-----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, EEehUH8Rlli8SCfJmxEQIqYE1+lfUHrCheXIzM0XRYkHfTt3hM1sAadq5vw5N7go pyYEFyvy3iBlHI+HrWd0MA== 0001193125-08-084672.txt : 20080418 0001193125-08-084672.hdr.sgml : 20080418 20080418143545 ACCESSION NUMBER: 0001193125-08-084672 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20080418 DATE AS OF CHANGE: 20080418 EFFECTIVENESS DATE: 20080428 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: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-91226 FILM NUMBER: 08764360 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 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: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06025 FILM NUMBER: 08764361 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 C000011874 Group Variable Universal Life Insurance 485BPOS 1 d485bpos.txt GROUP VUL POST-EFFECTIVE AMENDMENT NO. 15 As filed with the Securities and Exchange Commission on April 18, 2008 Registration No. 033-91226 811-06025 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Post-Effective Amendment No. 15 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 37 [X] Metropolitan Life Separate Account UL (Exact Name of Registrant) Metropolitan Life Insurance Company (Name of Depositor) 200 Park Avenue New York, NY 10066 (Address of depositor's principal executive offices) ---------- James L. Lipscomb, Esq. Executive Vice President and General Counsel Metropolitan Life Insurance Company One MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 (Name and address of agent for service) Copy to: Stephen E. Roth, Esquire Mary E. Thornton, Esquire Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2415 It is proposed that this filing will become effective (check appropriate box) [_] immediately upon filing pursuant to paragraph (b) [X] on April 28, 2008 pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a)(1) [_] on (date) pursuant to paragraph (a)(1) of Rule 485 [_] this post-effective amendment designates a new effective date for a previously filed post-effective amendment Title of Securities Being Registered: Interests in Metropolitan Life Separate Account UL, which funds certain Variable Universal Life Insurance Policies. PROSPECTUS FOR GROUP VARIABLE UNIVERSAL LIFE INSURANCE POLICIES ("GROUP POLICIES") ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY ("METLIFE") APRIL 28, 2008 This Prospectus provides you with important information about MetLife's Group Variable Universal Life Policies and its Certificates. However, we will also issue a Group Policy to the employer and Certificates to the employees which are separate documents from the prospectus. There may be differences between the description of the Group Policy and the Certificate contained in this prospectus and the Group Policy issued to the employer and the Certificate issued to the employee due to differences in state law. Please consult the Group Policy and the Certificate for the provisions that apply in your state. The Group Policies are designed to provide: .. Life insurance coverage for employees (and/or their spouses) of employers who purchase a Group Policy .. Flexible premium payments, including the option of paying premiums through payroll deduction .. A death benefit that varies because it includes the employee's cash value in addition to a fixed insurance amount .. Ownership rights of employees set forth in a certificate ("Certificate") issued in connection with the Group Policy You allocate net premiums to and may transfer cash value among a fixed interest account ("Fixed Account") and the Metropolitan Life Separate Account UL investment divisions which invest in the following Portfolios: FIDELITY(R) VARIABLE INSURANCE PRODUCTS (INITIAL CLASS) Freedom 2010 Portfolio Freedom 2020 Portfolio Freedom 2030 Portfolio MET INVESTORS SERIES TRUST (CLASS A) BlackRock Large Cap Core Portfolio Lord Abbett Bond Debenture Portfolio METROPOLITAN SERIES FUND, INC. (CLASS A) BlackRock Bond Income Portfolio MFS(R) Value Portfolio (formerly BlackRock Diversified Portfolio Harris Oakmark Large Cap Value FI Mid Cap Opportunities Portfolio Portfolio) Julius Baer International Stock Morgan Stanley EAFE(R) Index Portfolio Portfolio (formerly FI International Oppenheimer Global Equity Portfolio Stock Portfolio) Russell 2000(R) Index Portfolio Lehman Brothers(R) Aggregate Bond Index T. Rowe Price Small Cap Growth Portfolio Portfolio MetLife Stock Index Portfolio
In some cases, the employer may limit which of the above Portfolios are available. Separate prospectuses for Fidelity(R) Variable Insurance Products, Met Investors Series Trust and Metropolitan Series Fund, Inc. are available from us. Those prospectuses are attached at the end of this Prospectus, and they describe in greater detail an investment in the Portfolios listed above. Before purchasing a Certificate, read the information in this prospectus and in the prospectus for each Fund. Keep these prospectuses for future reference. Since the Fixed Account is not registered under the federal securities laws, this Prospectus contains only limited information about the Fixed Account. The Group Policy and the Certificate give you more information on the operation of the Fixed Account. Neither the Securities and Exchange Commission ("SEC") nor any state securities authority has approved or disapproved these securities, nor have they determined if this Prospectus is accurate or complete. This prospectus does not constitute an offering in any jurisdiction where such offering may not lawfully be made. Any representation otherwise is a criminal offense. Interests in the Separate Account and the Fixed Account are not deposits or obligations of, or insured or guaranteed by, the U.S. Government, any bank or other depository institution including the Federal Deposit Insurance Corporation ("FDIC"), the Federal Reserve Board or any other agency or entity or person. We do not authorize any representations about this offering other than as contained in this Prospectus or its supplements or in our authorized supplemental sales material. We do not guarantee how any of the Portfolios will perform. TABLE OF CONTENTS
PAGE IN THIS SUBJECT PROSPECTUS - ------- ---------- Cover Pages Contacting Us................................................ 3 Summary of Benefits and Risks................................ 3 Certificate Benefits...................................... 3 Risks of a Certificate.................................... 4 Fee Tables................................................... 5 Transaction Fees.......................................... 6 Periodic Charges Other Than Portfolio Operating Expenses.. 6 Periodic Charges Applicable to Any Optional Riders That May be Added to Your Certificate........................ 7 Portfolio Operating Expenses.............................. 9 MetLife...................................................... 11 The Fixed Account......................................... 11 Separate Account UL.......................................... 11 The Funds................................................. 12 Certain Payments We Receive with Regard to the Portfolios. 12 Selection of Portfolios................................... 12 Management of Portfolios.................................. 13 The Portfolio Share Classes that We Offer................. 15 Issuing a Group Policy and a Certificate..................... 15 Payment and Allocation of Premiums........................... 16 Paying Premiums........................................... 16 Maximum and Minimum Premium Payments...................... 16 Allocating Net Premiums................................... 17 Insurance Proceeds........................................... 17 Death Benefit............................................. 17 Alternate Death Benefit................................... 18 Specified Face Amount..................................... 18 Income Plans.............................................. 19 Cash Value, Transfers and Withdrawals........................ 19 Cash Value................................................ 19 Cash Value Transfers...................................... 20 Surrender and Withdrawal Privileges....................... 23 Benefit at Final Date..................................... 24 Paid-Up Certificate Provision................................ 24 Loan Privileges.............................................. 24 Optional Benefits Added By Rider............................. 25 Charges and Deductions....................................... 26 Important Information Applicable to All Certificate Charges and Deductions.................................. 26 Charges Deducted from Premiums............................ 27 Charges Included in the Monthly Deduction................. 27 Charges Against the Separate Account...................... 29 Variations in Charges..................................... 29 Portfolio Company Charges................................. 29 Other Charges............................................. 29 Certificate Termination and Reinstatement.................... 30 Federal Tax Matters.......................................... 30 Rights We Reserve............................................ 35 Other Certificate Provisions................................. 35 Sales of Certificates........................................ 40 Legal Proceedings............................................ 42 Restrictions on Financial Transactions....................... 42 Financial Statements......................................... 42
2 CONTACTING US [SIDEBAR: YOU CAN CONTACT US AT OUR ADMINISTRATIVE OFFICE.] You can communicate all of your requests, instructions and notifications to us by contacting us in writing at our Administrative Office. We may require that certain requests, instructions and notifications be made on forms that we provide. These include: changing your beneficiary; taking a Certificate loan; changing the specified face amount; taking a partial withdrawal; surrendering the Certificate; making transfer requests (including elections with respect to the systematic investment strategies) or changing your premium allocations. Our Administrative Office is our office at 190 Carondelet Plaza, St. Louis, Missouri 63105. We may name additional or alternate Administrative Offices. If we do, we will notify you in writing. If you send your premium payments or transaction requests to an address other than the one we have designated for receipt of such premium 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. SUMMARY OF BENEFITS AND RISKS This summary gives an overview of the Group Policy and Certificates and is qualified by the more detailed information in the balance of this Prospectus, the Group Policy and the Certificates. MetLife issues the Group Policy and Certificates. CERTIFICATE BENEFITS PREMIUM PAYMENT FLEXIBILITY. Generally, if elected by your employer, you may pay premiums through payroll deduction. If payroll deduction is not available, you may pay premiums to us on a monthly, quarterly or annual basis. You may, with certain restrictions, make premium payments in any amount and at any frequency. However, you may also be required to make an unscheduled premium payment so that the Certificate will remain in force. The Certificate will remain in force until its Final Date, as long as the cash surrender value is large enough to cover one monthly deduction, regardless of whether or not premium payments have been made. CASH VALUE. Your cash value in the Certificate reflects your premium payments, the charges we deduct, interest we credit if you have cash value in our fixed interest account, any investment experience you have in our Separate Account, as well as your loan and withdrawal activity. TRANSFERS AND SYSTEMATIC INVESTMENT STRATEGIES. You may transfer cash value among the funding options, subject to certain limits (see "Cash Value, Transfers and Withdrawals"). If elected by your employer, you may also choose among four systematic investment strategies: the Equity Generator/SM/, the Equalizer/SM/, the Allocator/SM/, and the Rebalancer/SM/. SPECIFIED FACE AMOUNT OF INSURANCE. Within certain limits, you may choose your specified face amount of insurance when the Certificate is issued. You may also increase the amount at certain times determined by your employer and subject to our underwriting requirements. In certain cases, we will automatically increase the specified face amount at each employee's salary increase on dates chosen by the employer. You may also decrease the specified face amount. DEATH BENEFIT. The death benefit is the specified face amount of the Certificate plus the Certificate cash value at the date of death of the covered person. 3 INCOME PLANS. The insurance proceeds can be paid under a variety of income plans that are available under the Certificate. SURRENDERS, PARTIAL WITHDRAWALS AND LOANS. Within certain limits, you may take partial withdrawals and loans from the Certificate. You may also surrender the Certificate for its cash surrender value. PAID-UP CERTIFICATE BENEFIT. You can choose to terminate the death benefit (and any riders in effect) and use all or part of the cash surrender value as a single premium for a "paid-up" benefit within the terms set forth in the Certificate. ("Paid-up" means no further premiums are required.) TAX ADVANTAGES. If you meet certain requirements, you will not pay income taxes on withdrawals or surrenders or at the Final Date of the Certificate, until your cumulative withdrawn amounts exceed the cumulative premiums you have paid. The death benefit may be subject to Federal and state estate taxes, but your beneficiary will generally not be subject to income tax on the death benefit. As with any taxation matter, you should consult with and rely on the advice of your own tax advisor. OPTIONAL RIDER BENEFITS. You may be eligible for certain benefits provided by rider, subject to certain underwriting requirements and the payment of additional premiums. We will deduct any charges for the rider(s) as part of the monthly deduction. RISKS OF A CERTIFICATE This Prospectus discusses the risks associated with purchasing the Certificate. Other prospectuses (which are attached at the end of this Prospectus) discuss the risks associated with investment in the Fund described therein. Those prospectuses are being provided to you in addition to this Prospectus because each of the Separate Account UL investment divisions that are available to you under a Certificate invests solely in a corresponding "Portfolio" of a Fund. INVESTMENT RISK. MetLife does not guarantee the investment performance of the variable investment options and you should consider your risk tolerance before selecting any of these options. You will be subject to the risk that investment performance will be unfavorable and that your cash value will decrease. In addition, we deduct certain Certificate fees and charges from your Certificate's cash value, which can significantly reduce your Certificate's cash value. During times of poor investment performance, this deduction may have an even greater impact on your Certificate's cash value. It is possible to lose your full investment and your Certificate could terminate without value, unless you pay additional premiums. 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 stated in your Certificate. SURRENDER AND WITHDRAWAL RISKS. The Certificates are designed to provide lifetime insurance protection. They are not offered primarily as an investment, and are not suitable as a short-term savings vehicle. You should purchase a Certificate only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Certificate if you intend to surrender all or part of the Certificate's cash value in the near future. 4 RISK OF CERTIFICATE TERMINATION. Your Certificate may terminate without value 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 will terminate without value unless you make a premium payment sufficient to cover two monthly deductions within the 61-day grace period. If your Certificate does terminate, your insurance coverage will terminate (although you will be given an opportunity to reinstate your coverage if you satisfy certain requirements). Lapse of a certificate on which there is an outstanding loan may have adverse tax consequences. CERTIFICATE CHARGE AND EXPENSE INCREASE. We have the right to increase certain Certificate charges. TAX LAW RISKS. We anticipate that the Certificate should generally be deemed a life insurance contract under Federal tax law. Assuming that a Certificate qualifies as a life insurance contract for Federal income tax purposes, you should not be deemed to be in receipt of any portion of your Certificate's cash value until there is an actual distribution from the Certificate. Moreover, insurance proceeds payable under the Certificate should be excludable from the gross income of the beneficiary. Although the beneficiary generally should not have to pay Federal income tax on the insurance proceeds, other taxes, such as estate taxes, may apply. If you pay more than a certain amount of premiums, you may cause your Certificate to become a "modified endowment contract." If it does, you will pay income taxes on loans and other amounts we pay out to you (except for payment of insurance proceeds), to the extent of any gains in your Certificate (which is generally the excess of cash value over the premiums paid). In this case, an additional 10% tax penalty may also apply. If the Certificate 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. However, during the first 15 Certificate years, in certain circumstances, a distribution may be subject to tax on a income-out-first basis if there is a gain in the Certificate (which is generally when your cash value exceeds the cumulative premiums you paid). Loans will generally not be treated as distributions. Finally, neither distributions nor loans from a Certificate that is not a modified endowment contract are subject to the 10% penalty tax. Tax laws, regulations, and interpretations have often been changed in the past and such changes continue to be proposed. As with any taxation matter, you should consult with and rely on the advice of your own tax advisor. FEE TABLES The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Certificate. The charges set forth in the first three tables can vary, pursuant to terms of the Group Policy under which the Certificate is issued. In certain cases, we have the right to increase our charges for new Certificates, as well as for Certificates already outstanding. The maximum charges in such cases are shown in the far right-hand columns of each of the first three tables below. In addition to the following tables, certain charges that we don't currently impose (but which we have the right 5 to impose on your Certificate in the future) are described under "Charges and Deductions--Other Charges," further back in this Prospectus. TRANSACTION FEES This table describes the fees and expenses that you will pay at the time that you buy the Certificate, surrender the Certificate, or transfer cash value among the variable investment options or the Fixed Account. The Current Amount Deducted represents an amount that would be deducted from a hypothetical group that is representative of the groups to whom the Group Policy is offered. The amount may not reflect the actual amount currently deducted for any current Policy owner, since the current amount deducted varies from group to group based on the anticipated experience of the group.
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT CHARGE DEDUCTED DEDUCTED WE CAN DEDUCT - ------------------------------------------------------------------------------- Charge for average On payment of An amount equal to No specific expected state and premium the estimate of taxes maximum local taxes we will actually pay attributable to for your group, premiums/1/ currently up to 2.55% of each premium payment. - ------------------------------------------------------------------------------- Charge for expected On payment of 0.35% of each Same as current federal taxes premium premium payment amount attributable to premiums/1/ - ------------------------------------------------------------------------------- Surrender, On surrender, None Up to $25 per withdrawal and loan withdrawal or loan surrender, transaction fees/2/ withdrawal or loan
- -------- /1/ Rather than deducting this charge from each premium payment you make, we have the option of deducting an equivalent amount as part of the monthly deduction. In that case, the amount of the deduction will be based on the amount of premium payments received under all Certificates issued in connection with the Group Policy. We will waive the state premium tax charge for Internal Revenue Code Section 1035 exchanges from any other policy to a Certificate. We will also waive the state premium tax charge, as well as the charge for expected federal taxes attributable to premiums for 1035 exchanges, from another MetLife policy to a Certificate. /2/ Generally, we will not make any transaction charge for the surrender of a Certificate because of the termination of an employer's participation in the Group Policy. See your Certificate for more details. PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES These tables describe other fees and expenses that you will pay periodically during the time that you own the Certificate not including the fees and expenses of the Portfolios. The amounts shown for a 43 year old covered person assume that person is a member of a hypothetical group that has been derived from all groups to whom the Group Policy is offered. These amounts may not reflect the amounts for any actual Certificate owner, since the amounts vary from group to group based on the anticipated experience of the group. The actual charge at that age for your group may be higher or lower than the rate shown. 6 PERIODIC CHARGES APPLICABLE TO ALL CERTIFICATES
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT CHARGE DEDUCTED DEDUCTED WE CAN DEDUCT - ------------------------------------------------------------------------------------------------------------- Cost of term insurance* On each monthly anniversary of the Highest: $30.45 per Highest: $53.24 per Highest and lowest charge Certificate $1,000 of net amount $1,000 of Net among all possible covered at risk Amount at Risk persons Lowest: $.02 per Lowest: $.06 per $1,000 of net amount $1,000 of Net Charge for a hypothetical at risk Amount at Risk 45 year old $.10 per $1,000 of net $.43 per $1,000 of net amount at risk amount at risk - ------------------------------------------------------------------------------------------------------------- Mortality and expense risk Daily against the Effective annual rate Effective annual rate charge** cash value in the of .45% of the cash of .90% Separate Account value in the Separate Account - ------------------------------------------------------------------------------------------------------------- Administration charge*** On each monthly $0 to $3 per $5 per Certificate anniversary of the Certificate Certificate - ------------------------------------------------------------------------------------------------------------- Loan interest spread**** Annually (or on loan Annual rate of 0.25% Annual rate of 2% of termination, if of the loan amount the loan amount earlier)
PERIODIC CHARGES APPLICABLE TO ANY OPTIONAL RIDERS THAT MAY BE ADDED TO YOUR CERTIFICATE*****
WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT OPTIONAL FEATURE DEDUCTED DEDUCTED WE CAN DEDUCT - ---------------------------------------------------------------------------------------------- Disability waiver of monthly On each monthly Since your employer No separate deduction benefit anniversary of the decides for the whole maximum Certificate group whether to elect this benefit, the cost is included in the basic cost of insurance rates for the group. - ---------------------------------------------------------------------------------------------- Accelerated benefits option On each monthly Since your employer No separate anniversary of the decides for the whole maximum Certificate group whether to elect this benefit, the cost is included in the basic cost of insurance rates for the group. - ---------------------------------------------------------------------------------------------- Accidental death benefit On each monthly No maximum anniversary of the Highest: $.04 per applies to this Highest and Lowest charge among Certificate $1,000 of rider benefit all possible Certificates benefit amount Lowest: $.01 per $1,000 of rider Charge for a hypothetical benefit amount 45 year old $.03 per $1,000 of rider benefit amount - ----------------------------------------------------------------------------------------------
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WHEN CHARGE IS CURRENT AMOUNT MAXIMUM AMOUNT OPTIONAL FEATURE DEDUCTED DEDUCTED WE CAN DEDUCT - ------------------------------------------------------------------------------------------- Accidental Death or Dismemberment On each monthly No maximum Benefit anniversary of the Highest: $.05 per applies to this Certificate $1,000 of rider benefit Highest and Lowest Charge Among benefit amount All Possible Certificates Lowest: $.02 per $1,000 of rider benefit amount Charge for a hypothetical 45 year old $.04 per $1,000 of rider benefit amount - ------------------------------------------------------------------------------------------- Dependent life benefits (spouse On each monthly No maximum coverage only) anniversary of the applies to this Certificate benefit Highest and lowest charge among Highest: $30.34 per all possible certificates $1,000 of rider benefit amount Lowest: $.03 per $1,000 of rider benefit amount Charge for a hypothetical $.10 per $1,000 of 45 year old rider benefit amount - ------------------------------------------------------------------------------------------- Dependent life benefits (children On each monthly No maximum coverage only) anniversary of the applies to this Certificate benefit Highest and lowest charge among Highest: $.18 per all possible certificates $1,000 of rider benefit amount Lowest: $.07 per $1,000 of rider benefit amount Charge for a hypothetical 45 year $.13 per $1,000 of old rider benefit amount
* The cost of insurance charge varies based on anticipated variations in our costs or risks associated with the group or individuals in the group that the charge was intended to cover. The cost of insurance charge may not be representative of the charge that any particular Certificate owner would pay. See "Charges and Deductions--Cost of Insurance" for a more detailed discussion of factors affecting this charge. You can obtain more information about the cost of insurance or other charges that would apply by contacting your insurance sales representative. If you would like, we will provide you with an illustration of the impact of these and other charges under the Certificate based on various assumptions. ** We may determine differences in this charge for different employer groups based on differences in the levels of mortality and expense risks. See "Charges and Deductions--Certificate Charges--Charge Against the Separate Account" below for a fuller description of how this charge may vary. We are currently waiving the following amount of the Mortality and Expense Risk charge: 0.08% for the Investment Division investing in the BlackRock Large-Cap Core Portfolio. *** This charge for a Certificate may vary based on differences in the levels of administrative services performed by us and by the employer for the specific group under which the Certificate is issued. **** We charge interest on Certificate loans but credit you with interest on the amount of the cash value we hold as collateral for the loan. The loan interest spread is the excess of the interest rate we charge over the interest rate we credit. ***** The rider charges may vary based on individual characteristics, or anticipated variations in our costs or risks associated with the group or individuals in the group under which the Certificate is issued. The charge may not be representative of the charge that any particular Certificate owner would pay. You can obtain more information about this and other charges that would apply by contacting your insurance sales representative. 8 PORTFOLIO OPERATING EXPENSES Each of the Funds pays an investment management fee. Each of the Funds also incurs other direct expenses (see the applicable Fund Prospectus attached at the end of this Prospectus and the Statement of Additional Information referred to therein for each Fund). You bear indirectly your proportionate share of the fees and expenses of the Portfolios of each Fund that correspond to the Separate Account investment divisions you are using. The Funds offer various classes of shares, each of which has a different level of expenses. However, we offer only Class A shares of the Funds under the Certificates. This table describes the fees and expenses that the Portfolios will pay and that therefore a Certificate owner will indirectly pay periodically during the time that he or she owns a Certificate. The table shows the lowest and highest fees and expenses charged by the Portfolios for the fiscal year ended December 31, 2006, before and after any contractual fee waivers and expense reimbursements. More detail concerning each Portfolio's fees and expenses is contained in the table that follows this table and in the attached Fund prospectuses.
