) of such entity's interest deduction under Internal Revenue Code Section 264, even where such entity's indebtedness is in no way connected to the Policy. In addition, under Section 264(f)(5), if a business (other than a sole proprietorship) is directly or indirectly a beneficiary of the Policy, the Policy could be treated as held by the business for purposes of the Section 264(f) entity-holder rules. Therefore, it would be advisable to consult with a qualified tax adviser before any non-natural person is made an owner or holder of the Policy, or before a business (other than a sole proprietorship) is made a beneficiary of the Policy. GUIDANCE ON SPLIT DOLLAR PLANS. The IRS has issued guidance on split dollar insurance plans. A tax adviser should be consulted with respect to this guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. If your Policy is part of an equity split dollar arrangement taxed under the economic benefit regime, there is a risk that some portion of the Policy cash value may be taxed prior to any Policy distribution. If your split dollar plan provides deferred compensation, recently enacted rules governing deferred A-45 compensation arrangements may apply. Failure to adhere to these rules will result in adverse tax consequences. Consult a tax adviser. In addition, the Sarbanes-Oxley Act of 2002 (the "Act"), which was signed into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on U.S. exchanges, from extending, directly or indirectly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted to apply to split-dollar life insurance arrangements for directors and executive officers of such companies, since such arrangements can arguably be viewed as involving a loan from the employer for at least some purposes. Any affected business contemplating the payment of a premium on an existing Policy or the purchase of a new Policy in connection with a split-dollar life insurance arrangement should consult legal counsel. ALTERNATIVE MINIMUM TAX. There may also be an indirect tax upon the income in the Policy or the proceeds of a Policy under the Federal corporate alternative minimum tax, if the Policy Owner is subject to that tax. POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Policy could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the Policy. FOREIGN TAX CREDITS. To the extent permitted under Federal tax law, we may claim the benefit of certain foreign tax credits attributable to taxes paid by certain Portfolios to foreign jurisdictions. METLIFE'S INCOME TAXES Under current Federal income tax law, MetLife is not taxed on the Separate Account's operations. Thus, currently we do not deduct a charge from the Separate Account for Federal income taxes. We reserve the right to charge the Separate Account for any future Federal income taxes we may incur. Under current laws in several states, we may incur state and local taxes (in addition to premium taxes). These taxes are not now significant and we are not currently charging for them. If they increase, we may deduct charges for such taxes. DISTRIBUTION OF THE POLICIES We have entered into a distribution agreement with our affiliate, MetLife Investors Distribution Company ("Distributor"), for the distribution of the Policies. We and Distributor have entered into selling agreements with other affiliated and unaffiliated broker-dealers ("selling firms") for the sale of the Policies through their registered representatives. Our affiliated broker-dealers are MetLife Securities, Inc. ("MSI"), New England Securities Corporation ("NES"), Tower Square Securities, Inc. and Walnut Street Securities, Inc. Distributor, MSI, NES and our other affiliated selling firms are registered with the SEC as broker-dealers under the Securities Exchange Act of 1934 and are members of the Financial Industry Regulatory Authority ("FINRA"). An investor brochure that includes information describing FINRA's Public Disclosure 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. All selling firms receive commissions. The portion of the commission payments that selling firms pass on to their sales representatives is determined in accordance with their internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. A selling firm or a sales representative of a selling firm may receive different compensation for selling one product over another and/or may be inclined to favor one product provider over another due to differing compensation rates. The maximum commissions paid for sale of the Policies through unaffiliated selling firms, and through our affiliated selling firms Walnut Street Securities, Inc. and Tower Square Securities, Inc. are as follows: 90% of premiums paid up to the Commissionable Target Premium, and 3.0% of premiums paid in excess of Commissionable Target Premium in Policy year 1; 1.25% of all premiums paid in Policy years 2 through 10; and 0.25% of all premiums paid thereafter. In addition, commissions are payable based on the cash value of the Policies in the following amounts: 0.10% in Policy years 2 through 10; 0.08% in Policy years 11 through 20; and 0.06% thereafter. A-46 Commissionable Target Premium is generally the Target Premium as defined in the Glossary, excluding the portions associated with flat extras and certain riders, and is generally equal to or less than the Target Premium. We and/or Distributor may also make bonus payments to selling firms. The maximum amount of these bonus payments are as follows: 9.0% of premiums paid up to the Commissionable Target Premium and 2.0% of premiums paid in excess of Commissionable Target Premium in Policy year 1; and 0.25% of all premiums paid thereafter. Ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your purchase of the Policy. Sales representatives of our affiliates and their Managers may also be eligible for cash compensation such as bonuses, equity awards (for example, stock options), training allowances, supplemental salary, payments based on a percentage of the Policy's cash value, financing arrangements, marketing support, medical and retirement benefits and other insurance and non-insurance benefits. The amount of this cash compensation is based primarily on the amount of proprietary products sold. Proprietary products are products issued by us and our affiliates. Sales representatives of certain affiliates must meet a minimum level of sales of proprietary products in order to maintain their agent status with the company and in order to be eligible for most of the cash compensation listed above. Managers may be eligible for additional cash compensation based on the performance (with emphasis on the sale of proprietary products) of the sales representatives that the Manager supervises. Managers may pay a portion of their cash compensation to their sales representatives. Receipt of the cash compensation described above may provide our sales representatives and their Managers, and the sales representatives and Managers of our affiliates, with an incentive to favor the sale of the Policies over similar products issued by non-affiliates. Sales representatives and Managers of our affiliates are also eligible for various non-cash compensation programs that we offer such as conferences, trips, prizes, and awards. Other payments may be made for other services that do not directly involve the sale of the Policies. These services may include the recruitment and training of personnel, production of promotional literature, and similar services. We and Distributor may enter into preferred distribution arrangements with selected selling firms under which we pay additional compensation, 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 these variable insurance products. Introduction fees are payments to selling firms in connection with the addition of these variable 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 these products. Persistency payments are periodic payments based on account and/or cash values of these variable insurance products. Preferred status fees are paid to obtain preferred treatment of these products 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. These preferred distribution arrangements 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. Distributor has entered into preferred distribution arrangements with our affiliates, Walnut Street Securities Inc. and Tower Square Securities, Inc. and with the unaffiliated selling firms identified in the Statement of Additional Information. We and Distributor may enter into similar arrangements with our other affiliates, MSI and NES. The prospect of receiving, or the receipt of, additional compensation as described above may provide selling firms or their representatives with an incentive to favor sales of the Policies over other variable insurance policies (or other investments) with respect to which the 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 Policies. For more information about any such arrangements, ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your purchase of a Policy. 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 Distributor's management team, advertising expenses, and A-47 other expenses of distributing the Policies. Distributor's management team may also 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 similar items. We pay American Funds Distributors, Inc., principal underwriter for the American Funds Insurance Series, a percentage of all premiums allocated to the American Funds Bond Fund, the American Funds Global Small Capitalization Fund, the American Funds Growth Fund, and the American Funds Growth-Income Fund, for the services it provides in marketing the Funds' shares in connection with the Policies. Each of these Funds makes payments to Distributor under their distribution plans in consideration of services provided and expenses incurred by Distributor in distributing their shares. These payments currently equal 0.25% of Separate Account assets invested in the particular Portfolio. (See "Fee Tables--Annual Portfolio Operating Expenses" and the Portfolio prospectuses.) Commissions and other incentives or payments described above are not charged directly to Policy Owners or the Separate Account. We intend to recoup commissions and other sales expenses through fees and charges deducted under the Policy. The Statement of Additional Information contains additional information about the compensation paid for the sale of the Policies. LEGAL PROCEEDINGS In the ordinary course of business, MetLife, 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 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 to meet its obligations under the Policies. RESTRICTIONS ON FINANCIAL TRANSACTIONS Applicable laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to reject a premium payment and/or block or "freeze" your Policy. If these laws apply in a particular situation, we would not be allowed to process any request for withdrawals, surrenders, loans or death benefits, make transfers, or continue making payments under your death benefit option until instructions are received from the appropriate regulator. We also may be required to provide additional information about you or your Policy to government regulators. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The financial statements of each of the Investment Divisions of Metropolitan Life Separate Account UL included in this prospectus have been audited by Deloitte & Touche LLP, an independent public accounting firm, as stated in their report included herein, 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. FINANCIAL STATEMENTS You may find the financial statements of MetLife in the Statement of Additional Information. MetLife's financial statements should be considered only as bearing on our ability to meet our obligations under the Policies. They should not be considered as bearing on the investment performance of the assets held in the Separate Account. A-48 GLOSSARY AGE. The age of an insured refers to the insured's age at his or her nearest birthday. ATTAINED AGE. The insured's issue age plus the number of completed Policy years. BASE POLICY. The Policy without riders. CASH SURRENDER VALUE. The amount you receive if you surrender the Policy. It is equal to the Policy's cash value reduced by any Surrender Charge that would apply on surrender and by any outstanding Policy loan and accrued interest. CASH VALUE. A Policy's cash value includes the amount of its cash value held in the Separate Account, the amount held in the Fixed Account and, if there is an outstanding Policy loan, the amount of its cash value held in the Loan Account. FIXED ACCOUNT. The Fixed Account is a part of our general account to which you may allocate net premiums. It provides guarantees of principal and interest. INVESTMENT DIVISION. A sub-account of the Separate Account that invests in shares of an open-ended management investment company or other pools of investment assets. INVESTMENT START DATE. This is the later of the Policy Date and the date we first receive a premium payment for the Policy. ISSUE AGE. The age of the insured as of his or her birthday nearest to the Policy Date. LOAN ACCOUNT. The account to which cash value from the Separate and/or Fixed Accounts is transferred when a Policy loan is taken. NET CASH VALUE. The Policy's cash value less any outstanding loans and accrued loan interest. PLANNED PREMIUM. The Planned Premium is the premium payment schedule you choose to help meet your future goals under the Policy. The Planned Premium consists of a first-year premium amount and an amount for premium payments in subsequent Policy years. It is subject to certain limits under the Policy. POLICY DATE. The date on which coverage under the Policy and Monthly Deductions begin. If you make a premium payment with the application, unless you request otherwise, the Policy Date is generally the date the Policy application is approved. If you choose to pay the initial premium upon delivery of the Policy, unless you request otherwise, the Policy Date is generally the date on which we receive your initial payment. PREMIUMS. Premiums include all payments under the Policy, whether a Planned Premium or an unscheduled payment. SEPARATE ACCOUNT. Metropolitan Life Separate Account UL, a separate account established by MetLife to receive and invest premiums paid under the Policies and certain other variable life insurance policies, and to provide variable benefits. TARGET PREMIUM. We use the Target Premium to determine the amount of Mortality and Expense Risk Charge imposed on the Separate Account and the amount of Sales Charge imposed on premium payments. The Target Premium varies by issue age, sex, smoking status and any flat extras and substandard rating of the insured, and the Policy's base face amount, with additional amounts for most riders. YOU. "You" refers to the Policy Owner. A-49 APPENDIX A GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST In order to meet the Internal Revenue Code's definition of life insurance, the Policies provide that the death benefit will not be less than what is required by the "guideline premium test" under Section 7702(a)(2) of the Internal Revenue Code, or the "cash value accumulation test" under Section 7702(a)(1) of the Internal Revenue Code, as selected by you when the Policy is issued. The test you choose at issue will be used for the life of the Policy. (See "Death Benefits.") For the guideline premium test, the table below shows the percentage of the Policy's cash value that is used to determine the death benefit.
AGE OF AGE OF INSURED AT START OF PERCENTAGE OF INSURED AT START OF PERCENTAGE OF THE POLICY YEAR CASH VALUE THE POLICY YEAR CASH VALUE - ------------------- ------------- ------------------- ------------- 0 through 40 250 61 128 41 243 62 126 42 236 63 124 43 229 64 122 44 222 65 120 45 215 66 119 46 209 67 118 47 203 68 117 48 197 69 116 49 191 70 115 50 185 71 113 51 178 72 111 52 171 73 109 53 164 74 107 54 157 75 through 90 105 55 150 91 104 56 146 92 103 57 142 93 102 58 138 94 through 121 101 59 134 60 130
For the cash value accumulation test, sample net single premium factors for selected ages of male and female insureds, in a standard or better nonsmoker risk class, are listed below.
NET SINGLE PREMIUM FACTOR ------------------- AGE MALE FEMALE - --- -------- -------- 30.......................................................... 5.82979 6.59918 40.......................................................... 4.11359 4.63373 50.......................................................... 2.93292 3.28706 60.......................................................... 2.14246 2.40697 70.......................................................... 1.64028 1.82665 80.......................................................... 1.32530 1.44515 90.......................................................... 1.15724 1.22113 100......................................................... 1.08417 1.10646 120......................................................... 1.02597 1.02597
A-50 APPENDIX B ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND CASH SURRENDER VALUES The tables in Appendix B illustrate the way the Policies work, based on assumptions about investment returns and the insured's characteristics. They show how the death benefit, cash surrender value and cash value could vary over an extended period of time assuming hypothetical gross rates of return (i.e., investment income and capital gains and losses, realized or unrealized) for the Separate Account equal to constant after tax annual rates of 0%, 6% and 10%. The tables are based on a face amount of $300,000 for a male aged 35. The insured is assumed to be in the preferred nonsmoker risk class. The tables assume no rider benefits and assume that no allocations are made to the Fixed Account. Values are first given based on current Policy charges and then based on guaranteed Policy charges. (See "Charges.") Illustrations show the Option A death benefit. Policy values would be different (either higher or lower) from the illustrated amounts in certain circumstances. For example, illustrated amounts would be different where actual gross rates of return averaged 0%, 6% or 10%, but: (i) the rates of return varied above and below these averages during the period, (ii) premiums were paid in other amounts or at other than annual intervals, or (iii) cash values were allocated differently among individual Investment Divisions with varying rates of return. They would also differ if a Policy loan or partial withdrawal were made during the period of time illustrated, if the insured were female or in another risk classification, or if the Policies were issued at unisex rates. For example, as a result of variations in actual returns, additional premium payments beyond those illustrated may be necessary to maintain the Policy in force for the periods shown or to realize the Policy values shown, even if the average rate of return is achieved. The death benefits, cash surrender values and cash values shown in the tables reflect: (i) deductions from premiums for the sales charge, premium tax and federal tax charge; and (ii) a Monthly Deduction (consisting of a Coverage Expense Charge, a Mortality and Expense Risk Charge, and a charge for the cost of insurance) from the cash value on the first day of each Policy month. The cash surrender values reflect a Surrender Charge deducted from the cash value upon surrender, face reduction or lapse during the first ten Policy years. (See "Charges.") The illustrations reflect an arithmetic average of the gross investment advisory fees and operating expenses of the Portfolios, at an annual rate of .74% of the average daily net assets of the Portfolios. This average does not reflect expense subsidies by the investment advisers of certain Portfolios. The gross rates of return used in the illustrations do not reflect the deductions of the fees and expenses of the Portfolios. Taking account of the average investment advisory fee and operating expenses of the Portfolios, the gross annual rates of return of 0%, 6% and 10% correspond to net investment experience at constant annual rates of -.74%, 5.22% and 9.19%, respectively. If you request, we will furnish a personalized illustration reflecting the proposed insured's age, sex, risk class, and the face amount or premium payment schedule requested. Because these and other assumptions will differ, the values shown in the personalized illustrations can differ very substantially from those shown in the tables. Therefore, you should carefully review the information that accompanies any personalized illustration. That information will disclose all the assumptions on which the personalized illustration is based. Where applicable, we will also furnish on request a personalized illustration for a Policy which is not affected by the sex of the insured. You should contact your registered representative to request a personalized illustration. A-51 MALE ISSUE AGE 35 $1,620 ANNUAL PREMIUM FOR PREFERRED NONSMOKER RISK CLASS $300,000 FACE AMOUNT OPTION A DEATH BENEFIT THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL END OF RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF POLICY ---------------------------------- ----------------------------- ----------------------------- YEAR 0% 6% 10% 0% 6% 10% 0% 6% 10% - ------ -- -- --- -- -- --- -- -- --- 1 $ 300,000 $ 300,000 $ 300,000 $ 0 $ 0 $ 0 $ 861 $ 931 $ 977 2 300,000 300,000 300,000 0 0 0 1,684 1,877 2,010 3 300,000 300,000 300,000 0 0 0 2,469 2,839 3,104 4 300,000 300,000 300,000 0 176 621 3,216 3,817 4,261 5 300,000 300,000 300,000 842 1,727 2,405 3,922 4,807 5,485 6 300,000 300,000 300,000 1,783 3,007 3,977 4,584 5,808 6,777 7 300,000 300,000 300,000 2,680 4,297 5,622 5,200 6,817 8,142 8 300,000 300,000 300,000 3,812 5,876 7,627 5,772 7,836 9,587 9 300,000 300,000 300,000 5,912 8,496 10,762 6,892 9,476 11,742 10 300,000 300,000 300,000 7,964 11,158 14,048 7,964 11,158 14,048 15 300,000 300,000 300,000 12,991 20,797 29,036 12,991 20,797 29,036 20 300,000 300,000 300,000 17,126 32,464 51,676 17,126 32,464 51,676 25 300,000 300,000 300,000 19,756 46,225 85,739 19,756 46,225 85,739 30 300,000 300,000 300,000 19,712 61,576 137,070 19,712 61,576 137,070 35 300,000 300,000 300,000 15,246 77,640 215,886 15,246 77,640 215,886 40 300,000 300,000 364,983 4,527 93,912 341,105 4,527 93,912 341,105 45 300,000 561,943 105,147 535,184 105,147 535,184 50 300,000 870,396 93,059 828,948 93,059 828,948 55 300,000 1,327,139 2,823 1,263,942 2,823 1,263,942 60 1,945,629 1,926,365 1,926,365 65 2,991,833 2,962,211 2,962,211 70 4,587,793 4,542,369 4,542,369 75 7,007,915 6,938,529 6,938,529 80 10,634,787 10,529,492 10,529,492 85 15,981,513 15,823,280 15,823,280 86 17,327,749 17,156,187 17,156,187
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S INVESTMENT DIVISIONS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY METLIFE OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. A-52 MALE ISSUE AGE 35 $1,620 ANNUAL PREMIUM FOR PREFERRED NONSMOKER RISK CLASS $300,000 FACE AMOUNT OPTION A DEATH BENEFIT THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL END OF RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF POLICY ------------------------------ -------------------------- -------------------------- YEAR 0% 6% 10% 0% 6% 10% 0% 6% 10% - ------ -- -- --- -- -- --- -- -- --- 1 $300,000 $300,000 $300,000 $ 0 $ 0 $ 0 $ 597 $ 658 $ 699 2 300,000 300,000 300,000 0 0 0 1,168 1,328 1,439 3 300,000 300,000 300,000 0 0 0 1,716 2,012 2,226 4 300,000 300,000 300,000 0 0 0 2,229 2,700 3,051 5 300,000 300,000 300,000 0 315 841 2,712 3,395 3,921 6 300,000 300,000 300,000 362 1,294 2,037 3,162 4,094 4,838 7 300,000 300,000 300,000 1,050 2,268 3,275 3,570 4,789 5,795 8 300,000 300,000 300,000 1,969 3,510 4,827 3,929 5,470 6,788 9 300,000 300,000 300,000 3,253 5,151 6,833 4,233 6,131 7,813 10 300,000 300,000 300,000 4,474 6,762 8,865 4,474 6,762 8,865 15 300,000 300,000 300,000 4,840 9,595 14,901 4,840 9,595 14,901 20 300,000 300,000 300,000 3,339 11,175 22,064 3,339 11,175 22,064 25 300,000 300,000 8,742 28,687 8,742 28,687 30 300,000 31,717 31,717 35 300,000 23,986 23,986 40 45 50 55 60 65 70 75 80 85 86
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S INVESTMENT DIVISIONS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY METLIFE OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. A-53 Additional information about the Policy and the Separate Account can be found in the Statement of Additional Information, which is available online at our website www.metlife.com. You may also obtain a copy of the Statement of Additional Information, without charge, by calling our TeleService Center at 1-800-638-5000. You may also obtain, without charge, a personalized illustration of death benefits, cash surrender values and cash values by calling your registered representative. For Investment Division transfers and premium reallocations, for current information about your Policy values, to change or update Policy information such as your billing address, billing mode, beneficiary or ownership, for information about other Policy transactions, and to ask questions about your Policy, you may call us at 1-800-638-5000. This prospectus incorporates by reference all of the information contained in the Statement of Additional Information, which is legally part of this prospectus. Information about the Policy and the Separate Account, including the Statement of Additional Information, is available for viewing and copying at the SEC's Public Reference Room in Washington, D.C. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. The Statement of Additional Information, reports and other information about the Separate Account are available on the SEC Internet site at www.sec.gov. Copies of this information may be obtained upon payment of a duplicating fee, by writing to the SEC's Public Reference Section at 100 F Street, NE, Washington, DC 20549-0102. File No. 811-06025 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Policy Owners of Metropolitan Life Separate Account UL and the Board of Directors of Metropolitan Life Insurance Company: We have audited the accompanying statements of assets and liabilities of the Metropolitan Life Separate Account UL (the "Separate Account") of Metropolitan Life Insurance Company (the "Company") comprising each of the individual Investment Divisions listed in Appendix A as of December 31, 2007, and the related statements of operations and changes in net assets for each of the periods in the three years then ended. We have also audited the statements of operations and changes in net assets for each of the periods presented in the three years ended December 31, 2007, for each of the individual Investment Divisions 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 Investment Divisions constituting the Separate Account of the Company as of December 31, 2007, and the results of their operations and changes in net assets for each of the periods presented in the three 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 MSF BlackRock Diversified Investment Division MSF BlackRock Aggressive Growth Investment Division MSF MetLife Stock Index Investment Division MSF FI International Stock Investment Division MSF FI Mid Cap Opportunities Investment Division MSF T. Rowe Price Small Cap Growth Investment Division MSF Oppenheimer Global Equity Investment Division MSF Harris Oakmark Large Cap Value Investment Division MSF Neuberger Berman Mid Cap Value Investment Division MSF T. Rowe Price Large Cap Growth Investment Division MSF Lehman Brothers Aggregate Bond Index Investment Division MSF Morgan Stanley EAFE Index Investment Division MSF Russell 2000 Index Investment Division MSF Jennison Growth Investment Division MSF BlackRock Strategic Value Investment Division MSF MetLife Mid Cap Stock Index Investment Division MSF Franklin Templeton Small Cap Growth Investment Division MSF BlackRock Large Cap Value Investment Division MSF Davis Venture Value Investment Division MSF Loomis Sayles Small Cap Investment Division MSF BlackRock Legacy Large Cap Growth Investment Division MSF BlackRock Bond Income Investment Division MSF FI Value Leaders Investment Division MSF Harris Oakmark Focused Value Investment Division MSF Western Asset Management Strategic Bond Opportunities Investment Division MSF Western Asset Management U.S. Government Investment Division MSF BlackRock Money Market Investment Division MSF MFS Total Return Investment Division MSF MetLife Conservative Allocation Investment Division MSF MetLife Conservative to Moderate Allocation Investment Division MSF MetLife Moderate Allocation Investment Division MSF MetLife Moderate to Aggressive Allocation Investment Division MSF MetLife Aggressive Allocation Investment Division MSF FI Large Cap Investment Division MSF Capital Guardian U.S. Equity Investment Division Janus Aspen Large Cap Growth Investment Division Janus Aspen Balanced Investment Division Janus Aspen Forty Investment Division AIM V.I. Global Real Estate Investment Division Franklin Templeton Foreign Securities Investment Division Franklin Mutual Discovery Securities Investment Division AllianceBernstein Global Technology Investment Division Fidelity VIP Contrafund Investment Division Fidelity VIP Asset Manager: Growth Investment Division Fidelity VIP Investment Grade Bond Investment Division Fidelity VIP Equity-Income Investment Division American Funds Growth Investment Division American Funds Growth-Income Investment Division American Funds Global Small Capitalization Investment Division American Funds Bond Investment Division MIST T. Rowe Price Mid-Cap Growth Investment Division MIST MFS Research International Investment Division MIST PIMCO Total Return Investment Division APPENDIX A (CONTINUED) MIST RCM Technology Investment Division MIST Lord Abbett Bond Debenture Investment Division MIST Lazard Mid-Cap Investment Division MIST Met/AIM Small Cap Growth Investment Division MIST Harris Oakmark International Investment Division MIST Legg Mason Partners Aggressive Growth Investment Division MIST Lord Abbett Growth and Income Investment Division MIST Neuberger Berman Real Estate Investment Division MIST Van Kampen Mid Cap Growth Investment Division MIST Lord Abbett Mid-Cap Value Investment Division MIST Third Avenue Small Cap Value Investment Division MIST Oppenheimer Capital Appreciation Investment Division MIST Legg Mason Value Equity Investment Division MIST Cyclical Growth ETF Investment Division MIST Cyclical Growth and Income ETF Investment Division MIST PIMCO Inflation Protected Bond Investment Division MIST BlackRock Large-Cap Core Investment Division MIST Janus Forty Investment Division American Century VP Vista Investment Division Delaware VIP Small Cap Value Investment Division Dreyfus MidCap Stock Index Investment Division Dreyfus International Value Investment Division Goldman Sachs Mid Cap Value Investment Division Goldman Sachs Structured Small Cap Equity Investment Division MFS High Income Investment Division MFS Global Equity Investment Division MFS New Discovery Investment Division MFS Value Investment Division Van Kampen Government Investment Division Wells Fargo VT Total Return Bond Investment Division Wells Fargo VT Money Market Investment Division APPENDIX B MSF BlackRock Large Cap Investment Division AIM V.I. Government Securities Investment Division Dreyfus Emerging Leaders Investment Division Wells Fargo VT Asset Allocation Investment Division Wells Fargo VT Large Company Growth Investment Division Wells Fargo VT Equity Income Investment Division [THIS PAGE INTENTIONALLY LEFT BLANK] 1 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2007
MSF BLACKROCK MSF BLACKROCK MSF METLIFE MSF FI DIVERSIFIED AGGRESSIVE GROWTH STOCK INDEX INTERNATIONAL STOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 334,233,382 $ 260,053,399 $ 748,073,006 $ 72,781,181 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... 12,054 8,416 -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 334,245,436 260,061,815 748,073,006 72,781,181 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- 4,518 76,472 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- 4,518 76,472 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 334,245,436 $ 260,061,815 $ 748,068,488 $ 72,704,709 ================ ================ ================ ================ Units outstanding................. 12,715,624 10,673,487 34,637,993 3,371,026 Unit value (accumulation)......... $15.43 - $38.69 $18.84 - $26.64 $13.47 - $39.67 $17.46 - $23.95
The accompanying notes are an integral part of these financial statements. 2
MSF FI MID CAP MSF T. ROWE PRICE MSF OPPENHEIMER MSF HARRIS OAKMARK MSF NEUBERGER BERMAN MSF T. ROWE PRICE OPPORTUNITIES SMALL CAP GROWTH GLOBAL EQUITY LARGE CAP VALUE MID CAP VALUE LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- ------------------- ------------------- -------------------- ------------------- $ 283,109,072 $ 85,699,400 $ 52,072,899 $ 61,863,832 $ 82,114,153 $ 52,795,733 -- -- -- -- -- -- -- 46,787 -- 62,833 -- 15,508 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 283,109,072 85,746,187 52,072,899 61,926,665 82,114,153 52,811,241 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 31,220 -- 190 -- 108,780 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 31,220 -- 190 -- 108,780 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 283,077,852 $ 85,746,187 $ 52,072,709 $ 61,926,665 $ 82,005,373 $ 52,811,241 ================ ================ ================ ================ ================ ================ 13,843,071 4,692,085 2,347,437 4,115,566 3,292,329 3,529,093 $8.63 - $24.16 $17.16 - $19.47 $21.71 - $24.18 $14.14 - $17.54 $21.27 - $30.68 $11.53 - $17.60
The accompanying notes are an integral part of these financial statements. 3 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MSF LEHMAN BROTHERS MSF MORGAN STANLEY MSF RUSSELL MSF JENNISON AGGREGATE BOND INDEX EAFE INDEX 2000 INDEX GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION -------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 104,938,369 $ 71,605,228 $ 56,246,569 $ 15,728,934 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- 30,702 -- 12,782 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 104,938,369 71,635,930 56,246,569 15,741,716 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... 10,106 -- 1,969 -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 10,106 -- 1,969 -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 104,928,263 $ 71,635,930 $ 56,244,600 $ 15,741,716 ================ ================ ================ ================ Units outstanding................. 6,582,200 4,186,312 2,975,863 1,203,057 Unit value (accumulation)......... $14.56 - $16.17 $14.30 - $19.58 $14.83 - $20.87 $6.48 - $13.98
The accompanying notes are an integral part of these financial statements. 4
MSF BLACKROCK MSF METLIFE MSF FRANKLIN TEMPLETON MSF BLACKROCK MSF DAVIS MSF LOOMIS STRATEGIC VALUE MID CAP STOCK INDEX SMALL CAP GROWTH LARGE CAP VALUE VENTURE VALUE SAYLES SMALL CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- ---------------------- ------------------- ------------------- ------------------- $ 100,643,223 $ 63,960,422 $ 7,040,049 $ 12,275,048 $ 58,550,469 $ 15,771,472 -- -- -- -- -- -- 65,142 -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- 100,708,365 63,960,422 7,040,049 12,275,048 58,550,469 15,771,472 ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- -- -- -- -- -- -- -- 1,219 -- -- 225 -- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- -- 1,219 -- -- 225 -- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------- $ 100,708,365 $ 63,959,203 $ 7,040,049 $ 12,275,048 $ 58,550,244 $ 15,771,472 ================ ================ ================ ================ ================ ================= 4,450,536 3,466,871 569,953 770,111 1,479,707 98,083 $20.94 - $22.86 $17.07 - $18.75 $11.73 - $12.46 $15.30 - $16.10 $14.53 - $42.17 $15.07 - $333.74
The accompanying notes are an integral part of these financial statements. 5 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MSF BLACKROCK MSF BLACKROCK MSF FI MSF HARRIS OAKMARK LEGACY LARGE CAP GROWTH BOND INCOME VALUE LEADERS FOCUSED VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value. $ 3,830,011 $ 92,438,849 $ 6,742,766 $ 54,129,720 Other receivables......... -- -- -- -- Due from Metropolitan Life Insurance Company....... -- -- -- -- ---------------- ---------------- ---------------- ------------------ Total Assets.......... 3,830,011 92,438,849 6,742,766 54,129,720 ---------------- ---------------- ---------------- ------------------ LIABILITIES: Other payables............ -- -- -- -- Due to Metropolitan Life Insurance Company....... 5,461 2,491 2 -- ---------------- ---------------- ---------------- ------------------ Total Liabilities..... 5,461 2,491 2 -- ---------------- ---------------- ---------------- ------------------ NET ASSETS................. $ 3,824,550 $ 92,436,358 $ 6,742,764 $ 54,129,720 ================ ================ ================ ================== Units outstanding......... 265,094 4,467,585 440,904 191,591 Unit value (accumulation). $9.85 - $14.78 $15.30 - $31.06 $12.29 - $15.50 $268.52 - $285.05
The accompanying notes are an integral part of these financial statements. 6
MSF WESTERN MSF WESTERN ASSET MANAGEMENT ASSET MANAGEMENT MSF BLACKROCK MSF MFS MSF METLIFE STRATEGIC BOND OPPORTUNITIES U.S. GOVERNMENT MONEY MARKET TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ---------------------------- ------------------- ------------------- ------------------- ----------------------- $ 18,372,006 $ 15,797,381 $ 63,436,704 $ 5,549,551 $ 784,035 -- -- -- -- -- -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- 18,372,006 15,797,381 63,436,704 5,549,551 784,035 ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 38,647 41 -- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- 38,647 41 -- ---------------- ---------------- ---------------- ---------------- ---------------- $ 18,372,006 $ 15,797,381 $ 63,398,057 $ 5,549,510 $ 784,035 ================ ================ ================ ================ ================ 1,117,386 1,066,735 3,638,086 418,473 66,558 $15.63 - $16.60 $14.08 - $14.95 $17.41 - $17.57 $12.90 - $13.33 $11.53 - $11.81
MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION INVESTMENT DIVISION - ------------------- $ 2,977,400 -- -- ---------------- 2,977,400 ---------------- -- -- ---------------- -- ---------------- $ 2,977,400 ================ 244,254 $11.98 - $12.27
The accompanying notes are an integral part of these financial statements. 7 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MSF METLIFE MSF METLIFE MODERATE TO MSF METLIFE MSF FI MODERATE ALLOCATION AGGRESSIVE ALLOCATION AGGRESSIVE ALLOCATION LARGE CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- --------------------- --------------------- ------------------- ASSETS: Investments at fair value......... $ 18,395,945 $ 32,935,899 $ 8,191,098 $ 304,229 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 18,395,945 32,935,899 8,191,098 304,229 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 18,395,945 $ 32,935,899 $ 8,191,098 $ 304,229 ================ ================ ================ ================ Units outstanding................. 1,452,241 2,499,351 608,756 28,739 Unit value (accumulation)......... $12.44 - $12.74 $12.92 - $13.23 $13.22 - $13.54 $10.47 - $10.63
The accompanying notes are an integral part of these financial statements. 8
MSF CAPITAL GUARDIAN JANUS ASPEN JANUS ASPEN JANUS ASPEN AIM V.I. FRANKLIN TEMPLETON U.S. EQUITY LARGE CAP GROWTH BALANCED FORTY GLOBAL REAL ESTATE FOREIGN SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 447,428 $ 7,225,357 $ 80,038 $ 518,929 $ 2,752,181 $ 9,384,258 -- -- -- -- -- -- 69,103 -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 516,531 7,225,357 80,038 518,929 2,752,181 9,384,258 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 5,472 3 2 180,915 20,634 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 5,472 3 2 180,915 20,634 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 516,531 $ 7,219,885 $ 80,035 $ 518,927 $ 2,571,266 $ 9,363,624 ================ ================ ================ ================ ================ ================ 33,111 643,417 5,625 27,126 74,508 504,436 $15.60 $11.22 $14.23 $19.13 $34.51 $18.56
The accompanying notes are an integral part of these financial statements. 9 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
FRANKLIN ALLIANCEBERNSTEIN FIDELITY VIP FIDELITY VIP MUTUAL DISCOVERY SECURITIES GLOBAL TECHNOLOGY CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ------------------- ------------------- --------------------- ASSETS: Investments at fair value. $ 1,706,089 $ 53,105 $ 3,052,773 $ 1,263,804 Other receivables......... -- -- -- -- Due from Metropolitan Life Insurance Company....... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.......... 1,706,089 53,105 3,052,773 1,263,804 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables............ -- -- -- -- Due to Metropolitan Life Insurance Company....... 27 8 150,455 4,414 ---------------- ---------------- ---------------- ---------------- Total Liabilities..... 27 8 150,455 4,414 ---------------- ---------------- ---------------- ---------------- NET ASSETS................. $ 1,706,062 $ 53,097 $ 2,902,318 $ 1,259,390 ================ ================ ================ ================ Units outstanding......... 93,103 8,261 188,529 112,746 Unit value (accumulation). $18.32 $6.43 $15.39 $11.17
The accompanying notes are an integral part of these financial statements. 10
FIDELITY VIP FIDELITY VIP AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS INVESTMENT GRADE BOND EQUITY-INCOME GROWTH GROWTH-INCOME GLOBAL SMALL CAPITALIZATION BOND INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - --------------------- ------------------- ------------------- ------------------- --------------------------- ------------------- $ 852,371 $ 1,245,130 $ 121,273,017 $ 75,370,228 $ 67,615,279 $ 3,182,415 -- -- -- -- -- -- 1 -- -- -- -- -- ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- 852,372 1,245,130 121,273,017 75,370,228 67,615,279 3,182,415 ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 28,466 -- -- -- -- ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- -- 28,466 -- -- -- -- ---------------- ---------------- ----------------- ---------------- ---------------- ---------------- $ 852,372 $ 1,216,664 $ 121,273,017 $ 75,370,228 $ 67,615,279 $ 3,182,415 ================ ================ ================= ================ ================ ================ 73,675 87,700 1,218,654 1,381,044 1,945,062 291,647 $11.57 $13.87 $94.52 - $100.35 $51.88 - $55.07 $33.16 - $35.20 $10.78 - $10.95
The accompanying notes are an integral part of these financial statements. 11 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MIST T. ROWE PRICE MIST MFS RESEARCH MIST PIMCO MIST RCM MID-CAP GROWTH INTERNATIONAL TOTAL RETURN TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 17,384,201 $ 13,633,086 $ 32,210,481 $ 13,231,277 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 17,384,201 13,633,086 32,210,481 13,231,277 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... 2 3,162 -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 2 3,162 -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 17,384,199 $ 13,629,924 $ 32,210,481 $ 13,231,277 ================ ================ ================ ================ Units outstanding................. 1,587,296 695,827 2,175,489 1,867,295 Unit value (accumulation)......... $10.32 - $16.38 $17.33 - $20.03 $14.07 - $14.94 $6.74 - $7.15
The accompanying notes are an integral part of these financial statements. 12
MIST LORD ABBETT MIST LAZARD MIST MET/AIM MIST HARRIS OAKMARK MIST LEGG MASON MIST LORD ABBETT BOND DEBENTURE MID-CAP SMALL CAP GROWTH INTERNATIONAL PARTNERS AGGRESSIVE GROWTH GROWTH AND INCOME INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- ------------------- ------------------- -------------------------- ------------------- $ 22,265,656 $ 5,084,696 $ 3,233,323 $ 26,700,786 $ 7,804,601 $ 6,283,426 -- -- -- -- -- -- -- -- -- -- -- 5,960 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 22,265,656 5,084,696 3,233,323 26,700,786 7,804,601 6,289,386 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 3,277 -- 1 -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,277 -- 1 -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 22,262,379 $ 5,084,696 $ 3,233,322 $ 26,700,786 $ 7,804,601 $ 6,289,386 ================ ================ ================ ================ ================ ================ 1,249,287 340,316 208,985 1,335,770 893,124 539,972 $16.02 - $19.29 $13.14 - $15.10 $14.84 - $15.62 $19.20 - $20.20 $7.54 - $8.82 $11.65
The accompanying notes are an integral part of these financial statements. 13 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MIST NEUBERGER MIST VAN KAMPEN MIST LORD ABBETT MIST THIRD AVENUE BERMAN REAL ESTATE MID CAP GROWTH MID-CAP VALUE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 18,432,894 $ 31,371 $ 66,501 $ 381,063 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... 9 -- -- 1 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 18,432,903 31,371 66,501 381,064 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- 1 -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- 1 -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 18,432,903 $ 31,371 $ 66,500 $ 381,064 ================ ================ ================ ================ Units outstanding................. 1,071,638 2,000 4,638 24,943 Unit value (accumulation)......... $16.76 - $17.32 $15.69 $14.34 $15.28
The accompanying notes are an integral part of these financial statements. 14
MIST CYCLICAL MIST OPPENHEIMER MIST LEGG MASON MIST CYCLICAL GROWTH AND MIST PIMCO INFLATION MIST BLACKROCK CAPITAL APPRECIATION VALUE EQUITY GROWTH ETF INCOME ETF PROTECTED BOND LARGE-CAP CORE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------- ------------------- ------------------- ------------------- -------------------- ------------------- $ 955,427 $ 5,413,855 $ 639,459 $ 345,473 $ 911,539 $ 437,008,305 -- -- -- -- -- -- -- 22,047 -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 955,427 5,435,902 639,459 345,473 911,539 437,008,305 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- -- -- -- -- 32,623 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- 32,623 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 955,427 $ 5,435,902 $ 639,459 $ 345,473 $ 911,539 $ 436,975,682 ================ ================ ================ ================ ================ ================ 70,634 511,093 56,164 30,551 80,592 15,352,126 $13.27 - $13.59 $10.02 - $11.42 $11.24 - $11.41 $11.18 - $11.35 $11.16 - $11.33 $10.08 - $44.64
The accompanying notes are an integral part of these financial statements. 15 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
AMERICAN CENTURY DELAWARE VIP DREYFUS MIST JANUS FORTY VP VISTA SMALL CAP VALUE MIDCAP STOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 3,487,948 $ 29,135 $ 1,015,070 $ 305,775 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- 10,774 15,811 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 3,487,948 29,135 1,025,844 321,586 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- 2 -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- 2 -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 3,487,948 $ 29,133 $ 1,025,844 $ 321,586 ================ ================ ================ ================ Units outstanding................. 281,380 1,642 67,044 23,628 Unit value (accumulation)......... $12.33 - $12.40 $17.75 $15.30 $13.61
The accompanying notes are an integral part of these financial statements. 16
DREYFUS GOLDMAN SACHS GOLDMAN SACHS MFS MFS MFS INTERNATIONAL VALUE MID CAP VALUE STRUCTURED SMALL CAP EQUITY HIGH INCOME GLOBAL EQUITY NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------- ------------------- --------------------------- ------------------- ------------------- ------------------- $ 669,987 $ 1,259,838 $ 136,082 $ 21,944 $ 64,570 $ 3,269 -- -- -- -- -- -- 31,106 -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 701,093 1,259,838 136,082 21,944 64,570 3,269 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- 48,917 1,555 -- 1 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 48,917 1,555 -- 1 -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 701,093 $ 1,210,921 $ 134,527 $ 21,944 $ 64,569 $ 3,269 ================ ================ ================ ================ ================ ================ 42,550 84,789 12,264 1,776 3,948 253 $16.48 $14.28 $10.97 $12.36 $16.35 $12.89
The accompanying notes are an integral part of these financial statements. 17 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONCLUDED) DECEMBER 31, 2007
MFS VAN KAMPEN WELLS FARGO VT WELLS FARGO VT VALUE GOVERNMENT TOTAL RETURN BOND MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value......... $ 45,933 $ 22,716 $ 113,458 $ 2,051,425 Other receivables................. -- -- -- -- Due from Metropolitan Life Insurance Company............... -- -- 21 309 ---------------- ---------------- ---------------- ---------------- Total Assets.................. 45,933 22,716 113,479 2,051,734 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to Metropolitan Life Insurance Company......................... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- -- -- -- ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 45,933 $ 22,716 $ 113,479 $ 2,051,734 ================ ================ ================ ================ Units outstanding................. 2,966 1,920 9,697 181,995 Unit value (accumulation)......... $15.48 $11.83 $11.70 $11.27
The accompanying notes are an integral part of these financial statements. 18 [THIS PAGE INTENTIONALLY LEFT BLANK] 19 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK LARGE CAP INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 6,785,253 $ 5,365,248 $ 4,375,931 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 1,252,435 3,616,837 3,470,220 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 1,252,435 3,616,837 3,470,220 ---------------- ---------------- ---------------- Net investment income (loss)......................... 5,532,818 1,748,411 905,711 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 34,926,873 1,910,880 834,521 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 34,926,873 1,910,880 834,521 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (18,412,208) 47,641,145 8,704,485 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 16,514,665 49,552,025 9,539,006 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 22,047,483 $ 51,300,436 $ 10,444,717 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 20
MSF BLACKROCK MSF BLACKROCK DIVERSIFIED AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 8,526,571 $ 7,880,854 $ 4,998,633 $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,933,494 2,787,484 2,728,213 2,172,462 1,968,385 1,824,382 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,933,494 2,787,484 2,728,213 2,172,462 1,968,385 1,824,382 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,593,077 5,093,370 2,270,420 (2,172,462) (1,968,385) (1,824,382) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 3,011,483 2,697,730 655,141 1,382,763 (1,521,325) (2,231,885) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,011,483 2,697,730 655,141 1,382,763 (1,521,325) (2,231,885) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 7,614,036 21,697,213 3,822,631 44,452,957 16,167,405 23,892,825 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 10,625,519 24,394,943 4,477,772 45,835,720 14,646,080 21,660,940 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 16,218,596 $ 29,488,313 $ 6,748,192 $ 43,663,258 $ 12,677,695 $ 19,836,558 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 21 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE STOCK INDEX INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 7,661,035 $ 12,777,493 $ 8,971,609 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 6,053,181 5,268,088 4,641,173 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 6,053,181 5,268,088 4,641,173 ---------------- ---------------- ---------------- Net investment income (loss)......................... 1,607,854 7,509,405 4,330,436 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 14,892,115 21,804,470 -- Realized gains (losses) on sale of investments....... 7,438,301 6,189,767 3,573,660 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 22,330,416 27,994,237 3,573,660 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 7,171,409 53,741,400 14,173,789 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 29,501,825 81,735,637 17,747,449 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 31,109,679 $ 89,245,042 $ 22,077,885 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 22
MSF FI MSF FI INTERNATIONAL STOCK MID CAP OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 757,552 $ 881,159 $ 317,306 $ 384,517 $ 14,072 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 610,034 530,605 427,240 2,541,446 2,242,728 2,011,441 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 610,034 530,605 427,240 2,541,446 2,242,728 2,011,441 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 147,518 350,554 (109,934) (2,156,929) (2,228,656) (2,011,441) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,680,153 -- -- -- -- -- 1,481,666 832,502 237,027 (3,610,711) (4,482,428) (1,015,121) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,161,819 832,502 237,027 (3,610,711) (4,482,428) (1,015,121) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,044,733 7,805,567 8,151,109 25,889,645 33,489,573 17,191,699 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 6,206,552 8,638,069 8,388,136 22,278,934 29,007,145 16,176,578 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 6,354,070 $ 8,988,623 $ 8,278,202 $ 20,122,005 $ 26,778,489 $ 14,165,137 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 23 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF T. ROWE PRICE SMALL CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 695,384 661,143 595,465 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 695,384 661,143 595,465 ---------------- ---------------- ---------------- Net investment income (loss)......................... (695,384) (661,143) (595,465) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 1,678,195 842,686 37,997 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,678,195 842,686 37,997 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 6,321,798 2,138,730 7,936,747 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 7,999,993 2,981,416 7,974,744 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 7,304,609 $ 2,320,273 $ 7,379,279 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 24
MSF OPPENHEIMER MSF HARRIS OAKMARK GLOBAL EQUITY LARGE CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 569,763 $ 1,114,393 $ 209,625 $ 515,161 $ 447,049 $ 367,539 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 418,432 361,328 299,169 543,267 478,172 429,104 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 418,432 361,328 299,169 543,267 478,172 429,104 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 151,331 753,065 (89,544) (28,106) (31,123) (61,565) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 743,295 861,246 -- 1,800,935 -- -- 716,979 571,820 270,279 1,197,838 835,096 398,007 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,460,274 1,433,066 270,279 2,998,773 835,096 398,007 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,125,527 4,443,736 5,277,659 (5,878,800) 8,574,081 (1,475,339) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,585,801 5,876,802 5,547,938 (2,880,027) 9,409,177 (1,077,332) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 2,737,132 $ 6,629,867 $ 5,458,394 $ (2,908,133) $ 9,378,054 $ (1,138,897) ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 25 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF NEUBERGER BERMAN MID CAP VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 454,135 $ 340,446 $ 157,412 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 715,283 602,710 468,169 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 715,283 602,710 468,169 ---------------- ---------------- ---------------- Net investment income (loss)......................... (261,148) (262,264) (310,757) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,444,204 6,150,111 4,520,673 Realized gains (losses) on sale of investments....... 1,469,284 895,063 557,751 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 3,913,488 7,045,174 5,078,424 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (1,796,392) 382,304 1,374,494 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,117,096 7,427,478 6,452,918 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 1,855,948 $ 7,165,214 $ 6,142,161 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 26
MSF T. ROWE PRICE MSF LEHMAN BROTHERS LARGE CAP GROWTH AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 236,325 $ 147,322 $ 212,638 $ 4,412,510 $ 3,647,493 $ 2,790,273 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 435,556 370,484 319,250 729,528 616,266 528,874 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 435,556 370,484 319,250 729,528 616,266 528,874 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (199,231) (223,162) (106,612) 3,682,982 3,031,227 2,261,399 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 469,367 2,175 -- -- -- -- 1,613,290 505,143 187,894 192,840 (57,852) 113,726 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,082,657 507,318 187,894 192,840 (57,852) 113,726 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,367,516 5,044,250 2,209,286 2,133,669 (71,436) (1,403,001) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 4,450,173 5,551,568 2,397,180 2,326,509 (129,288) (1,289,275) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 4,250,942 $ 5,328,406 $ 2,290,568 $ 6,009,491 $ 2,901,939 $ 972,124 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 27 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF MORGAN STANLEY EAFE INDEX INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends.............................................. $ 1,286,968 $ 843,327 $ 597,805 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 561,411 419,647 312,106 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 561,411 419,647 312,106 ---------------- ---------------- ---------------- Net investment income (loss)......................... 725,557 423,680 285,699 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 686,383 -- -- Realized gains (losses) on sale of investments....... 1,572,951 984,685 590,734 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 2,259,334 984,685 590,734 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 2,980,876 9,577,488 3,753,078 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 5,240,210 10,562,173 4,343,812 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 5,965,767 $ 10,985,853 $ 4,629,511 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 28
MSF MSF JENNISON RUSSELL 2000 INDEX GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- -------- $ 526,533 $ 397,966 $ 293,721 $ 62,722 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 476,230 402,879 320,327 127,403 113,119 67,101 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 476,230 402,879 320,327 127,403 113,119 67,101 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 50,303 (4,913) (26,606) (64,681) (113,119) (67,101) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 4,308,974 1,842,549 1,438,122 525,988 11,909 -- 1,194,459 793,645 811,342 217,837 116,022 36,398 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,503,433 2,636,194 2,249,464 743,825 127,931 36,398 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (6,890,836) 5,025,107 (613,275) 832,560 269,709 2,206,440 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (1,387,403) 7,661,301 1,636,189 1,576,385 397,640 2,242,838 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (1,337,100) $ 7,656,388 $ 1,609,583 $ 1,511,704 $ 284,521 $ 2,175,737 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 29 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK STRATEGIC VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 321,242 $ 298,959 $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 923,234 828,876 714,689 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 923,234 828,876 714,689 ---------------- ---------------- ---------------- Net investment income (loss)......................... (601,992) (529,917) (714,689) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 12,338,055 17,677,150 5,489,850 Realized gains (losses) on sale of investments....... 644,889 1,173,096 647,742 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 12,982,944 18,850,246 6,137,592 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (16,875,056) (4,073,024) (2,502,234) ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (3,892,112) 14,777,222 3,635,358 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (4,494,104) $ 14,247,305 $ 2,920,669 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 30