LOWEST HIGHEST - ----------------------------------------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES (expenses that are deducted from Portfolio assets, including management fees, distribution (Rule 12b-1) fees and other expenses) 0.29% 0.96% - -----------------------------------------------------------------------------------
The table below describes the annual operating expenses for each Portfolio for the year ended December 31, 2007, as a percentage of the Portfolio's average daily net assets for the year.
CONTRACT- DISTRIB- UAL FEE UTION WAIVER AND/OR ACQUIRED TOTAL AND /OR NET TOTAL MANAGE- SERVICE FUND FEES ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER AND OPERATING REIM- OPERATING PORTFOLIO FEE FEES EXPENSES EXPENSES* EXPENSES BURSEMENT EXPENSES** - ---------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS -- INITIAL CLASS - ---------------------------------------------------------------------------------- Freedom 2010 Portfolio -- -- -- 0.56% 0.56% -- 0.56%/1/ - ---------------------------------------------------------------------------------- Freedom 2020 Portfolio -- -- -- 0.62% 0.62% -- 0.62%/1/ - ---------------------------------------------------------------------------------- Freedom 2030 Portfolio -- -- -- 0.66% 0.66% -- 0.66%/1/ - ---------------------------------------------------------------------------------- MET INVESTORS SERIES TRUST - -- CLASS A - ---------------------------------------------------------------------------------- BlackRock Large Cap Core Portfolio 0.58% -- 0.07% -- 0.65% -- 0.65% - ---------------------------------------------------------------------------------- Lord Abbett Bond Debenture Portfolio 0.49% -- 0.05% -- 0.54% -- 0.54% - ---------------------------------------------------------------------------------- METROPOLITAN SERIES FUND, INC. -- CLASS A - ---------------------------------------------------------------------------------- BlackRock Bond Income Portfolio 0.38% -- 0.06% -- 0.44% 0.01% 0.43%/2/ - ----------------------------------------------------------------------------------
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CONTRACT- DISTRIB- UAL FEE UTION WAIVER AND/OR ACQUIRED TOTAL AND /OR NET TOTAL MANAGE- SERVICE FUND FEES ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER AND OPERATING REIM- OPERATING PORTFOLIO FEE FEES EXPENSES EXPENSES* EXPENSES BURSEMENT EXPENSES** - ----------------------------------------------------------------------------------- BlackRock Diversified Portfolio 0.44% -- 0.06% -- 0.50% -- 0.50% - ----------------------------------------------------------------------------------- FI Mid Cap Opportunities Portfolio 0.68% -- 0.05% -- 0.73% -- 0.73% - ----------------------------------------------------------------------------------- Julius Baer International Stock Portfolio 0.84% -- 0.12% -- 0.96% 0.04% 0.92%/3/ - ----------------------------------------------------------------------------------- Lehman Brothers(R) Aggregate Bond Index Portfolio 0.25% -- 0.05% -- 0.30% 0.01% 0.29%/4/ - ----------------------------------------------------------------------------------- MetLife Stock Index Portfolio 0.25% -- 0.04% -- 0.29% 0.01% 0.28%/5/ - ----------------------------------------------------------------------------------- MFS(R) Value Portfolio 0.72% -- 0.05% -- 0.77% 0.07% 0.70%/6/ - ----------------------------------------------------------------------------------- Morgan Stanley EAFE(R) Index Portfolio 0.30% -- 0.12% 0.01% 0.43% 0.01% 0.42%/7/ - ----------------------------------------------------------------------------------- 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%/5/ - ----------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth Portfolio 0.51% -- 0.08% -- 0.59% -- 0.59% - -----------------------------------------------------------------------------------
* 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. ** Net Total Annual Operating Expenses do not reflect: (1) voluntary waivers of fees or expenses; (2) 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. - -------- /1/ The Portfolio purchases Initial Class shares of underlying Fidelity funds. As an investor in an underlying Fidelity fund, the Portfolio will bear its pro rata share of the fees and expenses of the underlying Fidelity fund. /2/ 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. /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 0.81% for the first $500 million of the Portfolio's average daily net assets and 0.78% for the next $500 million. /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 0.244%. /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/ 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. /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 0.293%. THE FEE AND EXPENSE INFORMATION REGARDING THE PORTFOLIOS WAS PROVIDED BY THOSE PORTFOLIOS. FOR INFORMATION CONCERNING COMPENSATION PAID FOR THE SALE OF THE GROUP POLICIES AND CERTIFICATES, SEE "SALES OF CERTIFICATES." 10 METLIFE MetLife is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company. Our main office is located at 200 Park Avenue, New York, New York 10166. We are obligated to pay all amounts and other benefits and other amounts to which you are entitled under the terms of your Certificate. THE FIXED ACCOUNT The Fixed Account is part of our general assets that are not in any legally segregated separate accounts. The minimum guaranteed interest rate will vary based on the provisions stated in the Certificate but will never be lower than 3%. We may also credit excess interest on such amounts. Different excess interest rates may apply to different amounts based upon when such amounts were allocated to the Fixed Account. We credit the guaranteed and excess interest on each "Valuation Date" (as defined below in "Other Certificate Provisions--When Your Requests Become Effective"). We guarantee the credited interest, and it becomes part of the Certificate's cash value in the Fixed Account. We charge the portion of the monthly deduction that is deducted from the Fixed Account against the most recent premiums paid and interest credited thereto. We can delay transfers, withdrawals, surrender and payment of Certificate loans from the Fixed Account for up to 6 months. Since the Fixed Account is not registered under the federal securities laws, this Prospectus contains only limited information about the Fixed Account. The Group Policy and the Certificate give you more information on the operation of the Fixed Account. SEPARATE ACCOUNT UL THE SEPARATE ACCOUNT The Separate Account receives premium payments from the Group Policies and Certificates described in this Prospectus and other variable life insurance policies that we issue. The assets in the Separate Account legally belong to us, but they are held solely for the benefit of investors in the Separate Account and no one else, including our other policyholders and creditors. We will keep an amount in the Separate Account that at least equals the value of our commitments to policy owners that are based on their investments in the Separate Account. We can also keep charges that we deduct and other excess amounts in the Separate Account or we can transfer the excess out of the Separate Account. THE INVESTMENT DIVISIONS [SIDEBAR: EACH SEPARATE ACCOUNT INVESTMENT DIVISION INVESTS IN A CORRESPONDING PORTFOLIO OF A FUND.] The Separate Account has subdivisions, called "investment divisions." Each investment division invests its assets exclusively in shares of a corresponding Portfolio of a Fund. We can add new investment divisions to or eliminate investment divisions from the Separate Account. You can designate how you would like your net premiums and cash value to be allocated among the available investment divisions and our Fixed Account. In some cases, your employer retains the right to allocate the portion of any net premiums it pays (rather than any premiums you pay). If so, the Certificate will state this. Amounts you allocate to each investment division receive the investment experience of the investment division, and you bear this investment risk. 11 SUBSTITUTION OF INVESTMENTS If investment in the Portfolios or a particular Portfolio is no longer possible, or in our judgment becomes inappropriate for the purposes of the Policies, or for any other reason in our sole discretion, we may substitute another portfolio without your consent. The substituted portfolio may have different fees and expenses. Substitution may be made with respect to existing investments or the investment of future premium payments, or both. However, we will not make such substitution without any necessary approval of the Securities and Exchange Commission. Furthermore, we may make available or close investment divisions to allocation of premium payments or cash value, or both, for some or all classes of Policies, at any time in our sole discretion. THE FUNDS [SIDEBAR: YOU SHOULD CAREFULLY REVIEW THE INVESTMENT OBJECTIVES, STRATEGIES, AND RISKS OF EACH PORTFOLIO WHICH ARE DESCRIBED IN THE PROSPECTUS FOR EACH FUND THAT IS ATTACHED AT THE END OF THIS PROSPECTUS.] Each of the Funds is a "series" type of mutual fund, which is registered as an open-end management investment company under the 1940 Act. Each Fund is divided into Portfolios, each of which represent a different class of stock in which a corresponding investment division of the Separate Account invests. Not all of the Portfolios of a Fund are available in connection with the Certificates. You should read each Fund prospectus, which is attached at the end of this Prospectus. It contains information about each Fund and its Portfolios, including the investment objectives, strategies, risks and investment advisers that are associated with each Portfolio. It also contains information on our different separate accounts and those of our affiliates that invest in each Fund and the risks related thereto. CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS We, and certain of our affiliated insurance companies, have 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 a Portfolio. 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 to the advisers and the Statement of Additional Information for the Funds for information on the management fees paid by the adviser to sub-advisers.) Additionally, an investment adviser or sub-adviser 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 affiliates amounts to participate in sales meetings. These amounts may be significant and may provide the adviser or sub-adviser (or their affiliate) with increased access to persons involved in the distribution of the Policies. SELECTION OF 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 sub-adviser'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 12 sub-adviser is one of our affiliates or whether the Portfolio, its adviser, its sub-adviser(s), or an affiliate will make payments to us or our affiliates. In this regard, the profit distributions we receive from our affiliated investment advisers are a component of the total revenue that we consider in configuring the features and investment choices available in the variable insurance products that we and our affiliated insurance companies issue. Since we and our affiliated insurance companies may benefit more from the allocation of assets to portfolios advised by our affiliates than 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. In some cases, we have included Portfolios based on recommendations made by selling firms. These selling firms may receive payments from the Portfolios they recommend and may benefit accordingly from the allocation of Cash Value to such Portfolio. We do not provide investment advice and do not recommend or endorse any particular Portfolio. You bear the risk of any decline in the Cash Value of your Equity Options resulting from the performance of the Portfolios you have chosen. MANAGEMENT OF PORTFOLIOS Each Fund has an investment adviser who is responsible for overall management of the Fund. These investment advisers have contracted with sub-advisers to make the day-to-day investment decisions for some of the Portfolios. The adviser, any sub-adviser and the investment objective of each Portfolio are as follows:
- -------------------------------------------------------------------------------- INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE ADVISER/SUBADVISER - -------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS -- INITIAL CLASS - -------------------------------------------------------------------------------- Freedom 2010 Portfolio Seeks high total return with a Fidelity Management & secondary objective of Research Company principal preservation as the fund approaches its target date and beyond. - -------------------------------------------------------------------------------- Freedom 2020 Portfolio Seeks high total return with a Fidelity Management & secondary objective of Research Company principal preservation as the fund approaches its target date and beyond. - -------------------------------------------------------------------------------- Freedom 2030 Portfolio Seeks high total return with a Fidelity Management & secondary objective of Research Company principal preservation as the fund approaches its target date and beyond. - -------------------------------------------------------------------------------- MET INVESTORS SERIES TRUST -- CLASS A - -------------------------------------------------------------------------------- BlackRock Large Cap Core Seeks long-term capital Met Investors Advisory, Portfolio growth. LLC Subadviser: BlackRock Advisors, LLC - --------------------------------------------------------------------------------
13
- -------------------------------------------------------------------------------------------- INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE ADVISER/SUBADVISER - -------------------------------------------------------------------------------------------- MET INVESTORS SERIES TRUST -- CLASS A - -------------------------------------------------------------------------------------------- Lord Abbett Bond Seeks high current income and Met Investors Advisory, Debenture Portfolio the opportunity for capital LLC appreciation to produce a high Subadviser: Lord, Abbett & total return. Co. LLC - -------------------------------------------------------------------------------------------- METROPOLITAN SERIES FUND, INC. -- CLASS A - -------------------------------------------------------------------------------------------- BlackRock Bond Income Seeks a competitive total MetLife Advisers, LLC Portfolio return primarily from Subadviser: BlackRock investing in fixed-income Advisors, LLC securities. - -------------------------------------------------------------------------------------------- BlackRock Diversified Seeks high total return while MetLife Advisers, LLC Portfolio attempting to limit investment Subadviser: BlackRock risk and preserve capital. Advisors, LLC - -------------------------------------------------------------------------------------------- FI Mid Cap Opportunities Seeks long-term growth of MetLife Advisers, LLC Portfolio capital. Subadviser: Pyramis Global Advisors, LLC/1/ - -------------------------------------------------------------------------------------------- Julius Baer International Seeks long-term growth of MetLife Advisers, LLC Stock Portfolio capital. Subadviser: Julius Baer Investment Management LLC - -------------------------------------------------------------------------------------------- Lehman Brothers(R) Seeks to equal the MetLife Advisers, LLC Aggregate Bond Index performance of the Lehman Subadviser: MetLife Portfolio Brothers(R) Aggregate Bond Investment Advisors Index. Company, LLC - -------------------------------------------------------------------------------------------- MetLife Stock Index Seeks to equal the MetLife Advisers, LLC Portfolio performance of the Standard & Subadviser: MetLife Poor's 500(R) Composite Stock Investment Advisors Price Index. Company, LLC - -------------------------------------------------------------------------------------------- MFS(R) Value Portfolio Seeks capital appreciation and MetLife Advisers, LLC reasonable income. Subadviser: Massachusetts Financial Services Company/2/ - -------------------------------------------------------------------------------------------- Morgan Stanley EAFE(R) Seeks to equal the MetLife Advisers, LLC Index Portfolio performance of the MSCI Subadviser: MetLife EAFE(R) Index. Investment Advisors Company, LLC - -------------------------------------------------------------------------------------------- Oppenheimer Global Equity Seeks capital appreciation. MetLife Advisers, LLC Portfolio Subadviser: OppenheimerFunds, Inc. - -------------------------------------------------------------------------------------------- Russell 2000(R) Index Portfolio Seeks to equal the return of MetLife Advisers, LLC the Russell 2000(R) Index. Subadviser: MetLife Investment Advisors Company, LLC - -------------------------------------------------------------------------------------------- T. Rowe Price Small Cap Seeks long-term capital MetLife Advisers, LLC Growth Portfolio growth. Subadviser: T. Rowe Price Associates, Inc. - --------------------------------------------------------------------------------------------
- -------- 1. Prior to April 28, 2008, Fidelity Management & Research Company was the sub-adviser to this Portfolio. 2. Prior to January 7, 2008, Harris Associates, L.P. was the sub-adviser to this Portfolio. Some of the Portfolios have names and investment objectives that are very similar to certain publicly available mutual funds that are managed by the same money managers. These Portfolios are not those publicly available mutual funds and will not have the same performance. Different performance will result from such factors as different implementation of investment policies, different cash flows into and out of the Portfolios, different fees and different sizes. 14 THE PORTFOLIO SHARE CLASSES THAT WE OFFER The Funds offer various classes of shares, each of which has a different level of expenses. The Fund prospectuses may provide information for share classes or Portfolios that are not available through the Certificate. When you consult the Fund prospectus for a Portfolio, you should be careful to refer only to the information regarding the Portfolio and class of shares that is available through the Certificate: .. For the Metropolitan Series Fund, Inc. and the Met Investors Series Trust, we offer Class A shares only. PURCHASE AND REDEMPTION OF PORTFOLIO SHARES BY OUR SEPARATE ACCOUNT As of the end of each Valuation Period (see "Valuation Period" description below in "Other Certificate Provisions--When Your Requests Become Effective"), we purchase and redeem Fund shares for the Separate Account at their net asset value without any sales or redemption charges. These purchases and redemptions reflect the amount of any of the following transactions that take effect at the end of the Valuation Period: .. The allocation of net premiums to the Separate Account. .. Dividends and distributions on Fund shares that are reinvested as of the dates paid (which reduces the value of each share of the Fund and increases the number of Fund shares outstanding, but has no effect on the cash value in the Separate Account). .. Certificate loans and loan repayments allocated to the Separate Account. .. Transfers to and among investment divisions. .. Withdrawals and surrenders taken from the Separate Account. VOTING RIGHTS THAT YOU WILL HAVE [SIDEBAR: YOU CAN GIVE US VOTING INSTRUCTIONS ON SHARES OF EACH PORTFOLIO OF A FUND THAT ARE ATTRIBUTED TO YOUR CERTIFICATE.] The Funds have shareholder meetings from time to time to, for example, elect directors and approve some changes in investment management arrangements. We will vote the shares of each Portfolio that are attributed to your Certificate based on your instructions. Should we determine that the 1940 Act no longer requires us to do this, we may decide to vote Fund shares in our own right, without input from you or any other owners of variable life insurance policies or variable annuity contracts that participate in a Fund. ISSUING A GROUP POLICY AND A CERTIFICATE [SIDEBAR: WE WILL ISSUE A CERTIFICATE TO YOU AS OWNER. UNLESS YOUR EMPLOYER HAS RESERVED OTHERWISE, YOU WILL HAVE ALL THE RIGHTS UNDER THE CERTIFICATE, INCLUDING THE ABILITY TO NAME A NEW OWNER OR CONTINGENT OWNER.] We may issue a Group Policy to an employer or association ("employer") or to a trust through which an employer participates. Generally, the minimum number of people in a group that is required before we will issue a Group Policy directly to an employer is 200 lives. However, we reserve the right to issue a Group Policy or provide coverage to an employer that does not meet this minimum. Employees of employers and members of associations ("employees") may own Certificates issued under their employer's Group Policy. If you want to own a Certificate, then you must complete an enrollment form, which must be received by the Administrative Office. We reserve the right to reject an enrollment form for any reason permitted by law, and our acceptance of an enrollment form is subject to our underwriting rules. 15 Generally, we will issue a Certificate only to an eligible employee, or a spouse of an eligible employee when permitted by the employer. The person upon whose life the Certificate is issued is called the covered person. The owner is generally the employee unless the enrollment form designates someone else as owner. For the purpose of computing the covered person's age under the Certificate, we start with the covered person's age on a day selected by your employer. Age can be measured from December 31st in a given year, or from any other date agreed to by your employer and us. The Date of Certificate is set forth in the Certificate and is the effective date for life insurance protection under the Certificate. We use the Date of Certificate to calculate the Certificate years (and Certificate months and monthly anniversaries). PAYMENT AND ALLOCATION OF PREMIUMS [SIDEBAR: YOU CAN MAKE PLANNED PERIODIC PREMIUM PAYMENTS AND UNSCHEDULED PREMIUM PAYMENTS.] The payment of a given premium will not necessarily guarantee that your Certificate will remain in force. Rather, this depends on the Certificate's cash surrender value. PAYING PREMIUMS You can make premium payments, subject to certain limitations discussed below, through: .. PAYROLL DEDUCTION: Where provided by your employer, you may pay premiums through payroll deduction. Your employer may require that you pay a minimum monthly amount in order to use payroll deduction. Your employer may send payroll deductions to us as much as 30 days after the deduction is made. .. PLANNED PERIODIC PAYMENTS: If there is no payroll deduction available, you may elect to pay premiums monthly, quarterly or annually. .. UNSCHEDULED PREMIUM PAYMENT OPTION: You also can make other premium payments at any time. We do not accept premiums made in cash or by money order. If you send your premium payments or transaction requests to an address other than the one we have designated for receipt of such premium 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 Certificate. MAXIMUM AND MINIMUM PREMIUM PAYMENTS .. The first premium may not be less than the planned premium. .. Unscheduled premium payments must be at least $100 each. We may change this minimum amount on 90 days notice to you. .. You may not pay premiums that exceed tax law premium limitations for life insurance policies. We will return any amounts that exceed these limits except that we will keep any amounts that are required to keep the Certificate from terminating. We will let you make premium payments that would turn the Certificate into a modified endowment contract, but we will promptly tell you of this status, and if possible, we will tell you how to reverse the status. ("See Tax Matters--Modified Endowment Contracts.") 16 ALLOCATING NET PREMIUMS [SIDEBAR: NET PREMIUMS ARE YOUR PREMIUMS MINUS THE CHARGES DEDUCTED FROM YOUR PREMIUMS.] Generally, you indicate on your enrollment form the initial allocation of net premiums (your premiums minus the charges deducted from your premiums) among the Fixed Account and the investment divisions of the Separate Account. In some cases, your employer has the right to allocate the portion of any net premiums it pays (but not any premiums that you pay) until the covered person retires (if the covered person is employed by your employer) or the Certificate becomes portable. (See "Portable Certificate" under "Other Certificate Provisions--Effect of Termination of Employer Participation in the Group Policy.") The Certificate includes a description of your right to allocate net premiums. The percentage of your net premium allocation into each of these investment options must be a minimum of 10% and in whole numbers. You can change your allocations at any time by giving us written notification at our Administrative Office or in any other manner that we permit. INSURANCE PROCEEDS If the Certificate is in force, we will pay your beneficiary the insurance proceeds as of the end of the Valuation Period that includes the covered person's date of death. We will pay this amount after we receive documents that we request as due proof of the covered person's death. The beneficiary can receive the death benefit in a single sum or under an income plan described below. You may make this choice during the covered person's lifetime. If no selection is made, we will place the amount in an account to which we will credit interest, and the beneficiary will have immediate access to all or part of that amount. This account is part of our general account. It is not a bank account and it is not insured by the FDIC or any other government agency. As part of our general account, it is subject to the claims of our creditors. We receive a benefit from all amounts left in this account. The beneficiary has one year from the date the insurance proceeds are paid to change the selection from a single sum payment to an income plan, as long as we have made no payments from the interest-bearing account. If the terms of the income plan permit the beneficiary to withdraw the entire amount from the plan, the beneficiary can also name contingent beneficiaries. The insurance proceeds equal: .. The death benefit provided on the date of death or the alternate death benefit; plus .. Any additional insurance proceeds provided by rider; minus .. Any unpaid Certificate loans and accrued interest thereon, and any due and unpaid charges accruing during a grace period. The amount of the death benefit that exceeds the Certificate's Cash Value is paid from our general account. Death benefit amounts paid from our general account are subject to the claims of our creditors. DEATH BENEFIT [SIDEBAR: THE CERTIFICATE PROVIDES A DEATH BENEFIT WHICH INCLUDES THE CASH VALUE OF THE CERTIFICATE.] The death benefit varies and equals the specified face amount of insurance of the Certificate plus the cash value on the date of death. 17 ALTERNATE DEATH BENEFIT In order to ensure that the Certificate qualifies as life insurance under the federal income tax laws, the beneficiary will receive an alternate death benefit if it is greater than the amount that the beneficiary would have received under the death benefit described above. The alternate death benefit is calculated by multiplying the Certificate's cash value by a prescribed percentage. The prescribed percentage is determined by the covered person's age at the time of the calculation and declines as the covered person grows older. The alternate death benefit is as follows:
AGE OF COVERED PERSON AT DEATH % OF CASH VALUE* ----------------------------------------------- 40 and less 250% 45 215% 50 185% 55 150% 60 130% 65 120% 70 115% 75 to 90 105% 95 100%
- -------- * For the ages not listed, the percentage decreases by a ratable portion for each full year. During any period when your cash value is high enough that the alternate death benefit applies, your charges for insurance costs will be higher, since the effective amount of your coverage will be greater. In no event will the death benefit be less than the minimum insurance amount required under current Federal income tax rules applicable to the definition of life insurance as in effect on the date your Certificate is issued. SPECIFIED FACE AMOUNT [SIDEBAR: YOU CAN GENERALLY INCREASE OR DECREASE THE CERTIFICATE'S SPECIFIED FACE AMOUNT.] The specified face amount is the basic amount of life insurance specified in the Certificate. The Minimum Specified Face Amount is the smallest amount of specified face amount for which a Certificate may be issued, and is set forth in the Certificate. This amount will never be less than $10,000. Generally, you may change your specified face amount subject to certain limitations. Any change you request will be effective on the monthly anniversary on or next following our approval of your request. You are permitted to decrease the specified face amount to as low as the Minimum Specified Face Amount set forth in the Certificate. You may request an increase on dates determined by your employer and set forth in the Certificate. If you are a qualifying employee, we will make automatic increases in the specified face amount when your salary increases on a date or dates determined by your employer. However, you can notify us in writing at any time that you do not desire such automatic increases in the future. Any requirements as to the minimum amount of an increase are set forth in the Certificate. Any increase is subject to our underwriting rules which may include a requirement for evidence satisfactory to us of the covered person's insurability. 18 Before you change your specified face amount you should consider the following: .. The insurance portion of your death benefit will change. This will affect the insurance charges, cash value and death benefit levels; .. Reducing your specified face amount may result in our returning an amount to you which, if it occurs during the first 15 Certificate years, could then be taxed on an income first basis, even if the Certificate is not a modified endowment contract; .. The amount of additional premiums that the tax laws permit you to pay into the Certificate may increase or decrease. The additional amount you can pay without causing the Certificate to be a modified endowment contract for tax purposes may also increase or decrease (see "Tax Matters--Modified Endowment Contracts"); and .. The Certificate could become a modified endowment contract in certain circumstances. INCOME PLANS [SIDEBAR: GENERALLY YOU CAN RECEIVE THE CERTIFICATE'S INSURANCE PROCEEDS UNDER AN INCOME PLAN INSTEAD OF IN A LUMP SUM.] The insurance proceeds can generally be paid under a variety of income plans. We currently make the following income plans available: .. Interest Income .. Installment Income for a Stated Period .. Installment Income of a Stated Amount .. Single Life Income-Guaranteed Payment Period .. Joint and Survivor Life Income .. Single Life Income-Guaranteed Return Before you choose an income plan you should consider: .. The tax consequences associated with the Certificate proceeds, which can vary considerably, depending on whether a plan is chosen. You or your beneficiary should consult with a qualified tax advisor about tax consequences; and .. That the rates of return we credit under these plans are not based on the investment performance of any of the Portfolios. CASH VALUE, TRANSFERS AND WITHDRAWALS CASH VALUE [SIDEBAR: THE CERTIFICATE IS DESIGNED TO ACCUMULATE CASH VALUE.] The Certificate's CASH VALUE equals: .. The Fixed Account cash value, plus .. The Loan Account cash value, plus .. The Separate Account cash value. The Certificate's CASH SURRENDER VALUE equals your cash value minus: .. Any outstanding Certificate loans (plus any accrued and unpaid loan interest); .. Any accrued and unpaid monthly deduction; and .. Any surrender transaction fee. Unless the Group Policy is still in its first year, we will, on the Investment Start Date for the Certificate, allocate your cash value among the investment divisions as you requested your net premiums to be allocated in your enrollment form or a subsequent reallocation request. See "Investment Start Date" description below in "Other Certificate Provisions--When Your Requests Become Effective." If the Group Policy is still in its first year, we will make this allocation 20 days after the Investment Start Date. 19 Thereafter, at the end of each Valuation Period the cash value in an investment division will equal: .. The cash value in the investment division at the beginning of the Valuation Period; plus .. All net premiums, loan repayments and cash value transfers into the investment division during the Valuation Period; minus .. All partial cash withdrawals, loans and cash value transfers out of the investment division during the Valuation Period; minus .. The portion of any charges and deductions allocated to the cash value in the investment division during the Valuation Period; plus .. The net investment return for the Valuation Period on the amount of cash value in the investment division at the beginning of the Valuation Period. The net investment return currently equals the rate of increase or decrease in the net asset value per share of the underlying Fund portfolio over the Valuation Period, adjusted upward to take appropriate account of any dividends and other distributions paid by the portfolio during the period. CASH VALUE TRANSFERS The minimum amount you may transfer is $200 or, if less, the total amount in an investment option. You may make transfers at any time after the Investment Start Date. In some cases, your employer retains the right to transfer the portion of any net premiums it pays (but not any premiums you pay). The Certificate will set forth any such employer rights. In some cases, the maximum amount that you may transfer or withdraw from the Fixed Account in any Certificate year is the greater of .. $200 and .. 25% of the largest amount in the Fixed Account over the last four Certificate years (or since the Date of Certificate if the Certificate has been in effect for less than four years). Any such limit does not apply to .. a full surrender .. any loans taken .. any transfers under a systematic investment strategy The Certificate includes a description of your cash value transfer rights. We do not charge for transfers. Currently, transfers are not taxable transactions. Frequent requests from Certificate 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 Certificate Owners and other persons who may have an interest in the Certificates (E.G., beneficiaries). 20 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., Julius Baer International Stock Portfolio, Morgan Stanley EAFE(R) Index Portfolio, Oppenheimer Global Equity Portfolio, Russell 2000(R) Index Portfolio, T. Rowe Price Small Cap Growth Portfolio, and Lord Abbett Bond Debenture Portfolio) and we monitor transfer activity in those Portfolios (the "Monitored Portfolios"). We employ various means to monitor transfer activity, such as examining the frequency and size of transfers into and out of the Monitored Portfolios within given periods of time. For example, we currently monitor transfer activity to determine if, for each category of international, small-cap and high-yield Portfolios, in a 12-month period there were; (1) six or more transfers involving the given category; (2) cumulative gross transfers involving the given category that exceed the current 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 any other harmful transfer activity that we identify from time to time. We may revise these policies and procedures in our sole discretion at any time without prior notice. Our policies and procedures may result in transfer restrictions being applied to deter market timing. Currently, when we detect transfer activity in the Monitored Portfolios that exceeds our current transfer limits, or other transfer activity that we believe may be harmful to other Certificate Owners or other persons who have an interest in the Certificates, we require all future transfer requests, to or from a Monitored Portfolio or other identified Portfolios, under that Certificate to be submitted in writing with an original signature. Transfers made under an automated investment strategy described in this prospectus are not treated as transfers when we evaluate trading patterns for market timing. The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective, such as the decision to monitor only those Portfolios that we believe are susceptible to market timing 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 Certificate Owners to avoid such detection. Our ability to restrict such transfer activity may also be limited by provisions of the Certificates. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Certificate Owners and other persons with interests in the Certificates. We do not accommodate market timing in any Portfolios and there are no arrangements in place to permit any Certificate 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 21 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 Certificate owners, and to execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific Certificate owners who violate the frequent trading policies established by the Portfolio. In addition, Certificate Owners and other persons with interests in the Certificates 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 contracts. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable insurance policies 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 Certificate Owners) will not be harmed by transfer activity relating to the 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 contract 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 Certificate Owner). You should read the Portfolio prospectuses for more details. SYSTEMATIC INVESTMENT STRATEGIES. For certain groups, you can choose one of four currently available strategies described below. Your employer can inform you whether these investment strategies are available. You can also change or cancel your choice at any time. EQUITY GENERATOR /SM/. Allows you to transfer an amount equal to the interest earned in the Fixed Account in any Certificate month equal to at least $20 to the MetLife Stock Index investment division. The transfer will be made at the beginning of the Certificate month following the Certificate month in which the interest was earned. EQUALIZER /SM/. Allows you to periodically equalize amounts in your Fixed Account and the MetLife Stock Index investment division. We currently make equalization each quarter. We will terminate this strategy if you make a transfer out of either of the investment divisions or the Fixed Account. You may then reelect the Equalizer on your next Certificate anniversary. 22 REBALANCER/SM/. Allows you to periodically redistribute amounts in the Fixed Account and investment divisions in the same proportion that the net premiums are then being allocated. We currently make the redistribution each quarter. ALLOCATOR/SM/. Allows you to systematically transfer money from the Fixed Account to any investment division(s). When you elect Allocator, you must have enough cash value in the Fixed Account to enable the election to be in effect for three months. The election can be to transfer each month: .. A specific amount, until the cash value in the Fixed Account is exhausted; .. A specific amount for a specific number of months; or .. Amounts in equal installments until the total amount you have requested has been transferred. These transfer privileges allow you to take advantage of investment fluctuations, but none assures a profit nor protects against a loss in declining markets. Because the Allocator involves continuous investment in securities regardless of the price levels of such securities, you should consider your financial ability to continue purchases through periods of fluctuating price levels. SURRENDER AND WITHDRAWAL PRIVILEGES [SIDEBAR: YOU CAN SURRENDER THE CERTIFICATE FOR ITS CASH SURRENDER VALUE.] We may ask you to return the Certificate before we honor your request to surrender the Certificate. The proceeds will be paid in a single sum. If the covered person dies after you surrender the Certificate but before the end of the Certificate month in which you surrendered the Certificate, we will pay your beneficiary an amount equal to the difference between the Certificate's death benefit and its cash value, computed as of the surrender date. You can make partial withdrawals if: .. the withdrawal is at least $200; and .. in some cases, the amount you request to withdraw from the Fixed Account is not more than the greater of (a) $200, and (b) 25% of the largest amount in the Fixed Account over the last four Certificate years (or since the Date of Certificate if the Certificate has been in effect for less than four years). The Certificate includes a description of your rights to make partial withdrawals. If you make a request for a partial withdrawal that is not permitted, we will tell you and you may then ask for a smaller withdrawal or surrender the Certificate. We will deduct your withdrawal from the Fixed Account and each of the investment divisions of the Separate Account in the same proportion that the Certificate's cash value in each such option bears to the total cash value of the Certificate in the Fixed Account and the investment divisions. As regards payment of amounts attributable to a check, we can wait for a reasonable time (15 days or less) to let the check clear. Before surrendering the Certificate or requesting a partial withdrawal you should consider the following: .. Transaction fees of up to $25 (but not greater than 2% of the amount withdrawn) may apply, if the Certificate so states. .. Amounts received may be taxable as income and, if your Certificate is a modified endowment contract, subject to certain tax penalties. (See "Tax Matters--Modified Endowment Contracts.") 23 .. If you also decrease your specified face amount at the time of the withdrawal, the Certificate could become a modified endowment contract. .. For partial withdrawals, your death benefit will decrease, generally by the amount of the withdrawal. In some cases you may be better off taking a Certificate loan, rather than a partial withdrawal. BENEFIT AT FINAL DATE The Final Date is the Certificate anniversary on which the covered person reaches age 95. Subject to certain conditions, we will allow you to extend that date where permitted by state law. If the covered person is living on the Final Date, we will pay the cash surrender value of the Certificate to the Certificate owner (generally the employee). The Certificate owner will receive the cash surrender value in a single sum. PAID-UP CERTIFICATE PROVISION Under this provision, you can choose to terminate the Certificate's usual death benefit (and any riders in effect) and use all or part of the cash surrender value as a single premium for a "paid-up" benefit under the Certificate. ("Paid-up" means no further premiums are required.) Thereafter, you may no longer allocate cash value to the Separate Account or the Fixed Account. You will receive in cash any remaining cash surrender value that is not used to elect a paid-up benefit. The paid-up benefit must not be: .. more than can be purchased using the Certificate's cash surrender value; .. more than the death benefit under the Certificate at the time you choose to use this provision; or .. less than $10,000. LOAN PRIVILEGES [SIDEBAR: YOU CAN BORROW FROM US AND USE THE CERTIFICATE AS SECURITY FOR THE LOAN.] The amount of each loan must be: .. At least $200; and .. No more than 75% of the cash surrender value (unless state law requires a different percentage to be applied, as set forth in your Certificate) when added to all other outstanding Certificate loans. For certain Group Policies, we may charge a transaction fee of up to $25 for each loan if the Certificate so states. As of your loan request's Date of Receipt, we will: .. Remove an amount equal to the loan from your cash value in the Fixed Account and each investment division of the Separate Account in the same proportion that the Certificate's cash value in each such option bears to the total cash value of the Certificate in the Fixed Account and the investment divisions. .. Transfer such cash value to the Loan Account, where it will be credited with interest at a rate equal to the loan rate charged less a percentage charge, based on expenses associated with Certificate loans, determined by us. This percentage charge will not exceed 2%, and the minimum rate we will credit to the Loan Account will be 3% per year (for Group Policies issued prior to March 1, 1999, the minimum rate is 4%). At least once a year, we will transfer any interest earned in 24 your Loan Account to the Fixed Account and the investment divisions, according to the way that we then allocate your net premiums. .. Charge you interest, which will accrue daily at a rate of up to 8% per year (which is the maximum rate we will ever charge). We will determine the current interest rate applicable to you at the time you take a loan. Your interest payments are generally due at the beginning of each Certificate year. However, we reserve the right to make interest payments due in a different manner. If you do not pay the amount within 31 days after it is due, we will treat it as a new Certificate loan. Repaying your loans (plus accrued interest) is done by sending in payments at any time before the Final Date while the covered person is living. You should designate whether a payment is intended as a loan repayment or a premium payment, since we will treat any payment for which no designation is made as a premium payment. We will allocate your repayment to the Fixed Account and the investment divisions, in the same proportion that net premiums are then allocated. Before taking a Certificate loan you should consider the following: .. Interest payments on loans are generally not deductible for tax purposes. .. Under certain situations, Certificate loans could be considered taxable distributions. .. Amounts held in your Loan Account do not participate in the investment experience of the investment divisions or receive the interest rate credited to the Fixed Account either of which may be higher than the interest rate credited on the amount you borrow. .. If you surrender the Certificate or if we terminate the Certificate, or at the Final Date, any outstanding loan amounts (plus accrued interest) may be taxed as a distribution. (See "Federal Tax Matters--Loans" below.) .. A Certificate loan increases the chances of our terminating the Certificate due to insufficient cash surrender value. We will terminate your Certificate with no value if: (a) on a monthly anniversary your loans (plus accrued interest) exceed your cash value minus the monthly deduction; and (b) we tell you of the insufficiency and you do not make a sufficient payment within the greater of (i) 61 days of the monthly anniversary, or (ii) 30 days after the date notice of the start of the grace period is mailed to you. .. The Certificate's death proceeds will be reduced by any unpaid loan (plus any accrued and unpaid loan interest). OPTIONAL BENEFITS ADDED BY RIDER You may be eligible for certain benefits provided by rider, subject to certain underwriting requirements and the payment of additional premiums. We will deduct any charges for the rider(s) as part of the monthly deduction. Each rider contains important information, including limits and conditions that apply to the benefits. Generally, we currently make the following benefits available by rider: .Disability Waiver of Monthly .Accidental Death or Deduction Benefit/1,2/ Dismemberment Benefit/1/ ----------------------------------------------------------------- .Accelerated Benefits Option/1,3/ .Dependent Life Benefits/1/ ----------------------------------------------------------------- .Accidental Death Benefit/1/
- -------- /1/ Provided to you only if elected by your employer. /2/ An increase in specified face amount may not be covered by this rider. If not, the portion of the monthly deduction associated with the increase will continue to be deducted from the cash value, which if insufficient, could result in the Certificate's termination. For this reason, it may be 25 advantageous for the owner, at the time of total disability, to reduce the specified face amount to that covered by this rider. /3/ Payment under this rider may affect eligibility for benefits under state or federal law. Each rider contains important information, including limits and conditions that apply to the benefits. If you decide to purchase any of the riders, you should carefully review their provisions to be sure the benefit is something that you want. You should also consider: .. That the addition of certain riders can restrict your ability to exercise certain rights under the Certificate. .. That the amount of benefits provided under the rider is not based on investment performance of a separate account; but, if the Certificate terminates because of poor investment performance or any other reason, the rider generally will also terminate. .. The tax consequences. You should consult with your tax advisor before purchasing one of the riders. CHARGES AND DEDUCTIONS [SIDEBAR: CAREFULLY REVIEW THE "FEE TABLES" IN THIS PROSPECTUS WHICH SET FORTH THE CHARGES THAT YOU PAY UNDER THE CERTIFICATE.] IMPORTANT INFORMATION APPLICABLE TO ALL CERTIFICATE CHARGES AND DEDUCTIONS The charges discussed in the paragraphs that follow are all included in the Fee Tables on pages 5 to 10 of this Prospectus. You should refer to those Fee Tables for information about the rates of and amounts of such charges, as well as other information that is not covered below. The Certificate charges compensate us for the services and benefits we provide, the costs and expenses we incur, and the risks we assume. Services and benefits we provide: .. the death benefit, cash, and loan benefits under the Certificate .. investment options, including premium allocations .. administration of elective options .. the distribution of reports to certificate owners Costs and expenses we incur: .. costs associated with processing and underwriting applications, and with issuing and administering the Certificate (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 charges of providing the services and benefits under the Certificates exceed the charges we deduct Our revenue from any particular charge may be more or less than any costs or expenses that charge is intended primarily to cover. We may use our revenues 26 from one charge to pay other costs and expenses in connection with the Certificates. We may also profit from all the charges combined, including the cost of insurance charge and the Mortality and Expense Risk charge. The following sets forth additional information about some (but not all) of the Certificate charges. CHARGES DEDUCTED FROM PREMIUMS CHARGE FOR AVERAGE EXPECTED STATE TAXES ATTRIBUTABLE TO PREMIUMS: We make this charge to reimburse us for the state premium taxes that we must pay on premiums we receive. Although premium taxes vary from state to state, we will charge one rate for each employer group. We estimate the initial charge for each employer group based on anticipated taxes to be incurred on behalf of each group during its first year of coverage. Thereafter, we will base this charge on anticipated taxes taking into account actual state and local premium taxes we incur on behalf of each employer group in the prior year and known factors affecting the coming year's taxes. This charge may vary based on changes in the law or changes in the residence of the Certificate owners. We may deduct this charge, as well as the charge for expected federal taxes attributable to premiums, either as a percent of premium or as part of the monthly deduction. In the latter case, the amount we deduct would depend on the amount of premiums paid by the group as a whole rather than the amount paid by you. Currently, we are charging covered employer groups rates up to 2.55%, which reflect the average state premium taxes currently being charged for the group. There is no specific maximum rate we may charge. CHARGE FOR EXPECTED FEDERAL TAXES ATTRIBUTABLE TO PREMIUMS. Federal income tax law requires us to pay certain amounts of taxes that are related to the amount of premiums we receive. We deduct 0.35% of each premium payment to offset the cost to us of those additional taxes, which may be more or less than the amount we pay in respect of your premiums. CHARGES INCLUDED IN THE MONTHLY DEDUCTION The Certificate describes the charges that are applicable to you as part of the monthly deduction. The monthly deduction accrues on each monthly anniversary starting with the Date of Certificate. However, we may make the actual deduction up to 45 days after each such monthly anniversary. We allocate the monthly deduction among the Fixed Account and each of the investment divisions of the Separate Account in the same proportion that the Certificate's cash value in each such option bears to the total cash value of the Certificate in the Fixed Account and the investment divisions. COST OF INSURANCE: This charge varies based on many factors. Each month, we determine the charge by multiplying your cost of insurance rate by the insurance amount. This is the amount we are at risk if the insured dies, and the Fee Table earlier in this Prospectus calls it our "Net Amount at Risk." The insurance amount (or Net Amount at Risk) is the death benefit at the beginning of the Certificate month, minus the cash value at the beginning of the Certificate month. The insurance amount will be affected by changes in the specified face amount of the Certificate. The insurance amount and 27 therefore the cost of insurance will be greater if the specified face amount is increased. If the alternate death benefit is in effect, then the insurance amount will increase and thus your cost of insurance will be higher. The cost of insurance rate is based on: .. The age and rate class of the covered person .. Group mortality characteristics .. The particular characteristics that are agreed to by your employer and us, such as: 1. The rate class structure; 2. The degree of stability in the charges sought by your