MSF METLIFE MSF FRANKLIN TEMPLETON MID CAP STOCK INDEX SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 463,568 $ 617,181 $ 278,096 $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 517,186 431,166 340,784 60,634 50,288 39,601 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 517,186 431,166 340,784 60,634 50,288 39,601 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (53,618) 186,015 (62,688) (60,634) (50,288) (39,601) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,483,952 3,502,918 2,036,561 476,487 286,106 154,763 1,219,996 660,796 682,809 249,458 136,411 129,715 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,703,948 4,163,714 2,719,370 725,945 422,517 284,478 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 158,945 201,865 1,900,535 (436,173) 106,882 (56,267) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,862,893 4,365,579 4,619,905 289,772 529,399 228,211 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 3,809,275 $ 4,551,594 $ 4,557,217 $ 229,138 $ 479,111 $ 188,610 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 31 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK LARGE CAP VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 112,942 $ 79,434 $ 37,063 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 99,096 57,120 34,801 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 99,096 57,120 34,801 ---------------- ---------------- ---------------- Net investment income (loss)......................... 13,846 22,314 2,262 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 429,497 389,137 39,914 Realized gains (losses) on sale of investments....... 332,037 121,354 81,656 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 761,534 510,491 121,570 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (536,165) 656,059 110,740 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 225,369 1,166,550 232,310 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 239,215 $ 1,188,864 $ 234,572 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 32
MSF MSF LOOMIS SAYLES DAVIS VENTURE VALUE SMALL CAP INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 429,495 $ 403,990 $ 244,019 $ 11,412 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 478,766 384,612 290,656 124,817 90,220 60,646 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 478,766 384,612 290,656 124,817 90,220 60,646 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (49,271) 19,378 (46,637) (113,405) (90,220) (60,646) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 1,567,864 848,702 83,073 581,875 2,307,728 226,016 234,076 208,239 74,135 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 581,875 2,307,728 226,016 1,801,940 1,056,941 157,208 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,282,046 3,652,646 3,304,528 (305,465) 425,449 365,753 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,863,921 5,960,374 3,530,544 1,496,475 1,482,390 522,961 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,814,650 $ 5,979,752 $ 3,483,907 $ 1,383,070 $ 1,392,170 $ 462,315 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 33 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK LEGACY LARGE CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 - ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 5,522 $ 12,152 $ 32,623 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 25,444 38,586 43,887 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 25,444 38,586 43,887 ---------------- ---------------- ---------------- Net investment income (loss)......................... (19,922) (26,434) (11,264) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 64,255 954,600 84,949 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 64,255 954,600 84,949 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 437,029 (1,121,566) 498,307 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 501,284 (166,966) 583,256 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 481,362 $ (193,400) $ 571,992 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 34
MSF BLACKROCK MSF FI BOND INCOME VALUE LEADERS INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 2,988,878 $ 5,391,669 $ 3,611,102 $ 58,988 $ 45,870 $ 23,066 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 742,928 735,582 716,223 55,755 39,722 19,333 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 742,928 735,582 716,223 55,755 39,722 19,333 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,245,950 4,656,087 2,894,879 3,233 6,148 3,733 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 92,238 1,043,295 558,447 105,940 -- 86,411 (260,701) 98,977 116,557 71,567 80,493 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 86,411 (168,463) 1,142,272 675,004 177,507 80,493 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,574,419 (1,188,505) (2,577,646) (503,196) 304,366 177,601 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,660,830 (1,356,968) (1,435,374) 171,808 481,873 258,094 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 4,906,780 $ 3,299,119 $ 1,459,505 $ 175,041 $ 488,021 $ 261,827 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 35 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF HARRIS OAKMARK FOCUSED VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 328,815 $ 158,000 $ 17,995 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 513,319 447,521 369,999 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 513,319 447,521 369,999 ---------------- ---------------- ---------------- Net investment income (loss)......................... (184,504) (289,521) (352,004) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,250,319 4,875,177 432,350 Realized gains (losses) on sale of investments....... 896,818 862,876 647,285 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 8,147,137 5,738,053 1,079,635 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (12,430,441) 467,020 3,071,366 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (4,283,304) 6,205,073 4,151,001 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (4,467,808) $ 5,915,552 $ 3,798,997 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 36
MSF WESTERN ASSET MANAGEMENT MSF WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES U.S. GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 459,233 $ 685,459 $ 322,307 $ 398,651 $ 423,016 $ 143,164 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 143,832 118,623 90,184 124,642 106,778 88,576 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 143,832 118,623 90,184 124,642 106,778 88,576 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 315,401 566,836 232,123 274,009 316,238 54,588 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 15,836 109,245 198,820 -- -- 195,299 29,149 44,303 55,156 988 (10,510) (2,681) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 44,985 153,548 253,976 988 (10,510) 192,618 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 187,688 (101,864) (261,648) 246,140 127,750 (152,454) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 232,673 51,684 (7,672) 247,128 117,240 40,164 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 548,074 $ 618,520 $ 224,451 $ 521,137 $ 433,478 $ 94,752 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 37 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MONEY MARKET INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 3,017,412 $ 1,804,658 $ 795,483 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 294,683 207,469 167,153 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 294,683 207,469 167,153 ---------------- ---------------- ---------------- Net investment income (loss)......................... 2,722,729 1,597,189 628,330 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... -- -- -- ---------------- ---------------- ---------------- Net realized gains (losses)...................... -- -- -- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... -- -- -- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ -- -- -- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,722,729 $ 1,597,189 $ 628,330 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 38
MSF MFS MSF METLIFE TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- -------- $ 93,266 $ 93,810 $ 23,976 $ -- $ 10,638 $ 372 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,006 27,494 13,447 5,884 3,484 348 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,006 27,494 13,447 5,884 3,484 348 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 53,260 66,316 10,529 (5,884) 7,154 24 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 141,980 58,740 15,212 413 4,082 99 25,643 5,870 18,142 23,983 (1,845) 271 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 167,623 64,610 33,354 24,396 2,237 370 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (104,370) 205,638 (3,131) 12,074 19,393 554 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 63,253 270,248 30,223 36,470 21,630 924 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 116,513 $ 336,564 $ 40,752 $ 30,586 $ 28,784 $ 948 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 39 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 (B) ---- ---- -------- INVESTMENT INCOME: Dividends............................................ $ -- $ 30,389 $ 2,224 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 21,161 11,718 1,984 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 21,161 11,718 1,984 ---------------- ---------------- ---------------- Net investment income (loss)......................... (21,161) 18,671 240 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 3,872 20,839 108 Realized gains (losses) on sale of investments....... 26,078 12,097 1,644 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 29,950 32,936 1,752 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 79,599 73,219 9,258 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 109,549 106,155 11,010 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 88,388 $ 124,826 $ 11,250 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 40
MSF METLIFE MSF METLIFE MODERATE ALLOCATION MODERATE TO AGGRESSIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 (B) 2007 2006 2005 (B) ---- ---- -------- ---- ---- -------- $ 27,294 $ 76,104 $ 5,987 $ 45,711 $ 77,374 $ 9,012 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 125,074 45,704 3,787 215,858 65,099 6,087 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 125,074 45,704 3,787 215,858 65,099 6,087 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (97,780) 30,400 2,200 (170,147) 12,275 2,925 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 18,896 106,419 133 26,120 196,911 210 170,037 48,706 3,556 96,319 14,344 4,752 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 188,933 155,125 3,689 122,439 211,255 4,962 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 262,197 474,841 25,822 371,705 870,757 64,564 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 451,130 629,966 29,511 494,144 1,082,012 69,526 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 353,350 $ 660,366 $ 31,711 $ 323,997 $ 1,094,287 $ 72,451 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 41 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE AGGRESSIVE ALLOCATION INVESTMENT DIVISION -------------------------------------------- 2007 2006 2005 (B) ---- ---- -------- INVESTMENT INCOME: Dividends.................................................................... $ 12,813 $ 9,703 $ 1,642 -------------- -------------- -------------- EXPENSES: Mortality and expense risk charges........................................... 52,966 13,592 1,181 Administrative charges....................................................... -- -- -- -------------- -------------- -------------- Total expenses............................................................. 52,966 13,592 1,181 -------------- -------------- -------------- Net investment income (loss)................................................. (40,153) (3,889) 461 -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.................................................. 8,186 40,723 1,242 Realized gains (losses) on sale of investments............................... 93,620 (41,990) 1,894 -------------- -------------- -------------- Net realized gains (losses).............................................. 101,806 (1,267) 3,136 -------------- -------------- -------------- Change in unrealized gains (losses) on investments........................... (95,922) 225,674 10,725 -------------- -------------- -------------- Net realized and unrealized gains (losses) on investments.................... 5,884 224,407 13,861 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations.............. $ (34,269) $ 220,518 $ 14,322 ============== ============== ==============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 42
MSF FI MSF CAPITAL GUARDIAN JANUS ASPEN LARGE CAP U.S. EQUITY LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------- ----------------------------- -------------------------------------------- 2007 2006 (C) 2007 2006 (C) 2007 2006 2005 ---- -------- ---- -------- ---- ---- ---- $ 221 $ -- $ -- $ 1,689 $ 48,004 $ 25,478 $ 15,028 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 1,641 246 2,206 1,107 31,075 24,818 21,214 -- -- -- -- -- -- -- - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 1,641 246 2,206 1,107 31,075 24,818 21,214 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- (1,420) (246) (2,206) 582 16,929 660 (6,186) - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 9,165 -- -- -- -- -- -- 2,290 21 50,654 40 60,269 80,063 (62,709) - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 11,455 21 50,654 40 60,269 80,063 (62,709) - -------------- -------------- -------------- -------------- -------------- -------------- -------------- (8,523) 4,291 (50,293) 25,383 750,675 477,638 263,241 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- 2,932 4,312 361 25,423 810,944 557,701 200,532 - -------------- -------------- -------------- -------------- -------------- -------------- -------------- $ 1,512 $ 4,066 $ (1,845) $ 26,005 $ 827,873 $ 558,361 $ 194,346 ============== ============== ============== ============== ============== ============== ==============
The accompanying notes are an integral part of these financial statements. 43 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
JANUS ASPEN BALANCED INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 1,879 $ 44 $ 25 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 256 7 1 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 256 7 1 ---------------- ---------------- ---------------- Net investment income (loss)......................... 1,623 37 24 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 747 33 1 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 747 33 1 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 2,101 147 1 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,848 180 2 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 4,471 $ 217 $ 26 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 44
JANUS ASPEN AIM V.I. FORTY GOVERNMENT SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- $ 676 $ 152 $ -- $ -- $ 280 $ 239 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,060 383 -- 3 32 46 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,060 383 -- 3 32 46 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (384) (231) -- (3) 248 193 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 6,298 (26) -- (141) (8) 107 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 6,298 (26) -- (141) (8) 107 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 82,907 8,113 -- 165 (28) (117) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 89,205 8,087 -- 24 (36) (10) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 88,821 $ 7,856 $ -- $ 21 $ 212 $ 183 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 45 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AIM V.I. GLOBAL REAL ESTATE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 166,720 $ 25,329 $ 18,091 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 13,977 10,103 6,839 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 13,977 10,103 6,839 ---------------- ---------------- ---------------- Net investment income (loss)......................... 152,743 15,226 11,252 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 397,922 87,476 64,792 Realized gains (losses) on sale of investments....... 172,588 329,460 148,313 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 570,510 416,936 213,105 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (881,479) 328,141 7,005 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (310,969) 745,077 220,110 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (158,226) $ 760,303 $ 231,362 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 46
FRANKLIN TEMPLETON FRANKLIN MUTUAL FOREIGN SECURITIES DISCOVERY SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 176,501 $ 91,823 $ 71,641 $ 21,726 $ 5,569 $ 814 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,650 31,977 26,380 6,018 2,376 268 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 40,650 31,977 26,380 6,018 2,376 268 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 135,851 59,846 45,261 15,708 3,193 546 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 365,468 -- -- 17,873 19,692 -- 366,226 553,100 259,867 71,623 7,128 132 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 731,694 553,100 259,867 89,496 26,820 132 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 305,602 743,656 264,624 8,690 90,251 8,764 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,037,296 1,296,756 524,491 98,186 117,071 8,896 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,173,147 $ 1,356,602 $ 569,752 $ 113,894 $ 120,264 $ 9,442 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 47 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
ALLIANCEBERNSTEIN GLOBAL TECHNOLOGY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 334 169 135 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 334 169 135 ---------------- ---------------- ---------------- Net investment income (loss)......................... (334) (169) (135) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 13,926 2,596 255 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 13,926 2,596 255 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (1,759) 2,024 1,638 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 12,167 4,620 1,893 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 11,833 $ 4,451 $ 1,758 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 48
FIDELITY VIP FIDELITY VIP CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 24,439 $ 18,557 $ 1,816 $ 47,327 $ 16,581 $ 18,249 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 12,994 7,808 3,729 5,479 4,218 3,454 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 12,994 7,808 3,729 5,479 4,218 3,454 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 11,445 10,749 (1,913) 41,848 12,363 14,795 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 728,457 161,683 165 -- -- -- 133,390 69,614 170,001 14,373 3,099 38,662 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 861,847 231,297 170,166 14,373 3,099 38,662 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (453,602) (100,652) (22,158) 140,304 39,972 (29,733) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 408,245 130,645 148,008 154,677 43,071 8,929 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 419,690 $ 141,394 $ 146,095 $ 196,525 $ 55,434 $ 23,724 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 49 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
FIDELITY VIP INVESTMENT GRADE BOND INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 1,370 $ 1,506 $ 548 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 497 147 80 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 497 147 80 ---------------- ---------------- ---------------- Net investment income (loss)......................... 873 1,359 468 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 92 335 Realized gains (losses) on sale of investments....... 1,728 (928) (59) ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,728 (836) 276 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 6,849 767 (370) ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 8,577 (69) (94) ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 9,450 $ 1,290 $ 374 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 50
FIDELITY VIP AMERICAN FUNDS EQUITY-INCOME GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 21,939 $ 8,458 $ 187 $ 910,466 $ 727,425 $ 437,807 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,725 885 259 963,168 728,495 489,519 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,725 885 259 963,168 728,495 489,519 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 19,214 7,573 (72) (52,702) (1,070) (51,712) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 103,323 35,411 431 7,520,494 522,218 -- 17,259 3,265 (5,940) 893,765 399,390 115,149 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 120,582 38,676 (5,509) 8,414,259 921,608 115,149 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (137,717) 1,802 605 3,035,574 6,751,062 8,793,861 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (17,135) 40,478 (4,904) 11,449,833 7,672,670 8,909,010 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 2,079 $ 48,051 $ (4,976) $ 11,397,131 $ 7,671,600 $ 8,857,298 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 51 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN FUNDS GROWTH-INCOME INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 1,142,855 $ 918,542 $ 587,451 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 619,745 467,194 343,213 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 619,745 467,194 343,213 ---------------- ---------------- ---------------- Net investment income (loss)......................... 523,110 451,348 244,238 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,332,094 1,285,086 163,244 Realized gains (losses) on sale of investments....... 792,717 194,098 116,683 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 3,124,811 1,479,184 279,927 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (1,027,655) 5,509,333 1,688,136 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,097,156 6,988,517 1,968,063 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,620,266 $ 7,439,865 $ 2,212,301 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 52
AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION BOND INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- --------------------------------- 2007 2006 2005 2007 2006 (C) ---- ---- ---- ---- -------- $ 1,729,457 $ 162,359 $ 167,221 $ 185,659 $ 2,483 - ---------------- ---------------- ---------------- ---------------- ---------------- 498,593 306,582 151,245 15,059 1,499 -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- 498,593 306,582 151,245 15,059 1,499 - ---------------- ---------------- ---------------- ---------------- ---------------- 1,230,864 (144,223) 15,976 170,600 984 - ---------------- ---------------- ---------------- ---------------- ---------------- 4,252,758 1,814,506 -- -- -- 1,739,097 1,195,131 669,665 13,076 (909) - ---------------- ---------------- ---------------- ---------------- ---------------- 5,991,855 3,009,637 669,665 13,076 (909) - ---------------- ---------------- ---------------- ---------------- ---------------- 1,948,016 4,197,799 3,507,811 (143,419) 13,837 - ---------------- ---------------- ---------------- ---------------- ---------------- 7,939,871 7,207,436 4,177,476 (130,343) 12,928 - ---------------- ---------------- ---------------- ---------------- ---------------- $ 9,170,735 $ 7,063,213 $ 4,193,452 $ 40,257 $ 13,912 ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 53 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST T. ROWE PRICE MID-CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 32,087 $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 119,212 91,448 62,726 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 119,212 91,448 62,726 ---------------- ---------------- ---------------- Net investment income (loss)......................... (87,125) (91,448) (62,726) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 624,268 373,372 206,008 Realized gains (losses) on sale of investments....... 750,188 524,517 102,486 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,374,456 897,889 308,494 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 843,627 (173,792) 895,073 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,218,083 724,097 1,203,567 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,130,958 $ 632,649 $ 1,140,841 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 54
MIST MFS MIST PIMCO RESEARCH INTERNATIONAL TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 175,461 $ 107,793 $ 21,589 $ 1,037,985 $ 719,124 $ 13,007 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 103,179 56,798 27,070 249,561 217,239 180,282 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 103,179 56,798 27,070 249,561 217,239 180,282 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 72,282 50,995 (5,481) 788,424 501,885 (167,275) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,709,535 423,780 184,503 -- 10,617 154,127 462,480 81,019 80,066 88,836 74,726 52,949 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,172,015 504,799 264,569 88,836 85,343 207,076 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (879,168) 963,904 280,569 1,198,111 469,783 311,680 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,292,847 1,468,703 545,138 1,286,947 555,126 518,756 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,365,129 $ 1,519,698 $ 539,657 $ 2,075,371 $ 1,057,011 $ 351,481 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 55 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST RCM TECHNOLOGY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 78,918 61,070 50,588 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 78,918 61,070 50,588 ---------------- ---------------- ---------------- Net investment income (loss)......................... (78,918) (61,070) (50,588) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 297,201 -- 46,291 Realized gains (losses) on sale of investments....... 321,209 222,324 194,566 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 618,410 222,324 240,857 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 1,944,863 156,356 445,709 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 2,563,273 378,680 686,566 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 2,484,355 $ 317,610 $ 635,978 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 56
MIST LORD ABBETT MIST LAZARD BOND DEBENTURE MID-CAP INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 1,117,160 $ 1,191,085 $ 744,214 $ 32,279 $ 17,856 $ 10,617 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 166,476 139,802 121,860 44,498 29,336 22,544 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 166,476 139,802 121,860 44,498 29,336 22,544 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 950,684 1,051,283 622,354 (12,219) (11,480) (11,927) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 25,764 -- -- 442,382 392,270 320,635 179,522 93,973 255,890 40,395 20,740 96,120 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 205,286 93,973 255,890 482,777 413,010 416,755 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 39,883 324,579 (722,955) (720,263) 56,316 (198,731) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 245,169 418,552 (467,065) (237,486) 469,326 218,024 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,195,853 $ 1,469,835 $ 155,289 $ (249,705) $ 457,846 $ 206,097 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 57 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST MET/AIM SMALL CAP GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 24,194 16,523 11,067 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 24,194 16,523 11,067 ---------------- ---------------- ---------------- Net investment income (loss)......................... (24,194) (16,523) (11,067) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 37,183 267,325 32,434 Realized gains (losses) on sale of investments....... 80,971 18,065 35,790 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 118,154 285,390 68,224 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 135,230 (33,826) 47,188 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 253,384 251,564 115,412 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 229,190 $ 235,041 $ 104,345 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 58
MIST HARRIS OAKMARK MIST LEGG MASON INTERNATIONAL PARTNERS AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 234,443 $ 350,324 $ 11,138 $ 17,148 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 229,276 127,018 55,708 67,790 65,378 52,753 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 229,276 127,018 55,708 67,790 65,378 52,753 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,167 223,306 (44,570) (50,642) (65,378) (52,753) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,011,612 874,510 116,064 718,994 438,536 7,588 713,857 125,443 131,605 207,519 177,119 89,582 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,725,469 999,953 247,669 926,513 615,655 97,170 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (3,512,929) 2,507,928 724,928 (747,047) (742,982) 756,884 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (787,460) 3,507,881 972,597 179,466 (127,327) 854,054 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (782,293) $ 3,731,187 $ 928,027 $ 128,824 $ (192,705) $ 801,301 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 59 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT GROWTH AND INCOME INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 59,988 $ 887 $ 447 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 28,949 22,648 16,835 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 28,949 22,648 16,835 ---------------- ---------------- ---------------- Net investment income (loss)......................... 31,039 (21,761) (16,388) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 259,517 3,901 40,557 Realized gains (losses) on sale of investments....... 36,864 958,803 25,218 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 296,381 962,704 65,775 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (147,617) (295,172) 110,292 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 148,764 667,532 176,067 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 179,803 $ 645,771 $ 159,679 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 60
MIST NEUBERGER BERMAN MIST VAN KAMPEN REAL ESTATE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 222,388 $ 128,299 $ -- $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 177,701 108,818 40,104 24 -- -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 177,701 108,818 40,104 24 -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 44,687 19,481 (40,104) (24) -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,785,543 609,936 8,770 -- -- -- 745,343 210,018 77,734 -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,530,886 819,954 86,504 -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (6,132,457) 3,020,558 660,111 (570) -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (3,601,571) 3,840,512 746,615 (570) -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (3,556,884) $ 3,859,993 $ 706,511 $ (594) $ -- $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 61 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MID-CAP VALUE INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 - ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 530 $ 203 $ 139 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 218 184 87 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 218 184 87 ---------------- ---------------- ---------------- Net investment income (loss)......................... 312 19 52 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 11,174 3,482 1,158 Realized gains (losses) on sale of investments....... (1,133) (69) 22 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 10,041 3,413 1,180 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (10,458) 880 85 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (417) 4,293 1,265 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (105) $ 4,312 $ 1,317 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 62
MIST THIRD AVENUE MIST OPPENHEIMER SMALL CAP VALUE CAPITAL APPRECIATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- -------- $ 2,794 $ 133 $ -- $ 618 $ 583 $ 77 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,456 482 51 4,920 1,966 275 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,456 482 51 4,920 1,966 275 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,338 (349) (51) (4,302) (1,383) (198) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 18,350 2,011 77 27,608 1,330 1,100 4,229 1,511 111 9,182 6,117 442 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 22,579 3,522 188 36,790 7,447 1,542 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (41,016) 21,745 1,856 18,908 12,744 2,715 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (18,437) 25,267 2,044 55,698 20,191 4,257 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (17,099) $ 24,918 $ 1,993 $ 51,396 $ 18,808 $ 4,059 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 63 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LEGG MASON MIST CYCLICAL VALUE EQUITY GROWTH ETF INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------------- 2007 2006 (C) 2007 2006 (C) ---- -------- ---- -------- INVESTMENT INCOME: Dividends.............................. $ 190 $ 7,771 $ -- $ 1,841 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges..... 54,485 28,159 3,337 279 Administrative charges................. -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total expenses....................... 54,485 28,159 3,337 279 ---------------- ---------------- ---------------- ---------------- Net investment income (loss)........... (54,295) (20,388) (3,337) 1,562 ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions............ 6,404 103,047 -- 385 Realized gains (losses) on sale of investments.......................... 31,337 (4,060) 10,329 1,385 ---------------- ---------------- ---------------- ---------------- Net realized gains (losses)........ 37,741 98,987 10,329 1,770 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments.......................... (371,535) 306,184 (2,639) 4,607 ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments.............. (333,794) 405,171 7,690 6,377 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations............ $ (388,089) $ 384,783 $ 4,353 $ 7,939 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 64
MIST CYCLICAL MIST PIMCO INFLATION MIST BLACKROCK MIST JANUS GROWTH AND INCOME ETF PROTECTED BOND LARGE-CAP CORE FORTY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - --------------------------------- --------------------------------- ------------------- ------------------- 2007 2006 (C) 2007 2006 (C) 2007 (D) 2007 (D) ---- -------- ---- -------- -------- -------- $ 1 $ 1,529 $ 5,472 $ -- $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,341 230 3,681 463 2,431,291 4,282 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,341 230 3,681 463 2,431,291 4,282 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (2,340) 1,299 1,791 (463) (2,431,291) (4,282) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 15 -- -- -- -- -- 9,148 1,197 4,018 1,472 181,462 23,570 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 9,163 1,197 4,018 1,472 181,462 23,570 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (2,024) 2,231 50,303 (1,429) 4,642,363 188,079 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 7,139 3,428 54,321 43 4,823,825 211,649 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 4,799 $ 4,727 $ 56,112 $ (420) $ 2,392,534 $ 207,367 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 65 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN CENTURY VP VISTA INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 93 81 47 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 93 81 47 ---------------- ---------------- ---------------- Net investment income (loss)......................... (93) (81) (47) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 52 -- Realized gains (losses) on sale of investments....... 1,950 66 6 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 1,950 118 6 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 4,790 1,653 961 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 6,740 1,771 967 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 6,647 $ 1,690 $ 920 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 66
DELAWARE VIP DREYFUS SMALL CAP VALUE MIDCAP STOCK INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 1,797 $ 87 $ 181 $ 665 $ 189 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,812 1,667 539 941 337 -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,812 1,667 539 941 337 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (2,015) (1,580) (358) (276) (148) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 53,893 23,651 8,183 25,997 17,011 -- 765 3,801 45 (4,230) (525) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 54,658 27,452 8,228 21,767 16,486 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (146,882) 21,618 2,540 (17,400) (13,109) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (92,224) 49,070 10,768 4,367 3,377 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (94,239) $ 47,490 $ 10,410 $ 4,091 $ 3,229 $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 67 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
DREYFUS EMERGING LEADERS INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 21 70 47 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 21 70 47 ---------------- ---------------- ---------------- Net investment income (loss)......................... (21) (70) (47) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 5,189 1,695 562 Realized gains (losses) on sale of investments....... (6,198) (33) 251 ---------------- ---------------- ---------------- Net realized gains (losses)...................... (1,009) 1,662 813 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 1,014 (791) 711 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 5 871 1,524 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (16) $ 801 $ 1,477 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 68
DREYFUS GOLDMAN SACHS INTERNATIONAL VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 11,153 $ 2,040 $ -- $ 10,129 $ 2,401 $ 267 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,245 1,650 850 3,838 502 222 -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,245 1,650 850 3,838 502 222 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 7,908 390 (850) 6,291 1,899 45 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 99,784 12,788 3,710 187,441 26,443 4,473 23,384 2,803 (8,588) 15,940 1,291 (3,479) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 123,168 15,591 (4,878) 203,381 27,734 994 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (101,858) 67,169 13,060 (272,066) (2,200) 223 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 21,310 82,760 8,182 (68,685) 25,534 1,217 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 29,218 $ 83,150 $ 7,332 $ (62,394) $ 27,433 $ 1,262 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 69 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 579 $ 576 $ 114 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 510 319 20 Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 510 319 20 ---------------- ---------------- ---------------- Net investment income (loss)......................... 69 257 94 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 15,009 6,284 4,217 Realized gains (losses) on sale of investments....... (448) (124) 1 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 14,561 6,160 4,218 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (37,975) 1,891 (5,644) ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (23,414) 8,051 (1,426) ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (23,345) $ 8,308 $ (1,332) ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 70
MFS MFS HIGH INCOME GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ 4,038 $ 4,418 $ 3,911 $ 796 $ -- $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 175 372 279 184 38 -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 175 372 279 184 38 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,863 4,046 3,632 612 (38) -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 2,587 -- -- 1,517 1,254 128 2,926 100 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,517 1,254 128 5,513 100 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (3,019) 2,298 (2,862) (2,915) 2,944 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (1,502) 3,552 (2,734) 2,598 3,044 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 2,361 $ 7,598 $ 898 $ 3,210 $ 3,006 $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 71 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MFS NEW DISCOVERY INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 13 -- -- Administrative charges............................... -- -- -- ---------------- ---------------- ---------------- Total expenses..................................... 13 -- -- ---------------- ---------------- ---------------- Net investment income (loss)......................... (13) -- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 243 -- -- Realized gains (losses) on sale of investments....... (4) -- -- ---------------- ---------------- ---------------- Net realized gains (losses)...................... 239 -- -- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (349) -- -- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ (110) -- -- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ (123) $ -- $ -- ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 72
MFS VAN KAMPEN VALUE GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- $ -- $ -- $ -- $ 863 $ 621 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 78 -- -- 68 54 12 -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 78 -- -- 68 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (78) -- -- 795 567 (12) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 2,376 -- -- 38 (329) (1) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,376 -- -- 38 (329) (1) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (1,846) -- -- 35 121 124 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 530 -- -- 73 (208) 123 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 452 $ -- $ -- $ 868 $ 359 $ 111 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 73 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
WELLS FARGO VT TOTAL RETURN BOND INVESTMENT DIVISION -------------------------------------------------- 2007 2006 2005 ---- ---- ---- INVESTMENT INCOME: Dividends............................................ $ 4,429 $ 1,616 $ 263 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 393 138 15 Administrative charges............................... -- ---------------- ---------------- ---------------- Total expenses..................................... 393 ---------------- ---------------- ---------------- Net investment income (loss)......................... 4,036 1,478 248 ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 482 (203) 238 ---------------- ---------------- ---------------- Net realized gains (losses)...................... 482 (203) 238 ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... 726 969 16 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 1,208 766 254 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 5,244 $ 2,244 $ 502 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 74
WELLS FARGO VT WELLS FARGO VT MONEY MARKET ASSET ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------------------- -------------------------------------------------- 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- $ 56,709 $ 17,272 $ -- $ -- $ 112 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,004 1,399 -- 8 13 -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,004 8 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 51,705 15,873 -- (8) 99 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- -- -- -- 729 293 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 729 293 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- (432) 432 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- 297 725 -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 51,705 $ 15,873 $ -- $ 289 $ 824 $ -- ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 75 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
WELLS FARGO VT LARGE COMPANY GROWTH INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ 15 ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges................... 138 243 31 Administrative charges............................... -- ---------------- ---------------- ---------------- Total expenses..................................... 138 ---------------- ---------------- ---------------- Net investment income (loss)......................... (138) (243) (16) ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 22,636 5,393 (5) ---------------- ---------------- ---------------- Net realized gains (losses)...................... 22,636 5,393 (5) ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments... (10,940) 10,126 797 ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments........................................ 11,696 15,519 792 ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations......................................... $ 11,558 $ 15,276 $ 776 ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 76
WELLS FARGO VT EQUITY INCOME INVESTMENT DIVISION -------------------------------------------------- 2007 (A) 2006 2005 -------- ---- ---- $ -- $ 130 $ 113 ---------------- ---------------- ---------------- 3 34 31 -- ---------------- ---------------- ---------------- 3 ---------------- ---------------- ---------------- (3) 96 82 ---------------- ---------------- ---------------- -- 19 -- 1,600 85 25 ---------------- ---------------- ---------------- 1,600 104 25 ---------------- ---------------- ---------------- (1,507) 1,202 301 ---------------- ---------------- ---------------- 93 1,306 326 ---------------- ---------------- ---------------- $ 90 $ 1,402 $ 408 ================ ================ ================
The accompanying notes are an integral part of these financial statements. 77 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MSF BLACKROCK LARGE CAP DIVERSIFIED INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ----------------------------------------- 2007 (A) 2006 2005 2007 2006 2005 -------- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)............... $ 5,532,818 $ 1,748,411 $ 905,711 $ 5,593,077 $ 5,093,370 $ 2,270,420 Net realized gains (losses)............. 34,926,873 1,910,880 834,521 3,011,483 2,697,730 655,141 Change in unrealized gains (losses) on investments.......... (18,412,208) 47,641,145 8,704,485 7,614,036 21,697,213 3,822,631 -------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations......... 22,047,483 51,300,436 10,444,717 16,218,596 29,488,313 6,748,192 -------------- ------------- ------------- ------------- ------------- ------------- POLICY TRANSACTIONS: Premium payments received from policy owners............... 15,638,404 51,976,132 57,155,216 40,003,652 43,210,333 48,752,996 Net transfers (including fixed account)............. (454,139,374) (12,663,855) (10,123,918) (6,583,051) (14,585,173) (4,525,462) Policy charges......... (9,520,648) (29,312,981) (30,084,463) (24,846,715) (25,567,832) (26,339,933) Transfers for policy benefits and terminations......... (9,922,680) (26,960,197) (25,650,785) (21,979,765) (20,863,345) (20,062,099) -------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from policy transactions......... (457,944,298) (16,960,901) (8,703,950) (13,405,879) (17,806,017) (2,174,498) -------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) in net assets........ (435,896,815) 34,339,535 1,740,767 2,812,717 11,682,296 4,573,694 NET ASSETS: Beginning of period.... 435,896,815 401,557,280 399,816,513 331,432,719 319,750,423 315,176,729 -------------- ------------- ------------- ------------- ------------- ------------- End of period.......... $ -- $ 435,896,815 $ 401,557,280 $ 334,245,436 $ 331,432,719 $ 319,750,423 ============== ============= ============= ============= ============= =============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 78
MSF BLACKROCK MSF METLIFE MSF FI AGGRESSIVE GROWTH STOCK INDEX INTERNATIONAL STOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------------- ----------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (2,172,462) $ (1,968,385) $ (1,824,382) $ 1,607,854 $ 7,509,405 $ 4,330,436 $ 147,518 $ 350,554 $ (109,934) 1,382,763 (1,521,325) (2,231,885) 22,330,416 27,994,237 3,573,660 5,161,819 832,502 237,027 44,452,957 16,167,405 23,892,825 7,171,409 53,741,400 14,173,789 1,044,733 7,805,567 8,151,109 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ 43,663,258 12,677,695 19,836,558 31,109,679 89,245,042 22,077,885 6,354,070 8,988,623 8,278,202 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ 24,166,939 26,442,113 29,002,147 108,420,954 97,155,710 113,017,163 7,358,066 7,377,673 7,207,636 (6,084,428) (4,120,591) (6,037,385) (8,388,405) (16,861,291) (5,222,960) 338,266 2,367,896 (102,719) (14,515,068) (14,565,748) (14,759,838) (45,320,834) (44,010,383) (42,744,650) (4,047,380) (3,898,913) (3,489,856) (15,886,481) (13,935,844) (13,570,874) (45,317,699) (23,533,626) (29,733,875) (4,807,457) (4,181,849) (3,112,473) - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ (12,319,038) (6,180,070) (5,365,950) 9,394,016 12,750,410 35,315,678 (1,158,505) 1,664,807 502,588 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ 31,344,220 6,497,625 14,470,608 40,503,695 101,995,452 57,393,563 5,195,565 10,653,430 8,780,790 228,717,595 222,219,970 207,749,362 707,564,793 605,569,341 548,175,778 67,509,144 56,855,714 48,074,924 - ------------- ------------- ------------- ------------- ------------- ------------- ------------ ------------ ------------ $ 260,061,815 $ 228,717,595 $ 222,219,970 $ 748,068,488 $ 707,564,793 $ 605,569,341 $ 72,704,709 $ 67,509,144 $ 56,855,714 ============= ============= ============= ============= ============= ============= ============ ============ ============
The accompanying notes are an integral part of these financial statements. 79 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF FI MSF T. ROWE PRICE MID CAP OPPORTUNITIES SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..................... $ (2,156,929) $ (2,228,656) $ (2,011,441) $ (695,384) $ (661,143) $ (595,465) Net realized gains (losses)................... (3,610,711) (4,482,428) (1,015,121) 1,678,195 842,686 37,997 Change in unrealized gains (losses) on investments................ 25,889,645 33,489,573 17,191,699 6,321,798 2,138,730 7,936,747 ------------- ------------- ------------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations.......... 20,122,005 26,778,489 14,165,137 7,304,609 2,320,273 7,379,279 ------------- ------------- ------------- ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners......... 35,873,638 38,876,326 43,356,457 9,360,936 10,038,924 11,374,021 Net transfers (including fixed account)............. (7,434,397) (8,221,054) (7,897,866) (3,254,756) (2,086,001) (1,830,915) Policy charges............... (17,322,434) (17,360,725) (17,604,754) (4,451,023) (4,682,277) (4,751,769) Transfers for policy benefits and terminations........... (19,624,632) (16,355,336) (13,599,210) (5,026,325) (4,410,219) (3,572,604) ------------- ------------- ------------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions........ (8,507,825) (3,060,789) 4,254,627 (3,371,168) (1,139,573) 1,218,733 ------------- ------------- ------------- ------------ ------------ ------------ Net increase (decrease) in net assets................. 11,614,180 23,717,700 18,419,764 3,933,441 1,180,700 8,598,012 NET ASSETS: Beginning of period.......... 271,463,672 247,745,972 229,326,208 81,812,746 80,632,046 72,034,034 ------------- ------------- ------------- ------------ ------------ ------------ End of period................ $ 283,077,852 $ 271,463,672 $ 247,745,972 $ 85,746,187 $ 81,812,746 $ 80,632,046 ============= ============= ============= ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 80
MSF OPPENHEIMER MSF HARRIS OAKMARK MSF NEUBERGER BERMAN GLOBAL EQUITY LARGE CAP VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 151,331 $ 753,065 $ (89,544) $ (28,106) $ (31,123) $ (61,565) $ (261,148) $ (262,264) $ (310,757) 1,460,274 1,433,066 270,279 2,998,773 835,096 398,007 3,913,488 7,045,174 5,078,424 1,125,527 4,443,736 5,277,659 (5,878,800) 8,574,081 (1,475,339) (1,796,392) 382,304 1,374,494 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 2,737,132 6,629,867 5,458,394 (2,908,133) 9,378,054 (1,138,897) 1,855,948 7,165,214 6,142,161 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 5,517,581 5,350,913 5,253,047 10,581,263 11,305,507 12,688,012 13,273,938 13,072,820 11,535,409 265,706 346,998 942,030 (1,429,602) (3,330,328) (1,524,510) (503,917) 3,378,877 5,790,659 (2,601,520) (2,495,915) (2,293,721) (4,317,588) (4,238,848) (4,202,871) (5,570,345) (5,310,344) (4,534,051) (2,790,725) (2,492,124) (1,937,431) (4,292,114) (3,266,980) (2,509,452) (4,785,600) (3,723,613) (2,997,044) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 391,042 709,872 1,963,925 541,959 469,351 4,451,179 2,414,076 7,417,740 9,794,973 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 3,128,174 7,339,739 7,422,319 (2,366,174) 9,847,405 3,312,282 4,270,024 14,582,954 15,937,134 48,944,535 41,604,796 34,182,477 64,292,839 54,445,434 51,133,152 77,735,349 63,152,395 47,215,261 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 52,072,709 $ 48,944,535 $ 41,604,796 $ 61,926,665 $ 64,292,839 $ 54,445,434 $ 82,005,373 $ 77,735,349 $ 63,152,395 ============ ============ ============ ============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 81 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF T. ROWE PRICE MSF LEHMAN BROTHERS LARGE CAP GROWTH AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ (199,231) $ (223,162) $ (106,612) $ 3,682,982 $ 3,031,227 $ 2,261,399 Net realized gains (losses)... 2,082,657 507,318 187,894 192,840 (57,852) 113,726 Change in unrealized gains (losses) on investments..... 2,367,516 5,044,250 2,209,286 2,133,669 (71,436) (1,403,001) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations................ 4,250,942 5,328,406 2,290,568 6,009,491 2,901,939 972,124 ------------ ------------ ------------ ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners.......... 7,257,794 7,320,586 7,692,933 17,877,600 17,471,563 16,818,608 Net transfers (including fixed account).................... (2,228,506) 264,173 (171,639) 3,276,682 387,397 4,909,390 Policy charges................ (3,216,395) (3,041,779) (2,932,312) (7,537,250) (6,943,571) (6,449,298) Transfers for policy benefits and terminations............ (2,568,167) (2,505,832) (1,892,610) (5,115,587) (3,947,414) (3,413,219) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions................ (755,274) 2,037,148 2,696,372 8,501,445 6,967,975 11,865,481 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets...................... 3,495,668 7,365,554 4,986,940 14,510,936 9,869,914 12,837,605 NET ASSETS: Beginning of period........... 49,315,573 41,950,019 36,963,079 90,417,327 80,547,413 67,709,808 ------------ ------------ ------------ ------------ ------------ ------------ End of period................. $ 52,811,241 $ 49,315,573 $ 41,950,019 $104,928,263 $ 90,417,327 $ 80,547,413 ============ ============ ============ ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 82
MSF MORGAN STANLEY MSF MSF EAFE INDEX RUSSELL 2000 INDEX JENNISON GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- -------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- ---- ---- ---- -------- $ 725,557 $ 423,680 $ 285,699 $ 50,303 $ (4,913) $ (26,606) $ (64,681) $ (113,119) $ (67,101) 2,259,334 984,685 590,734 5,503,433 2,636,194 2,249,464 743,825 127,931 36,398 2,980,876 9,577,488 3,753,078 (6,890,836) 5,025,107 (613,275) 832,560 269,709 2,206,440 - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 5,965,767 10,985,853 4,629,511 (1,337,100) 7,656,388 1,609,583 1,511,704 284,521 2,175,737 - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 11,289,849 9,956,199 8,982,849 8,728,900 9,061,617 8,761,720 2,217,875 2,455,072 1,741,473 4,399,093 1,802,577 1,409,687 182,391 1,828,304 216,481 (414,141) (87,387) 10,052,349 (4,672,031) (3,911,321) (3,289,298) (3,451,476) (3,270,510) (3,007,292) (905,170) (914,319) (846,907) (3,748,512) (2,889,103) (1,826,769) (3,167,104) (2,623,656) (2,029,407) (767,811) (722,873) (38,407) - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 7,268,399 4,958,352 5,276,469 2,292,711 4,995,755 3,941,502 130,753 730,493 10,908,508 - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 13,234,166 15,944,205 9,905,980 955,611 12,652,143 5,551,085 1,642,457 1,015,014 13,084,245 58,401,764 42,457,559 32,551,579 55,288,989 42,636,846 37,085,761 14,099,259 13,084,245 -- - ------------ ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- $ 71,635,930 $ 58,401,764 $ 42,457,559 $ 56,244,600 $ 55,288,989 $ 42,636,846 $15,741,716 $14,099,259 $13,084,245 ============ ============ ============ ============ ============ ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 83 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MSF METLIFE STRATEGIC VALUE MID CAP STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ (601,992) $ (529,917) $ (714,689) $ (53,618) $ 186,015 $ (62,688) Net realized gains (losses)... 12,982,944 18,850,246 6,137,592 3,703,948 4,163,714 2,719,370 Change in unrealized gains (losses) on investments..... (16,875,056) (4,073,024) (2,502,234) 158,945 201,865 1,900,535 ------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations................ (4,494,104) 14,247,305 2,920,669 3,809,275 4,551,594 4,557,217 ------------- ------------ ------------ ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners.......... 15,755,463 17,326,197 18,598,115 10,058,472 9,822,002 9,146,889 Net transfers (including fixed account).................... (2,527,871) (3,858,623) (376,162) 1,446,934 1,873,265 1,259,495 Policy charges................ (6,814,895) (6,990,567) (6,932,168) (4,088,802) (3,798,648) (3,403,753) Transfers for policy benefits and terminations............ (6,624,745) (5,432,706) (4,429,182) (3,356,812) (2,881,354) (1,921,955) ------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions................ (212,048) 1,044,301 6,860,603 4,059,792 5,015,265 5,080,676 ------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets...................... (4,706,152) 15,291,606 9,781,272 7,869,067 9,566,859 9,637,893 NET ASSETS: Beginning of period........... 105,414,517 90,122,911 80,341,639 56,090,136 46,523,277 36,885,384 ------------- ------------ ------------ ------------ ------------ ------------ End of period................. $ 100,708,365 $105,414,517 $ 90,122,911 $ 63,959,203 $ 56,090,136 $ 46,523,277 ============= ============ ============ ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 84