employer; and 3. Portability features. .. The amount of any surplus or reserves to be transferred to us from any previous insurer or from another of our policies (see "Other Certificate Provisions--Retrospective Experience Rating and Dividends"). The actual monthly cost of insurance rates will be based on our expectations as to future experience. The rates, however, will never exceed the guaranteed cost of insurance rates set forth in the Certificate. These guaranteed rates may be up to 150% of the rates that could be charged based on the 1980 Commissioners Standard Ordinary Mortality Table, Males, age last birthday ("1980 CSO Table"). The maximum guaranteed rates may be higher than the 1980 CSO Table because we use simplified underwriting and non-medical issue procedures whereby we may not require the covered person to submit to a medical or paramedical examination, and may provide coverage to groups that present substandard risk characteristics according to our underwriting criteria. Our current rates are lower than 100% of the 1980 CSO Table in most cases. We review our rates periodically and may adjust them based on our expectations of future experience. We will apply the same rates to everyone in a group who has had their Certificate for the same amount of time and who is the same age and rate class. We adjust the rates from time to time based on several factors, including: .. the number of Certificates in force for each group; .. the number of Certificates in the group surrendered or becoming portable during the period; and .. the actual experience of the group. As a general rule, the cost of insurance rate increases each year you own the Certificate, as the covered person's age increases. Our use of simplified underwriting and non-medical issue procedures may result in higher cost of insurance charges for some healthy individuals. Rate class relates to the level of mortality risk we assume with respect to a covered person. We and your employer will agree to the number of classes and characteristics of each class. The classes may vary by smoker and nonsmokers, active and retired status, Owners of portable Certificates and other Owners, and/or any other non-discriminatory classes we and your employer agree to. The covered person's rate class will affect your cost of insurance. ADMINISTRATION CHARGE: We make this monthly charge primarily to compensate us for expenses we incur in the administration of the Certificates, including our underwriting and start-up expenses. The Certificate will describe your administration charge. The charge will never exceed $5 per Certificate. We will determine differences in the administration charge rates applicable to different Certificates under the Group Policies based on expected differences in the administrative costs under the Certificates or in the amount 28 of revenues that we expect to derive from the charge. Such differences may result, for example, from: .. features that are agreed to by your employer and us; .. the extent to which certain administrative functions are to be performed by us or by your employer; and .. the expected average Certificate death benefit. CHARGE AGAINST THE SEPARATE ACCOUNT We make this daily Mortality and Expense Risk charge against the assets in the Separate Account primarily to compensate us for: .. mortality risks that covered persons may live for a shorter period than we expect; and .. expense risks that our issuing and administrative expenses may be higher than we expect. The maximum rate we may charge is equivalent to an effective annual rate of ..90% of the Cash Value in the Separate Account. We may determine differences in this charge for different employer groups based on differences in the levels of mortality and expense risks. These differences arise mainly from the fact that: .. the factors discussed above on which the cost of insurance and administration charges are based are more uncertain in some cases than others; and .. our ability to recover any unexpected costs from Certificate charges varies from case to case depending on the maximum rates for such charges we agree to with employers. We reserve the right, if permitted by law, to change the structure of this charge so that it is charged on a monthly basis as a percentage of cash value in the Separate Account or so that it is charged as a part of the monthly deduction. Our right to change the structure of this charge does not permit us to increase the maximum rate that is stated in the Policy. VARIATIONS IN CHARGES We will determine Certificate charge rates pursuant to our established actuarial procedures, and we will not discriminate unreasonably or unfairly against owners of Certificates under any Group Policy. PORTFOLIO COMPANY CHARGES Each of the Portfolios pays an investment management fee to its investment manager. Each Portfolio also incurs other direct expenses. See the fuller description contained in the Fee Table section of this Prospectus (also see the Fund Prospectus and Statement of Additional Information referred to therein for each Fund). You bear indirectly your proportionate share of the fees and expenses of the Portfolios of each Fund that correspond to the Separate Account investment divisions you are using. OTHER CHARGES ADDITIONAL TAXES. In general, we don't expect to incur federal, state or local taxes upon the earnings or realized capital gains attributable to the assets in 29 the Separate Account relating to the cash surrender value of the Policies. If we do incur such taxes, we reserve the right to charge cash value allocated to the Separate Account for these taxes. TRANSACTION FEE FOR SURRENDERS OR PARTIAL WITHDRAWALS. Your Certificate may provide that we may charge a transaction fee of up to $25 for each surrender or partial withdrawal. In no event, however, will the charge be greater than 2% of the amount withdrawn. LOAN INTEREST SPREAD: We charge interest on Certificate loans but credit you with interest on the amount of the Cash Value we hold as collateral for the loan. The loan interest spread is the excess of the interest rate we charge over the interest rate we credit. This charge is primarily to cover our expense in providing the loan. The spread is guaranteed to never exceed 2%. CERTIFICATE TERMINATION AND REINSTATEMENT TERMINATION: We will terminate the Certificate without any cash surrender value if: .. The cash surrender value on any monthly anniversary is less than the monthly deduction; and .. We do not receive a sufficient premium payment within the grace period to cover the monthly deduction. We will mail you notice if any grace period starts. The grace period is the greater of (a) 61 days measured from the monthly anniversary and (b) 30 days after the notice is mailed. REINSTATEMENT: The following applies unless the Group Policy has been terminated and you would not have been permitted to retain your Certificate on a portable or paid-up basis. Upon your request, we will reinstate the Certificate, subject to certain terms and conditions that the Certificate provides. We must receive your request within 3 years (or within a longer period if required by state law) after the end of the grace period and before the Final Date. You also must provide us with: .. A written request for reinstatement. .. Evidence of insurability that we find satisfactory. .. An additional premium amount that the Certificate prescribes for this purpose. Your Certificate can also terminate in some cases if your employer ends its participation in the Group Policy. This is discussed in detail under "Other Certificate Provisions--Effect of Termination of Employer Participation in the Group Policy" below. FEDERAL TAX MATTERS [SIDEBAR: YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR TO FIND OUT HOW TAXES CAN AFFECT YOUR BENEFITS AND RIGHTS UNDER THE CERTIFICATE.] The following is a brief summary of some tax rules that may apply to the Certificate. Such discussion does not purport to be complete or to cover every situation. You must consult with and rely on the advice of your own tax or ERISA counsel especially where the Certificate is being purchased in connection with an employee benefit plan, such as a death benefit or deferred compensation plan, or is being purchased for estate, tax planning or similar purposes. You should also consult with your own tax advisor to find out how taxes can affect your benefits and rights under the Certificate. Such consultation is especially important before you make unscheduled premium payments, change your specified face amount, change coverage provided by riders, take a loan or withdrawal, or assign or surrender the Certificate. 30 Under current federal income tax law, the taxable portion of distributions from variable life contracts is taxed at ordinary income tax rates and does not qualify for the reduced tax rate applicable to long-term capital gains and dividends. IRS CIRCULAR 230 NOTICE: The tax information contained in this Prospectus 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 Policyholder should seek tax advice based on its particular circumstances from an independent tax advisor. INSURANCE PROCEEDS .. Insurance proceeds are generally excludable from your beneficiary's gross income to the extent provided in Section 101 of the Internal Revenue Code ("Code"). Insurance proceeds may be taxable in some circumstances, such as where there is a transfer-for-value of a Certificate or where a business is the Owner of the Certificate, if certain requirements are not satisfied. .. The proceeds may be subject to federal estate tax: (i) if paid to the covered person's estate or (ii) if paid to a different beneficiary if the covered person possessed incidents of ownership at or within three years before death. .. If you die before the covered person, the value of the Certificate (determined under IRS rules) is included in your estate and may be subject to federal estate tax. .. Whether or not any federal estate tax is due is based on a number of factors including the estate size. .. The insurance proceeds payable upon death of the insured will never be less than the minimum amount required for a Certificate to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Certificate was issued. CASH VALUE (IF THE CERTIFICATE IS NOT A MODIFIED ENDOWMENT CONTRACT) .. You are generally not taxed on your cash value until you withdraw it or surrender the Certificate or receive a distribution such as when your Certificate terminates or on the Final Date. In these cases, you are generally permitted to take withdrawals and receive other distributions up to the amount of premiums paid without any tax consequences. However, withdrawals and other distributions will be subject to income tax after you have received amounts equal to the total premiums you paid. Somewhat different rules may apply if there is a death benefit reduction in the first 15 Certificate years, when a distribution may be subject to tax on an income-out-first basis if there is a gain in the Certificate (which is generally when your cash value exceeds the cumulative premiums you paid). There may be an indirect tax upon the income in the Certificate or the proceeds of a Certificate under the Federal corporate alternative minimum tax, if you are subject to that tax. LOANS .. Loan amounts you receive will generally not be subject to income tax, unless your Certificate is or becomes a modified endowment contract or terminates. .. Interest on loans is generally not deductible. .. If the Certificate terminates (upon surrender, cancellation, lapse, or the Final Date of replacement by your employer of your group coverage with other group coverage) while any Certificate loan is outstanding, the amount of the loan plus 31 accrued interest thereon will be deemed to be a "distribution" to you. Any such distribution will have the same tax consequences as any other Certificate distribution. Thus, there will generally be federal income tax payable on the amount by which withdrawals and loans exceed the premiums paid to date. Please be advised that amounts borrowed and withdrawn reduce the Certificate's cash value and any remaining cash value of the Certificate may be insufficient to pay the income tax on your gains. MODIFIED ENDOWMENT CONTRACTS These contracts are life insurance contracts where the premiums paid during the first 7 years after the Certificate is issued, or after a material change in the Certificate, exceed tax law limits referred to as the "7-pay test." Material changes in the Certificate include changes in the level of benefits and certain other changes to the Certificate after the issue date. Reductions in benefits during a 7-pay period also may cause the Certificate to become a modified endowment contract. Generally, a life insurance policy that is received in exchange for a modified endowment contract will also be considered a modified endowment contract. The IRS has promulgated a procedure for the correction of inadvertent modified endowment contracts. Due to the flexibility of the Certificates as to premiums and benefits, the individual circumstances of each Certificate will determine whether it is classified as a MEC. If your Certificate is considered a modified endowment contract the following applies: .. The death benefit will still generally be income tax free to your beneficiary, as discussed above. .. Amounts withdrawn or distributed before the covered person's death, including (without limitation) loans, assignments and pledges, are treated as income first and subject to income tax (to the extent of any gain in the Certificate). All modified endowment contracts you purchase from us and our affiliates during the same calendar year are treated as a single contract for purposes of determining the amount of any such income. .. An additional 10% income tax generally applies to the taxable portion of the amounts received before age 59 1/2, except generally if you are disabled or if the distribution is part of a series of substantially equal periodic payments made over life expectancy. .. If a Certificate becomes a modified endowment contract, distributions that occur during the contract year will be taxed as distributions from a modified endowment contract. In addition, distributions from a Certificate within two years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a Certificate that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. DIVERSIFICATION In order for the Certificate to qualify as life insurance, we must comply with certain diversification standards with respect to the investments underlying the Certificate. We believe that we satisfy and will continue to satisfy these diversification standards. Inadvertent failure to meet these standards may be able to be corrected. Failure to meet these standards would result in immediate taxation to Certificate owners of gains under their Certificates. In addition, if the Portfolio shares are sold directly to tax-qualified retirement 32 plans that later lose their tax-qualified status or to non-qualified plans, the separate accounts investing in the Portfolio may fail the diversification requirements of Section 817(h) of the Internal Revenue Code, which could have adverse tax consequences on your Certificate, including losing the benefit of tax deferral. INVESTOR CONTROL In some circumstances, owners of variable contracts who retain excessive control over the investment of the separate account assets underlying their contracts may be treated as the owners of those assets and may be subject to tax on income produced by those assets. Although published guidance in this area does not address certain aspects of the Certificates, we believe that the owner of a Certificate should not be treated as an owner of any assets in our Separate Account. We reserve the right to modify the Certificates to bring them into conformity with applicable standards should such modification be necessary to prevent owners of the Certificates from being treated as the owners of any underlying Separate Account assets. ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 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 decendents 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 2007-2009 the maximum estate tax rate is 45%. The estate tax exemption is $2,000,000 for 2006-2008 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 advisor to help ensure that your estate plan adequately addresses your needs and that of your beneficiaries under all possible scenarios. WITHHOLDING To the extent that Certificate 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 RESIDENTS OF PUERTO RICO In Rev. Rul. 2004-75, 2004-31 I.R.B. 109, the Internal Revenue Service recently announced that income received by residents of Puerto Rico under life insurance contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States Federal income tax. 33 LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from life insurance Certificates at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser's country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding taxation with respect to the purchase of a Certificate. CHANGES TO TAX RULES AND INTERPRETATIONS Changes in applicable tax rules and interpretations can adversely affect the tax treatment of your Certificate. These changes may take effect retroactively. We reserve the right to amend the Certificate in any way necessary to avoid any adverse tax treatment. Examples of changes that could create adverse tax consequences include: .. Possible taxation of cash value transfers between investment funds. .. Possible taxation as if you were the owner of your allocable portion of the Separate Account's assets. .. Possible limits on the number of investment funds available or the frequency of transfers among them. .. Possible changes in the tax treatment of Certificate benefits and rights. OTHER ISSUES RELATING TO GROUP VARIABLE UNIVERSAL LIFE While "employee pay all" group variable universal life should generally be treated as separate from any Internal Revenue Code Section 79 Group Term Life Insurance Plan also in effect, in some circumstances group variable universal life could be viewed as being part of such a plan, giving rise to adverse tax consequences. Finally, employer involvement and other factors determine whether group variable universal life is subject to the Employee Retirement Income Security Act ("ERISA"). To the extent permitted under the federal tax law, we may claim the benefit of certain foreign tax credits attributable to taxes paid by certain Funds to foreign jurisdictions. TAX CREDITS AND DEDUCTIONS The Company may be entitled to certain tax benefits related to the assets of the Separate Account. These tax benefits, which may include foreign tax credits and corporate dividend received deductions, are not passed back to the Separate Account or to Policy owners since the Company is the owner of the assets from which the tax benefits are derived. THE COMPANY'S INCOME TAXES Under current Federal income tax law we are not taxed on the Separate Account's operations. Thus, currently we do not deduct a charge from the Separate Account for company Federal income taxes. (We do deduct a charge for Federal taxes from premiums.) We reserve the right to charge the Separate Account for any future Federal income taxes we may incur. Under current laws 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. 34 RIGHTS WE RESERVE We reserve the right to make certain changes if we believe the changes are in the best interest of our Certificate owners or would help carry out the purposes of the Certificate. We will make these changes in the manner permitted by applicable law and only after obtaining any necessary owner and regulatory approval. We will notify you of any changes that result in a material change in the underlying investments in the investment divisions, and you will have a chance to transfer out of the affected division (without charge). Some of the changes we may make include: .. Operating the Separate Account in any other form that is permitted by applicable law. .. Changes to obtain or continue exemptions from the 1940 Act. .. Transferring assets among investment divisions or to other separate accounts, or our general account or combining or removing investment divisions from the Separate Account. .. Substituting Fund shares in an investment division for shares of another portfolio of a Fund or another fund or investment permitted by law. .. Changing the way we assess charges without exceeding the aggregate amount of the Certificate's guaranteed maximum charges. .. Making any necessary technical changes to the Certificate to conform it to the changes we have made. Some such changes might require us to obtain regulatory or Policy owner approval. Whether regulatory or Policy owner approval is required would depend on the nature of the change and, in many cases, the manner in which the change is implemented. You should not assume, therefore, that you necessarily will have an opportunity to approve or disapprove any such changes. Circumstances that could influence our determination to make any change might include changes in law or interpretations thereof; changes in financial or investment market conditions; changes in accepted methods of conducting operations in the relevant market; or a desire to achieve material operating economies or efficiencies. OTHER CERTIFICATE PROVISIONS [SIDEBAR: CAREFULLY REVIEW THE CERTIFICATE, WHICH CONTAINS A FULL DISCUSSION OF ALL ITS PROVISIONS.] FREE LOOK PERIOD You can return the Certificate or terminate an increase in the specified face amount during this period. The period ends on the later of: .. 10 days after you receive the Certificate or, in the case of an increase, the revised Certificate (unless state law requires a longer specified period); and .. 45 days after we receive the completed enrollment form or specified face amount increase request. If you return the Certificate, we will send you a complete refund of any premiums paid (or cash value plus any charges deducted if state law requires) within seven days. If you terminate an increase in the specified face amount, we will restore all Certificate values to what they would have been had there been no increase. We will also refund any premiums paid so that the Certificate will continue to qualify as life insurance under the federal income tax laws. SUICIDE Subject to applicable state law, if the covered person commits suicide within the first two Certificate years (or another period required by state law), your 35 beneficiary will receive all premiums paid (without interest), less any outstanding loans (plus accrued interest) and withdrawals taken. Similarly, we will pay the beneficiary only the cost of any increase in specified face amount if the covered person commits suicide within two years of such increase. RETROSPECTIVE EXPERIENCE RATING AND DIVIDENDS Depending on the provisions in the Group Policy and the claim experience under the Group Policy, the Group Policy may be eligible to receive premium refunds or dividends. We have set the cost of insurance rates in such a way that we will not generally pay a premium refund or a dividend. But, if either is due, it will be paid to the Group Policyholder who will distribute it to Certificate owners. Also, in some situations involving transfer of coverage to a Group Policy or to a successor insurer, certain amounts of surplus or reserves may also be transferred to us or the successor insurer rather than being declared as dividends or premium refunds. The Group Policy describes how we calculate whether any premium refund or dividend will be paid in more detail. EFFECT OF TERMINATION OF EMPLOYER PARTICIPATION IN THE GROUP POLICY Your employer can terminate its participation in the Group Policy. In addition, we may also terminate your employer's participation in the Group Policy if either: 1. during any twelve month period, the total specified face amount for all Certificate Owners under the Group Policy or the number of Certificates falls by certain amounts or below the minimum levels we establish (these levels are set forth in the Certificate), or 2. your employer makes available to its employees another life insurance product. Both your employer and MetLife must provide ninety days written notice to the other as well as to you before terminating participation in the Group Policy. Termination means that your employer will no longer send premiums to us through payroll deduction and that no new Certificates will be issued to employees in your employer's group. You will remain an Owner of your Certificate if: .. you are an Owner of a Certificate that has become portable (as discussed below) not later than the Certificate monthly anniversary prior to termination of your employer's participation; or .. you are an Owner who exercised the paid-up Certificate provision not later than the last Certificate monthly anniversary prior to notice being sent to you of the termination. For all other Owners, .. If your employer replaces your group coverage with another life insurance product that is designed to have cash value, .. we will terminate the Certificate and .. we will transfer your cash surrender value to the other life insurance product (or pay your cash surrender value to you if you are not covered by the new product). Any outstanding loan may be taxable. .. If the other life insurance product is not designed to have cash value, .. we will terminate your certificate and 36 .. we will pay your cash surrender value to you. In such case, the Federal income tax consequences to you would be the same as if you surrendered your Certificate. If your employer does not replace your group coverage with another life insurance product, then, depending on the terms of the Certificate, .. you may have the option of choosing to become an Owner of a portable Certificate or a paid-up Certificate, and .. you may have the option of purchasing insurance based on the "conversion" rights set forth in the Certificate and of receiving the cash surrender value of the Certificate. If you choose the conversion rights, the insurance provided will be substantially less (and in some cases nominal) than the insurance provided under the Certificate. Instead of any of the above options, you may choose to apply the Certificate's cash surrender value to the purchase of an annuity product from MetLife upon termination of the Certificate. PORTABLE CERTIFICATE: A Certificate becomes "portable" when an event specified in the Certificate occurs. These events may include: .. termination of the payroll deduction plan with no successor carrier .. other termination of the covered person's employment .. the sale by your employer of the business unit with which the covered person is employed If you become the Owner of a portable Certificate, the current cost of insurance may change, but it will never be higher than the guaranteed cost of insurance. Also, we may no longer consider you a member of your employer's group for purposes of determining cost of insurance rates and charges. ASSIGNMENT AND CHANGE IN OWNERSHIP You can assign the Certificate if you notify us in writing. The assignment or release of the assignment is effective when it is recorded at the Administrative Office. We are not responsible for determining the validity of the assignment or its release. Also, there could be serious adverse tax consequences to you or your beneficiary, so you should consult with your tax advisor before making any change of ownership or other assignment. REPORTS Generally, you will promptly receive statements confirming your significant transactions such as: .. Change in specified face amount; .. Transfers among investment divisions (including those through Systematic Investment Strategies, which may be confirmed quarterly); .. Partial withdrawals; .. Loan amounts you request; and .. Loan repayments and premium payments. If your premium payments are made through a payroll deduction plan, we will not send you any confirmation in addition to the one you receive from your bank or employer. 