MSF FRANKLIN TEMPLETON MSF BLACKROCK MSF SMALL CAP GROWTH LARGE CAP VALUE DAVIS VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (60,634) $ (50,288) $ (39,601) $ 13,846 $ 22,314 $ 2,262 $ (49,271) $ 19,378 $ (46,637) 725,945 422,517 282,478 761,534 510,491 121,570 581,875 2,307,728 226,016 (436,173) 106,882 (56,267) (536,165) 656,059 110,740 1,282,046 3,652,646 3,304,528 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 229,138 479,111 188,610 239,215 1,188,864 234,572 1,814,650 5,979,752 3,483,907 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 1,295,669 1,209,783 1,166,638 2,853,366 1,723,914 1,318,222 10,865,750 9,665,122 10,136,134 (34,464) 321,633 (104,904) 1,496,583 2,275,636 925,771 3,012,023 (4,035,297) 4,047,247 (461,653) (432,712) (397,275) (997,837) (637,550) (449,586) (4,001,496) (3,767,671) (3,216,813) (356,935) (317,572) (272,450) (713,538) (290,749) (212,728) (3,000,396) (1,975,307) (1,831,698) - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 442,617 781,132 392,009 2,638,574 3,071,251 1,581,679 6,875,881 (113,153) 9,134,870 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ 671,755 1,260,243 580,619 2,877,789 4,260,115 1,816,251 8,690,531 5,866,599 12,618,777 6,368,294 5,108,051 4,527,432 9,397,259 5,137,144 3,320,893 49,859,713 43,993,114 31,374,337 - ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ ------------ $ 7,040,049 $ 6,368,294 $ 5,108,051 $12,275,048 $ 9,397,259 $ 5,137,144 $ 58,550,244 $ 49,859,713 $ 43,993,114 =========== =========== =========== =========== =========== =========== ============ ============ ============
The accompanying notes are an integral part of these financial statements. 85 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF LOOMIS SAYLES MSF BLACKROCK SMALL CAP LEGACY LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (113,405) $ (90,220) $ (60,646) $ (19,922) $ (26,434) $ (11,264) Net realized gains (losses)...... 1,801,940 1,056,941 157,208 64,255 954,600 84,949 Change in unrealized gains (losses) on investments........ (305,465) 425,449 365,753 437,029 (1,121,566) 498,307 ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in net assets resulting from operations................... 1,383,070 1,392,170 462,315 481,362 (193,400) 571,992 ----------- ----------- ----------- ----------- ------------ ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 2,609,684 2,123,062 1,717,028 860,589 579,414 3,105,072 Net transfers (including fixed account)....................... 1,184,072 2,032,759 500,932 621,856 (7,570,628) 801,381 Policy charges................... (976,939) (791,339) (595,826) (303,215) (483,151) (694,288) Transfers for policy benefits and terminations................... (762,075) (537,409) (376,507) (105,375) (171,948) (132,635) ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in net assets resulting from policy transactions................... 2,054,742 2,827,073 1,245,627 1,073,855 (7,646,313) 3,079,530 ----------- ----------- ----------- ----------- ------------ ----------- Net increase (decrease) in net assets......................... 3,437,812 4,219,243 1,707,942 1,555,217 (7,839,713) 3,651,522 NET ASSETS: Beginning of period.............. 12,333,660 8,114,417 6,406,475 2,269,333 10,109,046 6,457,524 ----------- ----------- ----------- ----------- ------------ ----------- End of period.................... $15,771,472 $12,333,660 $ 8,114,417 $ 3,824,550 $ 2,269,333 $10,109,046 =========== =========== =========== =========== ============ ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 86
MSF BLACKROCK MSF FI MSF HARRIS OAKMARK BOND INCOME VALUE LEADERS FOCUSED VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- ----------------------------------- --------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 2,245,950 $ 4,656,087 $ 2,894,879 $ 3,233 $ 6,148 $ 3,733 $ (184,504) $ (289,521) $ (352,004) 86,411 (168,463) 1,142,272 675,004 177,507 80,493 8,147,137 5,738,053 1,079,635 2,574,419 (1,188,505) (2,577,646) (503,196) 304,366 177,601 (12,430,441) 467,020 3,071,366 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ 4,906,780 3,299,119 1,459,505 175,041 488,021 261,827 (4,467,808) 5,915,552 3,798,997 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ 12,386,608 13,105,607 17,949,210 1,529,707 1,367,655 766,467 10,174,883 10,865,790 10,775,287 (1,778,536) (6,953,279) (1,273,740) 104,032 1,301,345 1,396,629 (2,660,752) (1,374,110) 2,872,307 (6,382,704) (6,810,300) (7,133,185) (556,747) (460,789) (245,354) (4,002,257) (4,090,493) (3,827,784) (9,006,967) (5,023,099) (5,482,744) (288,167) (180,208) (107,252) (3,090,850) (2,391,996) (2,211,779) - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ (4,781,599) (5,681,071) 4,059,541 788,825 2,028,003 1,810,490 421,024 3,009,191 7,608,031 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ 125,181 (2,381,952) 5,519,046 963,866 2,516,024 2,072,317 (4,046,784) 8,924,743 11,407,028 92,311,177 94,693,129 89,174,083 5,778,898 3,262,874 1,190,557 58,176,504 49,251,761 37,844,733 - ------------ ------------ ------------ ----------- ----------- ----------- ------------- ------------ ------------ $ 92,436,358 $ 92,311,177 $ 94,693,129 $ 6,742,764 $ 5,778,898 $ 3,262,874 $ 54,129,720 $ 58,176,504 $ 49,251,761 ============ ============ ============ =========== =========== =========== ============= ============ ============
The accompanying notes are an integral part of these financial statements. 87 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF WESTERN ASSET MANAGEMENT MSF WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES U.S. GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)......................... $ 315,401 $ 566,836 $ 232,123 $ 274,009 $ 316,238 $ 54,588 Net realized gains (losses)...... 44,985 153,548 253,976 988 (10,510) 192,618 Change in unrealized gains (losses) on investments........ 187,688 (101,864) (261,648) 246,140 127,750 (152,454) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations................... 548,074 618,520 224,451 521,137 433,478 94,752 ------------ ------------ ------------ ------------ ------------ ------------ POLICY TRANSACTIONS: Premium payments received from policy owners............. 3,898,365 4,045,076 3,710,450 3,196,989 3,383,683 3,487,915 Net transfers (including fixed account)....................... 466,692 608,234 1,981,025 65,805 68,005 764,728 Policy charges................... (1,437,856) (1,458,611) (1,301,209) (1,262,963) (1,263,500) (1,227,554) Transfers for policy benefits and terminations............... (905,402) (719,792) (648,558) (773,977) (585,585) (583,670) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from policy transactions................... 2,021,799 2,474,907 3,741,708 1,225,854 1,602,603 2,441,419 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets......................... 2,569,873 3,093,427 3,966,159 1,746,991 2,036,081 2,536,171 NET ASSETS: Beginning of period.............. 15,802,133 12,708,706 8,742,547 14,050,390 12,014,309 9,478,138 ------------ ------------ ------------ ------------ ------------ ------------ End of period.................... $ 18,372,006 $ 15,802,133 $ 12,708,706 $ 15,797,381 $ 14,050,390 $ 12,014,309 ============ ============ ============ ============ ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 88
MSF BLACKROCK MSF MFS MSF METLIFE MONEY MARKET TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 (B) ---- ---- ---- ---- ---- ---- ---- ---- -------- $ 2,722,729 $ 1,597,189 $ 628,330 $ 53,260 $ 66,316 $ 25,741 $ (5,884) $ 7,154 $ 24 -- -- -- 167,623 64,610 18,142 24,396 2,237 370 -- -- -- (104,370) 205,638 (3,131) 12,074 19,393 554 - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 2,722,729 1,597,189 628,330 116,513 336,564 40,752 30,586 28,784 948 - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 5,145,397 5,160,393 3,943,073 1,181,286 1,268,749 657,976 157,209 60,249 11,888 (71,102) 28,142,059 (3,511,345) 1,133,382 560,665 970,499 218,409 382,425 113,429 (3,180,663) (1,921,201) (1,364,379) (457,695) (455,108) (250,392) (89,575) (39,164) (4,001) (547,125) (1,677,592) (829,829) (205,897) (86,159) (28,552) (24,846) (58,267) (4,039) - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 1,346,507 29,703,659 (1,762,480) 1,651,076 1,288,147 1,349,531 261,197 345,243 117,277 - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- 4,069,236 31,300,848 (1,134,150) 1,767,589 1,624,711 1,390,283 291,783 374,027 118,225 59,328,821 28,027,973 29,162,123 3,781,921 2,157,210 766,927 492,252 118,225 -- - ------------ ------------ ------------ ----------- ----------- ----------- ----------- ----------- ----------- $ 63,398,057 $ 59,328,821 $ 28,027,973 $ 5,549,510 $ 3,781,921 $ 2,157,210 $ 784,035 $ 492,252 $ 118,225 ============ ============ ============ =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 89 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 (B) 2007 2006 2005 (B) ---- ---- -------- ---- ---- -------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (21,161) $ 18,671 $ 240 $ (97,780) $ 30,400 $ 2,200 Net realized gains (losses)...... 29,950 32,936 1,752 188,933 155,125 3,689 Change in unrealized gains (losses) on investments........ 79,599 73,219 9,258 262,197 474,841 25,822 ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 88,388 124,826 11,250 353,350 660,366 31,711 ----------- ----------- ----------- ------------ ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 793,665 351,209 49,524 4,870,486 2,581,867 246,532 Net transfers (including fixed account)....................... 772,317 1,104,702 566,129 6,540,248 5,712,018 1,278,986 Policy charges................... (367,535) (201,780) (34,259) (1,921,467) (821,648) (93,673) Transfers for policy benefits and terminations................... (193,487) (73,416) (14,133) (852,946) (175,764) (14,121) ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 1,004,960 1,180,715 567,261 8,636,321 7,296,473 1,417,724 ----------- ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets......................... 1,093,348 1,305,541 578,511 8,989,671 7,956,839 1,449,435 NET ASSETS: Beginning of period.............. 1,884,052 578,511 -- 9,406,274 1,449,435 -- ----------- ----------- ----------- ------------ ----------- ----------- End of period.................... $ 2,977,400 $ 1,884,052 $ 578,511 $ 18,395,945 $ 9,406,274 $ 1,449,435 =========== =========== =========== ============ =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 90
MSF METLIFE MSF METLIFE MSF FI MSF CAPITAL GUARDIAN MODERATE TO AGGRESSIVE ALLOCATION AGGRESSIVE ALLOCATION LARGE CAP U.S. EQUITY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------------------------- ---------------------------------- ---------------------- ----------------------- 2007 2006 2005 (B) 2007 2006 2005 (B) 2007 2006 (C) 2007 2006 (C) ---- ---- -------- ---- ---- -------- ---- -------- ---- -------- $ (170,147) $ 12,275 $ 2,925 $ (40,153) $ (3,889) $ 461 $ (1,420) $ (246) $ (2,206) $ 582 122,439 211,255 4,962 101,806 (1,267) 3,136 11,455 21 50,654 40 371,705 870,757 64,564 (95,922) 225,674 10,725 (8,523) 4,291 (50,293) 25,383 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 323,997 1,094,287 72,451 (34,269) 220,518 14,322 1,512 4,066 (1,845) 26,005 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 11,490,456 3,660,525 350,076 2,720,243 769,602 77,484 51,455 13,027 78,786 48,952 12,371,719 8,417,200 2,046,335 3,811,580 1,804,040 381,966 217,615 64,888 60,667 245,401 (3,994,239) (1,282,528) (107,687) (899,415) (265,591) (23,230) (22,401) (4,862) (6,117) (2,972) (1,174,499) (320,422) (11,772) (341,600) (46,683) 2,131 (5,637) (15,434) 197 67,457 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 18,693,437 10,474,775 2,276,952 5,290,808 2,261,368 438,351 241,032 57,619 133,533 358,838 - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- 19,017,434 11,569,062 2,349,403 5,256,539 2,481,886 452,673 242,544 61,685 131,688 384,843 13,918,465 2,349,403 -- 2,934,559 452,673 -- 61,685 -- 384,843 -- - ------------ ------------ ----------- ----------- ----------- ---------- ---------- ----------- ----------- ----------- $ 32,935,899 $ 13,918,465 $ 2,349,403 $ 8,191,098 $ 2,934,559 $ 452,673 $ 304,229 $ 61,685 $ 516,531 $ 384,843 ============ ============ =========== =========== =========== ========== ========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 91 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
JANUS ASPEN JANUS ASPEN LARGE CAP GROWTH BALANCED INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 16,929 $ 660 $ (6,186) $ 1,623 $ 37 $ 24 Net realized gains (losses)...... 60,269 80,063 (62,709) 747 33 -- Change in unrealized gains (losses) on investments........ 750,675 477,638 263,241 2,101 147 4 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 827,873 558,361 194,346 4,471 217 28 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 704,439 729,644 743,854 34,534 234 234 Net transfers (including fixed account)....................... 57,292 (237,146) (38,037) 41,177 -- 1,745 Policy charges................... (191,669) (178,843) (174,801) (3,275) (328) (63) Transfers for policy benefits and terminations................... 20,341 (4,481) (67,923) 817 -- 7 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 590,403 309,174 463,093 73,253 (94) 1,923 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 1,418,276 867,535 657,439 77,724 123 1,951 NET ASSETS: Beginning of period.............. 5,801,609 4,934,074 4,276,635 2,311 2,188 237 ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 7,219,885 $ 5,801,609 $ 4,934,074 $ 80,035 $ 2,311 $ 2,188 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 92
JANUS ASPEN AIM V.I. AIM V.I. FORTY GOVERNMENT SECURITIES GLOBAL REAL ESTATE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 (A) 2006 2005 2007 2006 2005 ---- ---- ---- -------- ---- ---- ---- ---- ---- $ (384) $ (231) $ -- $ (3) $ 248 $ 193 $ 152,743 $ 15,226 $ 11,252 6,298 (26) -- (141) (8) 107 570,510 416,936 213,105 82,907 8,113 -- 165 (28) (117) (881,479) 328,141 7,005 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 88,821 7,856 -- 21 212 183 (158,226) 760,303 231,362 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 216,674 -- -- -- -- 4,439 118,444 86,308 128,022 107,905 107,014 -- -- -- 6,772 155,185 198,270 149,537 (5,310) (3,469) -- (68) (818) (1,010) (75,484) (59,455) (45,421) (525) (39) -- (7,610) 8 (6,439) (231,266) 29,368 (23,737) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 318,744 103,506 -- (7,678) (810) 3,762 (33,121) 254,491 208,401 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 407,565 111,362 -- (7,657) (598) 3,945 (191,347) 1,014,794 439,763 111,362 -- -- 7,657 8,255 4,310 2,762,613 1,747,819 1,308,056 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 518,927 $ 111,362 $ -- $ -- $ 7,657 $ 8,255 $ 2,571,266 $ 2,762,613 $ 1,747,819 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 93 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
FRANKLIN TEMPLETON FRANKLIN MUTUAL FOREIGN SECURITIES DISCOVERY SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 135,851 $ 59,846 $ 45,261 $ 15,708 $ 3,193 $ 546 Net realized gains (losses)...... 731,694 553,100 259,867 89,496 26,820 132 Change in unrealized gains (losses) on investments........ 305,602 743,656 264,624 8,690 90,251 8,764 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 1,173,147 1,356,602 569,752 113,894 120,264 9,442 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 1,046,007 763,068 695,341 388,710 81,841 3,124 Net transfers (including fixed account)....................... (11,614) (517,563) 355,482 341,064 596,967 110,323 Policy charges................... (294,839) (285,443) (268,301) (29,330) (17,388) (1,434) Transfers for policy benefits and terminations................... (115,394) (188,427) (213,877) (7,385) (4,239) 209 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 624,160 (228,365) 568,645 693,059 657,181 112,222 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 1,797,307 1,128,237 1,138,397 806,953 777,445 121,664 NET ASSETS: Beginning of period.............. 7,566,317 6,438,080 5,299,683 899,109 121,664 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 9,363,624 $ 7,566,317 $ 6,438,080 $ 1,706,062 $ 899,109 $ 121,664 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 94
ALLIANCEBERNSTEIN FIDELITY VIP FIDELITY VIP GLOBAL TECHNOLOGY CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (334) $ (169) $ (135) $ 11,445 $ 10,749 $ (1,913) $ 41,848 $ 12,363 $ 14,795 13,926 2,596 255 861,847 231,297 170,166 14,373 3,099 38,662 (1,759) 2,024 1,638 (453,602) (100,652) (22,158) 140,304 39,972 (29,733) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 11,833 4,451 1,758 419,690 141,394 146,095 196,525 55,434 23,724 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,465 17,259 6,941 608,723 311,963 159,311 166,685 206,112 202,315 (9,577) (346) 13,706 115,952 978,906 112,842 19,124 26,719 (157,813) (2,740) (1,156) (657) (106,944) (71,195) (35,260) (37,503) (32,847) (32,503) (17,975) 575 (76) (226,422) (190,863) (280,766) (43,517) (5,743) (31,699) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (21,827) 16,332 19,914 391,309 1,028,811 (43,873) 104,789 194,241 (19,700) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (9,994) 20,783 21,672 810,999 1,170,205 102,222 301,314 249,675 4,024 63,091 42,308 20,636 2,091,319 921,114 818,892 958,076 708,401 704,377 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 53,097 $ 63,091 $ 42,308 $ 2,902,318 $ 2,091,319 $ 921,114 $ 1,259,390 $ 958,076 $ 708,401 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 95 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
FIDELITY VIP FIDELITY VIP INVESTMENT GRADE BOND EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 873 $ 1,359 $ 468 $ 19,214 $ 7,573 $ (72) Net realized gains (losses)...... 1,728 (836) 276 120,582 38,676 (5,509) Change in unrealized gains (losses) on investments........ 6,849 767 (370) (137,717) 1,802 605 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 9,450 1,290 374 2,079 48,051 (4,976) ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 13,197 6,033 8,457 252,674 100,155 5,510 Net transfers (including fixed account)....................... 806,070 (2,639) 12,839 593,876 268,439 158,037 Policy charges................... (4,182) (1,496) (1,325) (17,750) (8,287) (3,758) Transfers for policy benefits and terminations................... (9,141) 306 18 (47,391) (590) (139,515) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 805,944 2,204 19,989 781,409 359,717 20,274 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 815,394 3,494 20,363 783,488 407,768 15,298 NET ASSETS: Beginning of period.............. 36,978 33,484 13,121 433,176 25,408 10,110 ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 852,372 $ 36,978 $ 33,484 $ 1,216,664 $ 433,176 $ 25,408 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 96
AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS GROWTH GROWTH-INCOME GLOBAL SMALL CAPITALIZATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - -------------------------------------- -------------------------------------- -------------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (52,702) $ (1,070) $ (51,712) $ 523,110 $ 451,348 $ 245,238 $ 1,230,864 $ (144,223) $ 15,976 8,414,259 921,608 115,149 3,124,811 1,479,184 279,927 5,991,855 3,009,637 669,665 3,035,574 6,751,062 8,793,861 (1,027,655) 5,509,333 1,688,136 1,948,016 4,197,799 3,507,811 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 11,397,131 7,671,600 8,857,298 2,620,266 7,439,865 2,212,301 9,170,735 7,063,213 4,193,452 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 21,780,214 20,408,448 17,644,031 14,383,389 13,556,781 12,314,898 10,006,735 7,823,334 5,167,339 5,478,471 7,977,297 8,768,204 4,796,374 3,888,560 3,766,503 11,624,893 8,047,794 6,080,729 (8,331,204) (7,453,637) (5,986,064) (5,606,686) (5,046,973) (4,287,121) (3,980,217) (2,891,945) (1,731,213) (6,086,335) (3,900,210) (2,523,999) (4,721,206) (2,734,867) (1,913,559) (2,849,609) (1,630,844) (1,006,984) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 12,841,146 17,031,898 17,902,172 8,851,871 9,663,501 9,880,721 14,801,802 11,348,339 8,509,871 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ 24,238,277 24,703,498 26,759,470 11,472,137 17,103,366 12,093,022 23,972,537 18,411,552 12,703,323 97,034,740 72,331,242 45,571,772 63,898,091 46,794,725 34,701,703 43,642,742 25,231,190 12,527,867 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $121,273,017 $ 97,034,740 $ 72,331,242 $ 75,370,228 $ 63,898,091 $ 46,794,725 $ 67,615,279 $ 43,642,742 $ 25,231,190 ============ ============ ============ ============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 97 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN FUNDS MIST T. ROWE PRICE BOND MID-CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------- ------------------------------------ 2007 2006 (C) 2007 2006 2005 ---- -------- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ 170,600 $ 984 $ (87,125) $ (91,448) $ (62,726) Net realized gains (losses)....................... 13,076 (909) 1,374,456 897,889 308,494 Change in unrealized gains (losses) on investments..................................... (143,419) 13,837 843,627 (173,792) 895,073 ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations............................... 40,257 13,912 2,130,958 632,649 1,140,841 ----------- ----------- ------------ ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.......................................... 628,735 89,127 2,924,293 2,471,595 2,046,729 Net transfers (including fixed account)........... 2,131,106 574,222 2,016,463 1,091,785 1,212,270 Policy charges.................................... (207,007) (24,950) (1,027,788) (896,982) (711,938) Transfers for policy benefits and terminations.... (54,852) (8,135) (1,061,019) (715,557) (345,287) ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions........................ 2,497,982 630,264 2,851,949 1,950,841 2,201,774 ----------- ----------- ------------ ----------- ----------- Net increase (decrease) in net assets............. 2,538,239 644,176 4,982,907 2,583,490 3,342,615 NET ASSETS: Beginning of period............................... 644,176 -- 12,401,292 9,817,802 6,475,187 ----------- ----------- ------------ ----------- ----------- End of period..................................... $ 3,182,415 $ 644,176 $ 17,384,199 $12,401,292 $ 9,817,802 =========== =========== ============ =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 98
MIST MFS MIST PIMCO MIST RCM RESEARCH INTERNATIONAL TOTAL RETURN TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ------------------------------------ -------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 72,282 $ 50,995 $ (5,481) $ 788,424 $ 501,885 $ (167,275) $ (78,918) $ (61,070) $ (50,588) 2,172,015 504,799 264,569 88,836 85,343 207,076 618,410 222,324 240,857 (879,168) 963,904 280,569 1,198,111 469,783 311,680 1,944,863 156,356 445,709 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 1,365,129 1,519,698 539,657 2,075,371 1,057,011 351,481 2,484,355 317,610 635,978 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 2,129,890 1,296,474 893,225 6,177,463 6,639,135 6,481,179 1,463,874 1,514,309 1,643,816 2,358,045 3,802,566 262,049 (29,170) (231,899) 1,715,784 2,934,006 (174,207) (451,962) (783,344) (479,047) (285,176) (2,306,501) (2,326,888) (2,233,771) (611,502) (544,205) (524,891) (1,243,321) (394,238) (132,515) (1,722,935) (1,385,066) (1,070,572) (563,025) (414,629) (327,410) - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 2,461,270 4,225,755 737,583 2,118,857 2,695,282 4,892,620 3,223,353 381,268 339,553 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- 3,826,399 5,745,453 1,277,240 4,194,228 3,752,293 5,244,101 5,707,708 698,878 975,531 9,803,525 4,058,072 2,780,832 28,016,253 24,263,960 19,019,859 7,523,569 6,824,691 5,849,160 - ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ----------- $ 13,629,924 $ 9,803,525 $ 4,058,072 $ 32,210,481 $ 28,016,253 $ 24,263,960 $13,231,277 $ 7,523,569 $ 6,824,691 ============ =========== =========== ============ ============ ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 99 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MIST BOND DEBENTURE LAZARD MID-CAP INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 950,684 $ 1,051,283 $ 622,354 $ (12,219) $ (11,480) $ (11,927) Net realized gains (losses)...... 205,286 93,973 255,890 482,777 413,010 416,755 Change in unrealized gains (losses) on investments........ 39,883 324,579 (722,955) (720,263) 56,316 (198,731) ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 1,195,853 1,469,835 155,289 (249,705) 457,846 206,097 ------------ ------------ ------------ ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners............. 3,554,382 3,396,611 3,151,962 1,149,737 908,370 900,458 Net transfers (including fixed account)....................... 500,659 251,738 360,705 838,156 136,080 189,141 Policy charges................... (1,363,634) (1,319,485) (1,241,179) (393,479) (318,175) (290,148) Transfers for policy benefits and terminations................... (993,295) (961,494) (1,037,292) (280,900) (197,498) (95,681) ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 1,698,112 1,367,370 1,234,196 1,313,514 528,777 703,770 ------------ ------------ ------------ ----------- ----------- ----------- Net increase (decrease) in net assets......................... 2,893,965 2,837,205 1,389,485 1,063,809 986,623 909,867 NET ASSETS: Beginning of period.............. 19,368,414 16,531,209 15,141,724 4,020,887 3,034,264 2,124,397 ------------ ------------ ------------ ----------- ----------- ----------- End of period.................... $ 22,262,379 $ 19,368,414 $ 16,531,209 $ 5,084,696 $ 4,020,887 $ 3,034,264 ============ ============ ============ =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 100
MIST MET/AIM MIST HARRIS OAKMARK MIST LEGG MASON SMALL CAP GROWTH INTERNATIONAL PARTNERS AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ------------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (24,194) $ (16,523) $ (11,067) $ 5,167 $ 223,306 $ (44,570) $ (50,642) $ (65,378) $ (52,753) 118,154 285,390 68,224 2,725,469 999,953 247,669 926,513 615,655 97,170 135,230 (33,826) 47,188 (3,512,929) 2,507,928 724,928 (747,047) (742,982) 756,884 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 229,190 235,041 104,345 (782,293) 3,731,187 928,027 128,824 (192,705) 801,301 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 601,183 582,851 446,774 5,746,134 3,829,877 2,085,109 1,456,917 1,626,695 1,636,045 354,513 239,798 77,613 3,549,633 5,611,008 3,959,003 (281,052) (19,816) 62,227 (197,171) (173,327) (132,549) (1,935,617) (1,281,424) (668,044) (539,471) (581,499) (541,547) (131,197) (94,796) (52,304) (1,288,608) (452,967) (293,448) (705,050) (411,238) (292,483) - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 627,328 554,526 339,534 6,071,542 7,706,494 5,082,620 (68,656) 614,142 864,242 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- 856,518 789,567 443,879 5,289,249 11,437,681 6,010,647 60,168 421,437 1,665,543 2,376,804 1,587,237 1,143,358 21,411,537 9,973,856 3,963,209 7,744,433 7,322,996 5,657,453 - ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- ----------- $ 3,233,322 $ 2,376,804 $ 1,587,237 $ 26,700,786 $ 21,411,537 $ 9,973,856 $ 7,804,601 $ 7,744,433 $ 7,322,996 =========== =========== =========== ============ ============ =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 101 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MIST NEUBERGER BERMAN GROWTH AND INCOME REAL ESTATE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...... $ 31,039 $ (21,761) $ (16,388) $ 44,687 $ 19,481 $ (40,104) Net realized gains (losses)....... 296,381 962,704 65,775 2,530,886 819,954 86,504 Change in unrealized gains (losses) on investments......... (147,617) (295,172) 110,292 (6,132,457) 3,020,558 660,111 ----------- ----------- ----------- ------------ ------------ ----------- Net increase (decrease ) in net assets resulting from operations.................... 179,803 645,771 159,679 (3,556,884) 3,859,993 706,511 ----------- ----------- ----------- ------------ ------------ ----------- POLICY TRANSACTIONS: Premium payments received from policy owners................... 510,985 975,882 908,127 5,237,292 3,735,060 2,008,005 Net transfers (including fixed account)........................ (145,041) 189,576 (24,320) 710,529 5,998,130 3,582,147 Policy charges.................... (120,041) (112,856) (102,306) (1,829,684) (1,362,713) (695,428) Transfers for policy benefits and terminations.................... 2,312 2,408 (35,225) (1,115,544) (638,267) (170,997) ----------- ----------- ----------- ------------ ------------ ----------- Net increase (decrease) in net assets resulting from policy transactions.................... 248,215 1,055,010 746,276 3,002,593 7,732,210 4,723,727 ----------- ----------- ----------- ------------ ------------ ----------- Net increase (decrease) in net assets.......................... 428,018 1,700,781 905,955 (554,291) 11,592,203 5,430,238 NET ASSETS: Beginning of period............... 5,861,368 4,160,587 3,254,632 18,987,194 7,394,991 1,964,753 ----------- ----------- ----------- ------------ ------------ ----------- End of period..................... $ 6,289,386 $ 5,861,368 $ 4,160,587 $ 18,432,903 $ 18,987,194 $ 7,394,991 =========== =========== =========== ============ ============ ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 102
MIST VAN KAMPEN MIST LORD ABBETT MIST THIRD AVENUE MID CAP GROWTH MID-CAP VALUE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ (24) $ -- $ -- $ 312 $ 19 $ 52 $ 1,338 $ (349) $ (51) -- -- -- 10,041 3,413 1,180 22,579 3,522 188 (570) -- -- (10,458) 880 85 (41,016) 21,745 1,856 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (594) -- -- (105) 4,312 1,317 (17,099) 24,918 1,993 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -- -- -- 13,650 3,267 1,127 129,727 55,993 7,110 32,025 -- -- 12,564 5,000 30,132 12,080 172,022 16,509 (33) -- -- (2,281) (1,756) (567) (9,900) (4,612) (1,175) (27) -- -- 92 (547) 49 (9,328) (1,597) 16 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 31,965 -- -- 24,025 5,964 30,741 122,579 221,806 22,460 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 31,371 -- -- 23,920 10,276 32,058 105,480 246,724 24,453 -- -- -- 42,580 32,304 246 275,584 28,860 4,407 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 31,371 $ -- $ -- $ 66,500 $ 42,580 $ 32,304 $ 381,064 $ 275,584 $ 28,860 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 103 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST OPPENHEIMER MIST LEGG MASON CAPITAL APPRECIATION VALUE EQUITY INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------- --------------------- 2007 2006 2005 (B) 2007 2006 (C) ---- ---- -------- ---- -------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)........................... $ (4,302) $ (1,383) $ (199) $ (54,295) $ (20,388) Net realized gains (losses)............................ 36,790 7,447 1,542 37,741 98,987 Change in unrealized gains (losses) on investments..... 18,908 12,744 2,715 (371,535) 306,184 ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations......................................... 51,396 18,808 4,058 (388,089) 384,783 POLICY TRANSACTIONS: Premium payments received from policy owners........... 205,021 117,398 12,067 1,048,842 765,241 Net transfers (including fixed account)................ 461,399 123,969 108,334 (45,958) 4,793,005 Policy charges......................................... (68,093) (39,578) (6,115) (411,469) (378,446) Transfers for policy benefits and terminations......... (23,596) (7,607) (2,034) (305,084) (26,923) ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from policy transactions.................................. 574,731 194,182 112,252 286,331 5,152,877 ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets.................. 626,127 212,990 116,310 (101,758) 5,537,660 NET ASSETS: Beginning of period.................................... 329,300 116,310 -- 5,537,660 -- ---------- ---------- ---------- ---------- ---------- End of period.......................................... $ 955,427 $ 329,300 $ 116,310 $5,435,902 $5,537,660 ========== ========== ========== ========== ==========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 104
MIST CYCLICAL MIST CYCLICAL MIST PIMCO MIST BLACKROCK MIST JANUS GROWTH ETF GROWTH AND INCOME ETF INFLATION PROTECTED BOND LARGE-CAP CORE FORTY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - --------------------- --------------------- ------------------------ ------------------- ------------------- 2007 2006 (C) 2007 2006 (C) 2007 2006 (C) 2007 (D) 2007 (D) ---- -------- ---- -------- ---- -------- -------- -------- $ (3,337) $ 1,562 $ (2,340) $ 1,299 $ 1,791 $ (463) $ (2,431,291) $ (4,282) 10,329 1,770 9,163 1,197 4,018 1,472 181,462 23,570 (2,639) 4,607 (2,024) 2,231 50,303 (1,429) 4,642,363 188,079 - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- 4,353 7,939 4,799 4,727 56,112 (420) 2,392,534 207,367 89,074 9,903 139,370 6,299 100,106 30,639 31,838,356 150,350 415,367 162,517 115,257 108,357 716,990 134,189 442,192,771 3,200,586 (30,535) (3,804) (28,375) (2,470) (37,516) (6,678) (19,369,800) (32,750) (15,115) (240) (2,126) (365) (53,881) (28,002) (20,078,179) (37,605) - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- 458,791 168,376 224,126 111,821 725,699 130,148 434,583,148 3,280,581 - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- 463,144 176,315 228,925 116,548 781,811 129,728 436,975,682 3,487,948 176,315 -- 116,548 -- 129,728 -- -- -- - ---------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- $ 639,459 $ 176,315 $ 345,473 $ 116,548 $ 911,539 $ 129,728 $ 436,975,682 $3,487,948 ========== ========== ========== ========== ========== ========== ============= ==========
The accompanying notes are an integral part of these financial statements. 105 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN CENTURY DELAWARE VIP VP VISTA SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (93) $ (81) $ (47) $ (2,015) $ (1,580) $ (358) Net realized gains (losses)...... 1,950 118 6 54,658 27,452 8,228 Change in unrealized gains (losses) on investments........ 4,790 1,653 961 (146,882) 21,618 2,540 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 6,647 1,690 920 (94,239) 47,490 10,410 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 7,595 -- -- 340,918 5,729 6,852 Net transfers (including fixed account)....................... 953 9,705 14,262 290,002 342,518 121,033 Policy charges................... (1,106) (536) (428) (15,765) (10,021) (2,409) Transfers for policy benefits and terminations................... (9,883) (515) (171) (19,176) (1,578) 4,080 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... (2,441) 8,654 13,663 595,979 336,648 129,556 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 4,206 10,344 14,583 501,740 384,138 139,966 NET ASSETS: Beginning of period.............. 24,927 14,583 -- 524,104 139,966 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 29,133 $ 24,927 $ 14,583 $ 1,025,844 $ 524,104 $ 139,966 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 106
DREYFUS DREYFUS DREYFUS INTERNATIONAL MIDCAP STOCK EMERGING LEADERS VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 (A) 2006 2005 2007 2006 2005 ---- ---- ---- -------- ---- ---- ---- ---- ---- $ (276) $ (148) $ -- $ (21) $ (70) $ (47) $ 7,908 $ 390 $ (850) 21,767 16,486 -- (1,009) 1,662 813 123,168 15,591 (4,878) (17,400) (13,109) -- 1,014 (791) 711 (101,858) 67,169 13,060 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 4,091 3,229 -- (16) 801 1,477 29,218 83,150 7,332 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 214,800 -- -- 2,929 511 -- 185,615 66,631 19,214 -- 107,014 -- (15,389) -- 11,018 (194,916) 383,627 243,471 (4,153) (3,047) -- (181) (275) (5,197) (14,159) (8,030) (1,203) 16,080 (16,428) -- 779 20 3,523 (21,097) 2,577 (95,877) - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 226,727 87,539 -- (11,862) 256 9,344 (44,557) 444,805 165,605 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 230,818 90,768 -- (11,878) 1,057 10,821 (15,339) 527,955 172,937 90,768 -- -- 11,878 10,821 -- 716,432 188,477 15,540 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 321,586 $ 90,768 $ -- $ -- $ 11,878 $ 10,821 $ 701,093 $ 716,432 $ 188,477 =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 107 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
GOLDMAN SACHS GOLDMAN SACHS MID CAP VALUE STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...... $ 6,291 $ 1,899 $ 45 $ 69 $ 257 $ 94 Net realized gains (losses)....... 203,381 27,734 994 14,561 6,160 4,218 Change in unrealized gains (losses) on investments......... (272,066) (2,200) 223 (37,975) 1,891 (5,644) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease ) in net assets resulting from operations.................... (62,394) 27,433 1,262 (23,345) 8,308 (1,332) ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners................... 105,410 35,499 3,107 26,101 19,548 -- Net transfers (including fixed account)........................ 978,190 156,680 107,030 47,326 13,395 51,421 Policy charges.................... (16,541) (3,580) (2,368) (2,711) (1,623) (41) Transfers for policy benefits and terminations.................... (57,710) 1,288 (74,661) (2,434) (204) 118 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions.................... 1,009,349 189,887 33,108 68,282 31,116 51,498 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets.......................... 946,955 217,320 34,370 44,937 39,424 50,166 NET ASSETS: Beginning of period............... 263,966 46,646 12,276 89,590 50,166 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period..................... $ 1,210,921 $ 263,966 $ 46,646 $ 134,527 $ 89,590 $ 50,166 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 108
MFS MFS MFS HIGH INCOME GLOBAL EQUITY NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- ---- ---- ---- $ 3,863 $ 4,046 $ 3,632 $ 612 $ (38) $ -- $ (13) $ -- $ -- 1,517 1,254 128 5,513 100 -- 239 -- -- (3,019) 2,298 (2,862) (2,915) 2,944 -- (349) -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 2,361 7,598 898 3,210 3,006 -- (123) -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,591 14,794 2,055 24,545 11,259 -- -- -- -- (64,551) (7,401) 16,844 12,209 13,359 -- 3,357 -- -- (846) (2,093) (1,694) (2,386) (793) -- (78) -- -- (2,622) 86 (42) 135 25 -- 113 -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (62,428) 5,386 17,163 34,503 23,850 -- 3,392 -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (60,067) 12,984 18,061 37,713 26,856 -- 3,269 -- -- 82,011 69,027 50,966 26,856 -- -- -- -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 21,944 $ 82,011 $ 69,027 $ 64,569 $ 26,856 $ -- $ 3,269 $ -- $ -- =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 109 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MFS VAN KAMPEN VALUE GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (78) $ -- $ -- $ 795 $ 567 $ (12) Net realized gains (losses)...... 2,376 -- -- 38 (329) (1) Change in unrealized gains (losses) on investments........ (1,846) -- -- 35 121 124 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 452 -- -- 868 359 111 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 5,064 -- -- 9,025 4,438 2,678 Net transfers (including fixed account)....................... 42,062 -- -- -- (3,528) 10,908 Policy charges................... (1,514) -- -- (171) (346) (79) Transfers for policy benefits and terminations................... (131) -- -- (1,839) 274 18 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... 45,481 -- -- 7,015 838 13,525 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... 45,933 -- -- 7,883 1,197 13,636 NET ASSETS: Beginning of period.............. -- -- -- 14,833 13,636 -- ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ 45,933 $ -- $ -- $ 22,716 $ 14,833 $ 13,636 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 110
WELLS FARGO VT WELLS FARGO VT WELLS FARGO VT TOTAL RETURN BOND MONEY MARKET ASSET ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION - ----------------------------------- ----------------------------------- ----------------------------------- 2007 2006 2005 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- ---- ---- ---- -------- ---- ---- $ 4,036 $ 1,478 $ 248 $ 51,705 $ 15,873 $ -- $ (8) $ 99 $ -- 482 (203) 238 -- -- -- 729 293 -- 726 969 16 -- -- -- (432) 432 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5,244 2,244 502 51,705 15,873 -- 289 824 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 21,305 5,794 3,570 764,383 465,461 -- 806 4,896 -- 30,954 36,582 13,581 319,843 527,851 -- (12,353) 5,994 -- (2,836) (1,105) (95) (68,591) (27,417) -- (94) (185) -- (2,379) 477 (359) 2,280 346 -- (194) 17 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 47,044 41,748 16,697 1,017,915 966,241 -- (11,835) 10,722 -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 52,288 43,992 17,199 1,069,620 982,114 -- (11,546) 11,546 -- 61,191 17,199 -- 982,114 -- -- 11,546 -- -- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 113,479 $ 61,191 $ 17,199 $ 2,051,734 $ 982,114 $ -- $ -- $ 11,546 $ -- =========== =========== =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 111 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
WELLS FARGO VT WELLS FARGO VT LARGE COMPANY GROWTH EQUITY INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ----------------------------------- 2007 (A) 2006 2005 2007 (A) 2006 2005 -------- ---- ---- -------- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (138) $ (243) $ (16) $ (3) $ 96 $ 82 Net realized gains (losses)...... 22,636 5,393 (5) 1,600 104 25 Change in unrealized gains (losses) on investments........ (10,940) 10,126 797 (1,507) 1,202 301 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 11,558 15,276 776 90 1,402 408 ----------- ----------- ----------- ----------- ----------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners.................. 12,093 73,440 4,434 -- -- 4,436 Net transfers (including fixed account)....................... (210,108) 106,314 (49) -- -- 110 Policy charges................... (1,535) (3,644) (995) (78) (865) (998) Transfers for policy benefits and terminations................... (12,728) 823 10 (8,825) (6) (15) ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from policy transactions................... (212,278) 176,933 3,400 (8,903) (871) 3,533 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... (200,720) 192,209 4,176 (8,813) 531 3,941 NET ASSETS: Beginning of period.............. 200,720 8,511 4,335 8,813 8,282 4,341 ----------- ----------- ----------- ----------- ----------- ----------- End of period.................... $ -- $ 200,720 $ 8,511 $ -- $ 8,813 $ 8,282 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2005 to December 31, 2005. (c)For the period May 1, 2006 to December 31, 2006. (d)For the period April 30, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 112 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS 1. ORGANIZATION Metropolitan Life Separate Account UL (the "Separate Account"), a separate account of Metropolitan Life Insurance Company (the "Company"), was established by the Company's Board of Directors on December 13, 1988 to support operations of the Company with respect to certain variable life insurance policies (the "Policies"). 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 New York Department of Insurance. The Separate Account is divided into Investment Divisions, each of which is treated as an individual accounting entity for financial reporting purposes. Each Investment Division 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: Metropolitan Series Fund, Inc. ("MSF") Janus Aspen Series ("Janus Aspen") AIM Variable Insurance Funds ("AIM V.I.") Franklin Templeton Variable Insurance Products Trust ("FTVIPT") AllianceBernstein Variable Products Series Fund, Inc. ("AllianceBernstein") Fidelity Variable Insurance Products Fund ("Fidelity VIP") American Funds Insurance Series ("American Funds") Met Investors Series Trust ("MIST") American Century Variable Portfolios, Inc. ("American Century VP") Delaware VIP Trust ("Delaware VIP") Dreyfus Investment Portfolios ("Dreyfus") Dreyfus Variable Investment Fund ("Dreyfus VIF") Goldman Sachs Variable Insurance Trust ("Goldman Sachs") MFS Variable Insurance Trust ("MFS") Van Kampen Life Investment Trust ("Van Kampen") Wells Fargo Variable Trust ("Wells Fargo VT") 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 Policies is not chargeable with liabilities arising out of any other business the Company may conduct. Premium payments applied to the Separate Account are invested in one or more Investment Divisions in accordance with the selection made by the policy owner. The following Investment Divisions were available for investment as of December 31, 2007: MSF BlackRock Diversified Investment Division MSF BlackRock Aggressive Growth Investment Division MSF MetLife Stock Index Investment Division MSF FI International Stock Investment Division MSF FI Mid Cap Opportunities Investment Division MSF T. Rowe Price Small Cap Growth Investment Division* MSF Oppenheimer Global Equity Investment Division MSF Harris Oakmark Large Cap Value Investment Division MSF Neuberger Berman Mid Cap Value Investment Division MSF T. Rowe Price Large Cap Growth Investment Division MSF Lehman Brothers Aggregate Bond Index Investment Division MSF Morgan Stanley EAFE Index Investment Division MSF Russell 2000 Index Investment Division 113 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONTINUED) MSF Jennison Growth Investment Division MSF BlackRock Strategic Value Investment Division MSF MetLife Mid Cap Stock Index Investment Division MSF Franklin Templeton Small Cap Growth Investment Division MSF BlackRock Large Cap Value Investment Division MSF Davis Venture Value Investment Division MSF Loomis Sayles Small Cap Investment Division MSF BlackRock Legacy Large Cap Growth Investment Division MSF BlackRock Bond Income Investment Division MSF FI Value Leaders Investment Division MSF Harris Oakmark Focused Value Investment Division MSF Western Asset Management Strategic Bond Opportunities Investment Division MSF Western Asset Management U.S. Government Investment Division MSF BlackRock Money Market Investment Division MSF MFS Total Return Investment Division* MSF MetLife Conservative Allocation Investment Division MSF MetLife Conservative to Moderate Allocation Investment Division MSF MetLife Moderate Allocation Investment Division MSF MetLife Moderate to Aggressive Allocation Investment Division MSF MetLife Aggressive Allocation Investment Division MSF FI Large Cap Investment Division MSF Capital Guardian U.S. Equity Investment Division Janus Aspen Large Cap Growth Investment Division Janus Aspen Balanced Investment Division Janus Aspen Forty Investment Division AIM V.I. Global Real Estate Investment Division Franklin Templeton Foreign Securities Investment Division Franklin Mutual Discovery Securities Investment Division AllianceBernstein Global Technology Investment Division AllianceBernstein U.S. Government/High Grade Securities Investment Division** Fidelity VIP Contrafund Investment Division Fidelity VIP Asset Manager: Growth Investment Division Fidelity VIP Investment Grade Bond Investment Division Fidelity VIP Equity-Income Investment Division American Funds Growth Investment Division American Funds Growth-Income Investment Division American Funds Global Small Capitalization Investment Division American Funds Bond Investment Division MIST T. Rowe Price Mid-Cap Growth Investment Division* MIST MFS Research International Investment Division MIST PIMCO Total Return Investment Division MIST RCM Technology Investment Division MIST Lord Abbett Bond Debenture Investment Division MIST Lazard Mid-Cap Investment Division* MIST Met/AIM Small Cap Growth Investment Division MIST Harris Oakmark International Investment Division MIST Legg Mason Partners Aggressive Growth Investment Division* MIST Lord Abbett Growth and Income Investment Division 114 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONTINUED) MIST Neuberger Berman Real Estate Investment Division* MIST Van Kampen Mid Cap Growth Investment Division MIST Lord Abbett Mid-Cap Value Investment Division MIST Third Avenue Small Cap Value Investment Division MIST Oppenheimer Capital Appreciation Investment Division MIST Legg Mason Value Equity Investment Division MIST Cyclical Growth ETF Investment Division MIST Cyclical Growth and Income ETF Investment Division MIST PIMCO Inflation Protected Bond Investment Division MIST BlackRock Large-Cap Core Investment Division MIST Janus Forty Investment Division American Century VP Vista Investment Division Delaware VIP Small Cap Value Investment Division Dreyfus MidCap Stock Investment Division Dreyfus VIF International Value Investment Division Goldman Sachs Mid Cap Value Investment Division Goldman Sachs Structured Small Cap Equity Investment Division MFS High Income Investment Division MFS Global Equity Investment Division MFS New Discovery Investment Division MFS Value Investment Division Van Kampen Government Investment Division Wells Fargo VT Total Return Bond Investment Division Wells Fargo VT Money Market Investment Division * This Investment Division invests in two or more share classes within the underlying portfolio, series, or fund of the Trusts that may assess 12b-1 fees. **These investment divisions had no net assets as of December 31, 2007. The following Investment Division ceased operations during the year ended December 31, 2007: MSF BlackRock Large Cap Investment Division AIM V.I. Core Equity Investment Division AIM V.I. Government Securities Investment Division Dreyfus Emerging Leaders Investment Division Wells Fargo VT Asset Allocation Investment Division Wells Fargo VT Large Company Growth Investment Division Wells Fargo VT Large Company Core Investment Division Wells Fargo VT Equity Income Investment Division The operations of the Investment Divisions 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 115 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONCLUDED) MERGERS: Old Name New Name - -------- -------- BlackRock Large Cap Portfolio BlackRock Large Cap Core Portfolio SUBSTITUTIONS: Old Name New Name - -------- -------- AIM V.I. Core Equity Fund Capital Guardian U.S. Equity Portfolio LIQUIDATIONS: Dreyfus Emerging Leaders Portfolio This report is prepared for the general information of policy 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 life separate accounts registered as unit investment trusts. 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 Policies. 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 Policies. PREMIUM PAYMENTS The Company deducts a sales charge, a state premium tax charge, and a federal income tax charge from premiums before amounts are allocated to the Separate Account. In the case of certain Policies, the Company also deducts an administrative charge before amounts are allocated to the Separate Account. The federal income 116 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONCLUDED) tax charge is imposed in connection with certain Policies to recover a portion of the federal income tax adjustment attributable to policy acquisition expenses. Net premiums are credited as accumulation units as of the end of the valuation period in which received, as provided in the prospectus. NET TRANSFERS The policy owner has the opportunity to transfer funds between Investment Divisions 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 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. CHANGE IN BASIS OF PRESENTATION In prior year Statements of changes in net assets, the Separate Account reported cost of insurance ("COI") in the financial statement line item "Transfers for policy benefits and terminations." COI has been reclassified and now appears separately in the line item "Policy charges." This reclassification presents COI more consistent with the intent of what COI charges represent. The reclassification had no effect on the net assets of the Investment Division or unit values of the Policies. 3. EXPENSES AND RELATED PARTY TRANSACTIONS The following annual Separate Account charge is an asset-based charge and assessed through a daily reduction in unit values which is recorded as an expense in the accompanying statements of operations: 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 an aggregate amount of death benefits greater than anticipated. The expense risk assumed is where expenses incurred in issuing and administering the Policies will exceed the amounts realized from the administrative charges assessed against the Policies. 117 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 3. EXPENSES AND RELATED PARTY TRANSACTIONS -- (CONCLUDED) The table below represents the range of effective annual rates for the respective charge for the year ended December 31, 2007: Mortality and Expense Risk 0.45% - 0.90%
The above referenced charge 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 policy. For some Policies, the Mortality and Expense Risk charge which ranges from .30% to .60% is assessed on a monthly basis and recorded as Mortality and Expense Risk Charges in the statements of operations. Other policy charges generally include: COI charges, administrative charges, a policy fee, and charges for benefits provided by rider. The COI charge is the primary charge under the policy for the death benefit provided by the Company. Administrative charges range from $0 to $35 and are assessed monthly. For some Policies, a surrender charge is imposed if the policy is partially or fully surrendered within the specified surrender charge period that ranges from $1 to $45 for every $1,000 of the policy face amount. Surrender charges for other Policies is equal to the lesser of the maximum surrender charge premium or the premiums actually paid in the first two policy years. In the first policy year, the maximum surrender charge premium is 75% of the smoker federal guideline premium for the policy, assuming a level death benefit for the policy and any riders; and in the second and later policy years, it is 100% of the smoker federal guideline premium for the policy, again assuming a level death benefit for the policy and any riders. The surrender charge cannot exceed 100% of the cumulative premiums paid in the first two policy years. If the policy is surrendered in the first two policy years, the Company will deduct 100% of the surrender charge, determined as described above. After the second policy year, the percentage the Company deducts declines until it reaches 0% at the end of the 15th policy year. These charges are assessed through the redemption of units and are recorded as policy transactions in the accompanying statements of changes in net assets. Certain investments in the various portfolios, series or funds of the MIST and MSF Trusts hold shares which are managed by Met Investors Advisory, LLC and MetLife Advisers, LLC, respectively. Both act in the capacity of investment advisor and are indirect affiliates of the Company. 118 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. STATEMENT OF INVESTMENTS
FOR THE YEAR ENDED AS OF DECEMBER 31, 2007 DECEMBER 31, 2007 ---------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ---------- ----------- ------------- -------------- MSF BlackRock Large Cap Investment Division (a)............................ -- -- 8,636,325 461,078,250 MSF BlackRock Diversified Investment Division................................ 18,384,675 301,100,943 15,938,795 23,752,223 MSF BlackRock Aggressive Growth Investment Division................................ 9,001,503 208,043,675 3,671,605 18,164,401 MSF MetLife Stock Index Investment Division................................ 20,218,189 638,683,765 61,923,502 36,029,246 MSF FI International Stock Investment Division................................ 4,537,480 53,677,713 8,264,530 5,588,161 MSF FI Mid Cap Opportunities Investment Division................................ 13,392,104 236,422,200 6,041,508 16,703,836 MSF T. Rowe Price Small Cap Growth Investment Division..................... 4,962,425 60,940,790 2,454,173 6,524,919 MSF Oppenheimer Global Equity Investment Division................................ 2,975,594 36,804,177 3,973,807 2,721,982 MSF Harris Oakmark Large Cap Value Investment Division..................... 4,338,277 52,337,596 7,342,545 5,025,329 MSF Neuberger Berman Mid Cap Value Investment Division..................... 3,862,378 69,563,781 9,138,539 4,537,785 MSF T. Rowe Price Large Cap Growth Investment Division..................... 3,203,625 38,358,068 4,827,247 5,313,688 MSF Lehman Brothers Aggregate Bond Index Investment Division..................... 9,565,941 102,450,836 17,699,371 5,514,482 MSF Morgan Stanley EAFE Index Investment Division................................ 4,165,516 47,048,510 12,138,883 3,461,505 MSF Russell 2000 Index Investment Division 3,966,613 48,701,321 10,226,111 3,618,430 MSF Jennison Growth Investment Division... 1,154,841 12,420,225 1,545,868 961,871 MSF BlackRock Strategic Value Investment Division................................ 6,634,359 102,711,853 16,697,685 5,171,409 MSF MetLife Mid Cap Stock Index Investment Division................................ 4,255,517 53,080,493 9,553,247 3,063,026 MSF Franklin Templeton Small Cap Growth Investment Division..................... 659,798 6,479,325 1,443,987 585,512 MSF BlackRock Large Cap Value Investment Division................................ 901,914 11,661,660 4,597,804 1,515,883 MSF Davis Venture Value Investment Division................................ 1,606,764 44,516,443 8,721,686 1,895,067 MSF Loomis Sayles Small Cap Investment Division................................ 63,682 13,867,310 4,499,823 990,620 MSF BlackRock Legacy Large Cap Growth Investment Division..................... 143,232 3,270,617 1,454,912 400,109 MSF BlackRock Bond Income Investment Division................................ 827,490 89,582,308 9,139,472 11,675,101
119 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 ($) --------- ---------- ------------- -------------- MSF FI Value Leaders Investment Division........ 34,372 6,606,158 1,932,958 582,448 MSF Harris Oakmark Focused Value Investment Division...................................... 246,672 55,346,093 11,604,381 4,117,553 MSF Western Asset Management Strategic Bond Opportunities Investment Division............. 1,444,340 18,030,068 3,147,112 794,074 MSF Western Asset Management U.S. Government Investment Division........................... 1,264,802 15,479,811 2,429,662 929,799 MSF BlackRock Money Market Investment Division...................................... 634,367 63,436,726 12,024,367 7,916,542 MSF MFS Total Return Investment Division........ 35,941 5,412,222 2,819,039 972,688 MSF MetLife Conservative Allocation Investment Division...................................... 70,128 752,013 565,991 310,266 MSF MetLife Conservative to Moderate Allocation Investment Division........................... 256,451 2,815,324 1,365,481 377,816 MSF MetLife Moderate Allocation Investment Division...................................... 1,532,995 17,633,085 10,687,941 2,130,508 MSF MetLife Moderate to Aggressive Allocation Investment Division........................... 2,649,710 31,628,872 19,208,532 659,122 MSF MetLife Aggressive Allocation Investment Division...................................... 647,006 8,050,621 5,909,758 650,920 MSF FI Large Cap Investment Division............ 20,753 308,461 273,438 24,666 MSF Capital Guardian U.S. Equity Investment Division...................................... 35,967 472,338 509,356 379,380 Janus Aspen Large Cap Growth Investment Division...................................... 273,481 5,144,840 827,470 219,403 Janus Aspen Balanced Investment Division........ 2,575 77,786 135,165 60,286 Janus Aspen Forty Investment Division........... 12,719 427,910 354,300 35,936 AIM V.I. Government Securities Investment Division (a).................................. -- -- 256 7,683 AIM V.I. Global Real Estate Investment Division. 125,785 3,048,522 1,133,311 421,526 Franklin Templeton Foreign Securities Investment Division...................................... 455,989 6,990,724 1,949,736 821,253 Franklin Mutual Discovery Securities Investment Division...................................... 72,017 1,598,385 1,102,924 376,271 AllianceBernstein Global Technology Investment Division...................................... 2,615 47,056 55,948 78,103 Fidelity VIP Contrafund Investment Division..... 109,812 3,473,036 2,177,760 889,855 Fidelity VIP Asset Manager: Growth Investment Division...................................... 82,012 1,056,434 255,311 107,956 Fidelity VIP Investment Grade Bond Investment Division...................................... 67,275 845,113 1,361,278 554,463 Fidelity VIP Equity-Income Investment Division.. 52,272 1,380,440 1,139,399 206,863 American Funds Growth Investment Division....... 1,817,641 94,636,809 22,998,117 2,689,172
120 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 ($) FROM SALES ($) ---------- ----------- ------------- -------------- American Funds Growth-Income Investment Division.................................. 1,783,489 63,810,239 13,922,630 2,215,555 American Funds Global Small Capitalization Investment Division....................... 2,508,916 55,087,173 23,415,533 3,130,106 American Funds Bond Investment Division..... 288,524 3,311,997 3,193,049 524,467 MIST T. Rowe Price Mid-Cap Growth Investment Division....................... 1,769,246 14,536,286 5,066,206 1,677,121 MIST MFS Research International Investment Division.................................. 944,774 12,901,200 6,742,872 2,497,568 MIST PIMCO Total Return Investment Division.................................. 2,620,869 30,439,455 4,798,407 1,891,119 MIST RCM Technology Investment Division..... 1,940,070 10,273,189 4,564,449 1,122,814 MIST Lord Abbett Bond Debenture Investment Division.................................. 1,762,918 21,058,492 4,077,483 1,439,226 MIST Lazard Mid-Cap Investment Division..... 417,823 5,712,724 2,663,683 920,016 MIST Met/AIM Small Cap Growth Investment Division.................................. 217,586 2,969,178 1,084,437 444,114 MIST Harris Oakmark International Investment Division.................................. 1,546,079 26,520,683 10,416,302 2,327,983 MIST Legg Mason Partners Aggressive Growth Investment Division....................... 1,035,639 7,444,052 1,475,411 875,714 MIST Lord Abbett Growth and Income Investment Division....................... 217,495 5,976,641 932,967 394,436 MIST Neuberger Berman Real Estate Investment Division.................................. 1,309,239 20,759,878 8,075,872 3,243,062 MIST Van Kampen Mid-Cap Growth Investment Division.................................. 2,716 31,941 31,979 38 MIST Lord Abbett Mid-Cap Value Investment Division.................................. 3,414 75,984 87,963 52,452 MIST Third Avenue Small Cap Value Investment Division....................... 24,303 398,532 194,299 52,021 MIST Oppenheimer Capital Appreciation Investment Division....................... 96,120 921,061 697,378 99,350 MIST Legg Mason Value Equity Investment Division.................................. 515,605 5,479,207 713,351 473,581 MIST Cyclical Growth ETF Investment Division.................................. 52,979 637,491 568,884 113,433 MIST Cyclical Growth and Income ETF Investment Division....................... 29,352 345,266 382,345 160,544 MIST PIMCO Inflation Protected Bond Investment Division....................... 83,170 862,665 932,938 205,451 MIST BlackRock Large-Cap Core Investment Division (b).............................. 39,228,753 432,365,942 454,188,789 22,004,306 MIST Janus Forty Investment Division (b).... 41,617 3,299,869 3,462,963 186,665
121 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 ($) --------- --------- ------------- -------------- American Century VP Vista Investment Division.. 1,324 21,730 8,512 11,044 Delaware VIP Small Cap Value Investment Division..................................... 35,529 1,137,795 887,344 238,710 Dreyfus Mid Cap Stock Investment Division...... 19,791 336,284 241,837 22,280 Dreyfus Emerging Leaders Investment Division (a)................................. -- -- 47,238 53,932 Dreyfus International Value Investment Division 38,527 691,616 387,371 325,410 Goldman Sachs Mid Cap Value Investment Division..................................... 89,860 1,534,343 1,432,227 181,762 Goldman Sachs Structured Small Cap Equity Investment Division.......................... 12,706 177,810 88,117 3,203 MFS High Income Investment Division............ 2,317 22,375 14,164 72,731 MFS Global Equity Investment Division.......... 4,174 64,541 54,734 17,032 MFS New Discovery Investment Division.......... 200 3,618 3,704 82 MFS Value Investment Division.................. 3,038 47,779 148,133 102,731 Van Kampen Government Investment Division...... 2,389 22,436 17,428 9,619 Wells Fargo VT Total Return Bond Investment Division..................................... 11,414 111,746 81,798 30,732 Wells Fargo VT Money Market Investment Division..................................... 2,051,425 2,051,425 1,194,161 124,938 Wells Fargo VT Asset Allocation Investment Division (a)................................. -- -- 13,354 25,198 Wells Fargo VT Large Company Growth Investment Division (a)................................. -- -- 203,677 416,092 Wells Fargo VT Equity Income Investment Division (a)................................. -- -- -- 8,906
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 122 [THIS PAGE INTENTIONALLY LEFT BLANK] 123 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF BLACKROCK MSF BLACKROCK LARGE CAP DIVERSIFIED INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 (A) 2006 2005 2007 2006 2005 -------- ---- ---- ---- ---- ---- Units beginning of year.......... 16,009,494 16,488,159 16,507,025 13,096,726 13,638,816 13,455,017 Units issued and transferred from other funding options.......... 13,723 5,827,504 3,207,492 1,576,102 5,196,699 2,906,692 Units redeemed and transferred to other funding options....... (16,023,217) (6,306,169) (3,226,358) (1,957,204) (5,738,789) (2,722,893) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ -- 16,009,494 16,488,159 12,715,624 13,096,726 13,638,816 ============ =========== =========== =========== =========== =========== MSF FI MSF FI MID CAP INTERNATIONAL STOCK OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 3,412,213 3,294,341 3,241,370 14,298,595 14,520,500 14,284,163 Units issued and transferred from other funding options.......... 449,737 1,366,842 681,133 1,586,888 5,633,860 3,117,992 Units redeemed and transferred to other funding options....... (490,924) (1,248,970) (628,162) (2,042,412) (5,855,765) (2,881,655) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ 3,371,026 3,412,213 3,294,341 13,843,071 14,298,595 14,520,500 ============ =========== =========== =========== =========== =========== MSF HARRIS OAKMARK MSF NEUBERGER BERMAN LARGE CAP VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 4,099,325 4,085,993 3,767,330 3,225,765 2,912,765 2,435,399 Units issued and transferred from other funding options.......... 706,700 2,271,700 1,297,280 609,119 2,211,103 1,131,537 Units redeemed and transferred to other funding options....... (690,459) (2,258,368) (978,617) (542,555) (1,898,103) (654,171) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ 4,115,566 4,099,325 4,085,993 3,292,329 3,225,765 2,912,765 ============ =========== =========== =========== =========== =========== MSF MORGAN STANLEY MSF RUSSELL EAFE INDEX 2000 INDEX INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ ----------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 3,792,545 3,464,106 3,014,776 2,884,744 2,619,288 2,380,540 Units issued and transferred from other funding options.......... 1,009,072 2,413,387 1,268,548 550,789 1,598,139 809,404 Units redeemed and transferred to other funding options....... (615,305) (2,084,948) (819,218) (459,670) (1,332,683) (570,656) ------------ ----------- ----------- ----------- ----------- ----------- Units end of year................ 4,186,312 3,792,545 3,464,106 2,975,863 2,884,744 2,619,288 ============ =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 124
MSF BLACKROCK MSF METLIFE AGGRESSIVE GROWTH STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 11,198,297 11,502,614 11,775,258 33,607,228 32,156,989 29,475,869 1,043,072 3,534,643 1,944,636 5,684,335 14,883,687 8,538,465 (1,567,882) (3,838,960) (2,217,280) (4,653,570) (13,433,448) (5,857,345) ----------- ----------- ----------- ----------- ------------ ----------- 10,673,487 11,198,297 11,502,614 34,637,993 33,607,228 32,156,989 =========== =========== =========== =========== ============ =========== MSF T. ROWE PRICE MSF OPPENHEIMER SMALL CAP GROWTH GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 4,913,291 5,103,342 5,056,605 2,344,938 2,314,718 2,201,362 490,842 1,690,078 928,886 280,327 882,876 507,092 (712,048) (1,880,129) (882,149) (277,828) (852,656) (393,736) ----------- ----------- ----------- ----------- ------------ ----------- 4,692,085 4,913,291 5,103,342 2,347,437 2,344,938 2,314,718 =========== =========== =========== =========== ============ =========== MSF T. ROWE PRICE MSF LEHMAN BROTHERS LARGE CAP GROWTH AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 3,620,946 3,547,628 3,354,772 6,058,549 5,619,973 4,812,639 579,434 1,740,365 992,846 1,388,135 3,458,933 1,885,856 (671,287) (1,667,047) (799,990) (864,484) (3,020,357) (1,078,522) ----------- ----------- ----------- ----------- ------------ ----------- 3,529,093 3,620,946 3,547,628 6,582,200 6,058,549 5,619,973 =========== =========== =========== =========== ============ =========== MSF JENNISON MSF BLACKROCK GROWTH STRATEGIC VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 1,356,790 1,297,642 -- 4,494,782 4,485,936 4,164,014 166,465 1,435,002 1,299,954 646,818 2,369,030 1,327,411 (320,198) (1,375,854) (2,312) (691,064) (2,360,184) (1,005,489) ----------- ----------- ----------- ----------- ------------ ----------- 1,203,057 1,356,790 1,297,642 4,450,536 4,494,782 4,485,936 =========== =========== =========== =========== ============ ===========
125 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE MID MSF FRANKLIN TEMPLETON CAP STOCK INDEX SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 3,270,208 2,985,941 2,658,110 538,941 474,966 440,124 Units issued and transferred from other funding options.......... 702,937 1,900,659 949,998 110,335 358,131 163,769 Units redeemed and transferred to other funding options.......... (506,274) (1,616,392) (622,167) (79,323) (294,156) (128,927) --------- ----------- --------- --------- ----------- --------- Units end of year................ 3,466,871 3,270,208 2,985,941 569,953 538,941 474,966 ========= =========== ========= ========= =========== ========= MSF LOOMIS SAYLES MSF BLACKROCK SMALL CAP LEGACY LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 78,273 39,978 37,547 190,308 1,201,181 851,014 Units issued and transferred from other funding options.......... 30,647 62,838 13,626 112,767 396,179 506,273 Units redeemed and transferred to other funding options.......... (10,837) (24,543) (11,195) (37,981) (1,407,052) (156,106) --------- ----------- --------- --------- ----------- --------- Units end of year................ 98,083 78,273 39,978 265,094 190,308 1,201,181 ========= =========== ========= ========= =========== ========= MSF HARRIS OAKMARK MSF WESTERN ASSET MANAGEMENT FOCUSED VALUE STRATEGIC BOND OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 191,529 182,165 153,755 998,939 843,296 595,935 Units issued and transferred from other funding options.......... 32,899 130,546 71,513 270,755 946,567 474,609 Units redeemed and transferred to other funding options.......... (32,837) (121,182) (43,103) (152,308) (790,924) (227,248) --------- ----------- --------- --------- ----------- --------- Units end of year................ 191,591 191,529 182,165 1,117,386 998,939 843,296 ========= =========== ========= ========= =========== ========= MSF MFS MSF METLIFE TOTAL RETURN CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 297,430 190,293 69,569 44,128 53,570 -- Units issued and transferred from other funding options.......... 187,982 495,889 201,331 46,280 137,937 53,570 Units redeemed and transferred to other funding options.......... (66,939) (388,752) (80,607) (23,850) (147,379) -- --------- ----------- --------- --------- ----------- --------- Units end of year................ 418,473 297,430 190,293 66,558 44,128 53,570 ========= =========== ========= ========= =========== =========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 126
MSF BLACKROCK MSF DAVIS LARGE CAP VALUE VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 608,908 396,107 271,012 1,301,427 1,739,984 1,365,956 293,309 614,025 238,963 357,240 934,602 643,359 (132,106) (401,224) (113,868) (178,960) (1,373,159) (269,331) --------- ----------- --------- --------- ----------- --------- 770,111 608,908 396,107 1,479,707 1,301,427 1,739,984 ========= =========== ========= ========= =========== ========= MSF BLACKROCK MSF FI BOND INCOME VALUE LEADERS INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 4,668,001 5,010,744 4,716,266 393,835 248,972 101,071 708,428 2,023,116 1,284,065 120,346 471,583 221,903 (908,844) (2,365,859) (989,587) (73,277) (326,720) (74,002) --------- ----------- --------- --------- ----------- --------- 4,467,585 4,668,001 5,010,744 440,904 393,835 248,972 ========= =========== ========= ========= =========== ========= MSF WESTERN ASSET MANAGEMENT MSF BLACKROCK U.S. GOVERNMENT MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 988,756 879,572 705,185 3,575,759 1,760,759 1,880,485 236,483 760,575 399,842 494,785 2,526,901 380,493 (158,504) (651,391) (225,455) (432,458) (711,901) (500,219) --------- ----------- --------- --------- ----------- --------- 1,066,735 988,756 879,572 3,638,086 3,575,759 1,760,759 ========= =========== ========= ========= =========== ========= MSF METLIFE MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------- ------------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 161,903 65,370 -- 775,138 165,720 -- 121,294 243,072 65,370 935,987 1,073,164 165,720 (38,943) (146,539) -- (258,884) (463,746) -- --------- ----------- --------- --------- ----------- --------- 244,254 161,903 65,370 1,452,241 775,138 165,720 ========= =========== ========= ========= =========== =========
127 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MSF METLIFE MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION AGGRESSIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,098,433 249,839 -- 225,274 49,908 -- Units issued and transferred from other funding options.......... 1,608,801 1,395,647 249,839 441,487 388,486 49,908 Units redeemed and transferred to other funding options.......... (207,883) (547,053) -- (58,005) (213,120) -- --------- --------- -------- -------- --------- -------- Units end of year................ 2,499,351 1,098,433 249,839 608,756 225,274 49,908 ========= ========= ======== ======== ========= ======== JANUS ASPEN JANUS ASPEN LARGE CAP GROWTH BALANCED INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 595,051 563,653 509,009 179 187 22 Units issued and transferred from other funding options.......... 69,313 80,037 87,782 7,946 20 171 Units redeemed and transferred to other funding options.......... (20,947) (48,639) (33,138) (2,500) (28) (6) --------- --------- -------- -------- --------- -------- Units end of year................ 643,417 595,051 563,653 5,625 179 187 ========= ========= ======== ======== ========= ======== AIM V.I. GLOBAL FRANKLIN TEMPLETON REAL ESTATE FOREIGN SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 70,179 63,997 54,709 471,719 488,477 444,204 Units issued and transferred from other funding options.......... 13,540 11,212 25,913 84,038 66,725 97,898 Units redeemed and transferred to other funding options.......... (9,211) (5,030) (16,625) (51,321) (83,483) (53,625) --------- --------- -------- -------- --------- -------- Units end of year................ 74,508 70,179 63,997 504,436 471,719 488,477 ========= ========= ======== ======== ========= ======== FIDELITY VIP FIDELITY VIP CONTRAFUND ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- --------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 151,404 74,414 77,301 102,160 80,752 83,331 Units issued and transferred from other funding options.......... 81,153 104,221 24,890 22,228 26,178 24,061 Units redeemed and transferred to other funding options.......... (44,028) (27,231) (27,777) (11,642) (4,770) (26,640) --------- --------- -------- -------- --------- -------- Units end of year................ 188,529 151,404 74,414 112,746 102,160 80,752 ========= ========= ======== ======== ========= ========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 128
MSF FI MSF CAPITAL GUARDIAN LARGE CAP U.S. EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 6,047 -- -- 25,159 -- -- 26,099 11,244 -- 35,341 25,387 -- (3,407) (5,197) -- (27,389) (228) -- -------- ------- ----- -------- ------- -------- 28,739 6,047 -- 33,111 25,159 -- ======== ======= ===== ======== ======= ======== JANUS ASPEN AIM V.I. FORTY GOVERNMENT SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- 7,954 -- -- 691 769 420 21,485 8,253 -- -- -- 1,092 (2,313) (299) -- (691) (78) (743) -------- ------- ----- -------- ------- -------- 27,126 7,954 -- -- 691 769 ======== ======= ===== ======== ======= ======== FRANKLIN MUTUAL ALLIANCEBERNSTEIN DISCOVERY SECURITIES GLOBAL TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 54,880 9,138 -- 11,769 8,553 4,324 56,645 47,509 9,276 10,367 6,356 4,400 (18,422) (1,767) (138) (13,875) (3,140) (171) -------- ------- ----- -------- ------- -------- 93,103 54,880 9,138 8,261 11,769 8,553 ======== ======= ===== ======== ======= ======== FIDELITY VIP FIDELITY VIP INVESTMENT GRADE BOND EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 3,341 3,156 1,268 30,951 2,190 928 118,771 1,406 2,025 69,741 30,655 19,013 (48,437) (1,221) (137) (12,992) (1,894) (17,751) -------- ------- ----- -------- ------- -------- 73,675 3,341 3,156 87,700 30,951 2,190 ======== ======= ===== ======== ======= ========
129 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
AMERICAN FUNDS AMERICAN FUNDS GROWTH GROWTH-INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,094,384 898,134 656,749 1,228,077 1,035,047 811,401 Units issued and transferred from other funding options.......... 276,228 867,857 429,219 321,727 919,357 460,047 Units redeemed and transferred to other funding options.......... (151,958) (671,607) (187,834) (168,760) (726,327) (236,401) --------- --------- --------- --------- --------- --------- Units end of year................ 1,218,654 1,094,384 898,134 1,381,044 1,228,077 1,035,047 ========= ========= ========= ========= ========= ========= MIST T. ROWE PRICE MIST MFS RESEARCH MID-CAP GROWTH INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,338,870 1,132,034 856,351 566,593 294,106 234,897 Units issued and transferred from other funding options.......... 592,655 1,200,709 562,461 256,067 541,071 152,985 Units redeemed and transferred to other funding options.......... (344,229) (993,873) (286,778) (126,833) (268,584) (93,776) --------- --------- --------- --------- --------- --------- Units end of year................ 1,587,296 1,338,870 1,132,034 695,827 566,593 294,106 ========= ========= ========= ========= ========= ========= MIST LORD ABBETT MIST LAZARD BOND DEBENTURE MID-CAP INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,162,806 1,085,144 1,015,708 261,764 226,296 171,772 Units issued and transferred from other funding options.......... 184,166 609,507 328,926 129,129 244,858 136,196 Units redeemed and transferred to other funding options.......... (97,685) (531,845) (259,490) (50,577) (209,390) (81,672) --------- --------- --------- --------- --------- --------- Units end of year................ 1,249,287 1,162,806 1,085,144 340,316 261,764 226,296 ========= ========= ========= ========= ========= ========= MIST LEGG MASON MIST LORD ABBETT PARTNERS AGGRESSIVE GROWTH GROWTH AND INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 908,926 844,525 741,720 523,423 342,402 280,704 Units issued and transferred from other funding options.......... 167,283 564,765 290,526 43,331 529,241 78,527 Units redeemed and transferred to other funding options.......... (183,085) (500,364) (187,721) (26,782) (348,220) (16,829) --------- --------- --------- --------- --------- --------- Units end of year................ 893,124 908,926 844,525 539,972 523,423 342,402 ========= ========= ========= ========= ========= =========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 130
AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION BOND INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 1,521,701 1,088,603 676,191 63,414 -- -- 741,710 1,590,658 728,909 243,689 77,194 -- (318,349) (1,157,560) (316,497) (15,456) (13,780) -- --------- ----------- --------- --------- --------- --------- 1,945,062 1,521,701 1,088,603 291,647 63,414 -- ========= =========== ========= ========= ========= ========= MIST PIMCO MIST RCM TOTAL RETURN TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 2,039,385 1,849,249 1,483,392 1,395,573 1,334,943 1,273,073 459,131 1,580,219 818,646 861,145 1,036,397 518,666 (323,027) (1,390,083) (452,789) (389,423) (975,767) (456,796) --------- ----------- --------- --------- --------- --------- 2,175,489 2,039,385 1,849,249 1,867,295 1,395,573 1,334,943 ========= =========== ========= ========= ========= ========= MIST MET/AIM MIST HARRIS OAKMARK SMALL CAP GROWTH INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 170,794 129,221 101,110 1,060,490 636,793 289,245 87,382 152,658 72,111 501,471 1,213,847 536,478 (49,191) (111,085) (44,000) (226,191) (790,150) (188,930) --------- ----------- --------- --------- --------- --------- 208,985 170,794 129,221 1,335,770 1,060,490 636,793 ========= =========== ========= ========= ========= ========= MIST NEUBERGER BERMAN MIST VAN KAMPEN REAL ESTATE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------- ----------------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 939,464 503,432 151,740 -- -- -- 419,170 1,259,740 536,011 2,004 -- -- (286,996) (823,708) (184,319) (4) -- -- --------- ----------- --------- --------- --------- --------- 1,071,638 939,464 503,432 2,000 -- -- ========= =========== ========= ========= ========= =========
131 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MIST LORD ABBETT MIST THIRD AVENUE MID-CAP VALUE SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 2,988 2,543 21 17,494 2,073 366 Units issued and transferred from other funding options.......... 4,172 710 2,575 11,206 16,123 1,821 Units redeemed and transferred to other funding options.......... (2,522) (265) (53) (3,757) (702) (114) -------- ------- -------- ------- ------- ------- Units end of year................ 4,638 2,988 2,543 24,943 17,494 2,073 ======== ======= ======== ======= ======= ======= MIST CYCLICAL MIST CYCLICAL GROWTH ETF GROWTH AND INCOME ETF INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 16,395 -- -- 10,875 -- -- Units issued and transferred from other funding options.......... 43,076 18,885 -- 25,957 12,571 -- Units redeemed and transferred to other funding options.......... (3,307) (2,490) -- (6,281) (1,696) -- -------- ------- -------- ------- ------- ------- Units end of year................ 56,164 16,395 -- 30,551 10,875 -- ======== ======= ======== ======= ======= ======= AMERICAN CENTURY DELAWARE VP VISTA VIP SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,963 1,252 -- 31,911 9,876 -- Units issued and transferred from other funding options.......... 511 761 1,295 43,174 25,950 10,566 Units redeemed and transferred to other funding options.......... (832) (50) (43) (8,041) (3,915) (690) -------- ------- -------- ------- ------- ------- Units end of year................ 1,642 1,963 1,252 67,044 31,911 9,876 ======== ======= ======== ======= ======= ======= DREYFUS GOLDMAN SACHS INTERNATIONAL VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------- ----------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 45,198 14,559 1,371 18,361 3,769 1,123 Units issued and transferred from other funding options.......... 17,418 32,872 25,402 68,111 15,229 9,745 Units redeemed and transferred to other funding options.......... (20,066) (2,233) (12,214) (1,683) (637) (7,099) -------- ------- -------- ------- ------- ------- Units end of year................ 42,550 45,198 14,559 84,789 18,361 3,769 ======== ======= ======== ======= ======= =======
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 132
MIST OPPENHEIMER MIST LEGG MASON CAPITAL APPRECIATION VALUE EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ---------------------- 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 27,796 10,588 -- 490,888 -- -- 50,236 48,969 13,476 90,867 548,298 -- (7,398) (31,761) (2,888) (70,662) (57,410) -- ------- -------- ------- -------- -------- ---- 70,634 27,796 10,588 511,093 490,888 -- ======= ======== ======= ======== ======== ====
MIST PIMCO MIST BLACKROCK MIST JANUS INFLATION PROTECTED BOND LARGE-CAP CORE FORTY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------------- ------------------- 2007 2006 2005 2007 (B) 2007 (B) ---- ---- ---- -------- -------- 12,722 -- -- -- -- 86,389 33,652 -- 17,523,204 305,557 (18,519) (20,930) -- (2,171,078) (24,177) -------- -------- ---- ----------- -------- 80,592 12,722 -- 15,352,126 281,380 ======== ======== ==== =========== ========
DREYFUS DREYFUS MIDCAP STOCK EMERGING LEADERS INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ------------------------ 2007 2006 2005 2007 (A) 2006 2005 ---- ---- ---- -------- ---- ---- 7,996 -- -- 931 916 -- 15,966 8,296 -- 1,192 43 940 (334) (300) -- (2,123) (28) (24) ------ ----- ----- ------- ------- ------- 23,628 7,996 -- -- 931 916 ====== ===== ===== ======= ======= ======= GOLDMAN SACHS MFS STRUCTURED SMALL CAP EQUITY HIGH INCOME INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- 6,743 4,239 -- 6,738 6,238 4,700 5,781 2,659 4,244 823 8,397 1,719 (260) (155) (5) (5,785) (7,897) (181) ------ ----- ----- ------- ------- ------- 12,264 6,743 4,239 1,776 6,738 6,238 ====== ===== ===== ======= ======= =======
133 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
MFS MFS GLOBAL EQUITY NEW DISCOVERY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,789 -- -- -- -- -- Units issued and transferred from other funding options.......... 2,461 1,849 -- 260 -- -- Units redeemed and transferred to other funding options.......... (302) (60) -- (7) -- -- ------- ------- ------- -------- ------- ------- Units end of year................ 3,948 1,789 -- 253 -- -- ======= ======= ======= ======== ======= ======= WELLS FARGO VT WELLS FARGO VT TOTAL RETURN BOND MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 2006 2006 2007 2006 2006 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 5,553 1,620 -- 91,188 -- -- Units issued and transferred from other funding options.......... 5,733 4,733 1,631 105,491 93,909 -- Units redeemed and transferred to other funding options.......... (1,589) (800) (11) (14,684) (2,721) -- ------- ------- ------- -------- ------- ------- Units end of year................ 9,697 5,553 1,620 181,995 91,188 -- ======= ======= ======= ======== ======= ======= WELLS FARGO VT EQUITY INCOME INVESTMENT DIVISION ------------------------ 2007 (A) 2006 2005 -------- ---- ---- Units beginning of year.......... 653 727 402 Units issued and transferred from other funding options.......... -- -- 422 Units redeemed and transferred to other funding options.......... (653) (74) (97) ------- ------- ------- Units end of year................ -- 653 727 ======= ======= =======
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period April 30, 2007 to December 31, 2007. 134
MFS VAN KAMPEN VALUE GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 2006 2005 2007 2006 2006 ---- ---- ---- ---- ---- ---- -- -- -- 1,342 1,272 -- 3069 -- -- 1,425 701 1,280 (103) -- -- (847) (631) (8) ------- ------- ------- -------- ------- ------- 2,966 -- -- 1,920 1,342 1,272 ======= ======= ======= ======== ======= ======= WELLS FARGO VT WELLS FARGO VT ASSET ALLOCATION LARGE COMPANY GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------ ------------------------ 2007 (A) 2006 2005 2007 (A) 2006 2005 -------- ---- ---- -------- ---- ---- 907 -- -- 17,802 772 416 63 1,099 -- 1,045 18,861 464 (970) (192) -- (18,847) (1,831) (108) ------- ------- ------- -------- ------- ------- -- 907 -- -- 17,802 772 ======= ======= ======= ======== ======= =======
135 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Policies, 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 (%) ---------- ------------- ----------- ------------ --------------- -------------- MSF BlackRock Large Cap 2007 -- -- -- 1.57 0.45 - 0.90 5.66 - 6.56 Investment Division/a/ 2006 16,009,494 13.85 - 42.25 435,896,815 1.30 0.45 - 0.90 12.10 - 14.15 2005 16,488,159 12.13 - 37.35 401,557,280 1.09 0.45 - 0.90 2.67 - 3.59 2004 16,507,025 11.71 - 36.38 399,816,513 0.71 0.45 - 0.90 9.87 - 10.86 2003 16,150,806 10.57 - 33.12 367,087,301 0.83 0.45 - 0.90 29.08 - 30.24 MSF BlackRock Diversified 2007 12,715,624 15.43 - 38.69 334,245,436 2.54 0.45 - 0.90 4.96 - 8.02 Investment Division 2006 13,096,726 14.57 - 36.86 331,432,719 2.44 0.40 - 0.90 7.38 - 10.53 2005 13,638,816 13.18 - 33.65 319,750,423 1.57 0.40 - 0.90 2.13 - 3.05 2004 13,455,017 12.79 - 32.95 315,176,729 1.83 0.40 - 0.90 7.54 - 8.51 2003 12,880,974 11.79 - 30.64 289,033,387 3.73 0.45 - 0.90 19.48 - 20.56 MSF BlackRock Aggressive Growth 2007 10,673,487 18.84 - 26.64 260,061,815 -- 0.45 - 0.90 19.53 - 20.60 Investment Division 2006 11,198,297 15.63 - 22.09 228,717,595 -- 0.40 - 0.90 5.76 - 6.75 2005 11,502,614 14.64 - 20.73 222,219,970 -- 0.40 - 0.90 9.72 - 10.70 2004 11,775,258 13.23 - 18.89 207,749,362 -- 0.40 - 0.90 11.97 - 12.98 2003 11,833,051 11.71 - 16.87 187,268,373 -- 0.45 - 0.90 39.53 - 40.79 MSF MetLife Stock Index 2007 34,637,993 13.47 - 39.67 748,068,488 1.03 0.45 - 0.90 4.28 - 10.73 Investment Division 2006 33,607,228 12.80 - 38.04 707,564,793 1.97 0.40 - 0.90 8.73 - 15.48 2005 32,156,989 11.08 - 33.24 605,569,341 1.56 0.40 - 0.90 3.71 - 4.64 2004 29,475,869 10.59 - 32.05 548,175,778 0.83 0.40 - 0.90 9.55 - 10.53 2003 25,746,955 9.58 - 29.26 457,114,347 1.65 0.45 - 0.90 27.06 - 28.20 MSF FI International Stock 2007 3,371,026 17.46 - 23.95 72,704,709 1.05 0.45 - 0.90 9.36 - 11.35 Investment Division 2006 3,412,213 15.68 - 21.90 67,509,144 1.40 0.40 - 0.90 14.38 - 16.49 2005 3,294,341 13.71 - 18.97 56,855,714 0.60 0.40 - 0.90 16.95 - 18.00 2004 3,241,370 11.67 - 16.22 48,075,000 1.32 0.40 - 0.90 17.14 - 18.19 2003 3,484,064 9.92 - 13.85 43,984,289 0.65 0.45 - 0.90 26.90 - 28.04 MSF FI Mid Cap Opportunities 2007 13,843,071 8.63 - 24.16 283,077,852 0.13 0.45 - 0.90 7.38 - 8.34 Investment Division 2006 14,298,595 7.97 - 22.36 271,463,672 0.01 0.45 - 0.90 10.85 - 28.32 2005 14,520,500 7.12 - 20.08 247,745,972 -- 0.45 - 0.90 5.97 - 6.92 2004 14,284,163 6.66 - 18.87 229,326,208 0.53 0.45 - 0.90 16.15 - 17.19 2003 13,347,672 5.69 - 16.17 184,078,088 -- 0.45 - 0.90 33.38 - 35.10 MSF T. Rowe Price Small Cap Growth 2007 4,692,085 17.16 - 19.47 85,746,187 -- 0.45 - 0.90 8.88 - 9.89 Investment Division 2006 4,913,291 15.76 - 17.80 81,812,746 -- 0.45 - 0.90 2.96 - 3.93 2005 5,103,342 8.20 - 17.21 80,632,046 -- 0.45 - 0.90 10.02 - 11.01 2004 5,056,605 7.41 - 15.57 72,034,034 -- 0.45 - 0.90 9.58 - 11.08 2003 4,901,924 6.76 - 14.08 63,188,807 -- 0.45 - 0.90 37.24 - 40.87 MSF Oppenheimer Global Equity 2007 2,347,437 21.71 - 24.18 52,072,709 1.10 0.45 - 0.90 5.53 - 10.86 Investment Division 2006 2,344,938 20.38 - 22.70 48,944,535 2.49 0.45 - 0.90 11.00 - 16.59 2005 2,314,718 17.48 - 19.47 41,604,796 0.55 0.45 - 0.90 15.19 - 16.22 2004 2,201,362 15.04 - 16.76 34,182,477 1.52 0.45 - 0.90 15.38 - 16.42 2003 2,140,330 12.92 - 14.39 28,695,718 2.04 0.45 - 0.90 29.29 - 30.45
136 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Harris Oakmark Large Cap Value 2007 4,115,566 14.14 - 17.54 61,926,665 0.78 0.45 - 0.90 (4.67) - (3.48) Investment Division 2006 4,099,325 14.65 - 18.40 64,292,839 0.77 0.40 - 0.90 16.70 - 18.14 2005 4,085,993 12.55 - 15.72 54,445,434 0.70 0.40 - 0.90 (2.26) - (1.38) 2004 3,767,330 12.79 - 16.08 51,133,000 0.49 0.40 - 0.90 10.42 - 11.42 2003 3,060,299 11.53 - 14.56 37,503,629 -- 0.45 - 0.90 24.38 - 25.49 MSF Neuberger Berman Mid Cap Value 2007 3,292,329 21.27 - 30.68 82,005,373 0.55 0.90 2.51 - 3.45 Investment Division 2006 3,225,765 20.75 - 29.66 77,735,349 0.48 0.40 - 0.90 10.46 - 11.46 2005 2,912,765 18.79 - 26.61 63,152,395 0.29 0.40 - 0.90 11.27 - 12.27 2004 2,435,399 16.88 - 23.70 47,215,000 0.23 0.40 - 0.90 21.81 - 22.91 2003 1,946,013 13.86 - 19.29 30,945,551 0.32 0.60 - 0.90 35.30 - 36.52 MSF T. Rowe Price Large Cap Growth 2007 3,529,093 11.53 - 17.60 52,811,241 0.45 0.90 8.47 - 9.40 Investment Division 2006 3,620,946 10.63 - 16.09 49,315,573 0.33 0.40 - 0.90 12.21 - 13.23 2005 3,547,628 6.84 - 14.21 41,950,019 0.54 0.40 - 0.90 4.12 - 6.59 2004 3,354,771 6.47 - 13.33 36,962,724 0.21 0.40 - 0.90 2.91 - 9.93 2003 3,337,477 6.27 - 12.13 33,816,692 0.11 0.60 - 0.90 29.64 - 32.78 MSF Lehman Brothers Aggregate Bond 2007 6,582,200 14.56 - 16.17 104,928,263 4.49 0.45 - 0.90 5.89 - 11.27 Index Investment Division 2006 6,058,549 13.75 - 15.13 90,417,327 4.29 0.45 - 0.90 (0.88) - 4.15 2005 5,619,973 13.32 - 14.53 80,547,413 3.76 0.45 - 0.90 1.16 - 2.06 2004 4,812,639 13.17 - 14.23 67,709,808 3.00 0.45 - 0.90 3.17 - 4.10 2003 4,063,920 12.77 - 13.67 54,994,307 5.25 0.45 - 0.90 2.71 - 3.63 MSF Morgan Stanley EAFE Index 2007 4,186,312 14.30 - 19.58 71,635,930 1.94 0.45 - 0.90 9.83 - 13.98 Investment Division 2006 3,792,545 13.02 - 17.67 58,401,764 1.70 0.40 - 0.90 23.03 - 25.75 2005 3,464,106 10.45 - 14.05 42,457,559 1.59 0.40 - 0.90 12.24 - 13.24 2004 3,014,776 9.31 - 12.41 32,551,579 0.71 0.40 - 0.90 18.58 - 19.64 2003 2,675,762 7.85 - 10.37 24,290,177 1.48 0.45 - 0.90 36.41 - 37.70 MSF Russell 2000 Index 2007 2,975,863 14.83 - 20.87 56,244,600 0.91 0.45 - 0.90 (2.43) - 2.72 Investment Division 2006 2,884,744 15.20 - 21.19 55,288,989 0.81 0.45 - 0.90 12.11 - 17.99 2005 2,619,288 13.00 - 17.96 42,636,846 0.74 0.45 - 0.90 3.57 - 4.50 2004 2,380,540 12.55 - 17.19 37,085,761 0.44 0.45 - 0.90 16.71 - 17.77 2003 2,084,869 10.75 - 14.59 27,726,279 0.63 0.45 - 0.90 44.77 - 46.07 MSF Jennison Growth 2007 1,203,057 6.48 - 13.98 15,741,716 0.42 0.90 10.62 - 11.66 Investment Division 2006 1,356,790 5.81 - 12.52 14,099,259 -- 0.40 - 0.90 1.88 - 2.82 2005 1,147,750 5.65 - 12.19 13,084,245 -- 0.40 - 0.90 20.77 - 21.49 MSF BlackRock Strategic Value 2007 4,450,536 20.94 - 22.86 100,708,365 0.30 0.90 (4.30) - (3.41) Investment Division 2006 4,494,782 21.68 - 23.68 105,414,517 0.31 0.40 - 0.90 15.68 - 16.74 2005 4,485,936 18.58 - 20.28 90,122,911 -- 0.40 - 0.90 3.23 - 4.15 2004 4,164,014 17.84 - 19.48 80,342,000 -- 0.40 - 0.90 14.31 - 15.34 2003 3,371,798 15.46 - 16.89 56,539,662 -- 0.60 - 0.90 48.80 - 50.14 MSF MetLife Mid Cap Stock Index 2007 3,466,871 17.07 - 18.75 63,959,203 0.75 0.90 6.83 - 7.82 Investment Division 2006 3,270,208 15.84 - 17.39 56,090,136 1.19 0.48 - 0.90 9.11 - 10.09 2005 2,985,941 14.39 - 15.80 46,523,277 0.67 0.48 - 0.90 11.28 - 12.27 2004 2,658,110 12.82 - 14.07 36,885,384 0.48 0.48 - 0.90 15.01 - 16.05 2003 2,338,101 11.04 - 12.13 27,924,887 0.46 0.60 - 0.90 33.76 - 34.96
137 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Franklin Templeton Small Cap 2007 569,953 11.73 - 12.46 7,040,049 -- 0.90 3.53 - 4.53 Growth Investment Division 2006 538,941 11.33 - 11.92 6,368,294 -- 0.90 9.07 - 10.05 2005 474,966 8.20 - 10.83 5,108,051 -- 0.90 3.72 - 10.71 2004 440,124 10.01 - 10.35 4,527,432 -- 0.90 10.41 - 11.41 2003 328,803 9.07 - 9.29 3,038,000 -- 0.90 43.64 - 44.93 MSF BlackRock Large Cap Value 2007 770,111 15.30 - 16.10 12,275,048 0.98 0.90 2.41 - 3.40 Investment Division 2006 608,908 8.29 - 15.57 9,397,259 1.17 0.90 18.29 - 19.30 2005 396,107 12.63 - 13.05 5,137,144 0.88 0.90 5.04 - 5.98 2004 271,012 12.02 - 12.31 3,320,893 -- 0.90 12.39 - 13.40 2003 102,570 10.70 - 10.86 1,110,128 1.37 0.90 34.47 - 35.68 MSF Davis Venture Value 2007 1,479,707 14.53 - 42.17 58,550,244 0.77 0.90 3.65 - 4.56 Investment Division 2006 1,301,427 13.90 - 40.33 49,859,713 0.85 0.40 - 0.90 13.55 - 14.62 2005 1,739,984 12.13 - 35.19 43,993,114 0.65 0.40 - 0.90 9.32 - 10.30 2004 1,365,956 11.00 - 31.91 31,374,337 0.54 0.40 - 0.90 11.36 - 12.37 2003 1,321,574 9.79 - 28.40 24,429,495 0.37 0.60 - 0.90 29.70 - 30.87 MSF Loomis Sayles Small Cap 2007 98,083 15.07 - 333.74 15,771,472 0.08 0.90 10.90 - 11.90 Investment Division 2006 78,273 13.47 - 298.24 12,333,660 -- 0.40 - 0.90 15.64 - 16.72 2005 39,978 11.54 - 255.61 8,114,417 -- 0.40 - 0.90 6.00 - 6.96 2004 37,547 10.79 - 238.98 6,406,000 -- 0.40 - 0.90 15.31 - 16.35 2003 30,184 9.27 - 205.39 4,422,939 -- 0.60 - 0.90 35.25 - 36.47 MSF BlackRock Legacy Large Cap 2007 265,094 9.85 - 14.78 3,824,550 0.19 0.90 17.60 - 18.77 Growth Investment Division 2006 190,308 8.29 - 12.45 2,269,333 0.16 0.48 - 0.90 3.23 - 4.13 2005 1,201,181 7.96 - 11.96 10,109,046 0.39 0.48 - 0.90 6.05 - 7.00 2004 851,014 7.44 - 11.17 6,457,524 -- 0.48 - 0.90 8.81 - 11.74 2003 721,385 6.84 4,933,432 0.06 0.60 0.35 MSF BlackRock Bond Income 2007 4,467,585 15.30 - 31.06 92,436,358 3.24 0.45 - 0.90 5.36 - 12.31 Investment Division 2006 4,668,001 14.39 - 29.48 92,311,177 5.74 0.40 - 0.90 (2.17) - 4.43 2005 5,010,744 13.78 - 28.49 94,693,129 3.93 0.40 - 0.90 1.50 - 2.41 2004 4,716,266 13.46 - 28.07 89,174,083 4.09 0.40 - 0.90 3.50 - 4.43 2003 5,516,605 12.89 - 27.12 96,719,590 3.06 0.60 - 0.90 4.91 - 5.85 MSF FI Value Leaders 2007 440,904 12.29 - 15.50 6,742,764 0.91 0.90 3.22 - 4.24 Investment Division 2006 393,835 11.79 - 14.87 5,778,898 1.00 0.40 - 0.90 10.97 - 11.91 2005 248,972 10.54 - 13.29 3,262,874 1.04 0.40 - 0.90 9.71 - 10.69 2004 101,071 9.52 - 12.01 1,190,557 1.10 0.40 - 0.90 12.71 - 13.73 2003 48,986 8.37 - 10.56 505,283 0.52 0.60 - 0.90 25.79 - 26.92 MSF Harris Oakmark Focused Value 2007 191,591 268.52 - 285.05 54,129,720 0.56 0.90 (7.67) - (6.84) Investment Division 2006 191,529 290.84 - 305.98 58,176,504 0.30 0.90 11.45 - 12.45 2005 182,165 260.95 - 272.09 49,251,761 0.04 0.90 9.00 - 9.98 2004 153,755 239.40 - 247.40 37,844,733 0.04 0.90 8.95 - 9.93 2003 115,343 219.73 - 225.05 25,865,638 0.12 0.90 31.47 - 32.66 MSF Western Asset Management 2007 1,117,386 15.63 - 16.60 18,372,006 2.67 0.90 3.10 - 4.08 Strategic Bond Opportunities 2006 998,939 15.16 - 15.95 15,802,133 4.79 0.90 3.38 - 4.33 Investment Division 2005 843,296 14.56 - 15.19 12,708,706 3.01 0.90 1.92 - 2.83 2004 595,935 14.29 - 14.77 8,742,547 2.66 0.90 5.66 - 6.61 2003 374,682 13.52 - 13.85 5,163,069 1.70 0.90 11.62 - 12.62
138 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Western Asset Management 2007 1,066,735 14.08 - 14.95 15,797,381 2.66 0.90 3.38 - 4.33 U.S. Government Investment Division 2006 988,756 13.62 - 14.33 14,050,390 3.26 0.90 3.25 - 4.19 2005 879,572 13.19 - 13.75 12,014,309 1.33 0.90 0.82 - 1.72 2004 705,185 13.08 - 13.52 9,478,138 1.25 0.90 2.09 - 3.01 2003 559,100 12.82 - 13.13 7,304,902 0.62 0.90 0.77 - 1.68 MSF BlackRock Money Market 2007 3,638,086 17.41 - 17.57 63,398,057 4.94 0.90 4.15 - 5.07 Investment Division 2006 3,575,759 16.57 - 16.87 59,328,821 4.81 0.40 - 0.90 3.86 - 4.82 2005 1,760,759 12.92 - 16.24 28,027,973 2.78 0.40 - 0.90 1.97 - 2.89 2004 1,880,485 15.36 - 15.93 29,162,123 1.03 0.40 - 0.90 0.08 - 0.99 2003 1,760,371 15.21 - 15.92 27,346,427 0.78 0.60 - 0.90 (0.09) - 0.81 MSF MFS Total Return 2007 418,473 12.90 - 13.33 5,549,510 1.97 0.90 3.45 - 4.39 Investment Division 2006 297,430 12.47 - 12.77 3,781,921 3.21 0.40 - 0.90 11.19 - 12.18 2005 190,293 11.21 - 11.68 2,159,396 1.64 0.40 - 0.90 2.20 - 7.66 2004 69,569 10.85 - 11.04 767,164 -- 0.40 - 0.90 8.52 - 10.39 MSF MetLife Conservative Allocation 2007 66,558 11.53 - 11.81 784,035 -- 0.90 4.82 - 5.73 Investment Division 2006 44,128 11.00 - 11.17 492,252 2.90 0.90 6.27 - 7.27 2005 11,372 10.35 - 10.41 118,225 0.63 0.90 3.51 - 4.13 MSF MetLife Conservative to Moderate 2007 244,254 11.98 - 12.27 2,977,400 -- 0.90 4.08 - 5.05 Allocation Investment Division 2006 161,903 11.51 - 11.68 1,884,052 2.36 0.90 8.80 - 9.74 2005 54,464 10.58 - 10.64 578,511 0.77 0.90 5.80 - 6.43 MSF MetLife Moderate Allocation 2007 1,452,241 12.44 - 12.74 18,395,945 0.19 0.90 3.58 - 4.51 Investment Division 2006 775,138 12.01 - 12.19 9,406,274 1.48 0.90 11.20 - 12.19 2005 133,610 10.80 - 10.87 1,449,435 0.83 0.90 8.02 - 8.66 MSF MetLife Moderate to Aggressive 2007 2,499,351 12.92 - 13.23 32,935,899 0.19 0.90 3.19 - 4.09 Allocation Investment Division 2006 1,098,433 12.52 - 12.71 13,918,465 1.07 0.90 13.54 - 14.57 2005 212,022 11.03 - 11.09 2,349,403 0.77 0.90 10.28 - 10.94 MSF MetLife Aggressive Allocation 2007 608,756 13.22 - 13.54 8,191,098 0.22 0.90 2.56 - 3.52 Investment Division 2006 225,274 12.89 - 13.08 2,934,559 0.67 0.90 15.05 - 16.04 2005 40,224 11.20 - 11.27 452,673 0.73 0.90 12.05 - 12.72 MSF FI Large Cap Investment Division 2007 28,739 10.47 - 10.63 304,229 0.12 0.90 3.05 - 4.01 2006 6,047 10.16 - 10.22 61,685 -- 0.90 1.60 - 2.20 MSF Capital Guardian U.S. Equity 2007 33,111 15.60 516,531 -- 0.00 1.96 Investment Division 2006 25,159 15.30 384,843 0.50 0.48 36.32 Janus Aspen Large Cap Growth 2007 643,417 11.22 7,219,885 0.74 0.00 15.08 Investment Division 2006 595,051 9.75 5,801,609 0.49 0.48 - 0.60 11.38 2005 563,653 8.75 4,934,074 0.33 0.48 - 0.60 4.29 2004 509,009 8.39 4,276,635 0.15 0.48 - 0.60 4.52 2003 435,309 8.03 3,499,893 0.10 0.60 31.73 Janus Aspen Balanced 2007 5,625 14.23 80,035 3.00 0.00 10.31 Investment Division 2006 179 12.90 2,311 1.92 0.48 10.41 2005 187 11.68 2,186 2.07 0.60 7.66 2004 22 10.85 237 3.38 0.60 8.52
139 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 (%) ------- ------------ ---------- ------------ --------------- -------------- Janus Aspen Forty Investment Division 2007 27,126 19.13 518,927 0.25 0.00 36.64 2006 7,954 14.00 111,362 0.14 0.48 9.11 AIM V.I. Government Securities 2007 -- 11.76 -- -- 0.00 6.14 Investment Division/a/ 2006 691 11.08 7,657 3.54 0.40 3.28 2005 769 10.73 8,255 3.80 0.40 4.57 2004 420 10.26 4,310 1.40 0.40 2.60 AIM V.I. Global Real Estate 2007 74,508 34.51 2,571,266 5.97 0.00 (12.34) Investment Division 2006 70,179 39.37 2,762,613 1.18 0.40 - 0.60 42.62 2005 63,997 27.61 1,747,819 1.18 0.40 - 0.60 15.46 2004 54,709 23.91 1,308,000 1.25 0.40 -0.60 34.40 2003 10,108 17.79 178,608 1.49 0.60 38.82 Franklin Templeton Foreign Securities 2007 504,436 18.56 9,363,624 2.07 0.00 15.78 Investment Division 2006 471,719 16.03 7,566,317 1.35 0.48 - 0.60 21.69 2005 488,477 13.17 6,438,080 1.22 0.48 - 0.60 10.48 2004 444,204 11.92 5,300,000 1.12 0.48 - 0.60 18.87 2003 403,047 10.03 4,053,532 1.52 0.60 32.55 Franklin Mutual Discovery Securities 2007 93,103 18.32 1,706,062 1.59 0.00 11.84 Investment Division 2006 54,880 16.38 899,109 0.99 0.40 - 0.48 23.03 2005 9,138 13.31 121,664 1.34 0.40 - 0.48 15.97 AllianceBernstien Global Technology 2007 8,261 6.43 53,097 -- 0.00 19.96 Investment Division 2006 11,768 5.36 63,091 -- 0.40 - 0.60 8.36 2005 8,553 4.95 42,308 -- 0.40 - 0.60 3.65 2004 4,324 4.77 20,636 -- 0.48 - 0.60 5.09 2003 10,005 4.54 45,595 -- 0.60 43.79 Fidelity VIP Contrafund 2007 188,529 15.39 2,902,318 0.91 0.00 11.44 Investment Division 2006 151,404 13.81 2,091,319 1.15 0.40 - 0.60 11.57 2005 74,414 12.38 921,114 0.21 0.40 - 0.60 16.85 2004 77,301 10.59 819 0.21 0.40 - 0.60 15.34 2003 97,404 9.18 894 0.15 0.60 28.35 Fidelity VIP Asset Manager: Growth 2007 112,746 11.17 1,259,390 4.07 0.00 18.83 Investment Division 2006 102,160 9.40 958,076 1.87 0.48 6.89 2005 80,752 8.79 708,401 2.58 0.48 3.79 2004 83,331 8.47 704,000 2.23 0.48 5.85 2003 53,872 8.00 432,629 2.96 0.60 23.15 Fidelity VIP Investment Grade Bond 2007 73,675 11.57 852,372 0.68 0.00 4.23 Investment Division 2006 3,341 11.10 36,978 4.18 0.40 - 0.48 4.28 2005 3,156 10.64 33,484 2.35 0.40 - 0.48 2.08 2004 1,268 10.43 13,121 -- 0.40 4.27 Fidelity VIP Equity-Income 2007 87,700 13.87 1,216,664 3.23 0.00 (0.93) Investment Division 2006 30,951 14.00 433,176 3.96 0.40 - 0.48 20.07 2005 2,190 11.66 25,408 1.05 0.40 - 0.48 5.76 2004 928 11.02 10,110 -- 0.40 10.25
140 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 (%) --------- -------------- ----------- ------------ --------------- --------------- American Funds Growth 2007 1,218,654 94.52 - 100.35 121,273,017 0.82 0.90 11.33 - 12.35 Investment Division 2006 1,094,384 84.90 - 89.32 97,034,740 0.86 0.90 9.24 - 10.22 2005 898,134 77.72 - 81.04 72,331,242 0.74 0.90 15.16 - 16.19 2004 656,749 67.49 - 69.75 45,571,772 0.20 0.90 11.49 - 12.50 2003 417,055 60.53 - 62.00 25,759,940 0.13 0.90 35.59 - 36.81 American Funds Growth-Income 2007 1,381,044 51.88 - 55.07 75,370,228 1.59 0.90 4.11 - 5.04 Investment Division 2006 1,228,077 49.83 - 52.43 63,898,091 1.68 0.90 14.17 - 15.21 2005 1,035,047 43.64 - 45.51 46,794,725 1.44 0.90 4.89 - 5.83 2004 811,401 41.61 - 43.00 34,701,703 1.00 0.90 9.39 - 10.37 2003 524,999 38.04 - 38.96 20,368,911 1.18 0.90 31.25 - 32.43 American Funds Global Small 2007 1,945,062 33.16 - 35.20 67,615,279 3.01 0.90 20.32 - 21.42 Capitalization Investment Division 2006 1,521,701 27.56 - 28.99 43,642,742 0.46 0.90 22.97 - 24.05 2005 1,088,603 22.41 - 23.37 25,231,190 0.89 0.90 24.24 - 25.35 2004 676,191 18.04 - 18.64 12,527,867 -- 0.90 19.80 - 20.88 2003 377,860 15.06 - 15.42 5,800,860 0.49 0.90 52.16 - 53.53 American Funds Bond 2007 291,647 10.78 - 10.95 3,182,415 10.03 0.90 6.52 - 7.56 Investment Division 2006 63,414 10.12 - 10.18 644,176 0.87 0.90 1.20 - 1.80 MIST T. Rowe Price Mid-Cap Growth 2007 1,587,296 10.32 - 16.38 17,384,199 0.21 0.90 16.74 - 17.85 Investment Division 2006 1,338,870 8.84 - 13.92 12,401,292 -- 0.60 - 0.90 5.66 - 6.60 2005 1,132,034 8.37 - 13.11 9,817,802 -- 0.60 - 0.90 13.85 - 14.87 2004 856,351 7.35 - 11.44 6,475,187 -- 0.60 - 0.90 14.40 - 18.15 2003 526,964 6.28 - 6.43 3,375,270 -- 0.90 35.90 - 37.12 MIST MFS Research International 2007 695,827 17.33 - 20.03 13,629,924 1.44 0.90 12.59 - 13.61 Investment Division 2006 566,593 15.30 - 17.63 9,803,525 1.59 0.90 25.80 - 26.90 2005 294,107 12.09 - 13.89 4,058,072 0.63 0.90 6.38 - 16.77 2004 234,898 11.51 - 11.90 2,780,832 -- 0.90 18.65 - 19.72 2003 151,293 9.70 - 9.94 1,497,220 0.97 0.90 31.01 - 32.19 MIST PIMCO Total Return 2007 2,175,489 14.07 - 14.94 32,210,481 3.46 0.90 6.91 - 7.87 Investment Division 2006 2,039,385 13.16 - 13.85 28,016,253 2.73 0.90 3.85 - 4.81 2005 1,849,249 12.67 - 13.21 24,263,960 0.06 0.90 1.55 - 2.46 2004 1,483,392 12.48 - 12.90 19,019,859 7.63 0.90 4.31 - 5.25 2003 1,041,644 11.96 - 12.25 12,697,066 1.48 0.90 3.59 - 4.52 MIST RCM Technology 2007 1,867,295 6.74 - 7.15 13,231,277 -- 0.90 30.62 - 31.68 Investment Division 2006 1,395,573 5.16 - 5.43 7,523,569 -- 0.90 4.51 - 5.47 2005 1,334,943 4.94 - 5.15 6,824,691 -- 0.90 10.36 - 11.35 2004 1,273,073 4.47 - 4.62 5,849,160 -- 0.90 (5.13) - (4.28) 2003 932,206 4.72 - 4.83 4,480,813 -- 0.90 56.44 - 57.84 MIST Lord Abbett Bond Debenture 2007 1,249,287 16.02 - 19.29 22,262,379 5.32 0.45 - 0.90 5.88 - 14.15 Investment Division 2006 1,162,806 14.77 - 18.05 19,368,414 6.71 0.40 - 0.90 1.42 - 9.34 2005 1,085,144 13.96 - 16.51 16,531,209 4.70 0.40 - 0.90 0.90 - 1.81 2004 1,015,708 10.84 - 16.22 15,192,966 3.51 0.40 - 0.90 7.46 - 9.61 2003 963,357 9.21 - 14.95 12,846,410 1.85 0.45 - 0.90 17.17 - 25.04
141 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 Lazard Mid-Cap 2007 340,316 13.14 - 15.10 5,084,696 0.63 0.90 (3.37) - (2.45) Investment Division 2006 261,764 14.85 - 15.48 4,020,887 0.52 0.90 6.62 - 14.86 2005 226,296 11.78 - 13.48 3,034,264 0.41 0.90 7.44 - 8.40 2004 171,772 12.14 - 12.43 2,124,397 -- 0.90 13.57 - 14.60 2003 91,521 10.69 - 10.85 988,932 1.35 0.90 25.29 - 26.42 MIST Met/AIM Small Cap Growth 2007 208,985 14.84 - 15.62 3,233,322 -- 0.90 10.42 - 11.41 Investment Division 2006 170,794 13.44 - 14.02 2,376,804 -- 0.90 3.77 - 13.93 2005 129,221 11.71 - 12.31 1,587,237 -- 0.90 7.63 - 10.16 2004 101,110 11.06 - 11.33 1,143,358 -- 0.90 5.78 - 6.73 2003 60,439 10.46 - 10.62 643,451 -- 0.90 37.84 - 39.08 MIST Harris Oakmark International 2007 1,335,770 19.20 - 20.20 26,700,786 0.89 0.90 (1.74) - (0.83) Investment Division 2006 1,060,490 19.54 - 20.37 21,411,537 2.33 0.90 28.05 - 29.18 2005 636,793 15.26 - 15.77 9,973,856 0.16 0.90 13.47 - 14.48 2004 289,245 13.45 - 13.77 3,963,209 0.04 0.90 19.73 - 20.80 2003 71,528 11.23 - 11.40 813,505 1.84 0.90 34.16 - 35.37 MIST Legg Mason Partners Aggressive 2007 893,124 7.54 - 8.82 7,804,601 0.22 0.90 1.71 - 2.56 Growth Investment Division 2006 908,926 7.37 - 8.60 7,744,433 -- 0.48 - 0.90 (2.53) - (1.60) 2005 844,525 7.50 - 8.74 7,322,996 -- 0.48 - 0.90 12.83 - 13.84 2004 741,720 6.60 - 7.68 5,657,453 -- 0.48 - 0.90 7.85 - 8.82 2003 582,357 6.10 - 7.06 4,086,776 -- 0.60 - 0.90 23.37 - 29.93 MIST Lord Abbett Growth and Income 2007 539,972 11.65 6,289,386 1.00 0.00 4.02 Investment Division 2006 523,423 11.20 5,861,368 0.03 0.40 - 0.60 18.05 2005 342,402 9.49 - 12.19 4,160,587 0.10 0.40 - 0.60 3.68 - 4.62 2004 280,704 9.15 - 11.65 3,254,684 0.49 0.40 - 0.60 11.22 - 12.92 2003 199,532 8.10 - 10.47 2,083,614 0.70 0.60 29.15 - 32.18 MIST Neuberger Berman Real Estate 2007 1,071,638 16.76 - 17.32 18,432,903 1.09 0.90 (15.57) - (14.81) Investment Division 2006 939,464 19.85 - 20.33 18,987,194 1.01 0.40 - 0.90 36.70 - 37.93 2005 503,432 14.52 - 14.74 7,394,991 -- 0.40 - 0.90 12.60 - 13.61 2004 151,740 12.90 - 12.97 1,964,753 3.30 0.40 - 0.90 28.97 - 29.74 MIST Van Kampen Mid Cap Growth 2007 2,000 15.69 31,371 -- 0.00 23.52 Investment Division MIST Lord Abbett Mid-Cap Value 2007 4,638 14.34 66,500 0.94 0.00 0.63 Investment Division 2006 2,988 14.25 42,580 0.54 0.48 - 0.60 12.16 2005 2,543 12.71 32,304 0.86 0.48 - 0.60 8.05 2004 21 11.76 246 0.72 0.60 17.59 MIST Third Avenue Small Cap Value 2007 24,943 15.28 381,064 0.85 0.00 (2.98) Investment Division 2006 17,494 15.75 275,584 0.11 0.48 - 0.60 13.11 2005 2,073 13.92 28,860 -- 0.40 - 0.60 15.48 2004 366 12.06 4,407 0.55 0.40 20.58 MIST Oppenheimer Capital Appreciation 2007 70,634 13.27 - 13.59 955,427 0.11 0.90 13.42 - 14.49 Investment Division 2006 27,796 11.70 - 11.87 329,300 0.26 0.90 6.88 - 7.78 2005 10,588 10.95 - 11.01 116,310 0.13 0.90 9.21 - 9.86
142 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 ------------------------------------ UNIT VALUE/1/ LOWEST TO NET UNITS HIGHEST ($) ASSETS ($) ---------- ------------- ----------- MIST Legg Mason Value Equity 2007 511,093 10.02 - 11.42 5,435,902 Investment Division 2006 490,888 10.73 - 12.11 5,537,660 MIST Cyclical Growth ETF 2007 56,164 11.24 - 11.41 639,459 Investment Division 2006 16,395 10.71 - 10.77 176,315 MIST Cyclical Growth and Income ETF 2007 30,551 11.18 - 11.35 345,473 Investment Division 2006 10,875 10.67 - 10.73 116,548 MIST PIMCO Inflation Protected Bond 2007 80,592 11.16 - 11.33 911,539 Investment Division 2006 12,722 10.14 - 10.20 129,728 MIST BlackRock Large-Cap Core 2007 15,352,126 10.08 - 44.64 436,975,682 Investment Division/b/ MIST Janus Forty Investment Division/b/ 2007 281,380 12.33 - 12.40 3,487,948 American Century VP Vista 2007 1,642 17.75 29,133 Investment Division 2006 1,963 12.70 24,927 2005 1,252 11.65 14,583 Delaware VIP Small Cap Value 2007 67,044 15.30 1,025,844 Investment Division 2006 31,911 16.42 524,104 2005 9,876 14.17 139,966 Dreyfus MidCap Stock 2007 23,628 13.61 321,586 Investment Division 2006 7,996 11.35 90,768 Dreyfus Emerging Leaders 2007 -- -- -- Investment Division/a/ 2006 931 12.76 11,878 2005 916 11.81 10,821 Dreyfus International Value 2007 42,550 16.48 701,093 Investment Division 2006 45,198 15.85 716,432 2005 14,559 12.95 188,477 2004 1,371 11.6 15,540 Goldman Sachs Mid Cap Value 2007 84,789 14.28 1,210,921 Investment Division 2006 18,362 14.38 263,966 2005 3,769 12.38 46,646 2004 1,123 10.97 12,276 Goldman Sachs Structured Small Cap 2007 12,264 10.97 134,527 Equity Investment Division 2006 6,743 13.29 89,590 2005 4,239 11.83 50,166 MFS High Income 2007 1,776 12.36 21,944 Investment Division 2006 6,738 12.17 82,011 2005 6,238 11.07 69,027 2004 4,700 10.84 51
FOR THE YEAR ENDED DECEMBER 31 -------------------------------------------- INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ INCOME LOWEST TO LOWEST TO RATIO (%) HIGHEST (%) HIGHEST (%) ------------ --------------- --------------- MIST Legg Mason Value Equity -- 0.90 (6.62) - (5.70) Investment Division 0.16 0.48 - 0.90 7.73 - 27.65 MIST Cyclical Growth ETF -- 0.90 4.95 - 5.94 Investment Division 2.52 0.90 7.10 - 7.70 MIST Cyclical Growth and Income ETF -- 0.90 4.78 - 5.78 Investment Division 3.14 0.90 6.70 - 7.30 MIST PIMCO Inflation Protected Bond 1.27 0.90 10.06 - 11.08 Investment Division -- 0.90 1.40 - 2.00 MIST BlackRock Large-Cap Core -- 0.45 - 0.90 0.80 - 6.77 Investment Division/b/ MIST Janus Forty Investment Division/b/ -- 0.90 23.30 - 24.00 American Century VP Vista -- 0.00 39.76 Investment Division -- 0.40 9.03 -- 0.40 8.13 Delaware VIP Small Cap Value 0.21 0.00 (6.82) Investment Division 0.02 0.48 15.86 0.26 0.48 17.85 Dreyfus MidCap Stock 0.31 0.00 19.91 Investment Division 0.20 0.48 (8.96) Dreyfus Emerging Leaders -- 0.00 4.94 Investment Division/a/ -- 0.60 8.05 -- 0.60 4.75 Dreyfus International Value 1.66 0.00 3.97 Investment Division -- 0.40 - 0.48 22.35 -- 0.40 - 0.48 11.69 -- 0.40 15.99 Goldman Sachs Mid Cap Value 1.16 0.00 (0.70) Investment Division 1.82 0.40 - 0.48 16.17 0.91 0.40 - 0.48 12.83 1.17 0.40 - 0.48 9.71 Goldman Sachs Structured Small Cap 0.51 0.00 (17.46) Equity Investment Division 0.87 0.48 12.30 0.45 0.48 6.07 MFS High Income 9.79 0.00 1.56 Investment Division 5.42 0.40 - 0.48 9.98 11.32 0.40 - 0.48 2.05 -- 0.48 8.43
143 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE 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 (%) ------- ------------ ---------- ------------ --------------- -------------- MFS Global Equity 2007 3,948 16.35 64,569 1.71 0.00 8.93 Investment Division 2006 1,789 15.01 26,856 -- 0.40 - 0.48 24.04 MFS New Discovery 2007 253 12.89 3,269 -- 0.00 2.25 Investment Division MFS Value Investment Division 2007 2,966 15.48 45,933 -- 0.00 7.56 Van Kampen Government 2007 1,920 11.83 22,716 5.06 0.00 6.96 Investment Division 2006 1,342 11.06 14,833 4.52 0.40 3.14 2005 1,272 10.72 13,636 -- 0.40 3.28 Wells Fargo VT Total Return Bond 2007 9,697 11.70 113,479 4.64 0.00 6.17 Investment Division 2006 5,553 11.02 61,191 4.43 0.40 3.79 2005 1,620 10.62 17,199 3.06 0.40 1.90 Wells Fargo VT Money Market 2007 181,995 11.27 2,051,734 4.42 0.00 4.64 Investment Division 2006 91,188 10.77 982,114 2.41 0.40 4.39 Wells Fargo VT Asset Allocation 2007 -- 13.70 -- -- 0.00 7.62 Investment Division/a/ 2006 907 12.73 11,546 0.99 0.40 12.11 Wells Fargo VT Large Company 2007 -- 12.13 -- -- 0.00 7.54 Growth Investment Division/a/ 2006 17,802 11.28 200,720 -- 0.40 2.39 2005 772 11.02 8,511 0.23 0.40 5.70 2004 416 10.42 4,335 -- 0.40 4.23 Wells Fargo VT Equity Income 2007 -- 13.88 -- -- 0.00 2.89 Investment Division/a/ 2006 653 13.49 8,813 1.55 0.40 18.51 2005 727 11.38 8,282 1.79 0.40 5.38 2004 402 10.80 4,341 -- 0.40 8.03
1 The Company sells a number of variable life products, which have unique combinations of features and fees that are charged against the policy 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 Investment Division 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 policy 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 Investment Division is affected by the timing of the declaration of dividends by the underlying portfolio, series, or fund in which the Investment Division invests. 3 These amounts represent the annualized policy 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 policy 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 policy total returns are not within the ranges presented. a For the period January 1, 2007 to April 27, 2007. b For the period April 30, 2007 to December 31, 2007. 144 METROPOLITAN LIFE INSURANCE COMPANY 200 PARK AVENUE NEW YORK, NY 10166 RECEIPT This is to acknowledge receipt of an Equity Advantage VUL Prospectus (Book #253) dated April 28, 2008. This Variable Life Insurance Policy is offered by Metropolitan Life Insurance Company. - ----------------------------------------------------- ----------------------------------------------------- (Date) (Client's Signature)
EQUITY ADVANTAGE VUL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES METROPOLITAN LIFE SEPARATE ACCOUNT UL ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION (PART B) APRIL 28, 2008 This Statement of Additional Information is not a prospectus. This Statement of Additional Information relates to the Prospectus dated April 28, 2008 and should be read in conjunction therewith. A copy of the Prospectus may be obtained by writing to Metropolitan Life Insurance Company, P.O. Box 543, Warwick, RI 02887-0543. SAI-1 TABLE OF CONTENTS
PAGE ------- GENERAL INFORMATION AND HISTORY............................. SAI-3 The Company............................................... SAI-3 The Separate Account...................................... SAI-3 DISTRIBUTION OF THE POLICIES................................ SAI-3 ADDITIONAL INFORMATION ABOUT THE OPERATION OF THE POLICIES.................................................. SAI-4 Payment of Proceeds....................................... SAI-4 Payment Options........................................... SAI-4 ADDITIONAL INFORMATION ABOUT CHARGES........................ SAI-5 Group or Sponsored Arrangements........................... SAI-5 LOANS....................................................... POTENTIAL CONFLICTS OF INTEREST............................. SAI-5 LIMITS TO METLIFE'S RIGHT TO CHALLENGE THE POLICY........... SAI-5 MISSTATEMENT OF AGE OR SEX.................................. SAI-5 REPORTS..................................................... SAI-6 PERSONALIZED ILLUSTRATIONS.................................. SAI-6 PERFORMANCE DATA............................................ SAI-6 REGISTRATION STATEMENT...................................... SAI-6 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............... SAI-7 EXPERTS..................................................... SAI-7 FINANCIAL STATEMENTS........................................ F-1
SAI-2 GENERAL INFORMATION AND HISTORY THE COMPANY Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc., a publicly-traded company. MetLife, Inc., through its subsidiaries and affiliates, is a leading provider of insurance and other financial services to individual and institutional customers. Our main office is located at 200 Park Avenue, New York, New York 10166. MetLife was formed under the laws of New York State in 1868. THE SEPARATE ACCOUNT We established the Separate Account as a separate investment account on December 13, 1988. The Separate Account is the funding vehicle for the Policies, and other variable life insurance policies that we issue. These other policies impose different costs, and provide different benefits, from the Policies. The Separate Account meets the definition of a "separate account" under Federal securities laws, and is registered with the Securities and Exchange Commission (the "SEC") as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). Registration with the SEC does not involve SEC supervision of the Separate Account's management or investments. However, the New York Insurance Commissioner regulates MetLife and the Separate Account. DISTRIBUTION OF THE POLICIES Our affiliate, MetLife Investors Distribution Company, 5 Park Plaza, Suite 1900, Irvine, California 92614, ("Distributor") serves as principal underwriter for the Policies. Distributor is a Missouri corporation organized in 2000. Distributor is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as well as with the securities commissions in the states in which it operates, and is a member of the Financial Industry Regulatory Authority. Distributor is not a member of the Securities Investor Protection Corporation. Distributor may enter into selling agreements with other broker-dealers ("selling firms") and compensate them for their services. Distributor passes through commissions it receives to selling firms for their sales and does not retain any portion of them in return for its services as distributor for the Policies. The Policies are sold through licensed life insurance sales representatives who are either registered through our affiliated broker-dealers, or registered through other broker-dealers. We offer the Policies to the public on a continuous basis. We anticipate continuing to offer the Policies, but reserve the right to discontinue the offering. As noted in the prospectus, Distributor pays compensation to all selling firms in the form of commissions and certain types of non-cash compensation. 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. SAI-3 The following list sets forth the names of selling firms that received additional compensation from Distributor in 2007 in connection with the sale of variable annuity contracts, and other insurance products issued by our affiliate, MetLife Investors USA Insurance Company. The selling firms are listed in alphabetical order. Associated Securities Corp. Jefferson Pilot Securities America, Inc. Brookstreet Securities Key Investment Services Sigma Financial Corporation Corporation LaSalle St. Securities, L.L.C. Smith Barney Holdings, Inc. Centaurus Financial, Inc. Lincoln Financial Advisors Summit Brokerage Services, Inc. Compass Bank Lincoln Investment Planning Tower Square CUSO Financial Sevices, L.P. Medallion Investment Services, Transamerica Financial Davenport & Company Inc. U.S. Bancorp Investment, Inc. Ferris, Baker Watts Merrill Lynch United Planners' Financial Incorporated Morgan Keegan & Company, Inc. Services of America Founders Financial Securities Morgan Stanley UVEST Financial Services Group, Gunn Allen Financial Mutual Service Corporation Inc. H. Beck, Inc. National Planning Holdings Valmark Securities Harbour Investments, Inc. NEXT Financial Group Wall Street Financial Huntington Bank NFP Securities Walnut Street Securities, Inc. IFMG Securities, Inc. Planning Corp. of America Waterstone Financial Group, Infinex Investments, Inc. PNC Investments Inc. Intersecurities, Inc. Primerica Woodbury Financial Services Investment Professionals, Inc. Scott & Stringfellow, Inc. Workman Securities Janney Montgomery Scott LLC