37 We will also send you an annual statement generally within 30 days after a Certificate year. This statement will summarize the year's transactions and include information on: .. Deductions and charges; .. Status of the death benefit; .. Cash and cash surrender values; .. Amounts in the investment divisions and Fixed Account; .. Status of Certificate loans; .. Automatic loans to pay interest; and .. Information on your modified endowment contract status (if applicable) We will also send you a Fund's annual and semi-annual reports to shareholders. WHEN YOUR REQUESTS BECOME EFFECTIVE Generally, requests, premium payments and other instructions and notifications are effective on the Date of Receipt. In those cases, the effective time is at the end of the Valuation Period during which we receive them at our Administrative Office. (Some exceptions to this general rule are noted below and elsewhere in this Prospectus.) A Valuation Period is the period between two successive Valuation Dates. It begins at the close of regular trading on the New York Stock Exchange on a Valuation Date and ends at the close of regular trading on the New York Stock Exchange on the next succeeding Valuation Date. The close of regular trading is 4:00 p.m., Eastern Time on most days. A Valuation Date is each day on which the New York Stock Exchange is open for trading, except on the day after Thanksgiving when our Administrative Office is closed. Accordingly, if we receive your request, premium, or instructions after the close of regular trading on the New York Stock Exchange, 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, premium, or instructions 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). If your employer's participation in the Group Policy is still in its first year, the effective time of premium allocation instructions and transfer requests you make in the Certificate enrollment form, or within 20 days of your Investment Start Date, is the end of the first Valuation Date after that 20 day period. During the 20 day period, all of your cash value is automatically allocated to our Fixed Account. Your Investment Start Date is the Date of Receipt of your first premium payment with respect to the Certificate, or, if later, the Date of Receipt of your enrollment form. If your employer's participation in the Group Policy is not still in its first year, the Investment Start Date is the effective time of the allocation instructions you made in the Certificate enrollment form. If your employer has determined to exchange your current insurance coverage for a MetLife Group Policy, there may be a delay between the effective date of the Certificate and the receipt of any cash value from the 38 prior certificate for the 1035 exchange. At the sole discretion of MetLife, the premium attributable to the 1035 exchange may be credited interest from the Certificate effective date. In no case will transfers among the investment options for the premium attributable to the 1035 exchange be applied prior to the date of receipt. The effective date of your Systematic Investment Strategies will be that set forth in the strategy chosen. PAYMENT AND DEFERMENT We can delay transfers, withdrawals, surrender and payment of Certificate loans from the Fixed Account for up to 6 months. Generally, we will pay or transfer amounts from the Separate Account within seven days after the Date of Receipt of all necessary documentation required for such payment or transfer. We can defer this if: .. The New York Stock Exchange has an unscheduled closing. .. There is an emergency so that we could not reasonably determine the investment experience of the Certificate. .. The Securities and Exchange Commission determines that an emergency exists or by order permits us to do so for the protection of Certificate owners (provided that the delay is permitted under New York State insurance law and regulations). .. With respect to the insurance proceeds, if entitlement to a payment is being questioned or is uncertain. We currently pay interest on the amount of insurance proceeds at 3% per year (or higher if state law requires) from the date of death until the date we pay the benefit. We may withhold payment of surrender, partial withdrawals or loan proceeds if any portion of those proceeds would be derived from a Certificate Owner's check or from a preauthorized checking arrangement that has not yet cleared (i.e. that could still be dishonored by your banking institution). We may use telephone, fax, Internet or other means of communications to verify that payment from the Certificate owner's check or preauthorized checking arrangement 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. Certificate 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. THIRD PARTY REQUESTS Generally, we accept requests for transactions or information only from you. Therefore, we reserve the right not to process transactions requested on your behalf by your agent with a power of attorney or any other authorization. This includes processing transactions by an agent you designate, through a power of attorney or other authorization, who has the ability to control the amount and timing of transfers for a number of other Certificate owners, and who simultaneously makes the same request or series of requests on behalf of other Certificate owners. 39 EXCHANGE PRIVILEGE If you decide that you no longer want to take advantage of the investment divisions in the Separate Account, you may transfer all of your money into the Fixed Account. No transaction charge will be imposed on a transfer of your entire cash value (or the cash value attributable to a specified face amount increase) to the Fixed Account within the first 24 Certificate months (or within 24 Certificate months after a specified face amount increase you have requested, as applicable). In some states, in order to exercise your exchange privilege, you must transfer, without charge, the Certificate cash value (or the portion attributable to a specified face amount increase) to a flexible premium fixed benefit life insurance policy that we make available. SALES OF CERTIFICATES MetLife Investors Distribution Company ("MLIDC") is the principal underwriter and distributor of the Group Policies and Certificates. MLIDC's principal executive offices are located at 5 Park Plaza, Suite 1900, Irvine, CA 92614. MLIDC, which is our affiliate, is registered under the Securities Exchange Act of 1934 (the "34 Act") as a broker-dealer and is a member of the Financial Industry Regulatory Authority ("FINRA"). An investor brochure that includes information describing FINRA's Public Disclosure Program is available by calling 1-800-289-9999, or by visiting FINRA's website at www.finra.org. DISTRIBUTING THE GROUP POLICIES AND CERTIFICATES MLIDC enters into selling agreements with affiliated and unaffiliated broker-dealers who sell the Group Policies and Certificates through their registered representatives who are also licensed life insurance sales representatives. Our affiliated broker-dealers are MetLife Securities, Inc. ("MSI"). New England Securities Corporation, Walnut Street Securities, Inc. and Tower Square Securities, Inc. MSI and our other affiliated broker-dealers are registered with the SEC as broker-dealers under the 34 Act and are also members of FINRA. We reimburse MLIDC for expenses MLIDC incurs in distributing the Group Policies and Certificates, (e.g. commissions payable to the broker-dealers who sell the Group Policies and Certificates, including our affiliated broker-dealers). COMMISSIONS AND OTHER COMPENSATION MetLife sales representatives are sales representatives registered through MSI. We do not pay commissions to MetLife representatives for the sale of the Group Policies and Certificates, although they may earn certain incentive award credits. We may pay commissions to other registered broker-dealers (also referred to as selling firms) who have entered into selling agreements with us. Commissions or fees which are payable to a broker-dealer or third party administrator, including maximum commissions, are set forth in our schedules of group insurance commission rates. These commissions consist of: .. Up to 15% of the cost of insurance, and may be based on the services provided by the broker-dealer or a third party administrator, and 40 .. A per-Certificate payment, based on the total number of Certificates issued under a Group Policy. We may require all or part of the commission to be returned to us by the broker-dealer if you do not continue the Certificate for at least two years. COMPENSATION PAID TO SELLING FIRMS AND OTHER INTERMEDIARIES MetLife enters into arrangements concerning the sale, servicing and/or renewal of MetLife group insurance and certain other group-related products ("Products") with brokers, agents, consultants, third-party administrators, general agents, associations, and other parties that may participate in the sale, servicing and/or renewal of such Products (each an "Intermediary"). MetLife may pay your Intermediary compensation, which may include base compensation, supplemental compensation and/or a service fee. MetLife may pay compensation for the sale, servicing and/or renewal of Products, or remit compensation to an Intermediary on your behalf. Your Intermediary may also be owned by, controlled by or affiliated with another person or party, which may also be an Intermediary and who may also perform marketing and/or administration services in connection with your Products and be paid compensation by MetLife. Base compensation, which may vary from case to case and may change if you renew your Products with MetLife, may be payable to your Intermediary as a percentage of premium or a fixed dollar amount. In addition, supplemental compensation may be payable to your Intermediary. Under MetLife's current supplemental compensation plan, the amount payable as supplemental compensation may range from 0% to 2.25% of premium. The supplemental compensation percentage may be based on: (1) the number of Products sold or inforce through your Intermediary during a prior one-year period; (2) the amount of premium or fees with respect to Products sold or inforce through your Intermediary during a prior one-year period; and/or (3) a fixed percentage of the premium for Products as set by MetLife. The supplemental compensation percentage will be set by MetLife prior to the beginning of each calendar year and it may not be changed until the following calendar year. As such, the supplemental compensation percentage may vary from year to year, but will not exceed 2.25% under the current supplemental compensation plan. The cost of supplemental compensation is not directly charged to the price of our Products except as an allocation of overhead expense, which is applied to all eligible group insurance products, whether or not supplemental compensation is paid in relation to a particular sale or renewal. As a result, your rates will not differ by whether or not your Intermediary receives supplemental compensation. If your Intermediary collects the premium from you in relation to your Products, your Intermediary may earn a return on such amounts. Additionally, MetLife may have a variety of other relationships with your Intermediary or its affiliates that involve the payment of compensation and benefits that may or may not be related to your relationship with MetLife (e.g., consulting or reinsurance arrangements). More information about the eligibility criteria, limitations, payment calculations and other terms and conditions under MetLife's base compensation and supplemental compensation plans can be found on MetLife's Web site at www.whymetlife.com/brokercompensation. Questions regarding Intermediary compensation can be directed to ask4met@metlifeservice.com, 41 or if you would like to speak to someone about Intermediary compensation, please call (800) ASK 4MET. If you would like further information, ask your Intermediary or a MetLife representative for specific details concerning your Intermediary's compensation arrangement with MetLife. The commissions do not result in a charge against the Group Policies or Certificates in addition to the charges already described elsewhere in this Prospectus. The Statement of Additional Information contains additional information about the compensation paid for the sale of the Group Policies and Certificates. 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 Group Policies or the Certificates. RESTRICTIONS ON FINANCIAL TRANSACTIONS Federal laws designed to counter terrorism and prevent money laundering by criminals might, in certain circumstances, require us to reject a premium payment and/or block or "freeze" your account. 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 Certificate to government regulators. FINANCIAL STATEMENTS The financial statements of the Company and the Separate Account are contained in the Statement of Additional Information referred to on the back cover of this Prospectus. The financial statements of the Company should be considered only as bearing upon our ability to meet our obligations under the Certificate. 42 Additional information about the Group Policy, the Certificate and the Separate Account can be found in the Statement of Additional Information. You may obtain a copy of the Statement of Additional Information, without charge, by calling 1-800-664-4885, by e-mailing us at our website, or by logging on to our website at www.metlifegvul.com. You may also obtain, without charge, a personalized illustration of death benefits, cash surrender values and cash values by calling 1-800-664-4885. In order to help you understand how the Certificate's values would vary over time under different sets of assumptions, we will provide you with certain illustrations upon request. These will be based on the age and insurance risk characteristics of the person insured under the Certificate and such factors as the specified face amount, premium payment amounts and rates of return (within limits) that you request. You can request such illustrations at any time. We have filed an example of such an illustration as an exhibit to the registration statement referred to below. 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 Group Policy, Certificates 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 202-942-8090. The Statement of Additional Information, reports and other information about the Separate Account are available on the SEC Internet site as 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. 811-06025 43 GROUP VARIABLE UNIVERSAL LIFE POLICIES METROPOLITAN LIFE SEPARATE ACCOUNT UL ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION 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 for Group Variable Universal Life and should be read in conjunction therewith. A copy of that prospectus may be obtained by writing to MetLife GVUL Administration, 190 Carondelet Plaza, St. Louis, Missouri 63105. B-1 TABLE OF CONTENTS The Company and the Separate Account............................. B-3 Additional Information about the Operations of the Certificates.. B-3 Limits to MetLife's Right to Challenge the Certificate......... B-3 Misstatement of Age............................................ B-3 Additional Information About Voting.............................. B-3 Restrictions on Financial Transactions........................... Additional Information About Commissions......................... B-3 Independent Registered Public Accounting Firm.................... B-4 Financial Statements............................................. B-4 B-2 THE COMPANY AND THE SEPARATE ACCOUNT Metropolitan Life Insurance Company ("MetLife") is a wholly-owned subsidiary of MetLife, Inc., a publicly traded company. 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. We established the Separate Account under New York law on December 13, 1988. The Separate Account receives premium payments from the Policies described in the Prospectus and other variable life insurance policies that we issue. We have registered the Separate Account as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). For more information about MetLife, please visit our website at www.metlife.com ADDITIONAL INFORMATION ABOUT THE OPERATIONS OF THE CERTIFICATES LIMITS TO METLIFE'S RIGHT TO CHALLENGE THE CERTIFICATE We will not contest: .. The Certificate after two Certificate years from issue or reinstatement (excluding riders added later). .. An increase in a death benefit after it has been in effect for two years. MISSTATEMENT OF AGE We will adjust benefits to reflect the correct age of the covered person, if this information is not correct in the Certificate enrollment form. ADDITIONAL INFORMATION ON VOTING If you are eligible to give us voting instructions, we will send you informational material and a form to send back to us. We are entitled to disregard voting instructions in certain limited circumstances prescribed by the SEC. If we do so, we will give you our reasons in the next semi-annual report to Certificate owners. The number of shares for which you can give us voting instructions is determined as of the record date for the Fund shareholder meeting by dividing: .. The Certificate's cash value in the corresponding investment division; by .. The net asset value of one share of that Portfolio. We will count fractional votes. If we do not receive timely voting instructions from Certificate owners and other insurance and annuity owners that are entitled to give us voting instructions, we will vote those shares in the same proportion as the shares held in the same separate account for which we did receive voting instructions. The effect of this proportional voting is that a small number of Certificate owners may control the outcome of the vote. Also, we will vote Fund shares that are not attributable to insurance or annuity owners (including shares that we hold in our general account) or that are held in separate accounts that are not registered under the 1940 Act in the same proportion as the aggregate of the shares for which we received voting instructions from all insurance and annuity owners. ADDITIONAL INFORMATION ABOUT COMMISSIONS MetLife Investors Distribution Company ("MLIDC) is the principal underwriter and distributor of the Policies. MLIDC, which is our affiliate, is registered under the Securities Exchange Act of 1934 (the "34 Act") as a broker-dealer and is a member of the Financial Industry Regulatory Authority ("FINRA"). B-3 The Group Policies and Certificates are sold through licensed life insurance sales representatives who are associated with MetLife Securities, Inc. ("MSI"), our affiliate, or with our other affiliated broker-dealers, New England Securities Corporation, Walnut Street Securities, Inc. and Tower Square Securities, Inc. MSI and our other affiliated broker-dealers are registered with the SEC as broker-dealers under the 34 Act and are also members of FINRA. The Group Policies and Certificates may also be sold through licensed life insurance sales representatives associated with unaffiliated broker-dealers with which MLIDC enters into a selling agreement. MLIDC received sales compensation with respect to the Group Policies and Certificates in the following amounts.
AGGREGATE AMOUNT OF COMMISSIONS RETAINED BY AGGREGATE AMOUNT DISTRIBUTOR AFTER OF COMMISSIONS PAYMENTS TO FISCAL YEAR PAID TO DISTRIBUTOR* SELLING FIRMS ----------- -------------------- ----------------- 2007.... $173,223.84 $0
- -------- * Prior to May 1, 2007, we served as principal underwriter and distributor of the Group Policies and Certificates. As such we paid commissions in the following amounts, $75,031.13 (for 1/1/07-4/30/07) $188,526 (for 2006) and $151,685 (for 2005). INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The financial statements of each of the Investment Divisions of Metropolitan Life Separate Account UL included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The principal address of Deloitte & Touche LLP is 201 East Kennedy Boulevard, Suite 1200, Tampa, Florida 33602-5827. The consolidated financial statements of 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. FINANCIAL STATEMENTS The financial statements of Metropolitan Life Separate Account UL and MetLife are attached to this Statement of Additional Information. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Certificate. B-4 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 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 Metropolitan Life Separate Account UL PART C: OTHER INFORMATION ITEM 26. EXHIBITS (a) Resolution of the Board of Directors of Metropolitan Life effecting the establishment of Metropolitan Life Separate Account UL 3 (b) None (c) (i) Form of Broker Agreement 2 (ii) Schedule of Sales Commissions 1 (iii) Forms of Selling Agreement 7 (iv) Form of Retail Sales Agreement 11 (v) Principal Underwriting Agreement with MLIDC 13 (d) (i) Specimen Group Variable Universal Life Insurance Policy (including any alternative pages as required by state law) with form of riders, if any 2 (ii) Specimen of Group Variable Universal Life Insurance Certificate (including any alternative pages required by state law) with forms of riders 2 (e) (i) Application for Policy and Form of Receipt 2 (ii) Enrollment Form for Certificate and Form of Receipt 2 (iii) Request for Systematic Transfer Option Form 2 (iv) Enterprise Application for Policy 7 (f) (i) Restated Charter and By-Laws of Metropolitan Life 4 (ii) Amended and Restated Charter and By-laws of Metropolitan Life 6 (iii) Amended and Restated By-laws of Metropolitan Life 13 (g) Reinsurance Contracts 7 (h) (i) Participation Agreement with Met Investors Series Trust 6 (ii) Participation Agreement among Metropolitan Series Fund, Inc., MetLife Advisers, LLC and Metropolitan Life Insurance Company (8/31/07) 12 (iii) Amended and Restated Participation Agreement and First Amendment Metropolitan Life Insurance Company and Variable Insurance Products Fund, Variable Insurance Products Fund II, Variable Insurance Products Fund III, Variable Insurance Products Fund IV, Variable Insurance Products Fund V and Fidelity Distributors Corp. (i) None (j) None (k) Opinion and Consent of Marie C. Swift as to the legality of the securities being registered 9 (l) None (m) None (n) Consent of Independent Registered Public Accounting Firm (o) None (p) None (q) (i) Memoranda describing certain procedures filed pursuant to Rule 6e-3(T)(b)(12)(iii) 2 (ii) Addendum to Memoranda describing certain procedures filed pursuant to Rule 6e-3(T)(b)(12)(iii) 5 (r) Powers of Attorney 1 Incorporated by reference from sections entitled "Distribution of the Group Policies and Certificates" in the Prospectuses included herein and "Distribution of the Policies" in the Statement of Additional Information. 2 Incorporated herein by reference to Pre-Effective Amendment No. 1 of this Registration Statement of Separate Account UL (File No. 033-91226) on September 8, 1995. 3 Incorporated herein by reference to Post-Effective Amendment No. 5 to the Registration Statement of Separate Account UL (File No. 033-47927) filed April 30, 1997. 4 Incorporated herein by reference to Post-Effective Amendment No. 11 to the Registration Statement (File No. 033-47927) filed on April 6, 2000. 5 Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement (File No. 033-47927) filed on April 10, 2001. 6 Incorporated herein by reference to the Registration Statement for MetLife Separate Account E (File No. 333-83716) filed on March 5, 2002. 7 Incorporated herein by reference to Post-Effective Amendment No. 18 to the Registration Statement (File No. 033-47927) filed on April 30, 2004. 8 Incorporated herein by reference to the Registration Statement for MetLife Separate Account E (File No. 333-122883) filed on February 17, 2005. 9 Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement (File No. 033-91226) filed on April 29, 2005. 10 Incorporated herein by reference to the Registration Statement on Form N-6 (File No. 033-91226) filed on February 8, 2006. 11 Incorporated herein by reference to Post-Effective Amendment No. 20 to the Registration Statement on Form N-6 (File No. 033-47927) filed on April 25, 2006. 12 Incorporation herein by reference to Post-Effective Amendment No. 9 to Metropolitan Life Separate Account E's Registration Statement on Form N-4 (File No. 333-83716) filed September 10, 2007. 13 Incorporation herein by reference to Post-Effective Amendment No. 3 to Paragon Separate Account B's Registration Statement on Form N-6 (File No. 333-133675) filed January 16, 2008. ITEM 27. DIRECTORS AND OFFICERS OF DEPOSITOR
Name and Principal Business Address Position and Offices with Depositor - -------------------------------------------- ------------------------------------------- C. Robert Henrikson Chairman of the Board, President and Chief MetLife, Inc and Metropolitan Life Insurance Executive Officer Company One MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Sylvia Mathews Burwell Director President, Global Development Program The Bill and Melinda Gates Foundation 1551 Eastlake Avenue East Seattle, WA 98102 Eduardo Castro-Wright Director President and Chief Executive Officer Wal-Mart Stores, USA 702 Southwest 8th Street Bentonville, AK 72716 Burton A. Dole, Jr. Director Retired Chairman, Dole/Neal LLC Pauma Valley Country Club Pauma Valley Drive Pauma Valley, CA 92061
Name and Principal Business Address Position and Offices with Depositor - -------------------------------------------- ------------------------------------------- Cheryl W. Grise Director Retired Executive Vice President Northeast Utilities 24 Stratford Road West Hartford, CT 06117 James R. Houghton Director Chairman Emeritus and Director Corning Incorporated 80 E. Market Street Corning, NY 14830 R. Glenn Hubbard Director Dean and Russell L. Carson Professor of Finance and Economics Graduate School of Business Columbia University Uris Hall 3022 Broadway New York, NY 10027-6902 Helene L. Kaplan Director Of Counsel, Skadden, Arps, Slate, Meagher and Flom, LLP Four Times Square New York, NY 10036 John M. Keane Director Co-Founder and Senior Managing Director Keane Advisors, LLC 2020 K St., N.W. Washington, DC 20006 James M. Kilts Director Partner Centerview Partners Management, LLC 16 School Street Rye, NY 10580 Charles H. Leighton Director Executive Director US SAILING 15 Maritime Dr. Portsmouth, RI 02871 Hugh B. Price Director Senior Fellow Brookings Institution 1775 Massachusetts Avenue, N.W.