ADDITIONAL INFORMATION ABOUT THE OPERATION OF THE POLICIES PAYMENT OF PROCEEDS We may withhold payment of surrender or loan proceeds if those proceeds are coming from a Policy Owner's check, or from a premium transaction under our pre-authorized checking arrangement, which has not yet cleared. We may also delay payment while we consider whether to contest the Policy. We pay interest on the death benefit proceeds from the date they become payable to the date we pay them. Normally we promptly make payments of cash value, or of any loan value available, from cash value in the Fixed Account. However, we may delay those payments for up to six months. We pay interest in accordance with state insurance law requirements on delayed payments. PAYMENT OPTIONS We pay the Policy's death benefit and cash surrender value in one sum unless you or the payee choose a payment option for all or part of the proceeds. You can choose a combination of payment options. You can make, change or revoke the selection of payee or payment option before the death of the insured. You can contact your registered representative or our Designated Office for the procedure to follow. (See "Receipt of Communications and Payments at MetLife's Designated Office.") The payment options available are fixed benefit options only and are not affected by the investment experience of the Separate Account. Once payments under an option begin, withdrawal rights may be restricted. Even if the death benefit under the Policy is excludible from income, payments under Payment Options may not be excludible in full. This is because earnings on the death benefit after the insured's death are taxable and payments under the Payment Options generally include such earnings. You should consult a tax adviser as to the tax treatment of payments under Payment Options. The following payment options are available: (i) SINGLE LIFE INCOME. We pay proceeds in equal monthly installments for the life of the payee. (ii) SINGLE LIFE INCOME--10-YEAR GUARANTEED PAYMENT PERIOD. We pay proceeds in equal monthly installments during the life of the payee, with a guaranteed payment period of 10 years. (iii) JOINT AND SURVIVOR LIFE INCOME. We pay proceeds in equal monthly installments (a) while either of two payees is living, or (b) while either of the two payees is living, but for at least 10 years. SAI-4 ADDITIONAL INFORMATION ABOUT CHARGES GROUP OR SPONSORED ARRANGEMENTS We may issue the Policies to group or sponsored arrangements, as well as on an individual basis. A "group arrangement" includes a situation where a trustee, employer or similar entity purchases individual Policies covering a group of individuals. Examples of such arrangements are non-qualified deferred compensation plans. A "sponsored arrangement" includes a situation where an employer or an association permits group solicitation of its employees or members for the purchase of individual Policies. We may waive, reduce or vary any Policy charges under Policies sold to a group or sponsored arrangement. We may also raise the interest rate credited to loaned amounts under these Policies. The amount of the variations and our eligibility rules may change from time to time. In general, they reflect cost savings over time that we anticipate for Policies sold to the eligible group or sponsored arrangements and relate to objective factors such as the size of the group, its stability, the purpose of the funding arrangement and characteristics of the group members. Consult your registered representative for any variations that may be available and appropriate for your case. The United States Supreme Court has ruled that insurance policies with values and benefits that vary with the sex of the insured may not be used to fund certain employee benefit programs. Therefore, we offer Policies that do not vary based on the sex of the insured to certain employee benefit programs. We recommend that employers consult an attorney before offering or purchasing the Policies in connection with an employee benefit program. POTENTIAL CONFLICTS OF INTEREST The Portfolios' Boards of Trustees monitor events to identify conflicts that may arise from the sale of Portfolio shares to variable life and variable annuity separate accounts of affiliated and, if applicable, unaffiliated insurance companies and qualified plans. Conflicts could result from changes in state insurance law or Federal income tax law, changes in investment management of a Portfolio, or differences in voting instructions given by variable life and variable annuity contract owners and qualified plans, if applicable. If there is a material conflict, the Board of Trustees will determine what action should be taken, including the removal of the affected Portfolios from the Separate Account, if necessary. If we believe any Portfolio action is insufficient, we will consider taking other action to protect Policy Owners. There could, however, be unavoidable delays or interruptions of operations of the Separate Account that we may be unable to remedy. LIMITS TO METLIFE'S RIGHT TO CHALLENGE THE POLICY Generally, we can challenge the validity of your Policy or a rider during the insured's lifetime for two years (or less, if required by state law) from the date of issue, based on misrepresentations made in the application. We can challenge the portion of the death benefit resulting from an underwritten premium payment for two years during the insured's lifetime from receipt of the premium payment. However, if the insured dies within two years of the date of issue, we can challenge all or part of the Policy at any time based on misrepresentations in the application. We can challenge an increase in face amount, with regard to material misstatements concerning such increase, for two years during the insured's lifetime from its effective date. MISSTATEMENT OF AGE OR SEX If we determine during the first Policy year, and while the insured is still living, that there was a misstatement of age or sex in the application, the Policy values and charges will be recalculated from the issue date based on the correct information. If, after the first Policy year, or after the death of the insured in any Policy year, we determine that the application misstates the insured's age or sex, the Policy's death benefit is the amount that the most recent Monthly Deduction which was made would provide, based on the insured's correct age and, if the Policy is sex-based, correct sex. SAI-5 REPORTS We will send you an annual statement showing your Policy's death benefit, cash value and any outstanding Policy loan principal. We will also confirm Policy loans, account transfers, lapses, surrenders and other Policy transactions when they occur. You will be sent periodic reports containing the financial statements of the Portfolios. PERSONALIZED ILLUSTRATIONS We may provide personalized illustrations showing how the Policies work based on assumptions about investment returns and the Policy Owner's and/or insured's characteristics. The illustrations are intended to show how the death benefit, cash surrender value, and cash value could vary over an extended period of time assuming hypothetical gross rates of return (i.e., investment income and capital gains and losses, realized or unrealized) for the Separate Account equal to specified constant after-tax rates of return. One of the gross rates of return will be 0%. Gross rates of return do not reflect the deduction of any charges and expenses. The illustrations will be based on specified assumptions, such as face amount, premium payments, insured, risk class, and death benefit option. Illustrations will disclose the specific assumptions upon which they are based. Values will be given based on guaranteed mortality and expense risk and other charges and may also be based on current mortality and expense risk and other charges. The illustrated death benefit, cash surrender value, and cash value for a hypothetical Policy would be different, either higher or lower, from the amounts shown in the illustration if the actual gross rates of return averaged the gross rates of return upon which the illustration is based, but varied above and below the average during the period, or if premiums were paid in other amounts or at other than annual intervals. For example, as a result of variations in actual returns, additional premium payments beyond those illustrated may be necessary to maintain the Policy in force for the period shown or to realize the Policy values shown in particular illustrations even if the average rate of return is realized. Illustrations may also show the internal rate of return on the cash surrender value and the death benefit. The internal rate of return on the cash surrender value is equivalent to an interest rate (after taxes) at which an amount equal to the illustrated premiums could have been invested outside the Policy to arrive at the cash surrender value of the Policy. The internal rate of return on the death benefit is equivalent to an interest rate (after taxes) at which an amount equal to the illustrated premiums could have been invested outside the Policy to arrive at the death benefit of the Policy. Illustrations may also show values based on the historical performance of the Investment Divisions. PERFORMANCE DATA We may provide information concerning the historical investment experience of the Investment Divisions, including average annual net rates of return for periods of one, three, five, and ten years, as well as average annual net rates of return and total net rates of return since inception of the Portfolios. These net rates of return represent past performance and are not an indication of future performance. Insurance, sales, premium tax, mortality and expense risk and coverage expense charges, which can significantly reduce the return to the Policy Owner, are not reflected in these rates. The rates of return reflect only the fees and expenses of the underlying Portfolios. The net rates of return show performance from the inception of the Portfolios, which in some instances, may precede the inception date of the corresponding Investment Division. REGISTRATION STATEMENT This Statement of Additional Information and the prospectus omit certain information contained in the Registration Statement which has been filed with the SEC. Copies of such additional information may be obtained from the SEC upon payment of the prescribed fee. SAI-6 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The financial statements of Metropolitan Life 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 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. EXPERTS Paul L. LeClair, FSA, MAAA, Vice President of MetLife has examined actuarial matters included in the Registration Statement, as stated in his opinion filed as an exhibit to the Registration Statement. SAI-7 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of Metropolitan Life Insurance Company: We have audited the accompanying consolidated balance sheets of Metropolitan 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 Metropolitan 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 New York, New York April 3, 2008 F-1 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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: $157,779 and $157,673, respectively)............................................ $161,664 $162,385 Equity securities available-for-sale, at estimated fair value (cost: $4,053 and $3,000, respectively)............ 4,304 3,487 Trading securities, at estimated fair value (cost: $456 and $548, respectively)...................................... 457 563 Mortgage and consumer loans................................. 40,012 35,939 Policy loans................................................ 8,736 8,587 Real estate and real estate joint ventures held-for- investment............................................... 5,351 4,308 Real estate held-for-sale................................... 172 177 Other limited partnership interests......................... 4,945 3,670 Short-term investments...................................... 678 1,244 Other invested assets....................................... 8,975 6,960 -------- -------- Total investments........................................ 235,294 227,320 Cash and cash equivalents..................................... 2,331 1,455 Accrued investment income..................................... 2,529 2,328 Premiums and other receivables................................ 25,351 9,707 Deferred policy acquisition costs and value of business acquired.................................................... 12,141 12,043 Other assets.................................................. 6,548 6,240 Separate account assets....................................... 89,720 80,965 -------- -------- Total assets............................................. $373,914 $340,058 ======== ======== LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES: Future policy benefits...................................... $ 99,840 $ 96,599 Policyholder account balances............................... 87,660 80,498 Other policyholder funds.................................... 7,743 7,372 Policyholder dividends payable.............................. 991 957 Policyholder dividend obligation............................ 789 1,063 Short-term debt............................................. 357 833 Long-term debt.............................................. 3,215 2,369 Collateral financing arrangements........................... 850 850 Junior subordinated debt securities......................... 399 399 Shares subject to mandatory redemption...................... 159 278 Current income tax payable.................................. 392 781 Deferred income tax liability............................... 1,926 2,453 Payables for collateral under securities loaned and other transactions............................................. 28,952 32,119 Other liabilities........................................... 29,620 13,330 Separate account liabilities................................ 89,720 80,965 -------- -------- Total liabilities........................................ 352,613 320,866 -------- -------- CONTINGENCIES, COMMITMENTS AND GUARANTEES (NOTE 15) STOCKHOLDER'S EQUITY: Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 494,466,664 shares issued and outstanding at December 31, 2007 and 2006.................................. 5 5 Additional paid-in capital.................................... 14,426 14,343 Retained earnings............................................. 5,529 3,812 Accumulated other comprehensive income........................ 1,341 1,032 -------- -------- Total stockholder's equity............................... 21,301 19,192 -------- -------- Total liabilities and stockholder's equity............... $373,914 $340,058 ======== ========
See accompanying notes to consolidated financial statements. F-2 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
2007 2006 2005 ------- ------- ------- REVENUES Premiums............................................... $21,345 $20,284 $19,256 Universal life and investment-type product policy fees................................................. 2,246 2,183 1,948 Net investment income.................................. 13,486 12,297 11,718 Other revenues......................................... 1,002 890 820 Net investment gains (losses).......................... (464) (827) 179 ------- ------- ------- Total revenues.................................. 37,615 34,827 33,921 ------- ------- ------- EXPENSES Policyholder benefits and claims....................... 22,264 21,137 20,445 Interest credited to policyholder account balances..... 3,777 3,247 2,596 Policyholder dividends................................. 1,687 1,671 1,647 Other expenses......................................... 6,344 6,314 5,717 ------- ------- ------- Total expenses.................................. 34,072 32,369 30,405 ------- ------- ------- Income from continuing operations before provision for income tax........................................... 3,543 2,458 3,516 Provision for income tax............................... 1,138 636 1,093 ------- ------- ------- Income from continuing operations...................... 2,405 1,822 2,423 Income from discontinued operations, net of income tax.................................................. 27 104 830 ------- ------- ------- Net income............................................. $ 2,432 $ 1,926 $ 3,253 ======= ======= =======
See accompanying notes to consolidated financial statements. F-3 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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) ADJUSTMENTS ADJUSTMENT TOTAL ------- ---------- -------- -------------- ----------- ---------- ------- Balance at January 1, 2005............. $ 5 $ 13,827 $ 2,696 $ 2,408 $ 186 $ (130) $18,992 Treasury stock transactions, net -- by subsidiary........................... (15) (15) Issuance of stock options -- by subsidiary........................... (4) (4) Dividends on common stock.............. (3,200) (3,200) Comprehensive income: Net income........................... 3,253 3,253 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax...................... 184 184 Unrealized investment gains (losses), net of related offsets and income tax.................. (783) (783) Foreign currency translation adjustments, net of income tax.. (49) (49) Additional minimum pension liability adjustment, net of income tax...................... 89 89 ------- Other comprehensive income (loss).......................... (559) ------- Comprehensive income................. 2,694 ------- -------- ------- ----------- ---------- -------- ------- Balance at December 31, 2005........... 5 13,808 2,749 1,809 137 (41) 18,467 Treasury stock transactions, net -- by subsidiary........................... 12 12 Excess tax benefits related to stock- based compensation................... 34 34 Capital contribution from Holding Company -- (Notes 2 and 17).......... 489 489 Dividends on common stock.............. (863) (863) Comprehensive income: Net income........................... 1,926 1,926 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax...................... (20) (20) Unrealized investment gains (losses), net of related offsets and income tax.................. (93) (93) Foreign currency translation adjustments, net of income tax.. 7 7 Additional minimum pension liability adjustment, net of income tax...................... (18) (18) ------- Other comprehensive income (loss).......................... (124) ------- Comprehensive income................. 1,802 ------- Adoption of SFAS 158, net of income tax...................... (749) (749) ------- -------- ------- ----------- ---------- -------- ------- Balance at December 31, 2006........... 5 14,343 3,812 1,696 144 (808) 19,192 Cumulative effect of changes in accounting principles, net of income tax (Note 1)......................... (215) (215) ------- -------- ------- ----------- ---------- -------- ------- Balance at January 1, 2007............. 5 14,343 3,597 1,696 144 (808) 18,977 Treasury stock transactions, net -- by subsidiary........................... 10 10 Capital contribution from Holding Company -- (Notes 10 and 17)......... 7 7 Excess proceeds received on sale of interests in affiliate -- (Note 17).. 30 30 Excess tax benefits related to stock- based compensation................... 36 36 Dividends on common stock.............. (500) (500) Comprehensive income: Net income........................... 2,432 2,432 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax...................... (15) (15) Unrealized investment gains (losses), net of related offsets and income tax.................. (339) (339) Foreign currency translation adjustments, net of income tax.. 139 139 Defined benefit plans adjustment, net of income tax............... 524 524 ------- Other comprehensive income........ 309 ------- Comprehensive income................. 2,741 ------- -------- ------- ----------- ---------- -------- ------- Balance at December 31, 2007........... $5 $14,426 $ 5,529 $1,342 $283 $(284) $21,301 ======= ======== ======= =========== ========== ======== =======
See accompanying notes to consolidated financial statements. F-4 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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........................................... $ 2,432 $ 1,926 $ 3,253 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expenses.......... 368 308 299 Amortization of premiums and accretion of discounts associated with investments, net.... (592) (467) (203) (Gains) losses from sales of investments and businesses, net............................... 420 687 (1,379) Undistributed equity earnings of real estate joint ventures and other limited partnership interests..................................... (433) (376) (399) Interest credited to policyholder account balances...................................... 3,777 3,247 2,596 Universal life and investment-type product policy fees................................... (2,246) (2,183) (1,948) Change in accrued investment income............. (201) (295) (24) Change in premiums and other receivables........ 228 (3,565) (734) Change in deferred policy acquisition costs, net........................................... (598) (672) (504) Change in insurance-related liabilities......... 4,022 3,743 3,794 Change in trading securities.................... 188 (196) (375) Change in income tax payable.................... 715 144 147 Change in other assets.......................... (232) 772 (236) Change in other liabilities..................... (1,309) 1,109 1,878 Other, net...................................... 51 (37) 24 -------- -------- --------- Net cash provided by operating activities............ 6,590 4,145 6,189 -------- -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Sales, maturities and repayments of: Fixed maturity securities....................... 73,576 73,351 118,459 Equity securities............................... 1,265 858 777 Mortgage and consumer loans..................... 8,085 7,632 7,890 Real estate and real estate joint ventures...... 503 847 1,922 Other limited partnership interests............. 764 1,253 953 Purchases of: Fixed maturity securities....................... (73,375) (90,163) (119,375) Equity securities............................... (2,204) (731) (1,057) Mortgage and consumer loans..................... (11,891) (10,535) (9,473) Real estate and real estate joint ventures...... (1,369) (1,069) (1,323) Other limited partnership interests............. (1,459) (1,551) (1,012) Net change in short-term investments............... 582 (362) 409 Purchases of subsidiaries, net of cash received of $0, $0 and $0, respectively..................... -- (193) -- Proceeds from sales of businesses, net of cash disposed of $0, $0 and $43, respectively........ 25 48 260 Excess proceeds received on sale of interests in affiliate....................................... 30 -- -- Net change in policy loans......................... (149) (176) (156) Net change in other invested assets................ (1,587) (1,084) (598) Net change in property, equipment and leasehold improvements.................................... (88) (109) (114) Other, net......................................... 22 (4) (69) -------- -------- --------- Net cash used in investing activities................ $ (7,270) $(21,988) $ (2,507) -------- -------- ---------
See accompanying notes to consolidated financial statements. F-5 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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......................................... $ 39,125 $ 37,411 $ 30,008 Withdrawals...................................... (34,135) (31,366) (26,732) Net change in payables for collateral under securities loaned and other transactions......... (3,167) 11,110 (4,221) Net change in short-term debt....................... (476) 380 (992) Long-term debt issued............................... 1,705 8 1,216 Long-term debt repaid............................... (894) (112) (794) Collateral financing arrangements issued............ -- 850 -- Capital contribution from the Holding Company....... 7 93 -- Shares subject to mandatory redemption.............. (131) -- -- Junior subordinated debt securities issued.......... -- -- 399 Dividends on common stock........................... (500) (863) (3,200) Debt and equity issuance costs...................... (8) (13) -- Other, net.......................................... 30 13 (7) -------- -------- -------- Net cash provided by (used in) financing activities... 1,556 17,511 (4,323) -------- -------- -------- Change in cash and cash equivalents................... 876 (332) (641) Cash and cash equivalents, beginning of year.......... 1,455 1,787 2,428 -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF YEAR................ $ 2,331 $ 1,455 $ 1,787 ======== ======== ======== Cash and cash equivalents, subsidiaries held-for-sale, beginning of year................................... $ -- $ -- $ 58 ======== ======== ======== CASH AND CASH EQUIVALENTS, SUBSIDIARIES HELD-FOR-SALE, END OF YEAR......................................... $ -- $ -- $ -- ======== ======== ======== Cash and cash equivalents, from continuing operations, beginning of year................................... $ 1,455 $ 1,787 $ 2,370 ======== ======== ======== CASH AND CASH EQUIVALENTS, FROM CONTINUING OPERATIONS, END OF YEAR......................................... $ 2,331 $ 1,455 $ 1,787 ======== ======== ======== Supplemental disclosures of cash flow information: Net cash paid during the year for: Interest......................................... $ 332 $ 256 $ 203 ======== ======== ======== Income tax....................................... $ 1,010 $ 197 $ 1,385 ======== ======== ======== Non-cash transactions during the year: Business dispositions: Assets disposed................................ $ -- $ -- $ 366 Less: liabilities disposed..................... -- -- 269 -------- -------- -------- Net assets disposed............................ -- -- 97 Plus: equity securities received............... -- -- 43 Less: cash disposed............................ -- -- 43 -------- -------- -------- Business disposition, net of cash disposed..... $ -- $ -- $ 97 ======== ======== ======== Contribution of equity securities to MetLife Foundation..................................... $ -- $ -- $ 1 ======== ======== ======== Real estate acquired in satisfaction of debt..... $ -- $ 6 $ 1 ======== ======== ======== Contribution of other intangible assets, net of deferred income tax............................ $ -- $ 377 $ -- ======== ======== ======== Excess of net assets over purchase price for subsidiary..................................... $ -- $ 19 $ -- ======== ======== ========
See accompanying notes to consolidated financial statements. F-6 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS Metropolitan Life Insurance Company and its subsidiaries (collectively, the "Company") is a leading provider of insurance and other financial services with operations throughout the United States. The Company offers life insurance and annuities to individuals, as well as group insurance, reinsurance and retirement & savings products and services to corporations and other institutions. The Company is organized into three operating segments: Institutional, Individual and Reinsurance, as well as Corporate & Other. The Reinsurance segment has operations in various international markets. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (the "Holding Company"). BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of (i) Metropolitan Life Insurance Company and its subsidiaries; (ii) partnerships and joint ventures in which the Company has control; and (iii) variable interest entities ("VIEs") for which the Company is deemed to be the primary beneficiary. Closed block assets, liabilities, revenues and expenses are combined on a line- by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item. See Note 9. Intercompany accounts and transactions have been eliminated. 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 $1.7 billion and $1.5 billion at December 31, 2007 and 2006, respectively. Certain amounts in the prior year periods' 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 flow for the year ended December 31, 2006. See Note 11 for a description of the transaction. See also Note 20 for reclassifications related to discontinued operations. 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 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; F-7 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (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 follow. 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 principal investments are in fixed maturity and equity securities, mortgage and consumer loans, 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, except for trading securities, 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. F-8 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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). Trading Securities. The Company's trading securities portfolio, principally consisting of fixed maturity and equity securities, supports investment strategies that involve the active and frequent purchase and sale of securities and the execution of short sale agreements and supports asset and liability matching strategies for certain insurance products. Trading securities and short sale agreement liabilities are recorded at fair value with subsequent changes in fair value recognized in net investment income. Related dividends and investment income are also included in net investment income. 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 and Consumer Loans. Mortgage and consumer loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, net of valuation allowances. F-9 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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. Real estate held-for-sale is stated at the lower of depreciated cost or fair value less expected disposition costs. Real estate is not depreciated while it is classified as held-for-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 acquired upon foreclosure of commercial and agricultural mortgage loans is recorded at the lower of estimated fair value or the carrying value of the mortgage loan at the date of foreclosure. 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 F-10 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 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 principally of leveraged leases and funds withheld at interest. Leveraged leases are recorded net of non-recourse debt. The Company participates in lease transactions which are diversified by industry, asset type and geographic area. The Company recognizes income on the leveraged leases by applying the leveraged lease's estimated rate of return to the net investment in the lease. The Company regularly reviews residual values and impairs them to expected values as needed. 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, trading securities, 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 F-11 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 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, futures and option contracts, 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) except for those (i) in policyholder benefits and claims for economic hedges of liabilities embedded in certain variable annuity products offered by the Company, and (ii) in net investment income for all derivatives held in relation to the trading portfolios. 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 F-12 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 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 F-13 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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). 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). 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). 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 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 $1.2 billion and $1.1 billion at December 31, 2007 and 2006, respectively. Accumulated depreciation and amortization of property, equipment and leasehold improvements was $622 million and $538 million at December 31, 2007 and 2006, respectively. Related depreciation and amortization expense was $109 million, $101 million and $94 million for the years ended December 31, 2007, 2006 and 2005, respectively. F-14 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 $1.1 billion and $1.0 billion at December 31, 2007 and 2006, respectively. Accumulated amortization of capitalized software was $760 million and $664 million at December 31, 2007 and 2006, respectively. Related amortization expense was $102 million, $93 million and $97 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, 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, non-medical health 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 (dividend paying traditional contracts within the closed block) 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 F-15 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 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. F-16 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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, at the "reporting unit" level. A reporting unit is the operating segment or a business one level below the operating segment, if discrete financial information is prepared and regularly reviewed by management at that level. For purposes of goodwill impairment testing, goodwill within Corporate & Other is allocated to reporting units within the Company's business segments. If the carrying value of a reporting unit's goodwill exceeds its fair value, the excess is recognized as an impairment and recorded as a charge against net income. The fair values of the reporting units are 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 interest rate, ranging from 3% to 7% and mortality rates guaranteed in calculating the cash surrender values described in such contracts); and (ii) the liability for terminal dividends. Future policy benefits 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 10%. Participating business represented approximately 9% of the Company's life insurance in-force, and 76% of the number of life insurance policies in-force, at both December 31, 2007 and 2006. Participating policies represented approximately 36% and 36%, 34% and 33%, and 35% and 34% of gross and net life insurance premiums for the years ended December 31, 2007, 2006 and 2005, respectively. The percentages indicated are calculated excluding the business of the reinsurance segment. F-17 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 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. Interest rates used in establishing such liabilities range from 5% to 7%. 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 8%. 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. The Company establishes future policy benefit liabilities for minimum death and income benefit guarantees relating to certain annuity contracts and secondary and paid-up guarantees relating to certain life policies 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 ("S&P"). 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. Liabilities for universal and variable life secondary guarantees and paid- up 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 and paid-up 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 S&P experience. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. F-18 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 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. - 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. - 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; (ii) credited interest, ranging from 2% to 17%, less expenses, mortality charges, and withdrawals; and (iii) fair value adjustments relating to business combinations. 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, disability, long-term care and dental 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 F-19 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 and margins, 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 individual life, 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. Policyholder Dividends Policyholder dividends are approved annually by Metropolitan Life Insurance Company and its insurance subsidiaries' boards 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 the insurance subsidiaries. F-20 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Income Taxes The Company joins with the Holding Company 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 "Code"). The Company participates in a tax sharing agreement with the Holding Company. Under the agreement, current income tax expense (benefit) is computed on a separate return basis and provides that members shall make payments (receive reimbursement) to (from) the Holding Company to the extent that their incomes (losses and other credits) contribute to (reduce) the consolidated income tax expense. The consolidating companies are reimbursed for net operating losses or other tax attributes they have generated when utilized in the consolidated return. 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 14) 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-21 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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 F-22 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) establish assets and liabilities relating to ceded and assumed 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 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. Separate accounts not meeting the above criteria are combined on a line-by-line basis with the Company's general account assets, liabilities, revenues and expenses. Employee Benefit Plans The Company sponsors and administers various qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans covering eligible employees and sales representatives who meet specified eligibility requirements of the sponsor and its participating affiliates. A December 31 measurement date is used for all of the Company's defined benefit pension and other postretirement benefit plans. 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 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 based upon the average annual rate of interest on 30-year Treasury securities, for each account balance. As of December 31, 2007, virtually all the obligations are calculated using the traditional formula. The Company also provides certain postemployment benefits and certain postretirement medical and life insurance benefits for retired participants. Participants that were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age and service criteria while working for the Company, 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. Participants hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits. SFAS No. 87, Employers' Accounting for Pensions ("SFAS 87"), as amended, established the accounting for pension plan obligations. Under SFAS 87, the projected pension benefit obligation ("PBO") is defined as the actuarially calculated present value of vested and non-vested pension benefits accrued based on future salary levels. The accumulated pension benefit obligation ("ABO") is the actuarial present value of vested and non-vested pension benefits accrued based on current salary levels. Obligations, both PBO and ABO, of the defined benefit pension plans are determined using a variety of actuarial assumptions, from which actual results may vary, as described below. F-23 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SFAS No. 106, Employers' Accounting for Postretirement Benefits Other than Pensions ("SFAS 106"), as amended, established the accounting for expected postretirement plan benefit obligations ("EPBO") which represents the actuarial present value of all other postretirement benefits expected to be paid after retirement to employees and their dependents. Unlike for pensions, the EPBO is not recorded in the financial statements but is used in measuring the periodic expense. The accumulated postretirement plan benefit obligations ("APBO") represents the actuarial present value of future other postretirement benefits attributed to employee services rendered through a particular date and is the valuation basis upon which liabilities are established. The APBO is determined using a variety of actuarial assumptions, from which actual results may vary, as described below. Prior to December 31, 2006, the funded status of the pension and other postretirement plans, which is the difference between the fair value of plan assets and the PBO for pension plans and the APBO for other postretirement plans (collectively, the "Benefit Obligations"), were offset by the unrecognized actuarial gains or losses, prior service cost and transition obligations to determine prepaid or accrued benefit cost, as applicable. The net amount was recorded as a prepaid or accrued benefit cost, as applicable. Further, for pension plans, if the ABO exceeded the fair value of the plan assets, that excess was recorded as an additional minimum pension liability with a corresponding intangible asset. Recognition of the intangible asset was limited to the amount of any unrecognized prior service cost. Any additional minimum pension liability in excess of the allowable intangible asset was charged, net of income tax, to accumulated other comprehensive income. As described more fully in "Adoption of New Accounting Pronouncements", effective December 31, 2006, the Company adopted 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"). 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. Net periodic benefit cost is determined using management estimates and actuarial assumptions to derive service cost, interest cost, and expected return on plan assets for a particular year. Net periodic benefit cost also includes the applicable amortization of any prior service cost (credit) arising from the increase (decrease) in prior years' benefit costs due to plan amendments or initiation of new plans. These costs are amortized into net periodic benefit cost over the expected service years of employees whose benefits are affected by such plan amendments. Actual experience related to plan assets and/or the benefit obligations may differ from that originally assumed when determining net periodic benefit cost for a particular period, resulting in gains or losses. To the extent such aggregate gains or losses exceed 10 percent of the greater of the benefit obligations or the market-related asset value of the plans, they are amortized into net periodic benefit cost over the expected service years of employees expected to receive benefits under the plans. 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 consulting 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. The Company also sponsors defined contribution savings and investment plans ("SIP") for substantially all employees under which a portion of participant contributions are matched. Applicable matching contributions are F-24 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) made each payroll period. Accordingly, the Company recognizes compensation cost for current matching contributions. As all contributions are transferred currently as earned to the SIP trust, no liability for matching contributions is recognized in the consolidated balance sheets. Stock-Based Compensation Stock-based compensation recognized in the Company's consolidated results of operations is allocated from the Holding Company. The accounting policies described below represent those that the Holding Company applies in determining such allocated expense. Stock-based compensation grants prior to January 1, 2003 were accounted for using the intrinsic value method prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"), and related interpretations. Compensation expense, if any, was recorded based upon the excess of the quoted market price at grant date over the amount the employee was required to pay to acquire the stock. Under the provisions of APB 25, there was no compensation expense resulting from the issuance of stock options as the exercise price was equivalent to the fair market value at the date of grant. Compensation expense was recognized under the Long-Term Performance Compensation Plan ("LTPCP"), as described more fully in Note 17. Stock-based awards granted after December 31, 2002 but prior to January 1, 2006 were accounted for on a prospective basis using the fair value accounting method prescribed by SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), as amended by SFAS No. 148, Accounting for Stock-Based Compensation -- Transition and Disclosure ("SFAS 148"). The fair value method of SFAS 123 required compensation expense to be measured based on the fair value of the equity instrument at the grant or award date. Stock-based compensation was accrued over the vesting period of the grant or award, including grants or awards to retirement-eligible employees. As required by SFAS 148, the Company discloses the pro forma impact as if the stock options granted prior to January 1, 2003 had been accounted for using the fair value provisions of SFAS 123 rather than the intrinsic value method prescribed by APB 25. See Note 17. Effective January 1, 2006, the Holding Company adopted, using the modified prospective transition method, SFAS No. 123 (revised 2004), Share-Based Payment ("SFAS 123(r)"), which replaces SFAS 123 and supersedes APB 25. The adoption of SFAS 123(r) did not have a significant impact on the Company's financial position or results of operations. SFAS 123(r) requires that the cost of all stock-based transactions be measured at fair value and recognized over the period during which a grantee is required to provide goods or services in exchange for the award. Although the terms of the Holding Company's stock-based plans do not accelerate vesting upon retirement, or the attainment of retirement eligibility, the requisite service period subsequent to attaining such eligibility is considered nonsubstantive. Accordingly, the Company recognizes compensation expense related to stock-based awards over the shorter of the requisite service period or the period to attainment of retirement eligibility. SFAS 123(r) also requires an estimation of future forfeitures of stock-based awards to be incorporated into the determination of compensation expense when recognizing expense over the requisite service period. 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 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. Discontinued Operations The results of operations of a component of the Company that either has been disposed of or is classified as held-for-sale are reported in discontinued operations if the operations and cash flows of the component have been or F-25 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) will be eliminated from the ongoing operations of the Company as a result of the disposal transaction and the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction. 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 in particular quarterly or annual periods. 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 $35 million increase in the liability for unrecognized tax benefits, an $11 million decrease in the interest liability for unrecognized tax benefits, and a corresponding reduction to the January 1, 2007 balance of retained earnings of $13 million, net of $11 million of minority interest. See also Note 14. 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 F-26 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 be amortized over the rate reset period. The impact as of January 1, 2007 was a cumulative effect adjustment of $202 million, net of income tax of $116 million, which was recorded as a reduction to retained earnings. Defined Benefit and Other Postretirement Plans Effective December 31, 2006, the Holding 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 $749 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 16. Stock Compensation Plans As described previously, effective January 1, 2006, the Holding Company adopted SFAS 123(r) including supplemental application guidance issued by the U.S. Securities and Exchange Commission ("SEC") in Staff Accounting Bulletin ("SAB") No. 107, Share-Based Payment ("SAB 107") -- using the modified prospective transition method. In accordance with the modified prospective transition method, results for prior periods have not been restated. SFAS 123(r) requires that the cost of all stock-based transactions be measured at fair value and recognized over the period during which a grantee is required to provide goods or services in exchange for the award. The Holding Company had previously adopted the fair value method of accounting for stock-based awards as prescribed by SFAS 123 on a prospective basis effective January 1, 2003, and prior to January 1, 2003, accounted for its stock-based awards to employees under the intrinsic value method prescribed by APB 25. The Holding Company did not modify the substantive terms of any existing awards prior to adoption of SFAS 123(r). Under the modified prospective transition method, compensation expense recognized during the year ended December 31, 2006 includes: (a) compensation expense for all stock-based awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation expense for all stock- based awards granted beginning January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(r). F-27 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The adoption of SFAS 123(r) did not have a significant impact on the Company's financial position or results of operations as all stock-based awards accounted for under the intrinsic value method prescribed by APB 25 had vested prior to the adoption date and the Company, in conjunction with the Holding Company, had adopted the fair value recognition provisions of SFAS 123 on January 1, 2003. As required by SFAS 148, and carried forward in the provisions of SFAS 123(r), the Company discloses the pro forma impact as if stock-based awards accounted for under APB 25 had been accounted for under the fair value method in Note 17. SFAS 123 allowed forfeitures of stock-based awards to be recognized as a reduction of compensation expense in the period in which the forfeiture occurred. Upon adoption of SFAS 123(r), the Holding Company changed its policy and now incorporates an estimate of future forfeitures into the determination of compensation expense when recognizing expense over the requisite service period. The impact of this change in accounting policy was not significant to the Company's financial position or results of operations as of the date of adoption. Additionally, for awards granted after adoption, the Holding Company changed its policy from recognizing expense for stock-based awards over the requisite service period to recognizing such expense over the shorter of the requisite service period or the period to attainment of retirement-eligibility. The pro forma impact of this change in expense recognition policy for stock- based compensation is detailed in Note 17. Prior to the adoption of SFAS 123(r), the Company presented tax benefits of deductions resulting from the exercise of stock options within operating cash flows in the consolidated statements of cash flows. SFAS 123(r) requires tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options be classified and reported as a financing cash inflow upon adoption of SFAS 123(r). 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 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 (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 F-28 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 FASB Staff Position ("FSP") No. FAS 13-2, Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction ("FSP 13-2"). FSP 13-2 amends SFAS No. 13, Accounting for Leases, to require that a lessor review the projected timing of income tax cash flows generated by a leveraged lease annually or more frequently if events or circumstances indicate that a change in timing has occurred or is projected to occur. In addition, FSP 13-2 requires that the change in the net investment balance resulting from the recalculation be recognized as a gain or loss from continuing operations in the same line item in which leveraged lease income is recognized in the year in which the assumption is changed. The adoption of FSP 13-2 did not have a material impact on the Company's consolidated financial statements. 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 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 F-29 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ("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 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 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 F-30 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. 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 is no material 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 FSP No. FSP FIN 46(r)-7, Application of FASB Interpretation No. 46 to Investment Companies ("FSP FIN 46(r)-7"), F-31 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. 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 nonacquired 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. F-32 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) - 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 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 FAS 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. F-33 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2. ACQUISITIONS AND DISPOSITIONS On October 20, 2006, the Holding Company sold its subsidiary, Citicorp Life Insurance Company and its subsidiary, First Citicorp Life Insurance Company (collectively, "CLIC") to the Company for $135 million in cash consideration. The net assets of CLIC acquired by the Company were $154 million. The excess of the net assets of CLIC received over the purchase price resulted in an increase of $19 million in additional paid-in capital. In connection with the sale and merger of CLIC with and into Metropolitan Life Insurance Company, the Holding Company contributed $17 million to the Company. See Note 17. On September 30, 2006, the Company acquired MetLife Retirement Services LLC ("MRS") (formerly, CitiStreet Retirement Services LLC), and its subsidiaries from an affiliate, Metropolitan Tower Life Insurance Company ("MTL") for approximately $58 million in cash consideration settled in the fourth quarter of 2006. The assets acquired are principally comprised of $52 million related to the value of customer relationships acquired ("VOCRA"). Further information on VOCRA is described in Note 7. On July 1, 2005, the Holding Company completed the acquisition of The Travelers Insurance Company, excluding certain assets, most significantly, Primerica, from Citigroup Inc. ("Citigroup"), and substantially all of Citigroup's international insurance business (collectively, "Travelers"). On September 30, 2006, the Company received a capital contribution, as described in Note 17, from the Holding Company of $377 million in the form of intangible assets related to the value of distribution agreements ("VODA") of $389 million, net of deferred income tax of $12 million, for which the Company receives the benefit. The VODA originated through the Holding Company's acquisition of Travelers and was transferred at its amortized cost basis. Further information on VODA is described in Note 7. See Note 20 for information on the disposition of P.T. Sejahtera ("MetLife Indonesia") and SSRM Holdings, Inc. ("SSRM"). F-34 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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............ $ 53,468 $1,518 $1,292 $ 53,694 33.2% Residential mortgage-backed securities......................... 37,187 456 249 37,394 23.1 Foreign corporate securities......... 25,704 1,449 480 26,673 16.5 U.S. Treasury/agency securities...... 14,274 1,297 1 15,570 9.6 Commercial mortgage-backed securities......................... 13,122 213 105 13,230 8.2 Asset-backed securities.............. 7,528 33 340 7,221 4.5 Foreign government securities........ 5,743 1,424 24 7,143 4.4 State and political subdivision securities......................... 519 13 10 522 0.4 Other fixed maturity securities...... 234 12 29 217 0.1 -------- ------ ------ -------- ----- Total fixed maturity securities.... $157,779 $6,415 $2,530 $161,664 100.0% ======== ====== ====== ======== ===== Common stock......................... $ 1,999 $ 540 $ 93 $ 2,446 56.8% Non-redeemable preferred stock....... 2,054 34 230 1,858 43.2 -------- ------ ------ -------- ----- Total equity securities............ $ 4,053 $ 574 $ 323 $ 4,304 100.0% ======== ====== ====== ======== =====
DECEMBER 31, 2006 ------------------------------------------------ GROSS COST OR UNREALIZED AMORTIZED --------------- ESTIMATED % OF COST GAIN LOSS FAIR VALUE TOTAL --------- ------ ------ ---------- ----- (IN MILLIONS) U.S. corporate securities............ $ 51,003 $1,829 $ 492 $ 52,340 32.2% Residential mortgage-backed securities......................... 34,617 312 204 34,725 21.4 Foreign corporate securities......... 23,228 1,381 226 24,383 15.0 U.S. Treasury/agency securities...... 20,662 944 108 21,498 13.2 Commercial mortgage-backed securities......................... 11,794 164 72 11,886 7.3 Asset-backed securities.............. 9,369 55 41 9,383 5.8 Foreign government securities........ 5,024 1,238 12 6,250 3.9 State and political subdivision securities......................... 1,743 27 12 1,758 1.1 Other fixed maturity securities...... 233 6 77 162 0.1 -------- ------ ------ -------- ----- Total fixed maturity securities.... $157,673 $5,956 $1,244 $162,385 100.0% ======== ====== ====== ======== ===== Common stock......................... $ 1,454 $ 457 $ 14 $ 1,897 54.4% Non-redeemable preferred stock....... 1,546 59 15 1,590 45.6 -------- ------ ------ -------- ----- Total equity securities............ $ 3,000 $ 516 $ 29 $ 3,487 100.0% ======== ====== ====== ======== =====
F-35 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company held foreign currency derivatives with notional amounts of $7.8 billion and $7.3 billion 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 $1.5 billion and $2.0 billion, respectively, and unrealized losses of $139 million and $3 million, respectively. These securities are classified within asset-backed securities in the immediately preceding table. At December 31, 2007, 36% have been guaranteed by financial guarantors, of which 59% was guaranteed by financial guarantors who remain Aaa rated through February 2008. Overall, at December 31, 2007, $3.5 billion of the estimated fair value of the Company's fixed maturity securities were credit enhanced by financial guarantors of which $1.6 billion, $1.4 billion and $479 million at December 31, 2007, are included within corporate securities, asset-backed securities and state and political subdivisions, respectively, and 82% were guaranteed by financial guarantors who remain Aaa rated through February 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 $11.9 billion and $12.0 billion at December 31, 2007 and 2006, respectively. These securities had net unrealized gains of $87 million and $534 million at December 31, 2007 and 2006, respectively. Non-income producing fixed maturity securities were $12 million and $10 million at December 31, 2007 and 2006, respectively. Net unrealized gains associated with non-income producing fixed maturity securities were $11 million and $3 million at December 31, 2007 and 2006, respectively. 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................. $ 2,793 $ 2,889 $ 4,531 $ 4,616 Due after one year through five years... 27,817 28,560 28,494 29,095 Due after five years through ten years.. 26,059 26,452 25,535 26,071 Due after ten years..................... 43,273 45,918 43,333 46,609 -------- -------- -------- -------- Subtotal.............................. 99,942 103,819 101,893 106,391 Mortgage-backed and asset-backed securities............................ 57,837 57,845 55,780 55,994 -------- -------- -------- -------- Total fixed maturity securities....... $157,779 $161,664 $157,673 $162,385 ======== ======== ======== ========