Name and Principal Business Address Position and Offices with Depositor - -------------------------------------------- ------------------------------------------- Washington, DC 20036 David Satcher Director Director of Satcher Health Leadership Institute and Center of Excellence on Health Disparities Morehouse School of Medicine 720 Westview Drive, S.W. Atlanta, GA 30310-1495 Kenton J. Sicchitano Director Retired Global Managing Partner PricewaterhouseCoopers, LLC 25 Phillips Pond Road Natick, MA 01760 William C. Steere, Jr. Director Retired Chairman of the Board and Chief Executive Officer Pfizer, Inc. 235 East 42nd Street, 22nd Floor New York, NY 10017 Lulu C. Wang Director Chief Executive Officer Tupelo Capital Management LLC 12 E. 49th Street, #17 New York, NY 10017 Set forth below is a list of certain principal officers of MetLife. The principal business address of each officer of MetLife is 200 Park Avenue, New York, NY 10066.
Name Position with MetLife - -------------------------------------------- ---------------------------------------------- C. Robert Henrikson Chairman of the Board, President and Chief Executive Officer Gwenn L. Carr Senior Vice President and Secretary Ruth A. Fattori Executive Vice President and Chief Administrative Officer Steven A. Kandarian Executive Vice President and Chief Investment Officer James L. Lipscomb Executive Vice President and General Counsel Maria R. Morris Executive Vice President, Technology and Operations William J. Mullaney President, Institutional Business Joseph J. Prochaska, Jr. Executive Vice President and Chief Accounting Officer William J. Toppeta President, International Lisa Weber President, Individual Business William J. Wheeler Executive Vice President and Chief Financial Officer
ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR THE REGISTRANT The registrant is a separate account of Metropolitan Life Insurance Company under the New York Insurance law. Under said law the assets allocated to the separate account are the property of Metropolitan Life Insurance Company. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. a publicly traded company. The following outline indicates those persons who are controlled by or under common control with Metropolitan Life Insurance Company: ORGANIZATIONAL STRUCTURE OF METLIFE, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 2007 The following is a list of subsidiaries of MetLife, Inc. updated as of December 31, 2007. Those entities which are listed at the left margin (labeled with capital letters) are direct subsidiaries of MetLife, Inc. Unless otherwise indicated, each entity which is indented under another entity is a subsidiary of that other entity and, therefore, an indirect subsidiary of MetLife, Inc. Certain inactive subsidiaries have been omitted from the MetLife, Inc. organizational listing. The voting securities (excluding directors' qualifying shares, (if any)) of the subsidiaries listed are 100% owned by their respective parent corporations, unless otherwise indicated. The jurisdiction of domicile of each subsidiary listed is set forth in the parenthetical following such subsidiary. A. MetLife Group, Inc. (NY) B. MetLife Bank National Association (USA) C. Exeter Reassurance Company, Ltd. (Bermuda) D. MetLife Taiwan Insurance Company Limited (Taiwan) E. Metropolitan Tower Life Insurance Company (DE) 1. TH Tower NGP, LLC (DE) 2. Partners Tower, L.P. (DE) - a 99% limited partnership interest of Partners Tower, L.P. is held by Metropolitan Tower Life Insurance Company and 1% general partnership interest is held by TH Tower NGP, LLC (DE) 3. TH Tower Leasing, LLC (DE) 4. MetLife Reinsurance Company of Charleston (SC) 5. MetLife Reinsurance Company of Vermont (VT) 6. Entrecap Real Estate II, LLC (DE) a) PREFCO Dix-Huit LLC (CT) b) PREFCO X Holdings LLC (CT) c) PREFCO Ten Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Ten Limited Partnership is held by Entrecap Real Estate II, LLC and 0.1% general partnership is held by PREFCO X Holdings LLC. a) PREFCO Vingt LLC (CT) b) PREFCO Twenty Limited Partnership (CT) - a 99% limited partnership interest of PREFCO Twenty Limited Partnership is held by Entrecap Real Estate II, LLC and 1% general partnership is held by PREFCO Vingt LLC. 7. Plaza Drive Properties, LLC (DE) 8. MTL Leasing, LLC (DE) a) PREFCO IX Realty LLC (CT) b) PREFCO XIV Holdings LLC (CT) c) PREFCO Fourteen Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Fourteen Limited Partnership is held by MTL Leasing, LLC and 0.1% general partnership is held by PREFCO XIV Holdings LLC. F. MetLife Pensiones S.A. (Mexico)- 97.4738% is owned by MetLife, Inc. and 2.5262% is owned by MetLife International Holdings, Inc. G. MetLife Chile Inversiones Limitada (Chile)- 99.9999999% is owned by MetLife, Inc. and 0.0000001% is owned by Natiloportem Holdings, Inc. 1. MetLife Chile Seguros de Vida S.A. (Chile)- 99.99% is owned by MetLife Chile Inversiones Limitada and 0.01% is owned by MetLife International Holdings, Inc. a) MetLife Chile Administradora de Mutuos Hipotecarios S.A. (Chile)- 99.99% is owned by MetLife Chile Seguros de Vida S.A. and 0.01% is owned by MetLife Chile Inversiones Limitada. H. MetLife Mexico S.A. (Mexico)- 98.70541% is owned by MetLife, Inc., 1.29459% is owned by MetLife International Holdings, Inc. 1. MetLife Afore, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Mexico S.A. (Mexico) and 0.01% is owned by MetLife Pensiones S.A. a) Met1 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) b) Met2 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) c) MetA SIEFORE, S.A. de C.V. (Mexico)- 99.9% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) I. MetLife Mexico Servicios, S.A. de C.V. (Mexico)- 98% is owned by MetLife, Inc. and 2% is owned by MetLife International Holdings, Inc. J. MetLife Seguros de Vida S.A. (Uruguay) K. MetLife Securities, Inc. (DE) L. Enterprise General Insurance Agency, Inc. (DE) 1. MetLife General Insurance Agency of Texas, Inc. (DE) 2. MetLife General Insurance Agency of Massachusetts, Inc. (MA) 1 M. Metropolitan Property and Casualty Insurance Company (RI) 1. Metropolitan General Insurance Company (RI) 2. Metropolitan Casualty Insurance Company (RI) 3. Metropolitan Direct Property and Casualty Insurance Company (RI) 4. Met P&C Managing General Agency, Inc. (TX) 5. MetLife Auto & Home Insurance Agency, Inc. (RI) 6. Metropolitan Group Property and Casualty Insurance Company (RI) a) Metropolitan Reinsurance Company (U.K.) Limited (United Kingdom) 7. Metropolitan Lloyds, Inc. (TX) a) Metropolitan Lloyds Insurance Company of Texas (TX)- Metropolitan Lloyds Insurance Company of Texas, an affiliated association, provides automobile, homeowner and related insurance for the Texas market. It is an association of individuals designated as underwriters. Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company, serves as the attorney-in-fact and manages the association. 8. Economy Fire & Casualty Company (IL) a) Economy Preferred Insurance Company (IL) b) Economy Premier Assurance Company (IL) N. Cova Corporation (MO) 1. Texas Life Insurance Company (TX) 2. Cova Life Management Company (DE) O. MetLife Investors Insurance Company (MO) P. First MetLife Investors Insurance Company (NY) Q. Walnut Street Securities, Inc. (MO) R. Newbury Insurance Company, Limited (BERMUDA) S. MetLife Investors Group, Inc. (DE) 1. MetLife Investors Distribution Company (MO) 2. Met Investors Advisory, LLC (DE) 3. MetLife Investors Financial Agency, Inc. (TX) 2 T. MetLife International Holdings, Inc. (DE) 1. MetLife Mexico Cares, S.A. de C.V. (Mexico) a) Fundacion MetLife Mexico, A.C. (Mexico) 2. Natiloportem Holdings, Inc. (DE) a) Servicios Administrativos Gen, S.A. de C.V. (Mexico) (1) MLA Comercial, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. (2) MLA Servicios, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. 3. MetLife India Insurance Company Private Limited (India)- 26% is owned by MetLife International Holdings, Inc. and 74% is owned by third parties. 4. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)- 99.99905% is owned by MetLife International Holdings, Inc. and 0.00095% is owned by Natiloporterm Holdings, Inc. 5. Metropolitan Life Seguros de Retiro S.A. (Argentina)- 95.23% is owned by MetLife International Holdings, Inc. and 4.77% is owned by Natiloportem Holdings, Inc. 6. Metropolitan Life Seguros de Vida S.A. (Argentina)- 95.2499% is owned by MetLife International Holdings, Inc. and 4.7473% is owned by Natiloportem Holdings, Inc. 7. MetLife Insurance Company of Korea Limited (South Korea)- 21.22% of MetLife Insurance Company of Korea Limited is owned by MetLife, Mexico, S.A. and 78.78% is owned by Metlife International Holdings, Inc. 8. Metropolitan Life Seguros e Previdencia Privada S.A. (Brazil)- 74.5485235740% is owned by MetLife International Holdings, Inc. and 25.451476126% is owned by MetLife Worldwide Holdings, Inc. and 0.0000003% is owned by Natiloportem Holdings, Inc. 9. MetLife Global, Inc. (DE) 10. MetLife Administradora de Fundos Multipatrocinados Ltda (Brazil) - 95.4635% is owned by MetLife International Holdings, Inc. and 4.5364% is owned by Natiloportem Holdings, Inc. 11. MetLife Insurance Limited (United Kingdom) 12. MetLife General Insurance Limited (Australia) 13. MetLife Limited (United Kingdom) 14. MetLife Insurance S.A./NV (Belgium) - 99.9% is owned by MetLife International Holdings, Inc. and 0.1% is owned by third parties. 15. MetLife Services Limited (United Kingdom) 16. MetLife Insurance Limited (Australia) a) MetLife Insurance and Investment Trust (Australia) b) MetLife Investments Pty Limited (Australia) c) MetLife Services (Singapore) PTE Limited (Australia) 17. Siembra Seguros de Retiro S.A. (Argentina) - 96.8819% is owned by MetLife International Holdings, Inc. and 3.1180% is owned by Natiloportem Holdings, Inc. 18. Best Market S.A. (Argentina) - 5% of the shares are held by Natiloportem Holdings, Inc. and 94.9999% is owned by MetLife International Holdings Inc. 19. Compania Previsional MetLife S.A. (Brazil) - 95.4635% is owned by MetLife International Holdings, Inc. and 4.5364% is owned by Natiloportem Holdings, Inc. (a) Met AFJP S.A. (Argentina) - 75.4088% of the shares of Met AFJP S.A. are held by Compania Previsional MetLife SA, 19.5912% is owned by Metropolitan Life Seguros de Vida SA, 3.9689% is held by Natiloportem Holdings, Inc. and 1.0310% is held by Metropolitan Life Seguros de Retiro SA. 20. MetLife Worldwide Holdings, Inc. (DE) a) MetLife Towarzystwo Ubezpieczen na Zycie Spolka Akcyjna. (Poland) b) MetLife Direct Co., Ltd. (Japan) c) MetLife Fubon Limited (Japan) U. Metropolitan Life Insurance Company (NY) 1. 334 Madison Euro Investments, Inc. (DE) a) Park Twenty Three Investments Company (United Kingdom)- 1% voting control of Park Twenty Three Investments Company is held by St. James Fleet Investments Two Limited. 1% of the shares of Park Twenty Three Investments Company is held by Metropolitan Life Insurance Company. 99% is owned by 334 Madison Euro Investment, Inc. (1) Convent Station Euro Investments Four Company (United Kingdom)- 1% voting control of Convent Station Euro Investments Four Company is held by 334 Madison Euro Investments, Inc. as nominee for Park Twenty Three Investments Company. 99% is owned by Park Twenty Three Investments Company. 2. St. James Fleet Investments Two Limited (Cayman Islands)- 34% of the shares of St. James Fleet Investments Two Limited is held by Metropolitan Life Insurance Company. 3. One Madison Investments (Cayco) Limited (Cayman Islands)- 10.1% voting control of One Madison Investments (Cayco) Limited is held by Convent Station Euro Investments Four Company. 89.9% of the shares of One Madison Investments (Cayco) Limited is held by Metropolitan Life Insurance Company. 4. CRB Co, Inc. (MA)- AEW Real Estate Advisors, Inc. holds 49,000 preferred non-voting shares and AEW Advisors, Inc. holds 1,000 preferred non-voting shares of CRB, Co., Inc. 5. GA Holding Corp. (MA) 3 6. Thorngate, LLC (DE) 7. Alternative Fuel I, LLC (DE) 8. Transmountain Land & Livestock Company (MT) 9. MetPark Funding, Inc. (DE) 10. HPZ Assets LLC (DE) 11. Missouri Reinsurance (Barbados), Inc. (Barbados) 12. Metropolitan Tower Realty Company, Inc. (DE) a) Midtown Heights, LLC (DE) 13. MetLife Real Estate Cayman Company (Cayman Islands) 14. Metropolitan Marine Way Investments Limited (Canada) 15. MetLife Private Equity Holdings, LLC (DE) 16. 23rd Street Investments, Inc. (DE) a) Mezzanine Investment Limited Partnership-BDR (DE). Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-BDR and 23rd Street Investments, Inc. is a 1% general partner. b) Mezzanine Investment Limited Partnership-LG (DE). 23rd Street Investments, Inc. is a 1% general partner of Mezzanine Investment Limited Partnership-LG. Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-LG. c) MetLife Capital Credit L.P. (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc., 99% Limited Partnership Interest is held by Metropolitan Life Insurance Company. d) MetLife Capital Limited Partnership (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc., 99% Limited Partnership Interest is held by Metropolitan Life Insurance Company. 17. Metropolitan Realty Management, Inc. (DE) 18. Hyatt Legal Plans, Inc. (DE) a) Hyatt Legal Plans of Florida, Inc. (FL) 19. MetLife Holdings, Inc. (DE) a) MetLife Credit Corp. (DE) b) MetLife Funding, Inc. (DE) 4 20. Bond Trust Account A (MA) 21. MetLife Investments Asia Limited (Hong Kong). 22. MetLife Investments Limited (United Kingdom)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited. 23. MetLife Latin America Asesorias e Inversiones Limitada (Chile)- 23rd Street Investments, Inc. holds 0.01% of MetLife Latin America Asesorias e Inversiones Limitada. 24. New England Life Insurance Company (MA) a) MetLife Advisers, LLC (MA) b) New England Securities Corporation (MA) 25. GenAmerica Financial, LLC (MO) a) GenAmerica Capital I (DE) b) General American Life Insurance Company (MO) (1) GenAmerica Management Corporation (MO) 5 (2) Reinsurance Group of America, Incorporated (MO) - 52% is owned by General American Life Insurance Company. (a) Reinsurance Company of Missouri, Incorporated (MO) (i) Timberlake Financial, L.L.C. (DE) (A) Timberlake Reinsurance Company II (SC) (ii) RGA Reinsurance Company (MO) (A) Reinsurance Partners, Inc. (MO) (iii) Parkway Reinsuarnce Company (MO) (b) RGA Worldwide Reinsurance Company, Ltd. (Barbados) (c) RGA Atlantic Reinsurance Company, Ltd. (Barbados) (d) RGA Americas Reinsurance Company, Ltd. (Barbados) (e) RGA Reinsurance Company (Barbados) Ltd. (Barbados) (i) RGA Financial Group, L.L.C. (DE)- 80% is owned by RGA Reinsurance Company (Barbados) Ltd. RGA Reinsurance Company also owns a 20% non-equity membership in RGA Financial Group, L.L.C. (f) RGA Life Reinsurance Company of Canada (Canada) (g) RGA International Corporation (Nova Scotia/Canada) (h) RGA Holdings Limited (U.K.) (United Kingdom) (i) RGA UK Services Limited (United Kingdom) (ii) RGA Capital Limited U.K. (United Kingdom) (iii) RGA Reinsurance (UK) Limited (United Kingdom) (iv) RGA Services India Private Limited (India) - Reinsurance Group of America Incorporated owns 99% of RGA Services India Private Limited and RGA Holdings Limited owns 1%. (i) RGA South African Holdings (Pty) Ltd. (South Africa) (i) RGA Reinsurance Company of South Africa Limited (South Africa) (j) RGA Australian Holdings PTY Limited (Australia) (i) RGA Reinsurance Company of Australia Limited (Australia) (ii) RGA Asia Pacific PTY, Limited (Australia) (k) General American Argentina Seguros de Vida, S.A. (Argentina) - 95% of General American Argentina Seguros de Vida, S.A. is owned by Reinsurance Group of America, Incorporated and 5% is owned by RGA Reinsurance Company (Barbados) Ltd. 6 (l) RGA Technology Partners, Inc. (MO) (m) RGA International Reinsurance Company (Ireland) (n) RGA Capital Trust I (DE) (i) RGA Global Reinsurance Company, Ltd. (Bermuda) 26. Corporate Real Estate Holdings, LLC (DE) 27. Ten Park SPC (CAYMAN ISLANDS ) - 1% voting control of Ten Park SPC is held by 23rd Street Investments, Inc. 28. MetLife Tower Resources Group, Inc. (DE) 29. Headland - Pacific Palisades, LLC (CA) 30. Headland Properties Associates (CA) - 1% is owned by Headland - Pacific Palisades, LLC and 99% is owned by Metropolitan Life Insurance Company. 31. Krisman, Inc. (MO) 32. Special Multi-Asset Receivables Trust (DE) 33. White Oak Royalty Company (OK) 34. 500 Grant Street GP LLC (DE) 35. 500 Grant Street Associates Limited Partnership (CT) - 99% of 500 Grant Street Associates Limited Partnership is held by Metropolitan Life Insurance Company and 1% by 500 Grant Street GP LLC 36. MetLife Canada/MetVie Canada (Canada) 37. MetLife Retirement Services LLC (NJ) a) MetLife Investment Funds Services LLC (NJ) b) MetLife Investment Funds Management LLC (NJ) c) MetLife Associates LLC (DE) 38. Euro CL Investments LLC (DE) 39. MEX DF Properties, LLC (DE) 40. MSV Irvine Property, LLC (DE) - 4% of MSV Irvine Property, LLC is owned by Metropolitan Tower Realty Company, Inc. and 96% is owned by Metropolitan Life Insurance Company 41. MetLife Properties Ventures, LLC (DE) a) Citypoint Holdings II Limited (UK) 42. Housing Fund Manager, LLC (DE) 43. MTC Fund I, LLC (DE) 0.01% of MTC Fund I, LLC is held by Housing Fund Manager, LLC. 44. MTC Fund II, LLC (DE) V. MetLife Capital Trust II (DE) W. MetLife Capital Trust III (DE) X. MetLife Capital Trust IV (DE) Y. MetLife Insurance Company of Connecticut (CT) - 86.72% is owned by MetLife, Inc. and 13.28% is owned by MetLife Investors Group, Inc. (Life Department)(Accident Department) The operations of the Accident Department have ceased as a result of the transfer of the worker's compensation business to an unrelated party. 1. 440 South LaSalle LLC (DE) 2. Pilgrim Investments Oakmont Lane, LLC (DE) - 50% is owned by MetLife Insurance Company of Connecticut and 50% is owned by a third party. 3. Pilgrim Alternative Investments Opportunity Fund I, LLC (DE) - 67% is owned by MetLife Insurance Company of Connecticut, and 33% is owned by third party. 4. Pilgrim Alternative Investments Opportunity Fund III Associates, LLC (CT) - 67% is owned by MetLife Insurance Company of Connecticut, and 33% is owned by third party. 5. Pilgrim Investments Highland Park, LLC (DE) 6. Metropolitan Connecticut Properties Ventures, LLC (DE) 7. MetLife Canadian Property Ventures LLC (NY) 8. Euro TI Investments LLC (DE) 9. Greenwich Street Investments, LLC (DE) a) Greenwich Street Capital Offshore Fund, Ltd. (Virgin Islands) b) Greenwich Street Investments, L.P. (DE) 10. Hollow Creek, L.L.C. (CT) 11. One Financial Place Corporation (DE) - 100% is owned in the aggregate by MetLife Insurance Company of Connecticut. 12. One Financial Place Holdings, LLC (DE)-100% is owned in the aggregate by MetLife Insurance Company of Connecticut. 13. Plaza LLC (CT) a) Tower Square Securities, Inc. (CT) 1) Tower Square Securities Insurance Agency of New Mexico, Inc. (NM) 2) Tower Square Securities Insurance Agency of Ohio, Inc. (OH) 99% is owned by Tower Square Securities, Inc. 14. TIC European Real Estate LP, LLC (DE) 15. MetLife European Holdings, Inc. (UK) a) MetLife Europe Limited (IRELAND) (i) MetLife Pensions Trustees Limited (UK) b) MetLife Assurance Limited (UK) 16. Travelers International Investments Ltd. (Cayman Islands) 17. Euro TL Investments LLC (DE) 18. Corrigan TLP LLC (DE) 19. TLA Holdings LLC (DE) a) The Prospect Company (DE) 1) Panther Valley, Inc. (NJ) 20. TRAL & Co. (CT) - TRAL & Co. is a general partnership. Its partners are MetLife Insurance Company of Connecticut and Metropolitan Life Insurance Company. 21. Tribeca Distressed Securities L.L.C. (DE) 22. MetLife Investors USA Insurance Comapny (DE) 23. MetLife Property Ventures Canada ULC (Canada) Z. MetLife Reinsurance Company of South Carolina (SC) AA. MetLife Investment Advisors Company, LLC (DE) BB. MetLife Standby I, LLC (DE) 1. MetLife Exchange Trust I (DE) CC. MetLife Services and Solutions, LLC (DE) 1. MetLife Solutions Pte. Ltd. (Singapore) (i) MetLife Services East Private Limited (India) DD. Soap Acquisition Corporation (NY) The voting securities (excluding directors' qualifying shares, if any) of each subsidiary shown on the organizational chart are 100% owned by their respective parent corporation, unless otherwise indicated. In addition to the entities shown on the organizational chart, MetLife, Inc. (or where indicated, a subsidiary) also owns interests in the following entities: 1) Metropolitan Life Insurance Company owns varying interests in certain mutual funds distributed by its affiliates. These ownership interests are generally expected to decrease as shares of the funds are purchased by unaffiliated investors. 2) Metropolitan Life Insurance Company indirectly owns 100% of the non-voting preferred stock of Nathan and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting common stock of this company is held by an individual who has agreed to vote such shares at the direction of N.L. HOLDING CORP. (DEL), a direct wholly owned subsidiary of MetLife, Inc. 3) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited partnerships, are investment vehicles through which investments in certain entities are held. A wholly owned subsidiary of Metropolitan Life Insurance Company serves as the general partner of the limited partnerships and Metropolitan Life Insurance Company directly owns a 99% limited partnership interest in each MILP. The MILPs have various ownership and/or debt interests in certain companies. 4) The Metropolitan Money Market Pool and MetLife Intermediate Income Pool are pass-through investment pools, of which Metropolitan Life Insurance Company and/or its subsidiaries and/or affiliates are general partners. NOTE: THE METLIFE, INC. ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE JOINT VENTURES AND PARTNERSHIPS OF WHICH METLIFE, INC. AND/OR ITS SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE SUBSIDIARIES HAVE ALSO BEEN OMITTED. 7 ITEM 29. INDEMNIFICATION MetLife, Inc. has secured a Financial Institutions Bond in the amount of $50,000,000 subject to a $5,000,000 deductible. MetLife also maintains Directors' and Officers' Liability insurance coverage with limits of $400 million. The Directors and Officers of Metropolitan Life Insurance Company ("Metropolitan"), as well as certain other subsidiaries of MetLife, Inc., are covered under the Financial Institutions Bond as well as under the Directors' and Officers' Liability Policy. A provision in Metropolitan's by-laws provides for the indemnification (under certain circumstances) of individuals serving as directors or officers of Metropolitan. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Metropolitan pursuant to the foregoing provisions, or otherwise, Metropolitan Life Insurance Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Metropolitan of expenses incurred or paid by a director, officer or controlling person or Metropolitan Life Insurance Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Metropolitan will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 30. PRINCIPAL UNDERWRITERS (a) MetLife Investors Distribution Company is the principal underwriter and distributor of the Policies. MetLife Investors Distribution Company is the principal underwriter for the following investment companies: Met Investors Series Trust, Metropolitan Series Fund, Inc., Metropolitan Life Separate Account E, MetLife Investors USA Separate Account A, MetLife Investors Variable Annuity Account One, MetLife Investors Variable Annuity Account Five, MetLife Investors Variable Life Account One, MetLife Investors Variable Life Account Five, First MetLife Investors Variable Annuity Account One, General American Separate Account Eleven, General American Separate Account Twenty- Eight, General American Separate Account Twenty- Nine, General American Separate Account Two, Security Equity Separate Account 26, Security Equity Separate Account 27, MetLife of CT Fund ABD for Variable Annuities, MetLife of CT Fund ABD II for Variable Annuities, MetLife of CT Fund BD for Variable Annuities, MetLife of CT Fund BD II for Variable Annuities, MetLife of CT Fund BD III for Variable Annuities, MetLife of CT Fund BD IV for Variable Annuities, MetLife of CT Fund U for Variable Annuities, MetLife of CT Separate Account Five for Variable Annuities, MetLife of CT Separate Account Six for Variable Annuities, MetLife of CT Separate Account Seven for Variable Annuities, MetLife of CT Separate Account Eight for Variable Annuities, MetLife of CT Separate Account Nine for Variable Annuities, MetLife of CT Separate Account Ten for Variable Annuities, MetLife of CT Separate Account Eleven for Variable Annuities, MetLife of CT Separate Account Twelve for Variable Annuities, MetLife of CT Separate Account Thirteen for Variable Annuities, MetLife of CT Separate Account Fourteen for Variable Annuities, MetLife Insurance Company of CT Variable Annuity Separate Account 2002, and MetLife Life and Annuity Company of CT Variable Annuity Separate Account 2002, MetLife of CT Separate Account PF for Variable Annuities, MetLife of CT Separate Account PF II for Variable Annuities, MetLife of CT Separate Account QP for Variable Annuities, MetLife of CT Separate Account QPN for Variable Annuities, MetLife of CT Separate Account TM for Variable Annuities, MetLife of CT Separate Account TM II for Variable Annuities, MetLife of CT Fund UL for Variable Life Insurance, MetLife of CT Fund UL II for Variable Life Insurance, MetLife of CT Fund UL III for Variable Life Insurance, MetLife of CT Variable Life Insurance Separate Account One, MetLife of CT Variable Life Insurance Separate Account Two, MetLife of CT Variable Life Insurance Separate Account Three, Metropolitan Life Variable Annuity Separate Account I and Metropolitan Life Variable Annuity Separate Account II, Paragon Separate Account A, Paragon Separate Account B, Paragon Separate Account C, and Paragon Separate Account D. (b) The following persons are the officers and directors of MetLife Investors Distribution Company. The principal business address for MetLife Investors Distribution Company is 5 Park Plaza, Suite 1900, Irvine, CA 92614.