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. F-36 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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......................................... $54,680 $57,861 $97,347 Gross investment gains........................... $ 545 $ 387 $ 623 Gross investment losses.......................... $ (660) $ (855) $ (956)
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 LESS THAN 12 GREATER THAN 12 MONTHS MONTHS TOTAL ---------------- ---------------- ---------------- ESTI- GROSS ESTI- GROSS ESTI- GROSS MATED UNREAL- MATED UNREAL- MATED UNREAL- FAIR IZED FAIR IZED FAIR IZED VALUE LOSS VALUE LOSS VALUE LOSS ----- -------- ----- -------- ----- -------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) $18,- $6,1- $24,- U.S. corporate securities..... 213 $ 907 21 $385 334 $1,292 Residential mortgage-backed 9,4- 4,0- 13,- securities.................. 16 180 79 69 495 249 6,8- 3,2- 10,- Foreign corporate securities.. 98 306 78 174 176 480 U.S. Treasury/agency securities.................. 125 1 279 -- 404 1 Commercial mortgage-backed 1,7- 2,2- 3,9- securities.................. 23 59 46 46 69 105 4,9- 5,7- Asset-backed securities....... 32 267 808 73 40 340 Foreign government securities.................. 563 16 215 8 778 24 State and political subdivision securities...... 155 7 81 3 236 10 Other fixed maturity securities.................. 74 29 -- -- 74 29 ----- -------- ----- -------- ----- -------- Total fixed maturity $42,- $17,- $59,- securities............... 099 $1,772 107 $758 206 $2,530 ===== ======== ===== ======== ===== ======== $1,8- $2,1- Equity securities............. 68 $ 283 $ 293 $ 40 61 $ 323 ===== ======== ===== ======== ===== ======== Total number of securities in an unrealized loss 3,6- 2,8- position.................... 37 48 ===== =====
F-37 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006 ------------------------------------------------------------------------------------------ EQUAL TO OR GREATER THAN 12 LESS THAN 12 MONTHS MONTHS TOTAL ---------------------------- ---------------------------- ---------------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR VALUE UNREALIZED LOSS FAIR VALUE UNREALIZED LOSS FAIR VALUE UNREALIZED LOSS ---------- --------------- ---------- --------------- ---------- --------------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) U.S. corporate securities....... $11,033 $ 152 $ 8,162 $ 340 $19,195 $ 492 Residential mortgage-backed securities.................... 10,108 52 8,329 152 18,437 204 Foreign corporate securities.... 4,319 61 4,411 165 8,730 226 U.S. Treasury/agency securities.................... 9,075 99 377 9 9,452 108 Commercial mortgage-backed securities.................... 3,799 21 2,058 51 5,857 72 Asset-backed securities......... 3,184 27 662 14 3,846 41 Foreign government securities... 409 6 242 6 651 12 State and political subdivision securities.................... 217 9 104 3 321 12 Other fixed maturity securities.................... 122 77 -- -- 122 77 ------- ----------- ------- ----------- ------- ------------- Total fixed maturity securities................. $42,266 $504 $24,345 $740 $66,611 $1,244 ======= =========== ======= =========== ======= ============= Equity securities............... $ 613 $ 17 $ 287 $ 12 $ 900 $ 29 ======= =========== ======= =========== ======= ============= Total number of securities in an unrealized loss position...... 4,134 2,129 ======= =======
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........................ $ 28,650 $1,250 $ 896 $ 366 3,213 550 Six months or greater but less than nine months.................................... 9,799 15 484 4 981 10 Nine months or greater but less than twelve months.................................... 6,706 -- 409 -- 628 1 Twelve months or greater.................... 17,790 10 690 4 1,690 6 -------- ------ ------- ----- Total..................................... $62,945 $1,275 $ 2,479 $374 ======== ====== ======= =====
F-38 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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......................... $ 32,410 $ 25 $ 346 $ 7 3,112 62 Six months or greater but less than nine months..................................... 1,657 3 28 1 300 1 Nine months or greater but less than twelve months..................................... 9,305 -- 139 -- 659 -- Twelve months or greater..................... 25,356 28 746 6 2,123 6 -------- ----- ------- ------- Total...................................... $68,728 $56 $ 1,259 $14 ======== ===== ======= =======
At December 31, 2007 and 2006, $2.5 billion and $1.3 billion, 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, $374 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 29% of the cost or amortized cost of such securities. Of such unrealized losses of $374 million, $366 million related to securities that were in an unrealized loss position for a period of less than six months. At December 31, 2006, $14 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 25% of the cost or amortized cost of such securities. Of such unrealized losses of $14 million, $7 million related to securities that were in an unrealized loss position for a period of less than six months. The Company held 16 fixed maturity and equity securities, each with a gross unrealized loss at December 31, 2007 of greater than $10 million. These securities represented 8%, or $224 million in the aggregate, of the gross unrealized loss on fixed maturity and equity securities. The Company held four fixed maturity and equity securities, each with a gross unrealized loss at December 31, 2006 of greater than $10 million. These securities represented 7%, or $95 million in the aggregate, of the gross unrealized loss on fixed maturity and equity securities. At December 31, 2007 and 2006, the Company had $2.9 billion and $1.3 billion, 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.................................. 45% 39% Foreign corporate securities............................... 17 18 Asset-backed securities.................................... 12 3 Residential mortgage-backed securities..................... 9 16 Commercial mortgage-backed securities...................... 4 6 Other...................................................... 13 18 --- --- Total................................................... 100% 100% === ===
F-39 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, ----------- 2007 2006 ---- ---- INDUSTRY: Finance.................................................... 35% 7% Industrial................................................. 18 24 Mortgage-backed............................................ 13 22 Utility.................................................... 9 12 Government................................................. 1 9 Other...................................................... 24 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. 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 $26.9 billion and $30.1 billion and an estimated fair value of $27.9 billion and $31.0 billion 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 $28.7 billion and $32.0 billion at December 31, 2007 and 2006, respectively. There was no security collateral on deposit from customers in connection with securities lending transactions at December 31, 2007. Security collateral of $17 million on deposit from customers in connection with the securities lending transactions at December 31, 2006 could not have been sold or repledged and was not reflected in the consolidated financial statements. F-40 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 $1.7 billion and $1.2 billion at December 31, 2007 and 2006, respectively, consisting primarily of fixed maturity and equity securities. Company securities held in trust to satisfy collateral requirements had a cost or amortized cost of $2.4 billion and $2.3 billion 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. Additionally, the Company has pledged certain of its fixed maturity securities and mortgage loans in support of its funding agreements as described in Note 7. MORTGAGE AND CONSUMER LOANS Mortgage and consumer loans are categorized as follows:
DECEMBER 31, ------------------------------------- 2007 2006 ----------------- ----------------- AMOUNT PERCENT AMOUNT PERCENT ------- ------- ------- ------- (IN MILLIONS) Commercial mortgage loans................... $31,145 78% $28,369 78% Agricultural mortgage loans................. 8,985 22 7,527 21 Consumer loans.............................. 63 -- 203 1 ------- ------- ------- ------- Total..................................... 40,193 100% 36,099 100% ======= ======= Less: Valuation allowances.................. 181 160 ------- ------- Mortgage and consumer loans............... $40,012 $35,939 ======= =======
Mortgage loans are collateralized by properties primarily located in the United States. At December 31, 2007, 20%, 7% and 7% of the value of the Company's mortgage and consumer loans were located in California, Texas and Florida, respectively. Generally, the Company, as the lender, only loans up to 75% of the purchase price of the underlying real estate. Certain of the Company's real estate joint ventures have mortgage loans with the Company. The carrying values of such mortgages were $373 million and $372 million at December 31, 2007 and 2006, respectively. Information regarding loan valuation allowances for mortgage and consumer loans is as follows:
YEARS ENDED DECEMBER 31, ------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Balance at January 1,.................................. $160 $149 $154 Additions.............................................. 70 28 43 Deductions............................................. (49) (17) (48) ---- ---- ---- Balance at December 31,................................ $181 $160 $149 ==== ==== ====
F-41 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A portion of the Company's mortgage and consumer loans was impaired and consisted of the following:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Impaired loans with valuation allowances.................... $552 $371 Impaired loans without valuation allowances................. 8 39 ---- ---- Subtotal.................................................. 560 410 Less: Valuation allowances on impaired loans................ 67 20 ---- ---- Impaired loans............................................ $493 $390 ==== ====
The average investment on impaired loans was $399 million, $145 million and $152 million for the years ended December 31, 2007, 2006 and 2005, respectively. Interest income on impaired loans was $35 million, $1 million and $6 million for the years ended December 31, 2007, 2006 and 2005, respectively. The investment in restructured loans was $2 million and $9 million at December 31, 2007 and 2006, respectively. Interest income of less than $1 million, $1 million and $2 million was recognized on restructured loans for the years ended December 31, 2007, 2006 and 2005, respectively. Gross interest income that would have been recorded in accordance with the original terms of such loans amounted to less than $1 million, $1 million and $3 million for the years ended December 31, 2007, 2006 and 2005, respectively. Mortgage and consumer loans with scheduled payments of 90 days or more past due on which interest is still accruing, had an amortized cost of $1 million and $7 million at December 31, 2007 and 2006, respectively. Mortgage and consumer loans on which interest is no longer accrued had an amortized cost of $18 million and $35 million at December 31, 2007 and 2006, respectively. Mortgage and consumer loans in foreclosure had an amortized cost of $6 million and $30 million at December 31, 2007 and 2006, respectively. REAL ESTATE HOLDINGS Real estate holdings consisted of the following:
DECEMBER 31, ---------------- 2007 2006 ------- ------ (IN MILLIONS) Real estate.............................................. $ 4,124 $3,974 Accumulated depreciation................................. (1,068) (994) ------- ------ Net real estate.......................................... 3,056 2,980 Real estate joint ventures............................... 2,295 1,328 ------- ------ Real estate and real estate joint ventures............. 5,351 4,308 Real estate held-for-sale................................ 172 177 ------- ------ Total real estate holdings............................. $ 5,523 $4,485 ======= ======
Related depreciation expense on real estate was $112 million, $107 million and $103 million for the years ended December 31, 2007, 2006 and 2005, respectively. These amounts include $13 million, $14 million and $30 million of depreciation expense related to discontinued operations for the years ended December 31, 2007, 2006 and 2005, respectively. There were no impairments recognized on real estate held-for-sale for the year ended December 31, 2007. Impairment losses recognized on real estate held- for-sale were $8 million and $5 million for the years ended F-42 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) December 31, 2006 and 2005, respectively. The carrying value of non-income producing real estate was $8 million at both December 31, 2007 and 2006. The Company did not own real estate acquired in satisfaction of debt at December 31, 2007. The Company owned real estate acquired in satisfaction of debt of less than $1 million at December 31, 2006. Real estate holdings were categorized as follows:
DECEMBER 31, ----------------------------------- 2007 2006 ---------------- ---------------- AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- (IN MILLIONS) Office........................................ $2,417 44% $2,335 52% Apartments.................................... 1,226 22 737 17 Retail........................................ 561 10 534 12 Real estate investment funds.................. 404 7 307 7 Development joint ventures.................... 383 7 169 4 Industrial.................................... 356 7 291 6 Land.......................................... 107 2 50 1 Agriculture................................... 9 -- -- -- Other......................................... 60 1 62 1 ------ ------- ------ ------- Total real estate holdings.................. $5,523 100% $4,485 100% ====== ======= ====== =======
The Company's real estate holdings are primarily located in the United States. At December 31, 2007, 20%, 10%, 10% and 10% of the Company's real estate holdings were located in California, Texas, Florida and New York, respectively. LEVERAGED LEASES Investment in leveraged leases, included in other invested assets, consisted of the following:
DECEMBER 31, ---------------- 2007 2006 ------- ------ (IN MILLIONS) Rental receivables, net.................................. $ 1,483 $1,055 Estimated residual values................................ 1,185 887 ------- ------ Subtotal............................................... 2,668 1,942 Unearned income.......................................... (1,031) (694) ------- ------ Investment in leveraged leases......................... $ 1,637 $1,248 ======= ======
The Company's deferred income tax liability related to leveraged leases was $798 million and $670 million at December 31, 2007 and 2006, respectively. The rental receivables set forth above are generally due in periodic installments. The payment periods range from one to 15 years, but in certain circumstances are as long as 30 years. F-43 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The components of net income from investment in leveraged leases are as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Income from investment in leveraged leases (included in net investment income)........................... $ 48 $ 51 $ 54 Less: Income tax expense on leveraged leases.......... (17) (18) (19) ---- ---- ---- Net income from leveraged leases...................... $ 31 $ 33 $ 35 ==== ==== ====
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 $4.9 billion and $3.7 billion at December 31, 2007 and 2006, respectively. Included within other limited partnership interests at December 31, 2007 and 2006 are $1.2 billion and $848 million, respectively, of hedge funds. For the years ended December 31, 2007, 2006 and 2005, net investment income from other limited partnership interests included $71 million, $67 million and $20 million, respectively, related to hedge funds. FUNDS WITHHELD AT INTEREST Funds withheld at interest, included in other invested assets, were $4.5 billion and $4.0 billion 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........................ $10,169 $ 9,551 $ 8,588 Equity securities................................ 183 58 53 Mortgage and consumer loans...................... 2,426 2,315 2,246 Policy loans..................................... 523 495 497 Real estate and real estate joint ventures....... 775 708 504 Other limited partnership interests.............. 1,141 705 676 Cash, cash equivalents and short-term investments.................................... 154 201 113 Other............................................ 534 465 381 ------- ------- ------- Total investment income........................ 15,905 14,498 13,058 Less: Investment expenses........................ 2,419 2,201 1,340 ------- ------- ------- Net investment income.......................... $13,486 $12,297 $11,718 ======= ======= =======
For the years ended December 31, 2007, 2006 and 2005, affiliated net investment income of $21 million, $20 million and $16 million, respectively, related to fixed maturity securities; $12 million, less than $1 million and less than $1 million respectively, related to equity securities; and $66 million, $52 million and $3 million, respectively, related to other, are included in the table above. There was no affiliated investment income related to mortgage loans for the year ended December 31, 2007. For the years ended December 31, 2006 and 2005, affiliated investment income related to mortgage loans was $112 million and $189 million, respectively, which included the F-44 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) prepayment fees discussed below. See "-- Related Party Investment Transactions" for discussion of affiliated net investment income related to short-term investments included in the table above. In the fourth quarter of 2006, MTL sold its Peter Cooper Village and Stuyvesant Town properties for $5.4 billion. Upon the closing of the transaction, MTL repaid the mortgage of $770 million, including accrued interest, held by the Company on these properties and paid a prepayment fee of $68 million which was recognized as affiliated investment income related to mortgage loans included in the table above. In the second quarter of 2005, MTL sold its 200 Park Avenue real estate property located in New York City, to a third party for $1.72 billion. Concurrent with the sale, MTL repaid the related $690 million mortgage, including accrued interest, it owed to the Company. Based on the terms of the loan agreement, the Company also received a $120 million prepayment fee from MTL, which was recognized when received as affiliated investment income related to mortgage loans included in the table above. 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............................ $(310) $(572) $(518) Equity securities.................................... 133 67 121 Mortgage and consumer loans.......................... 4 (16) 31 Real estate and real estate joint ventures........... 45 38 7 Other limited partnership interests.................. 35 2 43 Derivatives.......................................... (665) (458) 410 Other................................................ 294 112 85 ----- ----- ----- Net investment gains (losses)...................... $(464) $(827) $ 179 ===== ===== =====
For the years ended December 31, 2007, 2006 and 2005, affiliated net investment gains (losses) of $42 million, ($18) million and ($5) million, respectively, are included in derivatives and ($3) million, ($2) million and $33 million, respectively, are included within other 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. Losses from fixed maturity and equity securities deemed other-than- temporarily impaired, included within net investment gains (losses), were $62 million, $37 million and $64 million for the years ended December 31, 2007, 2006 and 2005, respectively. F-45 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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......................... $ 3,785 $ 4,685 $ 5,972 Equity securities................................. 247 483 225 Derivatives....................................... (262) (238) (207) Minority interest................................. (150) (159) (171) Other............................................. (14) -- (82) ------- ------- ------- Subtotal........................................ 3,606 4,771 5,737 ------- ------- ------- Amounts allocated from: Insurance liability loss recognition............ (366) (806) (1,259) DAC and VOBA.................................... (420) (239) (148) Policyholder dividend obligation................ (789) (1,062) (1,492) ------- ------- ------- Subtotal..................................... (1,575) (2,107) (2,899) ------- ------- ------- Deferred income tax............................... (689) (968) (1,029) ------- ------- ------- Subtotal........................................ (2,264) (3,075) (3,928) ------- ------- ------- Net unrealized investment gains (losses).......... $ 1,342 $ 1,696 $ 1,809 ======= ======= =======
The changes in net unrealized investment gains (losses) are as follows:
YEARS ENDED DECEMBER 31, -------------------------- 2007 2006 2005 ------- ------ ------- (IN MILLIONS) Balance, January 1,................................ $ 1,696 $1,809 $ 2,408 Unrealized investment gains (losses) during the year............................................. (1,165) (966) (2,556) Unrealized investment gains (losses) of subsidiaries at the date of sale................. -- -- 15 Unrealized investment gains (losses) relating to: Insurance liability gain (loss) recognition...... 440 453 694 DAC and VOBA..................................... (181) (91) 259 Policyholder dividend obligation................. 273 430 627 Deferred income tax.............................. 279 61 362 ------- ------ ------- Balance, December 31,.............................. $ 1,342 $1,696 $ 1,809 ======= ====== ======= Net change in unrealized investment gains (losses)......................................... $ (354) $ (113) $ (599) ======= ====== =======
TRADING SECURITIES The Company has a trading securities portfolio to support investment strategies that involve the active and frequent purchase and sale of securities, the execution of short sale agreements and asset and liability matching strategies for certain insurance products. Trading securities and short sale agreement liabilities are recorded at fair value with subsequent changes in fair value recognized in net investment income related to fixed maturity securities. F-46 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) At December 31, 2007 and 2006, trading securities were $457 million and $563 million, respectively, and liabilities associated with the short sale agreements in the trading securities portfolio, which were included in other liabilities, were $107 million and $387 million, respectively. The Company had pledged $407 million and $614 million of its assets, primarily consisting of trading securities, as collateral to secure the liabilities associated with the short sale agreements in the trading securities portfolio at December 31, 2007 and 2006, respectively. During the years ended December 31, 2007, 2006 and 2005, interest and dividends earned on trading securities in addition to the net realized and unrealized gains (losses) recognized on the trading securities and the related short sale agreement liabilities included within net investment income totaled $6 million, $32 million and ($3) million, respectively. Included within unrealized gains (losses) on such trading securities and short sale agreement liabilities, are changes in fair value of ($4) million, $3 million and less than $1 million for the years ended December 31, 2007, 2006 and 2005, respectively. VARIABLE INTEREST ENTITIES The following table presents the total assets of and maximum exposure to loss relating to VIEs for which the Company has concluded that: (i) it is the primary beneficiary and which are consolidated in the Company's consolidated financial statements at December 31, 2007; and (ii) it holds significant variable interests but it is not the primary beneficiary and which have not been consolidated:
DECEMBER 31, 2007 --------------------------------------------------- PRIMARY BENEFICIARY NOT PRIMARY BENEFICIARY ------------------------ ------------------------ MAXIMUM MAXIMUM TOTAL EXPOSURE TO TOTAL EXPOSURE TO ASSETS (1) LOSS (2) ASSETS (1) LOSS (2) ---------- ----------- ---------- ----------- (IN MILLIONS) Asset-backed securitizations........... $ -- $ -- $ 792 $ 100 Real estate joint ventures (3)......... 48 26 155 -- Other limited partnership interests (4).................................. 2 1 36,236 1,942 Trust preferred securities (5)......... -- -- 37,882 2,149 Other investments (6).................. -- -- 358 49 ---------- ----------- ---------- ----------- Total................................ $50 $27 $75,423 $ 4,240 ========== =========== ========== ===========
- -------- (1) The assets of the asset-backed securitizations are reflected at fair value. The assets of the real estate joint ventures, other limited partnership interests, trust preferred securities and other investments 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 the asset-backed securitizations is equal to the carrying amounts of retained interests. In addition, the Company provides collateral management services for certain of these structures for which it collects a management fee. The maximum exposure to loss relating to real estate joint ventures, other limited partnership interests, trust preferred securities and other investments 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) Real estate joint ventures include partnerships and other ventures which engage in the acquisition, development, management and disposal of real estate investments. (4) Other limited partnership interests include partnerships established for the purpose of investing in public and private debt and equity securities. F-47 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (5) 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. (6) Other investments include securities that are not trust preferred securities or asset-backed securitizations. RELATED PARTY INVESTMENT TRANSACTIONS As of December 31, 2007 and 2006, the Company held $162 million and $222 million, respectively, of its total invested assets in the Metropolitan Money Market Pool, an affiliated partnership. These amounts are included in short-term investments. Net investment income from these invested assets was $12 million, $10 million and $6 million for the years ended December 31, 2007, 2006 and 2005, respectively. The MetLife Intermediate Income Pool (the "MIIP") was formed as a New York general partnership consisting solely of U.S. domestic insurance companies owned directly or indirectly by MetLife, Inc. and is managed by Metropolitan Life Insurance Company. Each partner's investment in the MIIP represents such partner's pro rata ownership interest in the pool. The affiliated companies' ownership interests in the pooled money market securities held by the MIIP was $101 million and $210 million as of December 31, 2007 and 2006, respectively. Net investment income allocated to affiliates from the MIIP was $7 million, $8 million, and $7 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........................................... $142 $ 97 $762 Amortized cost of assets transferred to affiliates..... $145 $ 99 $723 Net investment gains (losses) recognized on transfers.. $ (3) $ (2) $ 39 Estimated fair value of assets transferred from affiliates........................................... $778 $307 $691
F-48 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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................ $ 48,554 $ 416 $ 614 $17,865 $ 207 $ 79 Interest rate floors............... 32,855 420 -- 25,955 193 -- Interest rate caps................. 34,784 44 -- 19,754 119 -- Financial futures.................. 6,127 35 34 6,824 52 19 Foreign currency swaps............. 16,220 639 1,608 14,952 287 1,102 Foreign currency forwards.......... 1,807 41 11 1,204 22 4 Options............................ 1,423 123 -- 1 1 -- Financial forwards................. 3,449 63 1 2,900 12 24 Credit default swaps............... 5,754 52 31 5,023 4 16 Synthetic GICs..................... 3,670 -- -- 3,739 -- -- Other.............................. 250 43 -- 250 56 -- -------- ------ ------ ------- ----- ------- Total............................ $154,893 $1,876 $2,299 $98,467 $ 953 $ 1,244 ======== ====== ====== ======= ===== =======
The above table does not include notional amounts for equity futures and equity variance swaps. At December 31, 2007, the Company owned 171 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 132,000 equity variance swaps. Fair values of equity variance swaps are included in financial forwards in the preceding table. F-49 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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....... $10,021 $24,746 $ 7,900 $ 5,887 $ 48,554 Interest rate floors...... -- 13,068 19,787 -- 32,855 Interest rate caps........ 21,204 13,580 -- -- 34,784 Financial futures......... 6,127 -- -- -- 6,127 Foreign currency swaps.... 1,612 6,468 6,556 1,584 16,220 Foreign currency forwards................ 1,799 -- -- 8 1,807 Options................... -- -- 1,250 173 1,423 Financial forwards........ -- -- -- 3,449 3,449 Credit default swaps...... 305 3,985 1,215 249 5,754 Synthetic GICs............ 317 -- -- 3,353 3,670 Other..................... -- -- -- 250 250 ---------------- ------------------ ----------------- --------------- -------- Total................... $ 41,385 $ 61,847 $ 36,708 $ 14,953 $154,893 ================ ================== ================= =============== ========
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. The Company also enters into basis swaps to better match the cash flows from assets and related liabilities. In a basis swap, both legs of the swap are floating with each based on a different index. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. A single net payment is usually made by one counterparty at each due date. Basis swaps are included in interest rate swaps in the preceding table. Interest rate caps and floors are used by the Company primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities (duration mismatches), as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. 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. F-50 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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, foreign currency forwards and currency option contracts, 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. The Company enters into currency option contracts that give it the right, but not the obligation, to sell the foreign currency amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be net settled in cash, based on differentials in the foreign exchange rate and the strike price. Currency option contracts are included in options in the preceding table. Swaptions are used by the Company to hedge interest rate risk associated with the Company's long-term liabilities, as well as to sell, or monetize, embedded call options in its fixed rate liabilities. A swaption is an option to enter into a swap with an effective date equal to the exercise date of the embedded call and a maturity date equal to the maturity date of the underlying liability. The Company receives a premium for entering into the swaption. Swaptions are included in options in the preceding table. The Company enters into financial forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. 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. Swap spread locks are used by the Company to hedge invested assets on an economic basis against the risk of changes in credit spreads. Swap spread locks are forward starting swaps where the Company agrees to pay a coupon based on a predetermined reference swap spread in exchange for receiving a coupon based on a floating rate. The Company has the option to cash settle with the counterparty in lieu of maintaining the swap after the effective date. Swap spread locks 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 F-51 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) instrument such as a U.S. Treasury or Agency security. The Company also enters into certain credit default swaps held in relation to trading portfolios. A synthetic guaranteed interest contract ("GIC") is a contract that simulates the performance of a traditional GIC through the use of financial instruments. Under a synthetic GIC, the policyholder owns the underlying assets. The Company guarantees a rate return on those assets for a premium. Total rate of return swaps ("TRRs") are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and LIBOR, calculated by reference to an agreed notional principal amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. 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. TRRs can be used as hedges or to synthetically create investments and are included in the other classification in the preceding table. 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................... $ 9,301 $ 630 $ 94 $ 7,890 $ 290 $ 84 Cash flow.................... 3,084 23 311 2,656 33 149 Foreign operations........... 686 -- 116 489 -- 39 Non-qualifying............... 141,822 1,223 1,778 87,432 630 972 -------- ------ ------- ------- ----- ------- Total...................... $154,893 $1,876 $ 2,299 $98,467 $953 $ 1,244 ======== ====== ======= ======= ===== =======
The following table presents the settlement payments recorded in income for the:
YEARS ENDED DECEMBER 31, ------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Qualifying hedges: Net investment income................................ $ 24 $ 48 $ 42 Interest credited to policyholder account balances... (28) (26) 17 Non-qualifying hedges: Net investment income................................ (5) -- -- Net investment gains (losses)........................ 197 225 86 ---- ---- ---- Total............................................. $188 $247 $145 ==== ==== ====
FAIR VALUE HEDGES The Company designates and accounts for the following as fair value hedges when they have met the requirements of SFAS 133: (i) interest rate swaps to convert fixed rate investments to floating rate investments; and (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated investments and liabilities. F-52 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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............. $ 319 $ 278 $(118) Changes in the fair value of the items hedged........ (308) (278) 116 ----- ----- ----- Net ineffectiveness of fair value hedging activities......................................... $ 11 $ -- $ (2) ===== ===== =====
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; (iii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments and liabilities; and (iv) financial forwards to buy and sell securities. For the years ended December 31, 2007 and 2006, the Company did not recognize any net investment gains (losses) which represented the ineffective portion of all cash flow hedges. For the year ended December 31, 2005, the Company recognized net investment gains (losses) of ($21) million which represented 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. In certain instances, 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. The net amounts reclassified into net investment losses for the years ended December 31, 2007, 2006 and 2005 related to such discontinued cash flow hedges were $3 million, $3 million and $42 million, respectively. 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. The following table presents the components of other comprehensive income (loss), before income tax, related to cash flow hedges:
YEARS ENDED DECEMBER 31, --------------------- 2007 2006 2005 ----- ----- ----- (IN MILLIONS) Other comprehensive income (loss) balance at January 1,................................................. $(238) $(207) $(447) Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges............................................. (185) (30) 168 Amounts reclassified to net investment gains (losses)........................................... 150 (15) 72 Amounts reclassified to net investment income........ 12 15 2 Amortization of transition adjustment................ (1) (1) (2) ----- ----- ----- Other comprehensive income (loss) balance at December 31,................................................ $(262) $(238) $(207) ===== ===== =====
At December 31, 2007, $91 million of the deferred net loss on derivatives accumulated in other comprehensive income (loss) is expected to be reclassified to earnings during the year ending December 31, 2008. F-53 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS The Company uses forward exchange contracts, foreign currency swaps, options and non-derivative financial instruments 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 statements of stockholder's equity for the years ended December 31, 2007, 2006 and 2005 include gains (losses) of ($144) million, ($7) million and ($27) million, respectively, related to foreign currency contracts and non-derivative financial instruments used to hedge its net investments in foreign operations. At December 31, 2007 and 2006, the cumulative foreign currency translation loss recorded in accumulated other comprehensive income related to these hedges was $235 million and $91 million, respectively. When net investments in foreign operations are sold or substantially 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, purchased caps and floors, and interest rate futures to economically hedge its exposure to interest rate volatility; (ii) foreign currency forwards, swaps and option contracts to economically hedge its exposure to adverse movements in exchange rates; (iii) swaptions to sell embedded call options in fixed rate liabilities; (iv) credit default swaps to economically hedge exposure to adverse movements in credit; (v) equity futures, interest rate futures and equity variance swaps to economically hedge liabilities embedded in certain variable annuity products; (vi) swap spread locks to economically hedge invested assets against the risk of changes in credit spreads; (vii) financial forwards to buy and sell securities; (viii) synthetic guaranteed interest contracts; (ix) credit default swaps and TRRs to synthetically create investments; (x) basis swaps to better match the cash flows of assets and related liabilities; (xi) credit default swaps held in relation to trading portfolios; and (xii) swaptions to hedge interest rate risk. 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............................................... $(743) $(701) $372 Net investment income (1)................................... $ 20 $ -- $ --
- -------- (1) Changes in fair value related to derivatives held in relation to trading portfolios. 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, guaranteed minimum accumulation contracts and modified coinsurance contracts. F-54 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the fair value of the Company's embedded derivatives at:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Embedded derivative assets.................................. $ 91 $ 57 Embedded derivative liabilities............................. $694 $164
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).......................... $(135) $ 12 $ 29 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 both the pledging and 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 $233 million and $94 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. As of December 31, 2007 and 2006, the Company had also accepted collateral consisting of various securities with a fair market value of $98 million and $16 million, respectively, which are held in separate custodial accounts. The Company is permitted by contract to sell or repledge this collateral, but as of December 31, 2007 and 2006, none of the collateral had been sold or repledged. As of December 31, 2007 and 2006, the Company provided collateral of $162 million and $80 million, respectively, which is included in fixed maturity securities in the consolidated balance sheets. In addition, the Company has exchange traded futures, which require the pledging of collateral. As of December 31, 2007 and 2006, the Company pledged collateral of $33 million and $23 million, respectively, which is included in fixed maturity securities. The counterparties are permitted by contract to sell or repledge this collateral. F-55 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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......................... $10,255 $ 807 $11,062 Capitalizations.................................. 1,619 -- 1,619 ------- ----- ------- Subtotal.................................... 11,874 807 12,681 ------- ----- ------- Less: Amortization related to: Net investment gains (losses)................. 13 2 15 Unrealized investment gains (losses).......... (244) (15) (259) Other expenses................................ 1,304 66 1,370 ------- ----- ------- Total amortization.......................... 1,073 53 1,126 ------- ----- ------- Less: Dispositions and other..................... 120 (3) 117 ------- ----- ------- Balance at December 31, 2005....................... 10,681 757 11,438 Capitalizations.................................. 1,677 -- 1,677 ------- ----- ------- Subtotal.................................... 12,358 757 13,115 ------- ----- ------- Less: Amortization related to: Net investment gains (losses)................. (136) (2) (138) Unrealized investment gains (losses).......... 105 (14) 91 Other expenses................................ 1,248 (21) 1,227 ------- ----- ------- Total amortization.......................... 1,217 (37) 1,180 ------- ----- ------- Less: Dispositions and other..................... (85) (23) (108) ------- ----- ------- Balance at December 31, 2006....................... 11,226 817 12,043 Effect of SOP 05-1 adoption...................... (195) (123) (318) Capitalizations.................................. 1,689 -- 1,689 ------- ----- ------- Subtotal.................................... 12,720 694 13,414 ------- ----- ------- Less: Amortization related to: Net investment gains (losses)................. (224) (1) (225) Unrealized investment gains (losses).......... 110 71 181 Other expenses................................ 1,364 21 1,385 ------- ----- ------- Total amortization.......................... 1,250 91 1,341 ------- ----- ------- Less: Dispositions and other..................... (68) -- (68) ------- ----- ------- Balance at December 31, 2007....................... $11,538 $ 603 $12,141 ======= ===== =======
The estimated future amortization expense allocated to other expenses for the next five years for VOBA is $48 million in 2008, $41 million in 2009, $35 million in 2010, $37 million in 2011 and $38 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-56 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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,....................................... $202 $200 Acquisitions................................................ 2 2 ---- ---- Balance at December 31,..................................... $204 $202 ==== ====
7. INSURANCE INSURANCE LIABILITIES Insurance liabilities are as follows:
DECEMBER 31, ------------------------------------------------------------- OTHER FUTURE POLICY POLICYHOLDER POLICYHOLDER BENEFITS ACCOUNT BALANCES FUNDS ----------------- ----------------- --------------- 2007 2006 2007 2006 2007 2006 ------- ------- ------- ------- ------ ------ (IN MILLIONS) Institutional Group life..................... $ 3,326 $ 3,250 $13,207 $12,774 $2,359 $2,252 Retirement & savings........... 26,119 25,797 38,749 32,396 213 20 Non-medical health & other..... 10,430 9,339 501 -- 595 529 Individual Traditional life............... 51,457 50,737 -- -- 1,431 1,395 Universal variable life........ 229 207 6,121 6,129 791 746 Annuities...................... 1,817 1,879 20,056 20,604 14 375 Other.......................... -- -- 2,368 2,381 1 1 International.................... 324 291 4 3 2 1 Reinsurance...................... 6,159 5,140 6,656 6,213 2,298 1,979 Corporate and Other (1).......... (21) (41) (2) (2) 39 74 ------- ------- ------- ------- ------ ------ Total....................... $99,840 $96,599 $87,660 $80,498 $7,743 $7,372 ======= ======= ======= ======= ====== ======
(1) Corporate and Other includes intersegment eliminations. Affiliated insurance liabilities included in the table above include reinsurance assumed and ceded. Affiliated future policy benefits, included in the table above, were $406 million and $422 million at December 31, 2007 and 2006, respectively. Affiliated policyholder account balances, included in the table above, were $613 million and $278 million at December 31, 2007 and 2006, respectively. Affiliated other policyholder funds, included in the table above, were ($251) million and $177 million at December 31, 2007 and 2006, respectively. F-57 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) VALUE OF DISTRIBUTION AGREEMENTS AND CUSTOMER RELATIONSHIPS ACQUIRED Information regarding the VODA and VOCRA, which are reported in other assets, is as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2007 2006 --------- --------- (IN MILLIONS) Balance at January 1,.................................. $439 $ -- Capitalization......................................... -- 441 Amortization........................................... (8) (2) --------- --------- Balance at December 31,................................ $ 431 $ 439 ========= =========
The value of the other identifiable intangibles included in the table above reflects the estimated fair value of Citigroup/Travelers distribution agreement and customer relationships acquired at the original acquisition date and will be amortized in relation to the expected economic benefits of the agreement. The weighted average amortization period of the other intangible assets is 16 years. If actual experience under the distribution agreements or with customer relationships differs from expectations, the amortization of these intangibles will be adjusted to reflect actual experience. The use of discount rates was necessary to establish the fair value of the other identifiable intangible assets. In selecting the appropriate discount rates, management considered its weighted average cost of capital as well as the weighted average cost of capital required by market participants. A discounted rate of 11.5% was used to value these intangible assets. The estimated future amortization expense allocated to other expenses for the next five years for VODA and VOCRA is $12 million in 2008, $15 million in 2009, $18 million in 2010, $21 million in 2011 and $24 million in 2012. See Note 2 for a description of acquisitions and dispositions. 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,................................ $121 $ 95 $75 Capitalization....................................... 29 31 29 Amortization......................................... (18) (5) (9) ----- ----- ---- Balance at December 31,.............................. $ 132 $ 121 $ 95 ===== ===== ====
SEPARATE ACCOUNTS Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $71.4 billion and $64.5 billion 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 $18.3 billion and $16.5 billion at December 31, 2007 and 2006, respectively. The latter category consisted primarily of Met Managed GICs and participating close-out contracts. The average interest rate credited on these contracts was 4.73% and 4.63% at December 31, 2007 and 2006, respectively. F-58 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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 $1.3 billion, $1.2 billion and $1.1 billion for the years ended December 31, 2007, 2006 and 2005, respectively. The Company's proportional interest in separate accounts is included in the consolidated balance sheets as follows:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Fixed maturity securities.................................... $ 6 $ 5 Equity securities............................................ $35 $35 Cash and cash equivalents.................................... $ 1 $ 1
For 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 The Company 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, the Company issued $4.6 billion, $5.2 billion and $4.0 billion, respectively, and repaid $3.7 billion, $1.5 billion and $1.1 billion, respectively, of GICs under this program. At December 31, 2007 and 2006, GICs outstanding, which are included in policyholder account balances, were $19.1 billion and $16.8 billion, respectively. During the years ended December 31, 2007, 2006 and 2005, interest credited on the contracts, which are included in interest credited to policyholder account balances, was $918 million, $673 million and $384 million, respectively. OBLIGATIONS UNDER FUNDING AGREEMENTS Metropolitan Life Insurance Company is a member of the Federal Home Loan Bank of New York ("FHLB of NY") and holds $339 million and $136 million of common stock of the FHLB of NY at December 31, 2007 and 2006, respectively, which is included in equity securities. Metropolitan Life Insurance Company has also entered into funding agreements with the FHLB of NY whereby Metropolitan Life Insurance Company has issued such funding agreements in exchange for cash and for which the FHLB of NY has been granted a lien on certain Metropolitan Life Insurance Company assets, including residential mortgage-backed securities to collateralize Metropolitan Life Insurance Company 's obligations under the funding agreements. Metropolitan Life Insurance Company maintains control over these pledged assets, and may use, commingle, encumber or dispose of any portion of the collateral as long as there is no event of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by Metropolitan Life Insurance Company , the FHLB of NY's recovery on the collateral is limited to the amount of Metropolitan Life Insurance Company 's liability to the FHLB of NY. The amount of the Company's liability for funding agreements with the FHLB of NY was $4.6 billion at December 31, 2007, which is included in policyholder account balances. The advances on these agreements are collateralized by residential mortgage-backed securities with fair values of $4.8 billion at December 31, 2007. Metropolitan Life Insurance Company did not have any funding agreements with the FHLB of NY at December 31, 2006. Metropolitan Life Insurance Company has issued funding agreements to certain trusts that have issued securities guaranteed as to payment of interest and principal by the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States. The obligations under these funding agreements are secured by a pledge of certain eligible agricultural real estate mortgage loans and may, under certain circumstances, F-59 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) be secured by other qualified collateral. The amount of the Company's liability for funding agreements issued to such trusts was $2.5 billion and $1.5 billion at December 31, 2007 and 2006, respectively, which is included in policyholder account balances. The obligations under these funding agreements are collateralized by designated agricultural real estate mortgage loans with fair values of $2.9 billion and $1.7 billion at December 31, 2007 and 2006, respectively. LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES Information regarding the liabilities for unpaid claims and claim expenses relating to group accident and non-medical health policies and contracts, which are reported in future policy benefits and other policyholder funds, is as follows:
YEARS ENDED DECEMBER 31, --------------------------- 2007 2006 2005 ------- ------- ------- (IN MILLIONS) Balance at January 1,............................. $ 4,500 $ 4,191 $ 3,847 Less: Reinsurance recoverables.................. (268) (295) (292) ------- ------- ------- Net balance at January 1,......................... 4,232 3,896 3,555 ------- ------- ------- Incurred related to: Current year.................................... 3,743 2,997 2,791 Prior years..................................... (104) (28) (41) ------- ------- ------- 3,639 2,969 2,750 ------- ------- ------- Paid related to: Current year.................................... (2,077) (1,814) (1,667) Prior years..................................... (885) (819) (742) ------- ------- ------- (2,962) (2,633) (2,409) ------- ------- ------- Net balance at December 31,....................... 4,909 4,232 3,896 Add: Reinsurance recoverables................... 265 268 295 ------- ------- ------- Balance at December 31,........................... $ 5,174 $ 4,500 $ 4,191 ======= ======= =======
During 2007 and 2006, as a result of changes in estimates of insured events in the respective prior year, claims and claim adjustment expenses associated with prior years decreased by $104 million and $28 million, respectively, due to improved loss ratio for non-medical health claim liabilities and improved claim management. In 2005, the claims and claim adjustment expenses decreased by $41 million due to a refinement in the estimation methodology for non-medical health long- term care claim liabilities, improved loss ratio for non-medical health claims liabilities and improved claim management. 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 F-60 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 or a guaranteed paid up benefit. 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 AT IN THE AT EVENT OF DEATH ANNUITIZATION EVENT OF DEATH ANNUITIZATION -------------- ------------- -------------- ------------- (IN MILLIONS) ANNUITY CONTRACTS (1) RETURN OF NET DEPOSITS Separate account value........ $ 3,937 N/A $ 3,233 N/A Net amount at risk (2)........ $ 7(3) N/A $ --(3) N/A Average attained age of contractholders............. 60 years N/A 59 years N/A ANNIVERSARY CONTRACT VALUE OR MINIMUM RETURN Separate account value........ $ 36,404 $ 6,524 $ 34,362 $ 5,273 Net amount at risk (2)........ $ 399(3) $ 86(4) $ 354(3) $ 16(4) Average attained age of contractholders............. 62 years 57 years 61 years 57 years TWO TIER ANNUITIES General account value......... N/A $ 286 N/A $ 296 Net amount at risk (2)........ N/A $ 51(5) N/A $ 53(5) 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)............................ $ 6,550 $ 1,403 $ 6,094 $ 1,770 Net amount at risk (2)................ $ 103,219(3) $ 13,482(3) $ 101,431(3) $ 14,500(3) Average attained age of policyholders....................... 47 years 54 years 46 years 53 years
- -------- (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. F-61 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (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. (5) 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. 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 GUARANTEED DEATH ANNUITIZATION SECONDARY PAID UP BENEFITS BENEFITS GUARANTEES GUARANTEES TOTAL ---------- ------------- ---------- ---------- --------- (IN MILLIONS) Balance at January 1, 2005.. $ 6 $ 7 $ 6 $ 7 $ 26 Incurred guaranteed benefits.................. 4 -- 3 3 10 Paid guaranteed benefits.... (2) -- (1) -- (3) ---------- ------------- ---------- ---------- --------- Balance at December 31, 2005...................... 8 7 8 10 33 Incurred guaranteed benefits.................. 1 -- 1 (1) 1 Paid guaranteed benefits.... (3) -- -- -- (3) ---------- ------------- ---------- ---------- --------- Balance at December 31, 2006...................... 6 7 9 9 31 Incurred guaranteed benefits.................. 4 8 4 3 19 Paid guaranteed benefits.... (2) -- -- -- (2) ---------- ------------- ---------- ---------- --------- Balance at December 31, 2007...................... $ 8 $15 $13 $12 $48 ========== ============= ========== ========== =========
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................................................ $23,494 $23,510 Bond.................................................. 3,430 2,757 Balanced.............................................. 5,312 1,125 Money Market.......................................... 350 220 Specialty............................................. 402 522 ------- ------- Total.............................................. $32,988 $28,134 ======= =======
8. 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. Until 2005, the Company reinsured up to 90% of the mortality risk for all new individual life insurance policies that it wrote through its various franchises. This practice was initiated by the different franchises for different products starting at various points in time between 1992 and 2000. During 2005, the Company changed its F-62 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) retention practices for certain individual life insurance. Amounts reinsured in prior years remain reinsured under the original reinsurance; however, under the new retention guidelines, the Company reinsures up to 90% of the mortality risk in excess of $1 million for most new individual life insurance policies that it writes through its various franchises and for certain individual life policies the retention limits remained unchanged. On a case by case basis, the Company may retain up to $20 million per life and reinsure 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. In addition, the Company reinsures a significant portion of the mortality risk on its individual universal life policies issued since 1983. 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 had also protected itself through the purchase of combination risk coverage. This reinsurance coverage pooled risks from several lines of business and included individual and group life claims in excess of $2 million per policy. This combination risk coverage was commuted during 2005. 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. In the Reinsurance Segment, Reinsurance Group of America, Incorporated ("RGA"), retains a maximum of $6 million of coverage per individual life with respect to its assumed reinsurance business. 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.................................. $17,413 $16,960 $16,466 Reinsurance assumed.............................. 5,961 5,061 4,517 Reinsurance ceded................................ (2,029) (1,737) (1,727) ------- ------- ------- Net premiums..................................... $21,345 $20,284 $19,256 ======= ======= ======= Reinsurance recoverables netted against policyholder benefits and claims............... $ 1,637 $ 1,552 $ 1,495 ======= ======= =======
Reinsurance recoverables, included in premiums and other receivables, were $21.2 billion and $5.2 billion at December 31, 2007 and 2006, respectively, including $17.2 billion and $1.2 billion for years ending December 31, 2007 and 2006, respectively, relating to reinsurance of long-term GICs, structured settlement lump sum contracts and closed block liabilities accounted for as financing transactions, and $1.1 billion and $1.4 billion at December 31, 2007 and 2006, respectively, relating to the reinsurance of investment-type contracts held by small market defined contribution plans. Reinsurance and ceded commissions payables, included in other liabilities, were $323 million and $202 million at December 31, 2007 and 2006, respectively. F-63 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company has reinsurance agreements with certain of the Holding Company's subsidiaries, including Exeter Reassurance Company, Ltd., Texas Life Insurance Company ("TLIC"), First MetLife Investors Insurance Company, MetLife Insurance Company of Connecticut ("MICC"), MetLife Investors USA Insurance Company ("MLI USA"), MetLife Investors Insurance Company, MetLife Reinsurance Company of Charleston ("MRC"), and MTL, all of which are related parties. At December 31, 2007, the Company had reinsurance-related assets and liabilities from these agreements totaling $17.6 billion and $20.1 billion, respectively. At December 31, 2006, comparable assets and liabilities were $1.7 billion and $5.6 billion, respectively. 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...................................... $ 52 $ 42 $ 37 Assumed fees, included in universal life and investment-type product policy fees................. $ 2 $ 1 $ -- Interest earned on assumed reinsurance, included in other revenues...................................... $ (4) $ (3) $ (3) Assumed benefits, included in policyholder benefits and claims.......................................... $ 54 $ 86 $ 108 Assumed benefits, included in interest credited to policyholder account balances....................... $ 18 $ 11 $ 8 Assumed acquisition costs, included in other expenses............................................ $144 $322 $ 137 Ceded premiums........................................ $113 $116 $ 141 Ceded fees, included in universal life and investment- type product policy fees............................ $112 $ 64 $ 218 Ceded fees, included in net investment gains (losses)............................................ $ -- $ -- $ 6 Interest earned on ceded reinsurance, included in other revenues...................................... $ -- $ -- $ 2 Ceded benefits, included in policyholder benefits and claims.............................................. $ 80 $ 69 $ 85 Ceded benefits, included in interest credited to policyholder account balances....................... $ 65 $ 49 $ 42 Ceded benefits, included in policyholder dividends.... $ 29 $ 27 $ 24 Interest costs on ceded reinsurance, included in other expenses............................................ $ 5 $ (2) $(120)
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 are included within net investment gains (losses). The ceded reinsurance also contain embedded derivatives and changes in their fair value are included within net investment gains (losses). The ceded amounts were $42 million, ($18) million and ($5) million for the years ended December 31, 2007, 2006 and 2005, respectively. Effective January 1, 2005, a subsidiary of the Company, General American Life Insurance Company ("GALIC") entered into a reinsurance agreement to cede an in-force block of business to MLI USA, an affiliate. This agreement covered certain term and universal life policies issued by GALIC on and after January 1, 2000 through December 31, 2004. This agreement also covers certain term and universal life policies issued on or after January 1, 2005. Under this agreement, GALIC 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, GALIC recognized a realized gain of $19 million, net of income taxes. GALIC 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, GALIC ceded premiums and related fees of $121 million, $119 million and $192 million, respectively, and ceded benefits and related costs of $86 million, $98 million and $143 million, respectively, for the years ended December 31, 2007, 2006 and 2005. F-64 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Reinsurance recoverables, included in premiums and other receivables, related to this reinsurance agreement as of December 31, 2007 and 2006 were $1.1 billion and $1.0 billion, respectively. On December 1, 2006, TLIC recaptured business previously ceded under a 2002 reinsurance treaty with the Company. The agreement required the Company to assume, on a co-insurance basis, certain structured settlement business from TLIC. On January 5, 2007, the Company transferred cash in the amount of $989 million, which represented $984 million for the fair value of the returned future policy benefits plus $5 million in interest. For the year ended December 31, 2006, as a result of this transaction, the Company recognized an expense of $184 million. In December 2007, the Company ceded a portion of its closed block liabilities on a coinsurance with funds withheld basis to MRC, an affiliate. The cession to MRC does not transfer significant risk and therefore is accounted for under the deposit method. In connection with this transaction the Company recorded in premiums and other receivables, an affiliated receivable of $16 billion and in other liabilities, an affiliated funds withheld liability of $16 billion. 9. CLOSED BLOCK On April 7, 2000, (the "Demutualization Date"), Metropolitan Life Insurance Company converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance (the "Superintendent") approving Metropolitan Life Insurance Company's plan of reorganization, as amended (the "Plan"). On the Demutualization Date, Metropolitan Life Insurance Company established a closed block for the benefit of holders of certain individual life insurance policies of Metropolitan Life Insurance Company. Assets have been allocated to the closed block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies, including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for the continuation of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales continues, and for appropriate adjustments in such scales if the experience changes. At least annually, the Company compares actual and projected experience against the experience assumed in the then-current dividend scales. Dividend scales are adjusted periodically to give effect to changes in experience. The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed block will benefit only the holders of the policies in the closed block. To the extent that, over time, cash flows from the assets allocated to the closed block and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what was assumed when the closed block was established, total dividends paid to closed block policyholders in the future may be greater than or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect for 1999 had been continued. Any cash flows in excess of amounts assumed will be available for distribution over time to closed block policyholders and will not be available to stockholders. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed block remains in-force. The expected life of the closed block is over 100 years. The Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to the Demutualization Date. However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders as additional dividends as described below. The excess of closed block liabilities over closed block assets at the effective date of the demutualization (adjusted to eliminate the impact of related amounts in accumulated other comprehensive income) represents the estimated maximum future earnings from the closed block expected to result from operations attributed to the closed block after income taxes. Earnings of the closed block are recognized in income over the period the policies and contracts F-65 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) in the closed block remain in-force. Management believes that over time the actual cumulative earnings of the closed block will approximately equal the expected cumulative earnings due to the effect of dividend changes. If, over the period the closed block remains in existence, the actual cumulative earnings of the closed block is greater than the expected cumulative earnings of the closed block, the Company will pay the excess of the actual cumulative earnings of the closed block over the expected cumulative earnings to closed block policyholders as additional policyholder dividends unless offset by future unfavorable experience of the closed block and, accordingly, will recognize only the expected cumulative earnings in income with the excess recorded as a policyholder dividend obligation. If over such period, the actual cumulative earnings of the closed block is less than the expected cumulative earnings of the closed block, the Company will recognize only the actual earnings in income. However, the Company may change policyholder dividend scales in the future, which would be intended to increase future actual earnings until the actual cumulative earnings equal the expected cumulative earnings. F-66 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the closed block liabilities and assets designated to the closed block is as follows:
DECEMBER 31, ---------------- 2007 2006 ------- ------- (IN MILLIONS) CLOSED BLOCK LIABILITIES Future policy benefits.......................................... $43,362 $43,089 Other policyholder funds........................................ 323 282 Policyholder dividends payable.................................. 709 701 Policyholder dividend obligation................................ 789 1,063 Payables for collateral under securities loaned and other transactions................................................. 5,610 6,483 Other liabilities............................................... 290 192 ------- ------- Total closed block liabilities............................... 51,083 51,810 ------- ------- ASSETS DESIGNATED TO THE CLOSED BLOCK Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $29,631 and $30,286, respectively).... 30,481 31,255 Equity securities available-for-sale, at estimated fair value (cost: $1,555 and $1,184, respectively)...................... 1,875 1,484 Mortgage loans on real estate................................... 7,472 7,848 Policy loans.................................................... 4,290 4,212 Real estate and real estate joint ventures held-for-investment.. 297 242 Short-term investments.......................................... 14 62 Other invested assets........................................... 829 644 ------- ------- Total investments............................................ 45,258 45,747 Cash and cash equivalents......................................... 333 255 Accrued investment income......................................... 485 517 Deferred income tax assets........................................ 640 754 Premiums and other receivables.................................... 151 156 ------- ------- Total assets designated to the closed block.................. 46,867 47,429 ------- ------- Excess of closed block liabilities over assets designated to the closed block.................................................... 4,216 4,381 ------- ------- Amounts included in accumulated other comprehensive income: Unrealized investment gains (losses), net of income tax of $424 and $457, respectively....................................... 751 812 Unrealized gains (losses) on derivative instruments, net of income tax of ($19) and ($18), respectively.................. (33) (32) Allocated to policyholder dividend obligation, net of income tax of ($284) and ($381), respectively........................... (505) (681) ------- ------- Total amounts included in accumulated other comprehensive income....................................................... 213 99 ------- ------- Maximum future earnings to be recognized from closed block assets and liabilities................................................. $ 4,429 $ 4,480 ======= =======
F-67 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the closed block policyholder dividend obligation is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) Balance at January 1,..................................... $1,063 $1,607 $2,243 Impact on revenues, net of expenses and income tax........ -- (114) (9) Change in unrealized investment and derivative gains (losses)................................................ (274) (430) (627) ------ ------ ------ Balance at December 31,................................... $ 789 $1,063 $1,607 ====== ====== ======
Information regarding the closed block revenues and expenses is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) REVENUES Premiums................................................ $2,870 $2,959 $3,062 Net investment income and other revenues................ 2,350 2,355 2,382 Net investment gains (losses)........................... 28 (130) 10 ------ ------ ------ Total revenues....................................... 5,248 5,184 5,454 ------ ------ ------ EXPENSES Policyholder benefits and claims........................ 3,457 3,474 3,478 Policyholder dividends.................................. 1,492 1,479 1,465 Change in policyholder dividend obligation.............. -- (114) (9) Other expenses.......................................... 231 247 263 ------ ------ ------ Total expenses....................................... 5,180 5,086 5,197 ------ ------ ------ Revenues, net of expenses before income tax............... 68 98 257 Income tax................................................ 21 34 90 ------ ------ ------ Revenues, net of expenses and income tax from continuing operations.............................................. 47 64 167 Revenues, net of expenses and income tax from discontinued operations.............................................. -- 1 -- ------ ------ ------ Revenues, net of expenses and income tax and discontinued operations.............................................. $ 47 $ 65 $ 167 ====== ====== ======
The change in the maximum future earnings of the closed block is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) Balance at December 31,............................... $4,429 $4,480 $4,545 Less: Cumulative effect of a change in accounting principle, net of income tax..................... (4) -- -- ------ ------ ------ Balance at January 1,................................. 4,480 4,545 4,712 ------ ------ ------ Change during year.................................... $ (47) $ (65) $ (167) ====== ====== ======
Metropolitan Life Insurance Company charges the closed block with federal income taxes, state and local premium taxes, and other additive state or local taxes, as well as investment management expenses relating to the F-68 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) closed block as provided in the Plan. Metropolitan Life Insurance Company also charges the closed block for expenses of maintaining the policies included in the closed block. 10. LONG-TERM AND SHORT-TERM DEBT Long-term and short-term debt 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 Surplus notes -- affiliated.......... 5.85% - 7.38% 6.61% 2009-2037 1,394 800 Surplus notes........................ 7.63% - 7.88% 7.76% 2015-2025 697 697 Capital notes -- affiliated.......... 7.13% 7.13% 2032-2033 500 500 Fixed rate notes..................... 5.50% - 7.25% 6.68% 2008 73 107 Other notes with varying interest rates.............................. 4.45% - 4.50% 4.47% 2010-2012 3 3 Capital lease obligations............ 51 62 ------ ------ Total long-term debt................. 3,215 2,369 Total short-term debt................ 357 833 ------ ------ Total.............................. $3,572 $3,202 ====== ======
The aggregate maturities of long-term debt as of December 31, 2007 for the next five years are $85 million in 2008, $13 million in 2009, $2 million in 2010, $201 million in 2011, $1 million in 2012 and $2,912 million thereafter. Capital lease obligations are collateralized and rank highest in priority, followed by unsecured senior debt which consists of senior notes, fixed rate notes and other notes with varying interest rates, followed by subordinated debt which consists of junior subordinated debentures. 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. SURPLUS NOTES In December 2007, the Company repaid the $800 million surplus note issued in December 2005 with an interest rate of 5.00% to the Holding Company and then issued to the Holding Company a $700 million surplus note with an interest rate of LIBOR plus 1.15%. In December 2007, the Company issued a $694 million surplus note to MetLife Capital Trust IV, an affiliate, with an interest rate of 7.38%. The Company repaid a $250 million 7% surplus note which matured on November 1, 2005. F-69 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SHORT-TERM DEBT During the years ended December 31, 2007, 2006 and 2005, the Company's short-term debt consisted of commercial paper with a weighted average interest rate of 5.1%, 5.1% and 3.3%, respectively. During the years ended December 31, 2007, 2006 and 2005, the commercial paper's average daily balance was $927 million, $768 million and $944 million, respectively and was outstanding for an average of 25 days, 53 days and 47 days, respectively. INTEREST EXPENSE Interest expense related to the Company's indebtedness included in other expenses was $222 million, $205 million and $174 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 11, 12, and 13. These amounts include $78 million, $76 million and $36 million of interest expense related to affiliated debt for the years ended December 31, 2007, 2006 and 2005, respectively. CREDIT AND COMMITTED FACILITIES AND LETTERS OF CREDIT Credit Facilities. The Company maintains committed and unsecured credit facilities aggregating $3.8 billion as of December 31, 2007. When drawn upon, these facilities bear interest at varying rates in accordance with the respective agreements. The facilities can be used for general corporate purposes and at December 31, 2007, $3.0 billion of the facilities also served as back-up lines of credit for the Company's commercial paper programs. 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) MetLife, Inc. and MetLife Funding, Inc. ............................ June 2012 (1) $ 3,000 $ 1,532 $ -- $ 1,468 Reinsurance Group of America, Incorporated..................... May 2008 30 -- 30 -- Reinsurance Group of America, Incorporated..................... September 2012 (2) 750 406 -- 344 Reinsurance Group of America, Incorporated..................... March 2011 44 -- -- 44 -------- -------- ---------- ------------ Total............................ $3,824 $1,938 $30 $1,856 ======== ======== ========== ============
- -------- (1) In June 2007, the Holding Company and MetLife Funding, Inc. (collectively, the "Borrowers") entered into a $3.0 billion credit agreement with various financial institutions, the proceeds of which are available to be used for general corporate purposes, to support their commercial paper programs and for the issuance of letters of credit. All borrowings under the credit agreement must be repaid by June 2012, except that letters of credit outstanding upon termination may remain outstanding until June 2013. The borrowers and the lenders under this facility may agree to extend the term of all or part of the facility to no later than June 2014, except that letters of credit outstanding upon termination may remain outstanding until June 2015. The $1.5 billion credit agreement, with an April 2009 expiration and the $1.5 billion credit agreement, with an April 2010 expiration, were both terminated in June 2007. (2) 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. F-70 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Committed Facilities. Information on committed facilities as of December 31, 2007 is as follows:
LETTERS OF CREDIT UNUSED MATURITY ACCOUNT PARTY/BORROWER(S) EXPIRATION CAPACITY ISSUANCES DRAWDOWNS COMMITMENTS (YEARS) - ------------------------- ------------- -------- ---------- --------- ----------- -------- (IN MILLIONS) Exeter Reassurance Co Ltd., MetLife Inc., & Missouri Re............... June 2016 (1) $ 500 $490 $ -- $ 10 8 Timberlake Financial L.L.C. ........ June 2036 (2) 1,000 -- 850 150 29 ------- ------ --------- ---------- Total............................. $ 1,500 $ 490 $ 850 $ 160 ======= ====== ========= ==========
- -------- (1) Letters of credit and replacements or renewals thereof issued under this facility of $280 million, and $10 million and $200 million are set to expire no later than December 2015, March 2016 and June 2016, respectively. (2) As described in Note 11, 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 $2.5 billion in letters of credit, all of which are associated with the aforementioned credit facilities, from various financial institutions, of which $2.4 billion 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. 11. 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 note 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. 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 F-71 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. 12. 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. 13. SHARES SUBJECT TO MANDATORY REDEMPTION AND COMPANY-OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY TRUSTS GenAmerica Capital I. In June 1997, GenAmerica Corporation ("GenAmerica") issued $125 million of 8.525% capital securities through a wholly-owned subsidiary trust, GenAmerica Capital I. In October 2007, GenAmerica redeemed these securities which were due to mature on June 30, 2027. As a result of this redemption, the Company recognized additional interest expense of $10 million. Capital securities outstanding were $119 million, net of unamortized discounts of $6 million at December 31, 2006. Interest expense on these instruments is included in other expenses and was $20 million, $11 million and $11 million for the years ended December 31, 2007, 2006 and 2005, respectively. 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. 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 F-72 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) $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. 14. INCOME TAXES The provision for income tax from continuing operations is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) Current: Federal........................................... $1,066 $ 492 $ 828 State and local................................... 22 5 64 Foreign........................................... 19 20 21 ------ ------ ------ Subtotal.......................................... 1,107 517 913 ------ ------ ------ Deferred: Federal........................................... $ 11 $100 $ 169 State and local................................... 18 19 11 Foreign........................................... 2 -- -- ------ ------ ------ Subtotal.......................................... 31 119 180 ------ ------ ------ Provision for income tax............................ $1,138 $636 $1,093 ====== ====== ======
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for continuing operations is as follows:
YEARS ENDED DECEMBER 31, ------------------------- 2007 2006 2005 ------ ------- ------ (IN MILLIONS) Tax provision at U.S. statutory rate................ $1,241 $ 860 $1,230 Tax effect of: Tax-exempt investment income...................... (160) (167) (84) State and local income tax........................ 33 19 33 Prior year tax.................................... 38 (26) (20) Foreign tax rate differential and change in valuation allowance............................ (18) (23) (25) Other, net........................................ 4 (27) (41) ------ ------- ------ Provision for income tax............................ $1,138 $ 636 $1,093 ====== ======= ======
F-73 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) 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: Policyholder liabilities and receivables............... $ 2,908 $ 2,122 Net operating loss carryforwards....................... 372 788 Employee benefits...................................... 162 440 Capital loss carryforwards............................. 4 -- Tax credit carryforwards............................... 4 -- Litigation-related and government mandated............. 45 62 Other.................................................. 55 32 ------- ------- 3,550 3,444 Less: Valuation allowance.............................. 16 11 ------- ------- 3,534 3,433 ------- ------- Deferred income tax liabilities: Investments............................................ 1,625 1,475 DAC.................................................... 3,139 3,441 Net unrealized investment gains........................ 689 968 Other.................................................. 7 2 ------- ------- 5,460 5,886 ------- ------- Net deferred income tax liability........................ $(1,926) $(2,453) ======= =======
Domestic net operating loss carryforwards amount to $1,011 million at December 31, 2007 and will expire beginning in 2019. Foreign net operating loss carryforwards amount to $55 million at December 31, 2007 and were generated in various foreign countries with expiration periods of five years to indefinite expiration. Capital loss carryforwards amount to $11 million at December 31, 2007 and will expire beginning in 2010. Tax credit carryforwards amount to $4 million at December 31, 2007. The Company has recorded a valuation allowance related to tax benefits of certain foreign net operating loss carryforwards. The valuation allowance reflects management's assessment, based on available information, that it is more likely than not that the deferred income tax asset for certain foreign net operating loss carryforwards will not be realized. The tax benefit will be recognized when management believes that it is more likely than not that these deferred income tax assets are realizable. In 2007, the Company recorded $5 million of additional deferred income tax valuation allowance related to certain foreign net operating loss carryforwards. The Company files income tax returns with the U.S. federal government and various state and local jurisdictions, as well as foreign 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, or foreign income tax examinations by tax authorities for years prior to 2000. In the first quarter of 2005, the IRS commenced an examination of the Company's U.S. income tax returns for 2000 through 2002 that is anticipated to be completed in 2008. F-74 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) As a result of the implementation of FIN 48 on January 1, 2007, the Company recognized a $35 million increase in the liability for unrecognized tax benefits, an $11 million decrease in the interest liability for unrecognized tax benefits, and a corresponding reduction to the January 1, 2007 balance of retained earnings of $13 million, net of $11 million of minority interest. The Company's total amount of unrecognized tax benefits upon adoption of FIN 48 was $993 million. The Company reclassified, at adoption, $577 million of current income tax payables to the liability for unrecognized tax benefits included within other liabilities. The Company also reclassified, at adoption, $381 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 $612 million. The Company also had $228 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 $853 million and the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, is $503 million. The total amount of unrecognized tax benefits decreased by $140 million from the date of adoption primarily due to settlements reached with the IRS with respect to certain significant issues involving demutualization, post-sale purchase price adjustments, and reinsurance offset by additions for tax positions of the current year. As a result of the settlements, items within the liability for unrecognized tax benefits, in the amount of $171 million, were reclassified to current and deferred income taxes, as applicable, and a payment of $156 million was made in December of 2007 with the remaining $15 million to be paid in future years. In addition, the Company's liability for unrecognized tax benefits may change significantly in the next 12 months pending the outcome of remaining issues associated with the current IRS audit including demutualization, leasing, tax-exempt income, transfer pricing and tax credits. Management is working to resolve the remaining audit items directly with IRS auditors as well as through available accelerated IRS resolution programs and may protest any unresolved issues through the IRS appeals process and, possibly, litigation, the timing and extent of which is uncertain. Therefore, a reasonable estimate of the range of a payment or change in the liability cannot be made at this time; however, the Company continues to believe that the ultimate resolution of the issues will not result in a material effect on its consolidated financial statements, although the resolution of income tax matters could impact the Company's effective tax rate for a particular future 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)............. $ 993 Additions for tax positions of prior years................ 32 Reductions for tax positions of prior years............... (57) Additions for tax positions of current year............... 60 Settlements with tax authorities.......................... (171) Lapses of statutes of limitations......................... (4) ---------------- Balance at December 31, 2007.............................. $ 853 ================
F-75 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) During the year ended December 31, 2007, the Company recognized $89 million in interest expense associated with the liability for unrecognized tax benefits. As of December 31, 2007, the Company had $231 million of accrued interest associated with the liability for unrecognized tax benefits. The $3 million increase from the date of adoption in accrued interest associated with the liability for unrecognized tax benefits resulted from an increase of $89 million of interest expense and an $86 million decrease primarily resulting from the aforementioned IRS settlements. During 2007, $73 million of the $86 million, resulting from IRS settlements, has been reclassified to current income tax payable and the remaining $13 million reduced interest expense. 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 $113 million related to the separate account DRD. 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES CONTINGENCIES LITIGATION The Company is a defendant in a large number of litigation matters. In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the United States permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrate to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value. Thus, unless stated below, the specific monetary relief sought is not noted. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be inherently impossible to ascertain with any degree of certainty. Inherent uncertainties can include how fact finders will view individually and in their totality documentary evidence, the credibility and effectiveness of witnesses' testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and contingencies to be reflected in the Company's consolidated financial statements. The review includes senior legal and financial personnel. In 2007, the Company received $39 million upon the resolution of an indemnification claim associated with the 2000 acquisition of GALIC, and the Company reduced legal liabilities by $31 million after the settlement of certain cases. Unless stated below, estimates of possible losses or ranges of loss for particular matters cannot in the ordinary course be made with a reasonable degree of certainty. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities have been F-76 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) established for a number of the matters noted below; in 2007 the Company increased legal liabilities for pending sales practices, employment and intellectual property litigation matters against the Company. It is possible that some of the matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as of December 31, 2007. Demutualization Actions Several lawsuits were brought in 2000 challenging the fairness of the Plan and the adequacy and accuracy of Metropolitan Life Insurance Company's disclosure to policyholders regarding the Plan. The actions discussed below name as defendants some or all of Metropolitan Life Insurance Company, the Holding Company, and individual directors. Metropolitan Life Insurance Company, the Holding Company, and the individual directors believe they have meritorious defenses to the plaintiffs' claims and are contesting vigorously all of the plaintiffs' claims in these actions. Fiala, et al. v. Metropolitan Life Ins. Co., et al. (Sup. Ct., N.Y. County, filed March 17, 2000). The plaintiffs in the consolidated state court class actions seek compensatory relief and punitive damages against Metropolitan Life Insurance Company, the Holding Company, and individual directors. On January 30, 2007, the trial court signed an order certifying a litigation class of present and former policyholders on plaintiffs' claim that defendants violated section 7312 of the New York Insurance Law, but denying plaintiffs' motion to certify a litigation class with respect to a common law fraud claim. Plaintiffs and defendants have filed notices of appeal from this order. The court has directed various forms of class notice. In re MetLife Demutualization Litig. (E.D.N.Y., filed April 18, 2000). In this class action against Metropolitan Life Insurance Company and the Holding Company, plaintiffs served a second consolidated amended complaint in 2004. Plaintiffs assert violations of the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in connection with the Plan, claiming that the Policyholder Information Booklets failed to disclose certain material facts and contained certain material misstatements. They seek rescission and compensatory damages. By orders dated July 19, 2005 and August 29, 2006, the federal trial court certified a litigation class of present and former policyholders. The court has not yet directed the manner and form of class notice. Asbestos-Related Claims Metropolitan Life Insurance Company is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These suits principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both actual and punitive damages. Metropolitan Life Insurance Company has never engaged in the business of manufacturing, producing, distributing or selling asbestos or asbestos- containing products nor has Metropolitan Life Insurance Company issued liability or workers' compensation insurance to companies in the business of manufacturing, producing, distributing or selling asbestos or asbestos- containing products. The lawsuits principally have focused on allegations with respect to certain research, publication and other activities of one or more of Metropolitan Life Insurance Company's employees during the period from the 1920's through approximately the 1950's and allege that Metropolitan Life Insurance Company learned or should have learned of certain health risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. Metropolitan Life Insurance Company believes that it should not have legal liability in these cases. The outcome of most asbestos litigation matters, however, is uncertain and can be impacted by numerous variables, including differences in legal rulings in various jurisdictions, the nature of the alleged injury, and factors unrelated to the ultimate legal merit of the claims asserted against Metropolitan Life Insurance Company. Metropolitan Life Insurance Company employs a number of resolution strategies to manage its asbestos loss exposure, including seeking resolution of pending litigation by judicial rulings and settling litigation under appropriate circumstances. F-77 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Claims asserted against Metropolitan Life Insurance Company have included negligence, intentional tort and conspiracy concerning the health risks associated with asbestos. Metropolitan Life Insurance Company's defenses (beyond denial of certain factual allegations) include that: (i) Metropolitan Life Insurance Company owed no duty to the plaintiffs -- it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs did not rely on any actions of Metropolitan Life Insurance Company; (iii) Metropolitan Life Insurance Company's conduct was not the cause of the plaintiffs' injuries; (iv) plaintiffs' exposure occurred after the dangers of asbestos were known; and (v) the applicable time with respect to filing suit has expired. During the course of the litigation, certain trial courts have granted motions dismissing claims against Metropolitan Life Insurance Company, while other trial courts have denied Metropolitan Life Insurance Company's motions to dismiss. There can be no assurance that Metropolitan Life Insurance Company will receive favorable decisions on motions in the future. While most cases brought to date have settled, Metropolitan Life Insurance Company intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims at trials. The approximate total number of asbestos personal injury claims pending against Metropolitan Life Insurance Company as of the dates indicated, the approximate number of new claims during the years ended on those dates and the approximate total settlement payments made to resolve asbestos personal injury claims at or during those years are set forth in the following table:
DECEMBER 31, ---------------------------- 2007 2006 2005 ------- ------- -------- (IN MILLIONS, EXCEPT NUMBER OF CLAIMS) Asbestos personal injury claims at year end...... 79,717 87,070 100,250 Number of new claims during the year............. 7,161 7,870 18,500 Settlement payments during the year (1).......... $ 28.2 $ 35.5 $ 74.3
- -------- (1) Settlement payments represent payments made by Metropolitan Life Insurance Company during the year in connection with settlements made in that year and in prior years. Amounts do not include Metropolitan Life Insurance Company's attorneys' fees and expenses and do not reflect amounts received from insurance carriers. In 2004, Metropolitan Life Insurance Company received approximately 23,900 new claims, ending the year with a total of approximately 108,000 claims, and paid approximately $85.5 million for settlements reached in 2004 and prior years. In 2003, Metropolitan Life Insurance Company received approximately 58,750 new claims, ending the year with a total of approximately 111,700 claims, and paid approximately $84.2 million for settlements reached in 2003 and prior years. The number of asbestos cases that may be brought or the aggregate amount of any liability that Metropolitan Life Insurance Company may ultimately incur is uncertain. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for asbestos-related claims. Metropolitan Life Insurance Company's recorded asbestos liability is based on its estimation of the following elements, as informed by the facts presently known to it, its understanding of current law, and its past experiences: (i) the reasonably probable and estimable liability for asbestos claims already asserted against Metropolitan Life Insurance Company, including claims settled but not yet paid; (ii) the reasonably probable and estimable liability for asbestos claims not yet asserted against Metropolitan Life Insurance Company, but which Metropolitan Life Insurance Company believes are reasonably probable of assertion; and (iii) the legal defense costs associated with the foregoing claims. Significant assumptions underlying Metropolitan Life Insurance Company's analysis of the adequacy of its recorded liability with respect to asbestos litigation include: (i) the number of future claims; (ii) the cost to resolve claims; and (iii) the cost to defend claims. Metropolitan Life Insurance Company reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims experience, reviewing external literature regarding asbestos claims F-78 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) experience in the United States, assessing relevant trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. These variables include bankruptcies of other companies involved in asbestos litigation, legislative and judicial developments, the number of pending claims involving serious disease, the number of new claims filed against it and other defendants, and the jurisdictions in which claims are pending. As previously disclosed, in 2002 Metropolitan Life Insurance Company increased its recorded liability for asbestos-related claims by $402 million from approximately $820 million to $1,225 million. Metropolitan Life Insurance Company regularly reevaluates its exposure from asbestos litigation and has updated its liability analysis for asbestos-related claims through December 31, 2007. The ability of Metropolitan Life Insurance Company to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and the conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult to predict with any certainty the numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims, the disease mix and severity of disease in pending and future claims, the impact of the number of new claims filed in a particular jurisdiction and variations in the law in the jurisdictions in which claims are filed, the possible impact of tort reform efforts, the willingness of courts to allow plaintiffs to pursue claims against Metropolitan Life Insurance Company when exposure to asbestos took place after the dangers of asbestos exposure were well known, and the impact of any possible future adverse verdicts and their amounts. The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the future. In the Company's judgment, there is a future point after which losses cease to be probable and reasonably estimable. It is reasonably possible that the Company's total exposure to asbestos claims may be materially greater than the asbestos liability currently accrued and that future charges to income may be necessary. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material adverse effect on the Company's financial position. During 1998, Metropolitan Life Insurance Company paid $878 million in premiums for excess insurance policies for asbestos-related claims. The excess insurance policies for asbestos-related claims provide for recovery of losses up to $1.5 billion, which is in excess of a $400 million self-insured retention. The Company's initial option to commute the excess insurance policies for asbestos-related claims arises at the end of 2008. Thereafter, the Company will have a commutation right every five years. The excess insurance policies for asbestos-related claims are also subject to annual and per claim sublimits. Amounts exceeding the sublimits during 2007, 2006 and 2005 were approximately $16 million, $8 million and $0, respectively. The Company continues to study per claim averages, and there can be no assurance as to the number and cost of claims resolved in the future, including related defense costs, and the applicability of the sublimits to these costs. Amounts are recoverable under the policies annually with respect to claims paid during the prior calendar year. Although amounts paid by Metropolitan Life Insurance Company in any given year that may be recoverable in the next calendar year under the policies will be reflected as a reduction in the Company's operating cash flows for the year in which they are paid, management believes that the payments will not have a material adverse effect on the Company's liquidity. Each asbestos-related policy contains an experience fund and a reference fund that provide for payments to Metropolitan Life Insurance Company at the commutation date if the reference fund is greater than zero at commutation or pro rata reductions from time to time in the loss reimbursements to Metropolitan Life Insurance Company if the cumulative return on the reference fund is less than the return specified in the experience fund. The return in the reference fund is tied to performance of the Standard & Poor's ("S&P") 500 Index and the Lehman Brothers Aggregate Bond Index. A claim with respect to the prior year was made under the excess insurance policies in each year from 2003 through 2007 for the amounts paid with respect to asbestos litigation in excess of the retention. As the performance of the indices impacts the return in the reference fund, it is possible that loss reimbursements to the Company and the recoverable amount with respect to later periods may be less than the F-79 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) amount of the recorded losses. Foregone loss reimbursements may be recovered upon commutation depending upon future performance of the reference fund. If at some point in the future, the Company believes the liability for probable and reasonably estimable losses for asbestos-related claims should be increased, an expense would be recorded and the insurance recoverable would be adjusted subject to the terms, conditions and limits of the excess insurance policies. Portions of the change in the insurance recoverable would be recorded as a deferred gain and amortized into income over the estimated remaining settlement period of the insurance policies. The foregone loss reimbursements were approximately $56.1 million with respect to claims for the period of 2002 through 2006 and are estimated, as of December 31, 2007, to be approximately $69.1 million in the aggregate, including future years. Sales Practices Claims Over the past several years, Metropolitan Life Insurance Company; New England Mutual Life Insurance Company, New England Life Insurance Company and New England Securities Corporation (collectively "New England"); and GALIC; have faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. As of December 31, 2007, there were approximately 130 sales practices litigation matters pending against the Company. The Company continues 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's marketing and sales of individual life insurance, mutual funds or other products may be commenced in the future. Two putative class action lawsuits involving sales practices claims are pending against Metropolitan Life Insurance Company in Canada. In Jacynthe Evoy- Larouche v. Metropolitan Life Ins. Co. (Que. Super. Ct., filed March 1998), plaintiff alleges misrepresentations regarding dividends and future payments for life insurance policies and seeks unspecified damages. In Ace Quan v. Metropolitan Life Ins. Co. (Ont. Gen. Div., filed April 1997), plaintiff alleges breach of contract and negligent misrepresentations relating to, among other things, life insurance premium payments and seeks damages, including punitive damages. Regulatory authorities in a small number of states have had investigations or inquiries relating to Metropolitan Life Insurance Company's, New England's, or GALIC's sales of individual life insurance policies or annuities or other products. Over the past several years, these and a number of investigations by other regulatory authorities were resolved for monetary payments and certain other relief. The Company may continue to resolve investigations in a similar manner. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices claims against Metropolitan Life Insurance Company, New England, and GALIC. Regulatory Matters The Company receives and responds to subpoenas or other inquiries from state regulators, including state insurance commissioners; state attorneys general or other state governmental authorities; federal regulators, including the SEC; federal governmental authorities, including congressional committees; and the Financial Industry Regulatory Authority seeking a broad range of information. The issues involved in information requests and regulatory matters vary widely. Certain regulators have requested information and documents regarding contingent commission payments to brokers, the Company's awareness of any "sham" bids for business, bids and quotes that the Company submitted to potential customers, incentive agreements entered into with brokers, or compensation paid to intermediaries. Regulators also 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 received a subpoena from the Office of the U.S. Attorney for the Southern District of California asking for F-80 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) documents regarding the insurance broker Universal Life Resources. The Company has been cooperating fully with these inquiries. Other Litigation In Re Ins. Brokerage Antitrust Litig. (D. N.J., filed February 24, 2005). In this multi-district proceeding, plaintiffs filed a class action complaint consolidating claims from several separate actions that had been filed in or transferred to the District of New Jersey in 2004 and 2005. The consolidated complaint alleged that the Holding Company, Metropolitan Life Insurance Company, several non-affiliated insurance companies and several insurance brokers violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Employee Retirement Income Security Act of 1974 ("ERISA"), and antitrust laws and committed other misconduct in the context of providing insurance to employee benefit plans and to persons who participate in such employee benefit plans. In August and September 2007, the court issued orders granting defendants' motions to dismiss with prejudice the federal antitrust and the RICO claims. In January 2008, the court issued an order granting defendants' summary judgment motion on the ERISA claims, and in February 2008, the court dismissed the remaining state law claims on jurisdictional grounds. Plaintiffs have filed a notice of appeal of the court's decisions. A putative class action alleging that the Holding Company and other non-affiliated defendants violated state laws was transferred to the District of New Jersey but was not consolidated with other related actions. Plaintiffs' motion to remand this action to state court in Florida is pending. The American Dental Association, et al. v. MetLife Inc., et al. (S.D. Fla., filed May 19, 2003). The American Dental Association and three individual providers have sued the Holding Company, Metropolitan Life Insurance Company and other non-affiliated insurance companies in a putative class action lawsuit. The plaintiffs purport to represent a nationwide class of in-network providers who allege that their claims are being wrongfully reduced by downcoding, bundling, and the improper use and programming of software. The complaint alleges federal racketeering and various state law theories of liability. The district court has granted in part and denied in part the Company's motion to dismiss. The plaintiffs filed an amended complaint, and the Company filed another motion to dismiss. The court has issued a tag-along order, related to a medical managed care trial, which has stayed the lawsuit. Thomas, et al. v. Metropolitan Life Ins. Co., et al. (W.D. Okla., filed January 31, 2007). A putative class action complaint was filed against Metropolitan Life Insurance Company and MetLife Securities, Inc. Plaintiffs assert legal theories of violations of the federal securities laws and violations of state laws with respect to the sale of certain proprietary products by the Company's agency distribution group. Plaintiffs seek rescission, compensatory damages, interest, punitive damages and attorneys' fees and expenses. The Company is vigorously defending against the claims in this matter. Metropolitan Life Insurance Company also has been named as a defendant in a number of welding and mixed dust lawsuits filed in various state and federal courts. The Company is continuing to vigorously defend against these claims. Summary Putative or certified class action litigation and other litigation and 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 and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company's compliance with applicable insurance and other laws and regulations. F-81 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of potential losses, except as noted previously in connection with specific matters. In some of the matters referred to previously, very 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 particular quarterly or annual periods. 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. Assets and liabilities held for insolvency assessments are as follows:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Other Assets: Premium tax offset for future undiscounted assessments.. $24 $28 Premium tax offsets currently available for paid assessments........................................... 5 5 --- --- $29 $33 === === Liability: Insolvency assessments..................................... $41 $49 === ===
Assessments levied against the Company were less than $1 million for the year ended December 31, 2007, and $1 million for both the years ended December 31, 2006 and 2005. IMPACT OF HURRICANES On August 29, 2005, Hurricane Katrina made landfall in the states of Louisiana, Mississippi and Alabama, causing catastrophic damage to these coastal regions. The Company's cumulative gross losses were $21 million at December 31, 2005. During the year ended December 31, 2005, the Company recognized total net losses, net of income tax and reinsurance recoverables and including reinstatement premiums and other reinsurance-related premium adjustments related to the catastrophe of $14 million, net of income tax. There were no additional losses recognized for the years ended December 31, 2007 and 2006. Additional hurricane-related losses may be recorded in future periods as claims are received from insureds and claims to reinsurers are processed. Reinsurance recoveries are dependent upon the continued creditworthiness of the reinsurers, which may be affected by their other reinsured losses in connection with Hurricanes Katrina and otherwise. In addition, lawsuits, including purported class actions, have been filed in Louisiana and Mississippi challenging denial of claims for damages caused to property during Hurricane Katrina. The Company is a named party in some of these lawsuits. In addition, rulings in cases in which the Company is not a party may affect F-82 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) interpretation of its policies. The Company intends to vigorously defend these matters. However, any adverse rulings could result in an increase in the Company's hurricane-related claim exposure and losses. Based on information known by management, it does not believe that additional claim losses resulting from Hurricane Katrina will have a material adverse impact on the Company's consolidated financial statements. COMMITMENTS LEASES In accordance with industry practice, certain of the Company's income from lease agreements with retail tenants are contingent upon the level of the tenants' sales revenues. Additionally, 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............................................... $ 411 $ 18 $ 178 2009............................................... $ 377 $ 10 $ 186 2010............................................... $ 325 $ 5 $ 176 2011............................................... $ 248 $ 5 $ 151 2012............................................... $ 181 $ 4 $ 125 Thereafter......................................... $ 575 $ 4 $ 1,128
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 $3.9 billion and $2.4 billion 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 $3.3 billion at both December 31, 2007 and 2006. COMMITMENTS TO FUND BANK CREDIT FACILITIES, BRIDGE LOANS AND PRIVATE CORPORATE BOND INVESTMENTS The Company commits to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of these unfunded commitments were $667 million and $1.7 billion at December 31, 2007 and 2006, respectively. 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 F-83 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) recorded the initial repurchase of shares as treasury stock and recorded the amount received as an adjustment to the cost of the treasury stock. At December 31, 2007, the Company's ownership was approximately 52% of RGA. 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 $1 million to $800 million, with a cumulative maximum of $1.6 billion, 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 additional liabilities for indemnities, guarantees and commitments. The Company had no liability for indemnities, guarantees and commitments at 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 $1.3 billion at December 31, 2007. The credit default swaps expire at various times during the next ten years. 16. EMPLOYEE BENEFIT PLANS PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS The Company sponsors and administers various qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans covering employees and sales representatives who meet specified eligibility requirements of the sponsor and its participating affiliates. Participating affiliates are allocated a proportionate share of net expense related to the plans as well as contributions made to the plans. 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 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, based upon the average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. As of December 31, 2007, virtually all of the Company's obligations have been calculated using the traditional formula. The non-qualified pension plans provide supplemental benefits, in excess of amounts permitted by governmental agencies, to certain executive level F-84 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) employees. The Company's proportionate share of net pension expense related to its sponsored pension plans was $88 million or 94% for the year ended December 31, 2007. The Company also provides certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees. The other postretirement plans cover eligible employees of the sponsor and its participating affiliates who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age and service criteria while working for the Company or its participating affiliates, 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. Participating affiliates are allocated a proportionate share of net expense and contributions related to the postemployment and other postretirement plans. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits. The Company's proportionate share of net other postretirement expense related to its sponsored other postretirement plans was less than $1 million or 5% for the year ended December 31, 2007. As described more fully in Note 1, 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 $78 million, and the intangible asset was $12 million, at December 31, 2005. The excess of the additional minimum pension liability over the intangible asset of $66 million, $41 million net of income tax, 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 $92 million. The additional minimum pension liability of $59 million, net of income tax of $33 million, was recorded as a reduction of accumulated other comprehensive income. The change in the additional minimum pension liability of $18 million, net of income tax, was reflected as a component of comprehensive income for the year ended December 31, 2006. 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, prior service costs and credits, and the remaining net transition asset or obligation that had not yet been included in net periodic benefit cost at the date of adoption. The following table summarizes the 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 ------------------------------------------------------- MINIMUM PRE PENSION ADOPTION OF POST SFAS 158 LIABILITY SFAS 158 SFAS 158 BALANCE SHEET CAPTION ADJUSTMENTS ADJUSTMENT ADJUSTMENT ADJUSTMENTS - --------------------- ----------- ---------- ----------- ----------- (IN MILLIONS) Other assets: Prepaid pension benefit cost..................................... $ 1,878 $ -- $ (999) $ 879 Other assets: Intangible asset............. $ 12 $(12) $ -- $ -- Other liabilities: Accrued pension benefit cost..................................... $ (482) $(14) $ (79) $ (575) Other liabilities: Accrued postretirement benefit cost............................. $ (696) $ -- $ (100) $ (796) --------- --------- Accumulated other comprehensive income (loss), before income tax: Defined benefit plans.................... $ (66) $(26) $ (1,178) $ (1,270) Minority interest.......................... $ -- $ 8 Deferred income tax........................ $ 8 $ 421 --------- --------- Accumulated other comprehensive income (loss), net of income tax: Defined benefit plans.................... $ (41) $ (18) $ (749) $ (808) ========== ===========
F-85 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A December 31 measurement date is used for all of the Company's defined benefit pension and other postretirement benefit plans. OBLIGATIONS, FUNDED STATUS AND NET PERIODIC BENEFIT COSTS