Name and Principal Business Address Positions and Offices with Depositor - ----------------------------------- ------------------------------------ Michael K. Farrell *** Director Elizabeth M. Forget ** Executive Vice President, Investment Fund Management & Marketing Peter Gruppuso ***** Vice President, Chief Financial Officer Paul A. LaPiana * Executive Vice President, National Sales Manager-Life Craig W. Markham ***** Director Richard C. Pearson * Executive Vice President, General Counsel and Secretary Paul A. Sylvester * President, National Sales Manager-Annuities & LTC William J. Toppeta **** Director Edward C. Wilson * Senior Vice President, Channel Head-Wirehouse
* MetLife Investors, 5 Park Plaza, Suite 1900, Irvine, CA 92614 ** MetLife, 260 Madison Avenue, New York, NY 10016 *** MetLife, 10 Park Avenue, Morristown, NJ 07962 **** MetLife, One MetLife Plaza, 27-01 Queens Plaza North, Long Island City, NY 11101 ***** MetLife, 485-E US Highway 1 South, Iselin, NJ 08830 (c) Compensation from the Registrant.
(1) (2) (3) (4) (5) Compensation on Events Net Underwriting Occasioning the Name of Principal Discounts and Deduction of a Deferred Brokerage Other Underwriter Commissions Sales Load Commissions Compensation - ----------------- ---------------- ----------------------- ----------- ------------ MetLife Investors Distribution Company $173,224* $0 $0 $0
* Prior to May 1, 2007, we served as principal underwriter and distributor of the Policies. As such, we paid commission in the amount of $75,031 (1/1/07- 4/30/07). Commissions are paid by the Company directly to agents who are registered representatives of the Principal Underwriter or to broker-dealers that have entered into a selling agreement with the principal underwriter with respect to sales of the Contracts. ITEM 31. LOCATION OF ACCOUNTS AND RECORDS The following companies will maintain possession of the documents required by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder: (a) Registrant (b) Metropolitan Life Insurance Company 200 Park Avenue New York, NY 10166 (c) MetLife Investors Distribution Company 5 Park Plaza, Suite 1900 Irvine, CA 92614 ITEM 32. MANAGEMENT SERVICES Not applicable ITEM 33. FEE REPRESENTATION Metropolitan Life represents that the fees and charges deducted under the Policies offered and sold pursuant to this amended Registration Statement, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred, and the risks assumed by Metropolitan Life under the Policies. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Metropolitan Life Separate Account UL, certifies that it meets all of the requirements for effectiveness of this amended Registration Statement under Rule 485(b) under the Securities Act and has caused this Amendment to the Registration Statement to be signed on its behalf, in the City of New York, and the State of New York on the 18th day of April, 2008. Metropolitan Life Separate Account UL By: Metropolitan Life Insurance Company By: /s/ Paul G. Cellupica ------------------------------------ Paul G. Cellupica, Esq. Chief Counsel, Securities Regulation and Corporate Services SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, Metropolitan Life Insurance Company certifies that it meets all of the requirements for effectiveness of this amended Registration Statement under Rule 485(b) under the Securities Act and has caused this Amendment to the Registration Statement to be signed on its behalf, in the City of New York, and the State of New York on the 18th day of April, 2008. Metropolitan Life Insurance Company By: /s/ Paul G. Cellupica ------------------------------------ Paul G. Cellupica, Esq. Chief Counsel, Securities Regulation and Corporate Services Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons, in the capacities indicated, on April 18, 2008. SIGNATURE TITLE --------- ----- * Chairman, Chief Executive Officer - ------------------------------------- and President C. Robert Henrikson * Executive Vice President and - ------------------------------------- Chief Accounting Officer Joseph J. Prochaska, Jr. * - ------------------------------------- Sylvia Mathews Burwell Director * - ------------------------------------- Burton A. Dole, Jr. Director * - ------------------------------------- Cheryl W. Grise Director * - ------------------------------------- James R. Houghton Director * - ------------------------------------- R. Glenn Hubbard Director * - ------------------------------------- Helene L. Kaplan Director * - ------------------------------------- John M. Keane Director * - ------------------------------------- James M. Kilts Director * - ------------------------------------- Charles M. Leighton Director * - ------------------------------------- Hugh B. Price Director * - ------------------------------------- David Satcher Director * - ------------------------------------- Kenton J. Sicchitano Director * - ------------------------------------- William C. Steere, Jr. Director * Executive Vice President and - ------------------------------------- Chief Financial Officer William J. Wheeler By: /s/ Marie C. Swift --------------------------------- Marie C. Swift, Esq. Attorney- in - fact * Executed by Marie C. Swift, Esq. on behalf of those indicated pursuant to Powers of Attorney filed herewith. Exhibit Index (h)(iii) Amended and Restated Participation Agreement with Variable Insurance Products Funds I, II, III, IV and V. (n) Consent of Independent Registered Public Accounting Firm (r) Powers of Attorney EX-99.(H)(III) 2 dex99hiii.txt AMENDED AND RESTATED PARTICIPATION AGREEMENT FIRST AMENDMENT TO PARTICIPATION AGREEMENT This AMENDMENT (this "Amendment") is made and entered into as of the 28th day of April, 2008 by and among METROPOLITAN LIFE INSURANCE COMPANY (the "Company"), a New York corporation; FIDELITY DISTRIBUTORS CORPORATION (the "Underwriter"), a Massachusetts corporation; and each of VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, VARIABLE INSURANCE PRODUCTS FUND III, VARIABLE INSURANCE PRODUCTS FUND IV and VARIABLE INSURANCE PRODUCTS V, an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts (each, a "Fund") WHEREAS, the Company, on its own behalf and on behalf of each Account, the Underwriter and the Fund are parties to a Participation Agreement dated as of April 28, 2008 (the "Agreement"); WHEREAS, the parties wish to amend certain provisions of the Agreement as set forth herein; and WHEREAS, capitalized terms used, but not defined, in this Amendment have the meanings assigned to such terms in the Agreement. NOW THEREFORE, in consideration of the mutual promises, representations, and warranties made herein, covenants and agreements hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows: 1. Section 1.11 A (b) is hereby deleted in its entirety and replaced with the following: "(b) it will comply with its policies and procedures designed to prevent excessive trading as approved by the Fund, or will provide the Fund with shareholder information and follow the Fund's instructions as set forth in the Rule 22c-2 Shareholder Information Agreement between the parties." 2. Section 1.11 A (c) is hereby deleted in its entirety and replaced with the following, "(c) any annuity contract forms or variable life insurance policy forms not in use at the time of execution of this Agreement, but added to in the future via amendment of Schedule A hereto, will contain language reserving to the Company the right to refuse to accept transfers from persons that engage in market timing or other excessive or disruptive trading activity or such other limitations and restrictions that are approved by the state insurance departments." 3. Section 1.12 C (a) is hereby deleted in its entirety and replaced with the following: "All of the Company's employees who are authorized in connection with their employment to transact business with the Fund or Underwriter in accounts in the Company's name, in any nominee name maintained for the Company, or for which the Company serves as financial institution of record are required to undergo background checks in connection with employment with the Company and self-regulatory checks if their job responsibilities require NASD registrations and that no transactions places in any such accounts by the customer will contravene any of the Sanctions or Special Measures" 4. Section 1.11 C (b) is hereby deleted in its entirety. 5. The last sentence of Section 2.1 is hereby deleted in its entirety and replaced with the following: "The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account UNDER THE STATE INSURANCE LAWS OF THE JURISDICTION IN WHICH THE ACCOUNTS WERE ESTABLISHED and that each Account is either registered or exempt from registration as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts." 6. This Amendment shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 7. This Amendment may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 8. If any provision of this Amendment shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Amendment shall not be affected thereby. [SIGNATURE PAGES FOLLOW] 2 IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and on its behalf by its duly authorized representative. METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland Jr. ------------------------- Name: Alan C. Leland Jr. ------------------------- Its: Vice President ------------------------- VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II VARIABLE INSURANCE PRODUCTS FUND III VARIABLE INSURANCE PRODUCTS FUND IV, and VARIABLE INSURANCE PRODUCTS V By: ------------------------ Name: Kimberley Monasterio Their: Treasurer and Senior Vice President FIDELITY DISTRIBUTORS CORPORATION By: ------------------------ Name: Bill Loehning Title: Executive Vice President Date: ----------------- 3 AMENDED AND RESTATED -------------------- PARTICIPATION AGREEMENT ----------------------- Among VARIABLE INSURANCE PRODUCTS FUNDS, ---------------------------------- FIDELITY DISTRIBUTORS CORPORATION --------------------------------- and METROPOLITAN LIFE INSURANCE COMPANY ----------------------------------- THIS AMENDED AND RESTATED AGREEMENT, made and entered into as of the 28th day of April, 2008 by and among METROPOLITAN LIFE INSURANCE COMPANY, (hereinafter the "Company"), a New York corporation, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be amended from time to time (each such account hereinafter referred to as the "Account"); and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a Massachusetts corporation; and each of VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, VARIABLE INSURANCE PRODUCTS FUND III and VARIABLE INSURANCE PRODUCTS FUND IV and VARIABLE INSURANCE PRODUCTS FUND V each an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts (each referred to hereinafter as the "Fund"). RECITALS - -------- WHEREAS, each Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, the "Variable Insurance Products") and qualified pension and retirement plans within the meaning of Treasury Regulation section 1.817-5(f)(3)(iii) ("Qualified Plans") to be offered by insurance companies which have entered into participation agreements with the Fund and the Underwriter (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in each Fund is divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets, any one or more of which may be made available under this Agreement, as may be amended from time to time by mutual agreement of the parties hereto (each such series hereinafter referred to as a "Portfolio"); and 1 WHEREAS, each Fund has obtained an order from the Securities and Exchange Commission, dated October 15, 1985 (File No. 812-6102) or September 17, 1986 (File No. 812-6422), granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, each Fund is registered as an open-end management investment company under the 1940 Act and its shares are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly registered as an investment adviser under the federal Investment Advisers Act of 1940 and any applicable state securities law; and WHEREAS, the variable life insurance and/or variable annuity products identified on Schedule A hereto ("Contracts") have been or will be registered by the Company under the 1933 Act, unless such Contracts are exempt from registration thereunder; and WHEREAS, each Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid Contracts; and WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act, unless such Account is exempt from registration thereunder; and WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing of the Financial Industry Regulatory Authority (hereinafter "FINRA"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios on behalf of each Account to fund certain of the aforesaid Contracts and the Underwriter is authorized to sell such shares to each Account at net asset value; 2 AGREEMENT - --------- NOW, THEREFORE, in consideration of their mutual promises, the Company, the Underwriter and each Fund agree as follows: ARTICLE A. Amendment and Restatement; Form of Agreement -------------------------------------------- This agreement shall amend and supersede the following Agreements as of the date stated above among the Funds, Underwriter and Company with respect to all investments by the Company or its separate accounts in each Fund prior to the date of this Agreement, as though identical separate agreements had been executed by the parties hereto on the dates as indicated below. 1) Participation Agreement by and among Metropolitan Life Insurance Company (fka Paragon Life Insurance Company), Fidelity Distributors Corporation and VIP Fund I dated 9/1/1993, VIP Fund II dated 9/1/1993, VIP Fund III dated 3/1/1997 and VIP Fund IV dated 4/30/2007, all as amended. 2) Participation Agreement by and among Metropolitan Life Insurance Company (fka New England Mutual Life Insurance Company), Fidelity Distributors Corporation and VIP Fund I dated 4/30/1993, as amended. 3) Participation Agreement by and among Metropolitan Life Insurance Company (fka Security Equity Life Insurance Company), Fidelity Distributors Corporation and VIP Fund I dated 11/19/1994 and VIP Fund II dated 11/19/1994, all as amended. 4) Participation Agreement by and among Metropolitan Life Insurance Company (fka Citicorp Life Insurance Company), Fidelity Distributors Corporation and VIP Fund I, VIP Fund II and VIP Fund III dated 5/1/2001, all as amended. 5) Participation Agreement by and among Metropolitan Life Insurance Company (fka First Citicorp Life Insurance Company), Fidelity Distributors Corporation and VIP Fund I, VIP Fund II and VIP Fund III dated 5/1/2001, all as amended. In addition, the parties hereby amend and restate their agreements herein. Although the parties have executed this Agreement in the form of a Master Participation Agreement for administrative convenience, this Agreement shall create a separate participation agreement for each Fund, as though the Company and the Underwriter had executed a separate, identical form of participation agreement with each Fund. No rights, responsibilities or liabilities of any Fund shall be attributed to any other Fund. 3 ARTICLE I. Sale of Fund Shares ------------------- 1.1. The Underwriter agrees to sell to the Company those shares of the Fund which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company shall be the designee of the Fund for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such order by 9:00 a.m. Boston time on the next following Business Day. Beginning within three months of the effective date of this Agreement, the Company agrees that all order for the purchase and redemption of Fund shares on behalf of the Accounts will be placed by the Company with the Funds or their transfer agent by electronic transmission. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the Securities and Exchange Commission. 1.2. The Fund agrees to make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates its net asset value pursuant to rules of the Securities and Exchange Commission and the Fund shall use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.3. The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts and Qualified Plans. No shares of any Portfolio will be sold to the general public. 1.4. The Fund and the Underwriter will not sell Fund shares to any insurance company, separate account or Qualified Plan unless an agreement containing provisions substantially the same as Articles I, III, V, VII and Section 2.5 of Article II of this Agreement is in effect to govern such sales. 1.5. The Fund agrees to redeem for cash, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. For purposes of this Section 1.5, the Company shall be the designee of the Fund for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such request for redemption on the next following Business Day. This section shall not apply to VIP Fund shares or share classes that are subject to redemption fees. The Company shall not purchase or redeem VIP Fund shares that are subject to redemption fees, including shares of Portfolios or share 4 classes that later become subject to redemption fees, in the absence of an additional written agreement signed by all parties. 1.6. The Company agrees that purchases and redemptions of Portfolio shares offered by the then current prospectus of the Fund shall be made in accordance with the provisions of such prospectus. 1.7. The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account. 1.9. The Fund shall furnish same day notice (by wire or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the Fund's shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.10. The Fund shall make the net asset value per share for each Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated (normally by 6:30 p.m. Boston time) and shall use its best efforts to make such net asset value per share available by 7 p.m. Boston time. 1.11. The parties agree that the Contracts are not intended to serve as vehicles for frequent transfers among the Portfolios in response to short-term stock market fluctuations. A. Accordingly, the Company represents and warrants that: (a) all purchase and redemption orders it provides under this Article I shall result solely from Contract Owner transactions fully received and recorded by the Company before the time as of which each applicable VIP Portfolio net asset value was calculated (currently 4:00 p.m. e.s.t); (b) it will comply with its policies and procedures designed to prevent excessive trading as approved by the Fund, or will comply with the Fund's policies and procedures regarding excessive trading as set forth in the Fund's prospectus; (c) any annuity contract forms or variable life insurance policy forms not in use at the time of execution of this Agreement, but added to in the future via amendment of Schedule A 5 hereto, will contain language reserving to the Company the right to refuse to accept instructions from persons that engage in market timing or other excessive or disruptive trading activity. 1.12 A. Company agrees to comply with its obligations under applicable anti-money laundering ("AML") laws, rules and regulations, including but not limited to its obligations under the United States Bank Secrecy Act of 1970, as amended (by the USA PATRIOT Act of 2001 and other laws), and the rules, regulations and official guidance issued thereunder (collectively, the "BSA"). B. The Company agrees to undertake inquiry and due diligence regarding the customers to whom the Company offers and/or sells Portfolio shares or on whose behalf the Company purchases Portfolio shares and that the inquiry and due diligence is reasonably designed to determine that the Company is not prohibited from dealing with any such customer by (i) any sanction administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury (collectively, the "Sanctions"); or (ii) any of the Special Measures. C. The Company hereby represents, covenants and warrants to the Fund and the Underwriter that: (a) None of the Company's employees who are authorized in connection with their employment to transact business with the Fund or Underwriter in accounts in the Company's name, in any nominee name maintained for the Company, or for which the Company serves as financial institution of record are designated or targeted under any of the Sanctions or Special Measures and that no transactions placed in any such accounts by any of the Company's authorized employees will contravene any of the Sanctions or Special Measures; (b) As the Sanctions or Special Measures are updated, the Company shall periodically review them to confirm that none of the Company's employees that are authorized to transact business with the Fund or Underwriter are designated or targeted under any of the Sanctions or Special Measures; and (c) The Company, including any of the Company's affiliates, does not maintain offices in any country or territory to which any of the Sanctions or Special Measures prohibit the export of services or other dealings. D. The Company agrees to notify the Fund and the Underwriter or the Portfolios' transfer agent promptly when and if it learns that the establishment or maintenance of any account holding, or transaction in or relationship with a holder of, Portfolio shares pursuant to this Agreement violates or appears to violate any of the Sanctions or Special Measures. 6 ARTICLE II. Representations and Warranties ------------------------------ 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act or are exempt from registration thereunder; that the Contracts will be issued and sold in compliance in all material respects with all applicable Federal and State laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account under Section _____ of the ________ Insurance Code and that each Account is either registered or exempt from registration as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts. 2.2. The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the State of _________ and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3. The Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Company represents that the Contracts are currently treated as endowment, life insurance or annuity insurance contracts, under applicable provisions of the Code and that it will make every effort to maintain such treatment and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5. (a) With respect to Initial Class shares, the Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for distribution expenses. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of trustees, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. 7 (b) With respect to Service Class shares and Service Class 2 shares, the Fund has adopted Rule 12b-1 Plans under which it makes payments to finance distribution expenses. The Fund represents and warrants that it has a board of trustees, a majority of whom are not interested persons of the Fund, which has formulated and approved each of its Rule 12b-1 Plans to finance distribution expenses of the Fund and that any changes to the Fund's Rule 12b-1 Plans will be approved by a similarly constituted board of trustees. 2.6. The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Fund represents that the Fund's investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the State of ________ and the Fund and the Underwriter represent that their respective operations are and shall at all times remain in material compliance with the laws of the State of ___________ to the extent required to perform this Agreement. 2.7. The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. The Underwriter further represents that it will sell and distribute the Fund shares in accordance with the laws of the Commonwealth of Massachusetts and all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act. 2.8. The Fund represents that it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material respects with the 1940 Act. 2.9. The Underwriter represents and warrants that the Adviser is and shall remain duly registered in all material respects under all applicable federal and state securities laws and that the Adviser shall perform its obligations for the Fund in compliance in all material respects with the laws of the Commonwealth of Massachusetts and any applicable state and federal securities laws. 2.10. The Fund and Underwriter represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage for the benefit of the Fund, and that said bond is issued by a reputable bonding company, includes coverage for larceny and embezzlement, and is in an amount not less than $5 million. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is 8 always in effect, and agrees to notify the Fund and the Underwriter in the event that such coverage no longer applies. ARTICLE III. Prospectuses and Proxy Statements; Voting ----------------------------------------- 3.1. The Underwriter shall provide the Company with as many printed copies of the Fund's current prospectus and Statement of Additional Information as the Company may reasonably request. If requested by the Company in lieu thereof, the Fund shall provide camera-ready film containing the Fund's prospectus and Statement of Additional Information, and such other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus and/or Statement of Additional Information for the Fund is amended during the year) to have the prospectus, private offering memorandum or other disclosure document ("Disclosure Document") for the Contracts and the Fund's prospectus printed together in one document, and to have the Statement of Additional Information for the Fund and the Statement of Additional Information for the Contracts printed together in one document. Alternatively, the Company may print the Fund's prospectus and/or its Statement of Additional Information in combination with other fund companies' prospectuses and statements of additional information. Except as provided in the following three sentences, all expenses of printing and distributing Fund prospectuses and Statements of Additional Information shall be the expense of the Company. For prospectuses and Statements of Additional Information provided by the Company to its existing owners of Contracts in order to update disclosure annually as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the Company chooses to receive camera-ready film in lieu of receiving printed copies of the Fund's prospectus, the Fund will reimburse the Company in an amount equal to the product of A and B where A is the number of such prospectuses distributed to owners of the Contracts, and B is the Fund's per unit cost of typesetting and printing the Fund's prospectus. The same procedures shall be followed with respect to the Fund's Statement of Additional Information. The Company agrees to provide the Fund or its designee with such information as may be reasonably requested by the Fund to assure that the Fund's expenses do not include the cost of printing any prospectuses or Statements of Additional Information other than those actually distributed to existing owners of the Contracts. 