DECEMBER 31, --------------------------------- OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS --------------- --------------- 2007 2006 2007 2006 ------ ------ ------ ------ (IN MILLIONS) Change in benefit obligation: Benefit obligation at beginning of year...... $5,896 $5,717 $2,055 $2,160 Service cost............................... 161 158 26 35 Interest cost.............................. 350 330 103 116 Plan participants' contributions........... -- -- 31 29 Divestitures............................... -- (3) -- -- Net actuarial (gains) losses............... (385) 15 (465) (1) Change in benefits......................... 39 (2) -- (143) Prescription drug subsidy.................. -- -- 13 10 Benefits paid.............................. (349) (319) (171) (151) ------ ------ ------ ------ Benefit obligation at end of year............ 5,712 5,896 1,592 2,055 ------ ------ ------ ------ Change in plan assets: Fair value of plan assets at beginning of year....................................... 6,249 5,471 1,169 1,091 Actual return on plan assets............... 541 715 58 103 Divestitures............................... -- (3) -- -- Employer contribution...................... 50 385 1 1 Benefits paid.............................. (349) (319) (47) (26) ------ ------ ------ ------ Fair value of plan assets at end of year..... 6,491 6,249 1,181 1,169 ------ ------ ------ ------ Funded status at end of year................. $ 779 $ 353 $ (411) $ (886) ====== ====== ====== ====== Amounts recognized in the consolidated balance sheet consist of: Other assets............................... $1,382 $ 935 $ -- $ -- Other liabilities.......................... (603) (582) (411) (886) ------ ------ ------ ------ Net amount recognized................... $ 779 $ 353 $ (411) $ (886) ====== ====== ====== ====== Accumulated other comprehensive (income) loss: Net actuarial (gains) losses............... $ 633 $1,126 $ (112) $ 328 Prior service cost (credit)................ 63 39 (194) (230) ------ ------ ------ ------ Accumulated other comprehensive (income) loss.................................. $ 696 $1,165 $ (306) $ 98 ====== ====== ====== ======
F-86 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The aggregate projected benefit obligation and aggregate fair value of plan assets for the pension plans were as follows:
DECEMBER 31, ------------------------------------------------- NON-QUALIFIED QUALIFIED PLAN PLAN TOTAL --------------- ------------- --------------- 2007 2006 2007 2006 2007 2006 ------ ------ ----- ----- ------ ------ (IN MILLIONS) Aggregate fair value of plan assets (principally Company contracts)...................... $6,491 $6,249 $ -- $ -- $6,491 $6,249 Aggregate projected benefit obligation...................... 5,111 5,318 601 578 5,712 5,896 ------ ------ ----- ----- ------ ------ Over (under) funded............... $1,380 $ 931 $(601) $(578) $ 779 $ 353 ====== ====== ===== ===== ====== ======
The accumulated benefit obligation for all defined benefit pension plans was $5,295 million and $5,457 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................................ $601 $578 Accumulated benefit obligation.............................. $524 $497 Fair value of plan assets................................... $ -- $ --
Information for pension and other postretirement plans with a projected benefit obligation in excess of plan assets is as follows:
DECEMBER 31, ----------------------------- OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ----------- --------------- 2007 2006 2007 2006 ---- ---- ------ ------ (IN MILLIONS) Projected benefit obligation.................... $627 $603 $1,592 $2,055 Fair value of plan assets....................... $ 24 $ 22 $1,181 $1,169
F-87 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income were as follows:
YEARS ENDED DECEMBER 31, ------------------------------------------- OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS --------------------- ------------------- 2007 2006 2005 2007 2006 2005 ----- ----- ----- ----- ---- ---- (IN MILLIONS) NET PERIODIC BENEFIT COST Service cost.......................... $ 161 $ 158 $ 141 $ 26 $ 35 $ 36 Interest cost......................... 350 330 315 103 116 120 Expected return on plan assets........ (502) (448) (443) (87) (79) (78) Amortization of net actuarial (gains) losses.............................. 68 128 116 -- 22 14 Amortization of prior service cost (credit)............................ 17 10 16 (36) (37) (18) ----- ----- ----- ----- ---- ---- Net periodic benefit cost........... 94 $ 178 $ 145 6 $ 57 $ 74 ----- ===== ===== ----- ==== ==== OTHER CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OTHER COMPREHENSIVE INCOME Net actuarial (gains) losses........ (424) (440) Prior service cost (credit)......... 40 -- Amortization of net actuarial (gains) losses................... (68) -- Amortization of prior service cost (credit)......................... (17) 36 ----- ----- Total recognized in other comprehensive income........... (469) (404) ----- ----- Total recognized in net periodic benefit cost and other comprehensive income............. $(375) $(398) ===== =====
The estimated net actuarial losses and prior service cost for the pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are $13 million and $15 million, respectively. The estimated net actuarial gains and prior service credit for the defined benefit other postretirement 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 $36 million, respectively. In 2004, the Company adopted the guidance in FSP 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("FSP 106-2"), to account for future subsidies to be received under the Prescription Drug Act. The Company began receiving these subsidies F-88 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) during 2006. A summary of the reduction to the APBO and related reduction to the components of net periodic other postretirement benefit cost is as follows:
DECEMBER 31, ------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Cumulative reduction in benefit obligation: Beginning of year.................................... $328 $298 $230 Service cost......................................... 7 6 6 Interest cost........................................ 19 19 16 Net actuarial gains (losses)......................... (42) 15 46 Prescription drug subsidy............................ (13) (10) -- ---- ---- ---- End of year....................................... $299 $328 $298 ==== ==== ====
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Reduction in net periodic benefit cost: Service cost........................................ $ 7 $ 6 $ 6 Interest cost....................................... 19 19 16 Amortization of net actuarial gains (losses)........ 5 30 23 --- --- --- Total reduction in net periodic benefit cost..... $31 $55 $45 === === ===
The Company received subsidies of $10 million and $8 million for the years ended December 31, 2007 and 2006, respectively. ASSUMPTIONS Assumptions used in determining benefit obligations were as follows:
DECEMBER 31, --------------------------------- OTHER POSTRETIRE- PENSION BENEFITS MENT BENEFITS ----------------- ------------- 2007 2006 2007 2006 ------- ------- ----- ----- Weighted average discount rate............. 6.65% 6.00% 6.65% 6.00% Rate of compensation increase.............. 4% - 8% 4% - 8% 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........................ 6.00% 5.80% 5.85% 6.00% 5.79% 5.83% Weighted average expected rate of return on plan assets.... 8.25% 8.25% 8.49% 7.48% 7.42% 7.50% Rate of compensation increase.................... 4% - 8% 4% - 8% 4% - 8% N/A N/A N/A
F-89 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 average expected return on plan assets for use in that plan's valuation in 2008 is currently anticipated to be 8.25% for pension benefits and postretirement medical benefits and 6.25% for postretirement life benefits. The assumed healthcare cost trend rates used in measuring the APBO and net periodic benefit cost were as follows:
DECEMBER 31, ----------------------------------------------------------- 2007 2006 ---------------------------- ---------------------------- Pre-Medicare eligible claims.................... 8.5% down to 5% in 2014 9.0% down to 5% in 2014 Medicare eligible claims.... 10.5% down to 5% in 2018 11.0% down to 5% in 2018
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 MILLIONS) Effect on total of service and interest cost components......................................... $ 7 $ (6) Effect of accumulated postretirement benefit obligation......................................... $ 63 $ (62)
PLAN ASSETS The Company has issued group annuity and life insurance contracts supporting approximately 99% of all pension and other postretirement benefit plans' assets. The account values of the group annuity and life insurance contracts issued by the Company and held as assets of the pension and other postretirement benefit plans were $7,565 million and $7,321 million as of December 31, 2007 and 2006, respectively. The majority of such account values are held in separate accounts established by the Company. Total revenue from these contracts recognized in the consolidated statements of income was $28 million, $29 million and $28 million for the years ended December 31, 2007, 2006 and 2005, respectively, and includes policy charges, net investment income from investments backing the contracts and administrative fees. Total investment income, including realized and unrealized gains and losses, credited to the account balances were $603 million, $818 million and $460 million for the years ended December 31, 2007, 2006 and 2005, respectively. The terms of these contracts are consistent in all material respects with those the Company offers to unaffiliated parties that are similarly situated. F-90 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The weighted-average allocations of pension plan and other postretirement benefit plan assets were as follows:
DECEMBER 31, ----------------------------- OTHER PENSION POSTRETIRE- BENEFITS MENT BENEFITS ------------- ------------- 2007 2006 2007 2006 ----- ----- ----- ----- ASSET CATEGORY Equity securities............................... 38% 42% 37% 37% Fixed maturity securities....................... 44% 42% 58% 57% Other (Real Estate and Alternative Investments)................................. 18% 16% 5% 6% --- --- --- --- Total........................................... 100% 100% 100% 100% === === === ===
The weighted average target allocations of pension plan and other postretirement benefit plan assets for 2008 are as follows:
PENSION OTHER --------- --------- ASSET CATEGORY Equity securities................................... 30% - 55% 30% - 45% Fixed maturity securities........................... 30% - 65% 45% - 70% Other (Real Estate and Alternative Investments)..... 10% - 25% 0% - 10%
Target allocations of assets are determined with the objective of maximizing returns and minimizing volatility of net assets through adequate asset diversification. Adjustments are made to target allocations based on an assessment of the impact of economic factors and market conditions. CASH FLOWS It is the Company's practice to make contributions to the qualified pension plans to comply with minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended. In accordance with such practice, no contributions were required for the years ended December 31, 2007 or 2006. No contributions will be required for 2008. The Company did not make discretionary contributions to the qualified pension plans during the year ended December 31, 2007 and made contributions of $335 million during the year ended December 31, 2006. The Company expects to make additional discretionary contributions of $144 million in 2008. Benefit payments due under the non-qualified pension plans are funded from the Company's general assets as they become due under the provision of the plans. These payments totaled $50 million and $35 million for the years ended December 31, 2007 and 2006, respectively. These payments are expected to be at approximately the same level in 2008. 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. While the Company has partially funded such plans in advance, it has been the Company's practice to primarily use their general assets, net of participant's contributions, to pay postretirement medical claims as they come due in lieu of utilizing plan assets. Total payments equaled $171 million and $151 million for the years ended December 31, 2007 and 2006, respectively. The Company expects to make contributions of $115 million, net of participant's contributions, toward the other postretirement plan obligations in 2008. As noted previously, the Company expects to receive subsidies under the Prescription Drug Act to partially offset such payments. F-91 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Gross benefit payments for the next ten years, which reflect expected future service where appropriate, and gross subsidies to be received under the Prescription Drug Act are expected to be as follows:
OTHER POSTRETIREMENT BENEFITS ----------------------------- PENSION PRESCRIPTION BENEFITS GROSS DRUG SUBSIDIES NET -------- ----- -------------- ---- (IN MILLIONS) 2008........................................ $ 355 $115 $ (14) $101 2009........................................ $ 368 $119 $ (15) $104 2010........................................ $ 378 $123 $ (16) $107 2011........................................ $ 391 $127 $ (16) $111 2012........................................ $ 407 $130 $ (17) $113 2013 - 2017................................. $2,251 $705 $(100) $605
SAVINGS AND INVESTMENT PLANS The Company sponsors savings and investment plans for substantially all employees under which a portion of employee contributions are matched. The Company contributed $69 million, $73 million and $70 million for the years ended December 31, 2007, 2006 and 2005, respectively. 17. EQUITY CAPITAL CONTRIBUTIONS On December 12, 2007, the Holding Company contributed $7 million to the Company in connection with the Company's issuance of a surplus note to MetLife Capital Trust IV. See Note 10. On October 20, 2006, the Holding Company contributed $17 million to the Company in connection with the sale and merger of CLIC. See Note 2. On September 30, 2006, the Holding Company contributed $377 million to the Company in the form of intangible assets. See Note 2. On May 1, 2006, GALIC, an indirect insurance subsidiary of the Company, sold its wholly-owned insurance subsidiary, Paragon Life Insurance Company ("Paragon"), to its ultimate parent, the Holding Company. Immediately following the sale, the Holding Company merged Paragon, an affiliate of the Company, with and into the Company. In connection with the transaction, the Holding Company contributed $76 million to the Company. EXCESS PROCEEDS RECEIVED ON SALE OF INTERESTS IN AFFILIATES On November 1, 2007, the Company sold its interests in MetLife Mexico, S.A. and MetLife Pensiones, S.A., both affiliates, to MetLife International Holdings, Inc. ("MIHI"), also an affiliate, at their approximate aggregate fair value of $34 million. The Company's carrying value of the interests at the time of sale was $4 million. The excess cash consideration received from MIHI over the Company's carrying value resulted in an increase of $30 million in additional paid-in capital. STOCK-BASED COMPENSATION PLANS Overview As described more fully in Note 1, effective January 1, 2006, in conjunction with the Holding Company, the Company adopted SFAS 123(r) using the modified prospective transition method. The adoption of SFAS 123(r) did not have a significant impact on the Company's financial position or results of operations. F-92 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The stock-based compensation expense recognized by the Company is related to awards under incentive plans of the Holding Company, as described herein. Description of Plans The MetLife, Inc. 2000 Stock Incentive Plan, as amended (the "Stock Incentive Plan"), authorized the granting of awards in the form of options to buy shares of Holding Company common stock ("Stock Options") that either qualify as incentive Stock Options under Section 422A of the Internal Revenue Code or are non-qualified. Under the MetLife, Inc. 2005 Stock and Incentive Compensation Plan, as amended (the "2005 Stock Plan"), awards granted may be in the form of Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, Performance Shares or Performance Share Units, Cash-Based Awards, and Stock-Based Awards (each as defined in the 2005 Stock Plan). The Stock Incentive Plan, 2005 Stock Plan, and the LTPCP, as described below, are hereinafter collectively referred to as the "Incentive Plans." The aggregate number of shares of Holding Company common stock reserved for issuance under the 2005 Stock Plan and the LTPCP is 68,000,000, plus those shares available but not utilized under the Stock Incentive Plan and those shares utilized under the Stock Incentive Plan that are recovered due to forfeiture of Stock Options. Additional shares of Holding Company common stock carried forward from the Stock Incentive Plan and available for issuance under the 2005 Stock Plan were 12,506,003 as of December 31, 2007. Each share issued under the 2005 Stock Plan in connection with a Stock Option or Stock Appreciation Right reduces the number of shares remaining for issuance under that plan by one, and each share issued under the 2005 Stock Plan in connection with awards other than Stock Options or Stock Appreciation Rights reduces the number of shares remaining for issuance under that plan by 1.179 shares. As of December 31, 2007, the aggregate number of shares of Holding Company common stock remaining available for issuance pursuant to the 2005 Stock Plan was 60,862,366. Stock Option exercises and other stock-based awards to employees settled in shares are satisfied through the issuance of shares held in treasury by the Holding Company. The Company does not issue any of its own shares in satisfaction of stock-based compensation awards to employees. The Holding Company allocated 88%, 90% and 92% of stock-based compensation to the Company for the years ended December 31, 2007, 2006 and 2005, respectively. This allocation represents substantially all stock-based compensation recognized in the Company's consolidated results of operations. Accordingly, the discussion herein addresses the Holding Company's practices for recognizing expense for awards under the Incentive Plans. Underlying awards are expressed in their entirety with related expense amounts representing the resulting allocation to the Company. Compensation expense related to awards under the Incentive Plans is recognized based on the number of awards expected to vest, which represents the awards granted less expected forfeitures over the life of the award, as estimated at the date of grant. Unless a material deviation from the assumed rate is observed during the term in which the awards are expensed, any adjustment necessary to reflect differences in actual experience is recognized in the period the award becomes payable or exercisable. Compensation expense of $128 million, $130 million and $112 million, and income tax benefits of $45 million, $46 million and $39 million, related to the Incentive Plans was allocated to the Company for the years ended December 31, 2007, 2006 and 2005, respectively. Compensation expense is principally related to the issuance of Stock Options, Performance Shares and LTPCP arrangements. Stock Options All Stock Options granted had an exercise price equal to the closing price of the Holding Company's common stock as reported on the New York Stock Exchange on the date of grant, and have a maximum term of ten years. Certain Stock Options granted under the Stock Incentive Plan and the 2005 Stock Plan have or will become F-93 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) exercisable over a three year period commencing with the date of grant, while other Stock Options have or will become exercisable three years after the date of grant. A summary of the activity related to Stock Options for the year ended December 31, 2007 is presented below. The aggregate intrinsic value was computed using the closing share price on December 31, 2007 of $61.62 and December 29, 2006 of $59.01, as applicable.
WEIGHTED AVERAGE WEIGHTED REMAINING SHARES UNDER AVERAGE CONTRACTUAL AGGREGATE OPTION EXERCISE PRICE TERM INTRINSIC VALUE ------------ -------------- ----------- --------------- (YEARS) (IN MILLIONS) Outstanding at January 1, 2007............... 24,814,183 $ 34.69 6.58 $ 604 =========== =========== =============== Granted...................................... 3,297,875 $62.86 Exercised.................................... (3,508,416) $31.33 Cancelled/Expired............................ (68,314) $30.57 Forfeited.................................... (172,582) $55.13 ---------- Outstanding at December 31, 2007............. 24,362,746 $38.85 6.18 $555 ========== =========== =========== =========== Aggregate number of stock options expected to vest at December 31, 2007.................. 23,777,440 $38.52 6.13 $549 ========== =========== =========== =========== Exercisable, December 31, 2007............... 17,393,154 $32.84 5.29 $501 ========== =========== =========== ===========
Prior to January 1, 2005, the Black-Scholes model was used to determine the fair value of Stock Options granted and recognized in the financial statements or as reported in the pro forma disclosure which follows. The fair value of Stock Options issued on or after January 1, 2005 was estimated on the date of grant using a binomial lattice model. The Holding Company made this change because lattice models produce more accurate option values due to the ability to incorporate assumptions about grantee exercise behavior resulting from changes in the price of the underlying shares. In addition, lattice models allow for changes in critical assumptions over the life of the option in comparison to closed-form models like Black-Scholes, which require single-value assumptions at the time of grant. The Holding Company used daily historical volatility since the inception of trading when calculating Stock Option values using the Black-Scholes model. In conjunction with the change to the binomial lattice model, the Holding Company began estimating expected future volatility based upon an analysis of historical prices of the Holding Company's common stock and call options on that common stock traded on the open market. The Holding Company uses a weighted-average of the implied volatility for publicly traded call options with the longest remaining maturity nearest to the money as of each valuation date and the historical volatility, calculated using monthly closing prices of the Holding Company's common stock. The Holding Company chose a monthly measurement interval for historical volatility as it believes this better depicts the nature of employee option exercise decisions being based on longer-term trends in the price of the underlying shares rather than on daily price movements. The risk-free rate is based on observed interest rates for instruments with maturities similar to the expected term of the Stock Options. Whereas the Black- Scholes model requires a single spot rate for instruments with a term matching the expected life of the option at the valuation date, the binomial lattice model allows for the use of different rates for each year over the contractual term of the option. The table below presents the full range of imputed forward rates for U.S. Treasury Strips that was used in the binomial lattice model over the contractual term of all Stock Options granted in the period. F-94 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Dividend yield is determined based on historical dividend distributions compared to the price of the underlying common stock as of the valuation date and held constant over the life of the Stock Option. Use of the Black-Scholes model requires an input of the expected life of the Stock Options, or the average number of years before Stock Options will be exercised or expired. The Holding Company estimated expected life using the historical average years to exercise or cancellation and average remaining years outstanding for vested Stock Options. Alternatively, the binomial model used by the Holding Company incorporates the contractual term of the Stock Options and then considers expected exercise behavior and a post-vesting termination rate, or the rate at which vested options are exercised or expire prematurely due to termination of employment, to derive an expected life. The post-vesting termination rate is determined from actual historical exercise and expiration activity under the Incentive Plans. Exercise behavior in the binomial lattice model used by the Holding Company is expressed using an exercise multiple, which reflects the ratio of exercise price to the strike price of Stock Options granted at which holders of the Stock Options are expected to exercise. The exercise multiple is derived from actual historical exercise activity. The following weighted average assumptions, with the exception of risk-free rate, which is expressed as a range, were used to determine the fair value of Stock Options issued during the:
YEARS ENDED DECEMBER 31, ------------------------------------------- 2007 2006 2005 ------------- ------------- ------------- Dividend yield................................ 0.94% 1.04% 1.19% Risk-free rate of return...................... 4.30% - 5.32% 4.17% - 4.96% 3.34% - 5.41% Expected volatility........................... 19.54% 22.00% 23.24% Exercise multiple............................. 1.66 1.52 1.48 Post-vesting termination rate................. 3.66% 4.09% 5.19% Contractual term (years)...................... 10 10 10 Expected Life (years)......................... 6 6 6 Weighted average exercise price of stock options granted............................. $ 62.86 $ 50.21 $ 38.70 Weighted average fair value of stock options granted..................................... $ 17.76 $ 13.84 $ 10.09
Compensation expense related to Stock Option awards expected to vest and granted prior to January 1, 2006 is recognized ratably over the requisite service period, which equals the vesting term. Compensation expense related to Stock Option awards expected to vest and granted on or after January 1, 2006 is recognized ratably over the requisite service period or the period to retirement eligibility, if shorter. Compensation expense of $49 million, $51 million and $47 million related to Stock Options was allocated to the Company for the years ended December 31, 2007, 2006 and 2005, respectively. F-95 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Had compensation expense for grants awarded prior to January 1, 2003 been determined based on the fair value at the date of grant rather than the intrinsic value method, the Company's earnings would have been reduced to the following pro forma amounts for the following:
YEAR ENDED DECEMBER 31, ------------- 2005 ------------- (IN MILLIONS) Net income................................................... $ 3,253 Add: Stock option-based employee compensation expense included in reported net income, net of income tax......... 30 Deduct: Total stock option-based employee compensation determined under fair value based method for all awards, net of income tax.......................................... (32) ----------- Pro forma net income......................................... $3,251 ===========
As of December 31, 2007, the Holding Company had $41 million of total unrecognized compensation costs related to Stock Options. It is expected that these costs will be recognized over a weighted average period of 1.70 years. The Company's allocated portion of Stock Option expense was 89%. The Holding Company allocated to its subsidiaries the tax benefit associated with the deduction allowed for Stock Option exercises. The Company's consolidated results of operations include $41 million, $22 million, and $11 million of such tax benefits for the years ended December 31, 2007, 2006, and 2005, respectively. Performance Shares Beginning in 2005, the Holding Company awarded certain members of management Performance Shares under (and as defined in) the 2005 Stock Plan. Participants are awarded an initial target number of Performance Shares with the final number of Performance Shares payable being determined by the product of the initial target multiplied by a factor of 0.0 to 2.0. The factor applied is based on measurements of the Holding Company's performance with respect to: (i) the change in annual net operating earnings per share, as defined; and (ii) the proportionate total shareholder return, as defined, with reference to the three- year performance period relative to other companies in the S&P Insurance Index with reference to the same three-year period. Performance Share awards will normally vest in their entirety at the end of the three-year performance period (subject to certain contingencies) and will be payable entirely in shares of the Holding Company's common stock. The following is a summary of Performance Share activity for the year ended December 31, 2007:
WEIGHTED AVERAGE PERFORMANCE GRANT DATE SHARES FAIR VALUE ----------- ---------------- Outstanding at January 1, 2007.................... 1,849,575 $ 42.24 Granted......................................... 916,075 $60.86 Forfeited....................................... (75,525) $49.20 ----------- Outstanding at December 31, 2007.................. 2,690,125 $48.39 =========== Performance Shares expected to vest at December 31, 2007........................................ 2,641,669 $48.20 ===========
Performance Share amounts above represent aggregate initial target awards and do not reflect potential increases or decreases resulting from the final performance factor to be determined at the end of the respective performance period. As of December 31, 2007, the three year performance period for the 2005 Performance Share grants was completed. Included in the immediately preceding table are 965,525 outstanding Performance Shares to F-96 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) which the final performance factor will be applied. The calculation of the performance factor is expected to be finalized during the second quarter of 2008 after all data necessary to perform the calculation is publicly available. Performance Share awards are accounted for as equity awards but are not credited with dividend-equivalents for actual dividends paid on the Holding Company's common stock during the performance period. Accordingly, the fair value of Performance Shares is based upon the closing price of the Holding Company's common stock on the date of grant, reduced by the present value of estimated dividends to be paid on that stock during the performance period. Compensation expense related to initial Performance Shares granted prior to January 1, 2006 and expected to vest is recognized ratably during the performance period. Compensation expense related to initial Performance Shares granted on or after January 1, 2006 and expected to vest is recognized ratably over the performance period or the period to retirement eligibility, if shorter. Performance Shares expected to vest and the related compensation expenses may be further adjusted by the performance factor most likely to be achieved, as estimated by management, at the end of the performance period. Compensation expense of $79 million, $67 million and $22 million, related to Performance Shares was allocated to the Company for the years ended December 31, 2007, 2006 and 2005, respectively. As of December 31, 2007, the Holding Company had $57 million of total unrecognized compensation costs related to Performance Share awards. It is expected that these costs will be recognized over a weighted average period of 1.72 years. The Company's allocated portion of Performance Share expense was 88%. Long-Term Performance Compensation Plan Prior to January 1, 2005, the Holding Company granted stock-based compensation to certain members of management under the LTPCP. Each participant was assigned a target compensation amount (an "Opportunity Award") at the inception of the performance period with the final compensation amount determined based on the total shareholder return on the Holding Company's common stock over the three-year performance period, subject to limited further adjustment approved by the Holding Company's Board of Directors. Payments on the Opportunity Awards were normally payable in their entirety (subject to certain contingencies) at the end of the three-year performance period, and were paid in whole or in part with shares of the Holding Company's common stock, as approved by the Holding Company's Board of Directors. There were no new grants under the LTPCP during the years ended December 31, 2007, 2006 and 2005. A portion of each Opportunity Award under the LTPCP was settled in shares of the Holding Company's common stock while the remainder was settled in cash. The portion of the Opportunity Award settled in shares of the Holding Company's common stock was accounted for as an equity award with the fair value of the award determined based upon the closing price of the Holding Company's common stock on the date of grant. The compensation expense associated with the equity award, based upon the grant date fair value, was recognized into expense ratably over the respective three-year performance period. The portion of the Opportunity Award settled in cash was accounted for as a liability and was remeasured using the closing price of the Holding Company's common stock on the final day of each subsequent reporting period during the three-year performance period. The final LTPCP performance period concluded during the six months ended June 30, 2007. Final Opportunity Awards in the amount of 618,375 shares of the Holding Company's common stock and $16 million in cash were paid on April 18, 2007. No significant compensation expense related to LTPCP was recognized during the year ended December 31, 2007. Compensation expense of $12 million and $43 million related to LTPCP Opportunity Awards was allocated to the Company for the years ended December 31, 2006 and 2005, respectively. F-97 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 action. Metropolitan Life Insurance Company and each of its U.S. insurance subsidiaries 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 the various state insurance departments may impact the effect of Codification on the statutory capital and surplus of Metropolitan Life Insurance Company and its 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 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. Further, statutory accounting principles do not give recognition to purchase accounting adjustments. Statutory net income of Metropolitan Life Insurance Company, a New York domiciled insurer, was $2.1 billion, $1.0 billion and $2.2 billion for the years ended December 31, 2007, 2006 and 2005, respectively. Statutory capital and surplus, as filed with the Department, was $13.0 billion and $9.2 billion at December 31, 2007 and 2006, respectively. DIVIDEND RESTRICTIONS Under New York State Insurance Law, Metropolitan Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to the Holding Company as long as the aggregate amount of all such dividends in any calendar year does not exceed the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains). Metropolitan Life Insurance Company will be permitted to pay a cash dividend to the Holding Company in excess of the lesser of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Superintendent and the Superintendent does not disapprove the distribution within 30 days of its filing. Under New York State Insurance Law, the Superintendent has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its shareholders. The New York State Department of Insurance (the "Department") has established informal guidelines for such determinations. The guidelines, among other things, focus on the insurer's overall financial condition and profitability under statutory accounting practices. During the years ended December 31, 2007 and 2006, Metropolitan Life Insurance Company paid to the Holding Company $500 million and $863 million, respectively, in ordinary dividends. The maximum amount of dividends which Metropolitan Life Insurance Company may pay to the Holding Company in 2008 without prior regulatory approval is $1,299 million. F-98 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Stockholder dividends or other distributions proposed to be paid by New England Life Insurance Company ("NELICO") to its parent, Metropolitan Life Insurance Company , must be approved by Massachusetts Commissioner of Insurance (the "Commissioner") if such dividends or distributions made within the preceding calendar year, exceed the greater of (i) 10% of NELICO's statutory surplus as of the immediately preceding calendar year or (ii) NELICO's statutory net gains from operations for the immediately preceding calendar year. In addition, dividends cannot be paid from a source other than statutory unassigned funds surplus without prior approval of the Commissioner. NELICO paid no common stockholder dividends for the years ended December 31, 2007, 2006 and 2005. The maximum amount of the dividend which NELICO may pay to Metropolitan Life Insurance Company in 2008 without prior regulatory approval is $94 million. For the years ended December 31, 2007, 2006 and 2005, Metropolitan Life Insurance Company received dividends from subsidiaries of $60 million, $34 million and $77 million, respectively. 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.................................................... $(1,485) $ (926) $(2,611) Income tax effect of holding gains (losses)............... 655 324 984 Reclassification adjustments: Recognized holding (gains) losses included in current year income.......................................... (173) 403 241 Amortization of premiums and accretion of discounts associated with investments.......................... 493 (443) (186) Income tax effect......................................... (141) 14 (21) Allocation of holding gains on investments relating to other policyholder amounts.............................. 532 792 1,580 Income tax effect of allocation of holding gains to other policyholder amounts.................................... (235) (277) (596) Unrealized investment gains of subsidiary at date of sale.................................................... -- -- 15 Deferred income tax on unrealized investment gains of subsidiary at date of sale.............................. -- -- (5) ------- ------- ------- Net unrealized investment gains (losses).................. (354) (113) (599) ------- ------- ------- Foreign currency translation adjustments.................. 139 7 (54) Foreign currency translation adjustments of subsidiary at due date of sale........................................ -- -- 5 ------- ------- ------- Foreign currency translation adjustment................... 139 7 (49) Minimum pension liability adjustment...................... -- (18) 89 Defined benefit plan adjustment........................... 524 -- -- ------- ------- ------- Other comprehensive income (loss)......................... $ 309 $(124) $ (559) ======= ======= =======
F-99 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 18. OTHER EXPENSES Information on other expenses is as follows:
YEARS ENDED DECEMBER 31, --------------------------- 2007 2006 2005 ------- ------- ------- (IN MILLIONS) Compensation...................................... $ 2,693 $ 2,661 $ 2,564 Commissions....................................... 1,711 1,701 1,334 Interest and debt issue costs..................... 418 332 245 Amortization of DAC and VOBA...................... 1,160 1,089 1,385 Capitalization of DAC............................. (1,689) (1,677) (1,619) Rent, net of sublease income...................... 217 201 227 Minority interest................................. 302 225 168 Insurance tax..................................... 551 527 417 Other............................................. 981 1,255 996 ------- ------- ------- Total other expenses............................ $ 6,344 $ 6,314 $ 5,717 ======= ======= =======
As discussed in Note 8, the Company recognized an expense related to the recapture of a reinsurance treaty by an affiliate for the year ended December 31, 2006. For the year ended December 31, 2005, the Company entered into a reinsurance agreement with an affiliate and it received a ceding commission which is included in the table above. See Notes 8, 10, and 22 for discussion of affiliated expenses included in the table above. 19. BUSINESS SEGMENT INFORMATION The Company is a leading provider of insurance and other financial services with operations throughout the United States. The Company's business is divided into three operating segments: Institutional, Individual and Reinsurance, as well as Corporate & Other. These segments are managed separately because they either provide different products and services, require different strategies or have different technology requirements. Institutional offers a broad range of group insurance and retirement & savings products and services, including group life insurance, non-medical health insurance, such as short and long-term disability, long-term care, and dental insurance, and other insurance products and services. Individual offers a wide variety of protection and asset accumulation products, including life insurance, annuities and mutual funds. Through the Company's majority-owned subsidiary, RGA, the Reinsurance segment provides reinsurance of life and annuity policies in North America and various international markets. Additionally, reinsurance of critical illness policies is provided in select international markets. Corporate & Other contains the excess capital not allocated to the business segments, various start-up entities and run-off entities, as well as interest expense related to the majority of the Company's outstanding debt and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of all intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings, as well as intersegment transactions. Additionally, the Company's asset management business, including amounts reported as discontinued operations, is included in the results of operations for Corporate & Other. See Note 20 for disclosures regarding discontinued operations, including real estate. Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the F-100 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) unique and specific nature of the risks inherent in Company's businesses. As a part of the economic capital process, a portion of net investment income is credited to the segments based on the level of allocated equity. Set forth in the tables below is certain financial information with respect to the Company's segments, as well as Corporate & Other, for the years ended December 31, 2007, 2006 and 2005. The accounting policies of the segments are the same as those of the Company, except for the method of capital allocation and the accounting for gains (losses) from intercompany sales, which are eliminated in consolidation. The Company allocates equity to each segment based upon the economic capital model that allows the Company to effectively manage its capital. The Company evaluates the performance of each segment based upon net income excluding net investment gains (losses), net of income tax, adjustments related to net investment gains (losses), net of income tax, the impact from the cumulative effect of changes in accounting, net of income tax and discontinued operations, other than discontinued real estate, net of income tax. The Company allocates certain non-recurring items, such as expenses associated with certain legal proceedings, to Corporate & Other.
FOR THE YEAR ENDED CORPORATE & DECEMBER 31, 2007 INSTITUTIONAL INDIVIDUAL REINSURANCE OTHER TOTAL - ----------------------------------- ------------- ---------- ----------- ---------------- -------- (IN MILLIONS) STATEMENT OF INCOME: Premiums........................... $ 12,358 $ 4,073 $ 4,910 $ 4 $ 21,345 Universal life and investment-type product policy fees.............. 763 1,483 -- -- 2,246 Net investment income.............. 6,669 5,552 871 394 13,486 Other revenues..................... 712 152 77 61 1,002 Net investment gains (losses)...... (269) (81) (177) 63 (464) Policyholder benefits and claims... 13,332 4,924 3,989 19 22,264 Interest credited to policyholder account balances................. 2,451 1,064 262 -- 3,777 Policyholder dividends............. -- 1,685 -- 2 1,687 Other expenses..................... 2,391 2,290 1,226 437 6,344 -------- -------- ----------- ---------------- -------- Income from continuing operations before provision (benefit) for income tax....................... 2,059 1,216 204 64 3,543 Provision (benefit) for income tax.............................. 701 431 71 (65) 1,138 -------- -------- ----------- ---------------- -------- Income from continuing operations.. 1,358 785 133 129 2,405 Income from discontinued operations, net of income tax.... 7 -- -- 20 27 -------- -------- ----------- ---------------- -------- Net income......................... $ 1,365 $ 785 $ 133 $ 149 $ 2,432 ======== ======== =========== ================ ======== BALANCE SHEET: Total assets....................... $170,540 $167,257 $21,331 $14,786 $373,914 DAC and VOBA....................... $ 907 $ 7,715 $ 3,513 $ 6 $ 12,141 Separate account assets............ $ 49,577 $ 40,143 $ 17 $ (17) $ 89,720 Policyholder liabilities........... $ 95,499 $ 86,065 $15,113 $ 346 $197,023 Separate account liabilities....... $ 49,577 $ 40,143 $ 17 $ (17) $ 89,720
F-101 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEAR ENDED CORPORATE & DECEMBER 31, 2006 INSTITUTIONAL INDIVIDUAL REINSURANCE OTHER TOTAL - ----------------------------------- ------------- ---------- ----------- ----------- -------- (IN MILLIONS) STATEMENT OF INCOME: Premiums........................... $ 11,801 $ 4,129 $ 4,348 $ 6 $ 20,284 Universal life and investment-type product policy fees.............. 750 1,433 -- -- 2,183 Net investment income.............. 5,815 5,481 732 269 12,297 Other revenues..................... 677 114 66 33 890 Net investment gains (losses)...... (348) (394) 7 (92) (827) Policyholder benefits and claims... 12,918 4,712 3,490 17 21,137 Interest credited to policyholder account balances................. 1,944 1,049 254 -- 3,247 Policyholder dividends............. -- 1,669 -- 2 1,671 Other expenses..................... 2,483 2,213 1,227 391 6,314 -------- -------- ----------- --------- -------- Income (loss) from continuing operations before provision (benefit) for income tax......... 1,350 1,120 182 (194) 2,458 Provision (benefit) for income tax.............................. 445 400 64 (273) 636 -------- -------- ----------- --------- -------- Income from continuing operations.. 905 720 118 79 1,822 Income from discontinued operations, net of income tax.... 42 18 -- 44 104 -------- -------- ----------- --------- -------- Net income......................... $ 947 $ 738 $ 118 $ 123 $ 1,926 ======== ======== =========== ========= ======== BALANCE SHEET: Total assets....................... $157,673 $150,508 $18,818 $ 13,059 $340,058 DAC and VOBA....................... $ 1,205 $ 7,677 $ 3,152 $ 9 $ 12,043 Separate account assets............ $ 44,546 $ 36,403 $ 16 $ -- $ 80,965 Policyholder liabilities........... $ 86,359 $ 86,473 $13,332 $ 325 $186,489 Separate account liabilities....... $ 44,546 $ 36,403 $ 16 $ -- $ 80,965
F-102 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEAR ENDED CORPORATE & DECEMBER 31, 2005 INSTITUTIONAL INDIVIDUAL REINSURANCE OTHER TOTAL - ------------------------------------ ------------- ---------- ----------- ----------- ------- (IN MILLIONS) STATEMENT OF INCOME: Premiums............................ $ 11,271 $ 4,113 $ 3,869 $ 3 $19,256 Universal life and investment-type product policy fees............... 753 1,193 -- 2 1,948 Net investment income............... 5,231 5,555 606 326 11,718 Other revenues...................... 642 92 58 28 820 Net investment gains (losses)....... 76 83 22 (2) 179 Policyholder benefits and claims.... 12,448 4,823 3,206 (32) 20,445 Interest credited to policyholder account balances.................. 1,347 1,029 220 -- 2,596 Policyholder dividends.............. 1 1,644 -- 2 1,647 Other expenses...................... 2,199 2,173 991 354 5,717 --------- -------- ---------- ---------- ------- Income from continuing operations before provision (benefit) for income tax........................ 1,978 1,367 138 33 3,516 Provision (benefit) for income tax.. 661 487 46 (101) 1,093 --------- -------- ---------- ---------- ------- Income from continuing operations... 1,317 880 92 134 2,423 Income from discontinued operations, net of income tax................. 174 296 -- 360 830 --------- -------- ---------- ---------- ------- Net income.......................... $ 1,491 $1,176 $ 92 $ 494 $ 3,253 ========= ======== ========== ========== =======
Net investment income and net investment gains (losses) are based upon the actual results of each segment's specifically identifiable asset portfolio adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company's product pricing. Revenues derived from any customer did not exceed 10% of consolidated revenues for the years ended December 31, 2007, 2006 and 2005. Revenues from U.S. operations were $35.4 billion, $33.0 billion and $32.4 billion for the years ended December 31, 2007, 2006 and 2005, respectively, which represented 94%, 95% and 95%, respectively, of consolidated revenues. 20. DISCONTINUED OPERATIONS REAL ESTATE The Company actively manages its real estate portfolio with the objective of maximizing earnings through selective acquisitions and dispositions. Income related to real estate classified as held-for-sale or sold is presented in discontinued operations. These assets are carried at the lower of depreciated cost or fair value less expected disposition costs. F-103 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following information presents the components of income from discontinued real estate operations:
YEARS ENDED DECEMBER 31, -------------------- 2007 2006 2005 ---- ---- ------ (IN MILLIONS) Investment income..................................... $ 54 $ 68 $ 174 Investment expense.................................... (40) (47) (102) Net investment gains.................................. 7 91 961 ---- ---- ------ Total revenues...................................... 21 112 1,033 Provision for income tax.............................. 8 40 371 ---- ---- ------ Income from discontinued operations, net of income tax.............................................. $ 13 $ 72 $ 662 ==== ==== ======
The carrying value of real estate related to discontinued operations was $172 million and $177 million at December 31, 2007 and 2006, respectively. The following table presents the discontinued real estate operations by segment:
YEARS ENDED DECEMBER 31, ---------------------- 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Net investment income Institutional........................................ $ 3 $ 8 $ 29 Individual........................................... -- 4 20 Corporate & Other.................................... 11 9 23 --- --- ---- Total net investment income....................... $14 $21 $ 72 === === ==== Net investment gains (losses) Institutional........................................ $ 7 $58 $242 Individual........................................... -- 23 443 Corporate & Other.................................... -- 10 276 --- --- ---- Total net investment gains (losses)............... $ 7 $91 $961 === === ====
In the second quarter of 2005, the Company sold its One Madison Avenue property in Manhattan, New York for $918 million resulting in a gain, net of income tax, of $431 million. Net investment income on One Madison Avenue was $13 million for the year ended December 31, 2005. OPERATIONS On September 29, 2005, the Company completed the sale of MetLife Indonesia to a third party, resulting in a gain upon disposal of $10 million, net of income tax. As a result of this sale, the Company recognized income from discontinued operations of $5 million, net of income tax, for the year ended December 31, 2005. The Company reclassified the operations of MetLife Indonesia into discontinued operations for all years presented. F-104 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the amounts related to the operations of MetLife Indonesia that have been combined with the discontinued real estate operations in the consolidated statements of income:
YEAR ENDED DECEMBER 31, ------------- 2005 ------------- (IN MILLIONS) Revenues..................................................... $ 5 Expenses..................................................... 10 ------------ Income before provision for income tax....................... (5) Provision for income tax..................................... -- Net investment gain, net of income tax....................... 10 ------------ Income (loss) from discontinued operations, net of income tax..................................................... $ 5 ============
On January 31, 2005, the Company completed the sale of SSRM to a third party for $328 million in cash and stock. The Company reported the operations of SSRM in discontinued operations. As a result of the sale of SSRM, the Company recognized income from discontinued operations of $157 million, net of income tax, comprised of a realized gain of $165 million, net of income tax, and an operating expense related to a lease abandonment of $8 million, net of income tax. The Company's discontinued operations for the year ended December 31, 2005 included expenses of $6 million, net of income tax, related to the sale of SSRM. Under the terms of the sale agreement, MetLife will have an opportunity to receive additional payments based on, among other things, certain revenue retention and growth measures. The purchase price is also subject to reduction over five years, depending on retention of certain Company-related business. In the fourth quarter of 2007, the Company accrued a liability for $2 million, net of income tax, related to the termination of certain Company-related business. Also under the terms of such agreement, the Company had the opportunity to receive additional consideration for the retention of certain customers for a specific period in 2005. Upon finalization of the computation, the Company received payments of $30 million, net of income tax, in the second quarter of 2006 and $12 million, net of income tax, in the fourth quarter of 2005 due to the retention of these specific customer accounts. In the first quarter of 2007, the Company received a payment of $16 million, net of income tax, as a result of the revenue retention and growth measure provision in the sales agreement. In the fourth quarter of 2006, the Company eliminated $4 million of a liability that was previously recorded with respect to the indemnities provided in connection with the sale of SSRM, resulting in a benefit to the Company of $2 million, net of income tax. The Company believes that future payments relating to these indemnities are not probable. F-105 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The operations of SSRM include affiliated revenues of $5 million for the year ended December 31, 2005, related to asset management services provided by SSRM to the Company that have not been eliminated from discontinued operations as these transactions continued after the sale of SSRM. The following table presents the amounts related to operations of SSRM that have been combined with the discontinued real estate operations in the consolidated statements of income:
YEARS ENDED DECEMBER 31, ---------------------- 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Revenues............................................... $-- $-- $ 19 Expenses............................................... -- -- 38 --- --- ---- Income before provision for income tax................. -- -- (19) Provision for income tax............................... -- -- (5) Net investment gain, net of income tax................. 14 32 177 --- --- ---- Income from discontinued operations, net of income tax............................................... $14 $32 $163 === === ====
21. FAIR VALUE INFORMATION The estimated fair value of financial instruments have 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. F-106 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Amounts related to the Company's financial instruments are as follows:
NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE DECEMBER 31, 2007 -------- -------- ---------- (IN MILLIONS) Assets: Fixed maturity securities..................... $161,664 $161,664 Equity securities............................. $ 4,304 $ 4,304 Trading securities............................ $ 457 $ 457 Mortgage and consumer loans................... $ 40,012 $ 40,561 Policy loans.................................. $ 8,736 $ 8,736 Short-term investments........................ $ 678 $ 678 Cash and cash equivalents..................... $ 2,331 $ 2,331 Accrued investment income..................... $ 2,529 $ 2,529 Mortgage loan commitments..................... $3,277 $ -- $ (32) Commitments to fund bank credit facilities, bridge loans and private corporate bond investments................................ $ 667 $ -- $ (25) Liabilities: Policyholder account balances.............. $ 75,565 $ 75,145 Short-term debt............................ $ 357 $ 357 Long-term debt............................. $ 3,215 $ 3,280 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............ $ 28,952 $ 28,952
NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE DECEMBER 31, 2006 -------- -------- ---------- (IN MILLIONS) Assets: Fixed maturity securities..................... $162,385 $162,385 Equity securities............................. $ 3,487 $ 3,487 Trading securities............................ $ 563 $ 563 Mortgage and consumer loans................... $ 35,939 $ 36,184 Policy loans.................................. $ 8,587 $ 8,587 Short-term investments........................ $ 1,244 $ 1,244 Cash and cash equivalents..................... $ 1,455 $ 1,455 Accrued investment income..................... $ 2,328 $ 2,328 Mortgage loan commitments..................... $3,290 $ -- $ -- Commitments to fund bank credit facilities, bridge loans and private corporate bond investments................................ $1,662 $ -- $ -- Liabilities: Policyholder account balances................. $ 69,198 $ 66,965 Short-term debt............................... $ 833 $ 833 Long-term debt................................ $ 2,369 $ 2,514 Collateral financing arrangements............. $ 850 $ 850 Junior subordinated debt securities........... $ 399 $ 400 Shares subject to mandatory redemption........ $ 278 $ 357 Payables for collateral under securities loaned and other transactions.............. $ 32,119 $ 32,119
F-107 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: FIXED MATURITY SECURITIES, TRADING 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 AND CONSUMER LOANS, MORTGAGE LOAN COMMITMENTS AND COMMITMENTS TO FUND BANK CREDIT FACILITIES, BRIDGE LOANS AND PRIVATE CORPORATE BOND INVESTMENTS Fair values for mortgage and consumer loans 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, bridge loans and 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. 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 AND LONG-TERM DEBT, COLLATERAL FINANCING ARRANGEMENTS, JUNIOR SUBORDINATED DEBT SECURITIES AND SHARES SUBJECT TO MANDATORY REDEMPTION The fair values of short-term and 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. F-108 METROPOLITAN LIFE INSURANCE COMPANY AND SUBSIDIARIES (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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, including financial futures, financial forwards, interest rate, credit default and foreign currency swaps, foreign currency forwards, caps, floors, and options are based upon quotations obtained from dealers or other reliable sources. See Note 4 for derivative fair value disclosures. 22. RELATED PARTY TRANSACTIONS SERVICE AGREEMENTS MetLife Group, Incorporated, a wholly-owned subsidiary of the Holding Company, was formed as a personnel services company to provide personnel, as needed, to support the activities of the Company. Charges for these services, recorded in other expenses, were approximately $2.0 billion, $1.9 billion and $1.9 billion in 2007, 2006 and 2005, respectively. See Notes 3, 7, 8 and 10 for discussion of additional related party transactions. F-109 -----END PRIVACY-ENHANCED MESSAGE-----