3.2. The Fund's prospectus shall state that the Statement of Additional Information for the Fund is available from the Underwriter or the Company (or in the Fund's discretion, the Prospectus shall state that such Statement is available from the Fund). 3.3. The Fund, at its expense, shall provide the Company with copies of its proxy statements, reports to shareholders, and other communications (except for prospectuses and Statements of Additional Information, which are covered in Section 3.1) to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners. 3.4. If and to the extent required by law the Company shall: (i) solicit voting instructions from Contract owners; 9 (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in a particular separate account in the same proportion as Fund shares of such portfolio for which instructions have been received in that separate account, so long as and to the extent that the Securities and Exchange Commission continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for assuring that each of their separate accounts participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule B attached hereto and incorporated herein by this reference, which standards will also be provided to the other Participating Insurance Companies. 3.5. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the Securities and Exchange Commission's interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the Commission may promulgate with respect thereto. ARTICLE IV. Sales Material and Information ------------------------------ 4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material in which the Fund or its investment adviser or the Underwriter is named, at least fifteen Business Days prior to its use. No such material shall be used if the Fund or its designee reasonably objects to such use within fifteen Business Days after receipt of such material. 4.2. The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the permission of the Fund or the Underwriter or the designee of either. 4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company and/or its separate account(s), is named at least fifteen Business 10 Days prior to its use. No such material shall be used if the Company or its designee reasonably objects to such use within fifteen Business Days after receipt of such material. 4.4. The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement or Disclosure Document for the Contracts, as such registration statement or Disclosure Document may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5. The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, contemporaneously with the filing of such document with the Securities and Exchange Commission or other regulatory authorities. 4.6. The Company will provide to the Fund at least one complete copy of all registration statements, Disclosure Documents, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to or affect the Fund, the Contracts or each Account, contemporaneously with the filing of such document with the SEC or other regulatory authorities or, if a Contract and its associated Account are exempt from registration, at the time such documents are first published. 4.7. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, any of the following that refer to the Fund or any affiliate of the Fund: advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, Disclosure Documents, Statements of Additional Information, shareholder reports, and proxy materials. ARTICLE V. Fees and Expenses ----------------- 5.1. The Fund and Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make 11 payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Underwriter in writing and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter or other resources available to the Underwriter. No such payments shall be made directly by the Fund. 5.2. All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund. The Fund shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Fund's shares. 5.3. The Company shall bear the expenses of distributing the Fund's prospectus and reports to owners of Contracts issued by the Company. The Fund shall bear the costs of soliciting Fund proxies from Contract owners, including the costs of mailing proxy materials and tabulating proxy voting instructions, not to exceed the costs charged by any service provider engaged by the Fund for this purpose. The Fund and the Underwriter shall not be responsible for the costs of any proxy solicitations other than proxies sponsored by the Fund. ARTICLE VI. Diversification --------------- 6.1. The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. In the event of a breach of this Article VI by the Fund, it will take all reasonable steps (a) to notify Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation 1.817-5. ARTICLE VII. Potential Conflicts ------------------- 7.1. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities 12 regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded. 7.3. If it is determined by a majority of the Board, or a majority of its disinterested trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested trustees), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company or managed separate account. 7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account within six months after the Board informs 13 the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification --------------- 8.1. Indemnification By The Company ------------------------------ 8.1(a). The Company agrees to indemnify and hold harmless the Fund and each trustee of the Board and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of, or investment in, the Fund's shares or the Contracts and: 14 (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Disclosure Documents for the Contracts or contained in the Contracts or sales literature for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in any Disclosure Document relating to the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1(b). The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 15 8.1(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2. Indemnification by the Underwriter ---------------------------------- 8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of, or investment in, the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or sales literature of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Underwriter or Fund by or on behalf of the Company for use in the registration statement or prospectus for the Fund 16 or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Fund, Adviser or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Disclosure Document or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund; or (iv) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 8.2(b). The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to each Company or the Account, whichever is applicable. 8.2(c). The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the 17 Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Underwriter to such party of the Underwriter's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). The Company agrees promptly to notify the Underwriter of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 8.3. Indemnification By the Fund --------------------------- 8.3(a). The Fund agrees to indemnify and hold harmless the Company, and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Fund and: (i) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI of this Agreement);or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. 8.3(b). The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Fund, the Underwriter or each Account, whichever is applicable. 18 8.3(c). The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Fund to such party of the Fund's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). The Company and the Underwriter agree promptly to notify the Fund of the commencement of any litigation or proceedings against it or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Applicable Law -------------- 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the Securities and Exchange Commission may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination ----------- 10.1. This Agreement shall continue in full force and effect until the first to occur of: (a) termination by any party for any reason by sixty (60) days advance written notice delivered to the other parties; or (b) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio based upon the Company's determination that 19 shares of such Portfolio are not reasonably available to meet the requirements of the Contracts; or (c) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event any of the Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or (d) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that the Fund may fail to so qualify; or (e) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio fails to meet the diversification requirements specified in Article VI hereof; or (f) termination by either the Fund or the Underwriter by written notice to the Company, if either one or both of the Fund or the Underwriter respectively, shall determine, in their sole judgment exercised in good faith, that the Company and/or its affiliated companies has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (g) termination by the Company by written notice to the Fund and the Underwriter, if the Company shall determine, in its sole judgment exercised in good faith, that either the Fund or the Underwriter has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or 10.2. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall at the option of the Company, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.2 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement. 10.3. The provisions of Articles II (Representations and Warranties), VIII (Indemnification), IX (Applicable Law) and XII (Miscellaneous) shall survive termination of this Agreement. In addition, all other applicable provisions of this Agreement shall survive 20 termination as long as shares of the Fund are held on behalf of Contract owners in accordance with section 10.2, except that the Fund and Underwriter shall have no further obligation to make Fund shares available in Contracts issued after termination. 10.4. The Company shall not redeem Fund shares attributable to the Contracts (as opposed to Fund shares attributable to the Company's assets held in the Account) except (i) as necessary to implement Contract Owner initiated or approved transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally Required Redemption") or (iii) as permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, the Company shall not prevent Contract Owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Fund or the Underwriter 90 days notice of its intention to do so. ARTICLE XI. Notices ------- Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund: 82 Devonshire Street Boston, Massachusetts 02109 Attention: Treasurer If to the Company: Metropolitan Life Insurance Company 501 Boylston Street Boston, MA 02116 Attention: Alan C. Leland, Jr., Vice President Copy to: Metropolitan Life Insurance Company 501 Boylston Street Boston, MA 02116 Attention: Law Department If to the Underwriter: 82 Devonshire Street Boston, Massachusetts 02109 Attention: Treasurer 21 ARTICLE XII. Miscellaneous ------------- 12.1 All persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund as neither the Board, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Fund. 12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the California Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the insurance operations of the Company are being conducted in a manner consistent with the California Insurance Regulations and any other applicable law or regulations. 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.8. This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto; provided, however, that the Underwriter may assign this Agreement or any rights or obligations hereunder to any affiliate of or company under common control with the Underwriter, if such assignee is duly licensed and registered to perform the obligations of the Underwriter under this Agreement. The 22 Company shall promptly notify the Fund and the Underwriter of any change in control of the Company. 12.9. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee copies of the following reports: (a) the Company's annual statement (prepared under statutory accounting principles) and annual report (prepared under generally accepted accounting principles ("GAAP"), if any), as soon as practical and in any event within 90 days after the end of each fiscal year; (b) the Company's quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event within 45 days after the end of each quarterly period: (c) any financial statement, proxy statement, notice or report of the Company sent to stockholders and/or policyholders, as soon as practical after the delivery thereof to stockholders; (d) any registration statement (without exhibits) and financial reports of the Company filed with the Securities and Exchange Commission or any state insurance regulator, as soon as practical after the filing thereof; (e) any other report submitted to the Company by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company, as soon as practical after the receipt thereof. 23 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative. METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ------------------------- Name: Alan C. Leland, Jr. ------------------------- Its: Vice President ------------------------- VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II VARIABLE INSURANCE PRODUCTS FUND III VARIABLE INSURANCE PRODUCTS FUND IV, and VARIABLE INSURANCE PRODUCTS FUND V By: ------------------------ Name: Kimberley Monasterio Their: Treasurer, SVP FIDELITY DISTRIBUTORS CORPORATION By: ------------------------ Name: Bill Loehning Title: Executive Vice President Date: ----------------- 24 Schedule A ---------- Separate Accounts and Associated Contracts ------------------------------------------
DATE EST. BY BOARD NAME OF SEPARATE ACCOUNT OF DIRECTORS CONTRACTS FUNDED BY SEPARATE ACCOUNT - ------------------------------------------------------------------------------------------------------- Paragon Separate Account A 10/30/1997 Group GVUL Policies and Certificates Paragon Separate Account B 01/04/1993 Paragon Separate Account C 08/01/1993 Paragon Separate Account D 01/03/1995 Metropolitan Life Separate Account UL 12/13/1988 Variable Life Insurance Policies (MetFlex) Group Variable Life Insurance Policies (GVUL) Individual Variable Life Insurance Metropolitan Life Separate Account DCVL 11/04/2003 Group Private Placement Variable Life Insurance Policies (PPVL) Individual Private Placement Variable Life Insurance Policies (IPPVL) Separate Account No. 13S 12/30/1994 Variable Life Insurance Policies (LCL2) Separate Account No. 8S 12/05/1994 Variable Life Insurance Policies (LCL1) Separate Account No. 18S 05/09/1996 Separate Account No. 20S 05/09/1996 Separate Account No. 34S 04/21/1997 Separate Account No. 485 (PENDING) Metropolitan Life Variable Annuity 07/06/1994 Variable Annuities Separate Account I Metropolitan Life Variable Annuity 07/06/1994 Variable Annuities Separate Account II The New England Variable Account 07/15/1987 Variable Annuities
25 SCHEDULE B PROXY VOTING PROCEDURE The following is a list of procedures and corresponding responsibilities for the handling of proxies relating to the Fund by the Underwriter, the Fund and the Company. The defined terms herein shall have the meanings assigned in the Participation Agreement except that the term "Company" shall also include the department or third party assigned by the Insurance Company to perform the steps delineated below. 1. The number of proxy proposals is given to the Company by the Underwriter as early as possible before the date set by the Fund for the shareholder meeting to facilitate the establishment of tabulation procedures. At this time the Underwriter will inform the Company of the Record, Mailing and Meeting dates. This will be done verbally approximately two months before meeting. 2. Promptly after the Record Date, the Company will perform a "tape run", or other activity, which will generate the names, addresses and number of units which are attributed to each contractowner/policyholder (the "Customer") as of the Record Date. Allowance should be made for account adjustments made after this date that could affect the status of the Customers' accounts as of the Record Date. Note: The number of proxy statements is determined by the activities described in Step #2. The Company will use its best efforts to call in the number of Customers to Fidelity, as soon as possible, but no later than two weeks after the Record Date. 3. The Fund's Annual Report no longer needs to be sent to each Customer by the Company either before or together with the Customers' receipt of a proxy statement. Underwriter will provide the last Annual Report to the Company pursuant to the terms of Section 3.3 of the Agreement to which this Schedule relates. 4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is provided to the Company by the Fund. The Company, at its expense, shall produce and personalize the Voting Instruction Cards. The Legal Department of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card before it is printed. Allow approximately 2-4 business days for printing information on the Cards. Information commonly found on the Cards includes: a. name (legal name as found on account registration) b. address c. Fund or account number d. coding to state number of units e. individual Card number for use in tracking and verification of votes (already on Cards as printed by the Fund) (This and related steps may occur later in the chronological process due to possible uncertainties relating to the proposals.) 26 5. During this time, Fidelity Legal will develop, produce, and the Fund will pay for the Notice of Proxy and the Proxy Statement (one document). Printed and folded notices and statements will be sent to Company for insertion into envelopes (envelopes and return envelopes are provided and paid for by the Insurance Company). Contents of envelope sent to Customers by Company will include: a. Voting Instruction Card(s) b. One proxy notice and statement (one document) c. return envelope (postage pre-paid by Company) addressed to the Company or its tabulation agent d. "urge buckslip" - optional, but recommended. (This is a small, single sheet of paper that requests Customers to vote as quickly as possible and that their vote is important. One copy will be supplied by the Fund.) e. cover letter - optional, supplied by Company and reviewed and approved in advance by Fidelity Legal. 6. The above contents should be received by the Company approximately 3-5 business days before mail date. Individual in charge at Company reviews and approves the contents of the mailing package to ensure correctness and completeness. Copy of this approval sent to Fidelity Legal. 7. Package mailed by the Company. * The Fund must allow at least a 15-day solicitation time to the Company ---- as the shareowner. (A 5-week period is recommended.) Solicitation time is calculated as calendar days from (but not including) the meeting, --- counting backwards. 8. Collection and tabulation of Cards begins. Tabulation usually takes place in another department or another vendor depending on process used. An often used procedure is to sort Cards on arrival by proposal into vote categories of all yes, no, or mixed replies, and to begin data entry. Note: Postmarks are not generally needed. A need for postmark information would be due to an insurance company's internal procedure and has not been required by Fidelity in the past. 9. Signatures on Card checked against legal name on account registration which was printed on the Card. Note: For Example, If the account registration is under "Bertram C. Jones, Trustee," then that is the exact legal name to be printed on the Card and is the signature needed on the Card. 27 10. If Cards are mutilated, or for any reason are illegible or are not signed properly, they are sent back to Customer with an explanatory letter, a new Card and return envelope. The mutilated or illegible Card is disregarded and considered to be not received for purposes of vote tabulation. Any ------------ Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure are "hand verified," i.e., examined as to why they did not complete the system. Any questions on those Cards are usually remedied individually. 11. There are various control procedures used to ensure proper tabulation of votes and accuracy of that tabulation. The most prevalent is to sort the Cards as they first arrive into categories depending upon their vote; an estimate of how the vote is progressing may then be calculated. If the initial estimates and the actual vote do not coincide, then an internal audit of that vote should occur. This may entail a recount. 12. The actual tabulation of votes is done in units which is then converted to shares. (It is very important that the Fund receives the tabulations stated in terms of a percentage and the number of shares.) Fidelity Legal must ------ review and approve tabulation format. 13. Final tabulation in shares is verbally given by the Company to Fidelity Legal on the morning of the meeting not later than 10:00 a.m. Boston time. Fidelity Legal may request an earlier deadline if required to calculate the vote in time for the meeting. 14. A Certification of Mailing and Authorization to Vote Shares will be required from the Company as well as an original copy of the final vote. Fidelity Legal will provide a standard form for each Certification. 15. The Company will be required to box and archive the Cards received from the Customers. In the event that any vote is challenged or if otherwise necessary for legal, regulatory, or accounting purposes, Fidelity Legal will be permitted reasonable access to such Cards. 16. All approvals and "signing-off" may be done orally, but must always be followed up in writing. 28 SCHEDULE C INTENTIONALLY OMITTED 29 SUB-LICENSE AGREEMENT --------------------- Agreement effective as of this 28th of April, 2008, by and between Fidelity Distributors Corporation (hereinafter called "Fidelity"), a corporation organized and existing under the laws of the Commonwealth of Massachusetts, with a principal place of business at 82 Devonshire Street, Boston, Massachusetts, and METROPOLITAN LIFE INSURANCE COMPANY (hereinafter called "Company"), a company organized and existing under the laws of the State of New York, with a principal place of business at 200 Park Avenue, New York, New York 10166. WHEREAS, FMR Corp., a Massachusetts corporation, the parent company of Fidelity, is the owner of the trademark and the tradename "FIDELITY INVESTMENTS" and is the owner of a trademark in a pyramid design (hereinafter, collectively the "Fidelity Trademarks"), a copy of each of which is attached hereto as Exhibit "A"; and WHEREAS, FMR Corp. has granted a license to Fidelity (the "Master License Agreement") to sub-license the Fidelity Trademarks to third parties for their use in connection with Promotional Materials as hereinafter defined; and WHEREAS, Company is desirous of using the Fidelity Trademarks in connection with distribution of "sales literature and other promotional material" with information, including the Fidelity Trademarks, printed in said material (such material hereinafter called the Promotional Material). For the purpose of this Agreement, "sales literature and other promotional material" shall have the same meaning as in the certain Participation Agreement dated as of the 9th day of May, 2004, among Fidelity, Company and the Variable Insurance Products Funds (hereinafter "Participation Agreement"); and WHEREAS, Fidelity is desirous of having the Fidelity Trademarks used in connection with the Promotional Material. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy whereof is hereby acknowledged, and of the mutual promises hereinafter set forth, the parties hereby agree as follows: 1. Fidelity hereby grants to Company a non-exclusive, non-transferable license to use the Fidelity Trademarks in connection with the promotional distribution of the Promotional Material and Company accepts said license, subject to the terms and conditions set forth herein. 2. Company acknowledges that FMR Corp. is the owner of all right, title and interest in the Fidelity Trademarks and agrees that it will do nothing inconsistent with the ownership of the Fidelity Trademarks by FMR Corp., and that it will not, now or hereinafter, contest any registration or application for registration of the Fidelity Trademarks by FMR Corp., nor will it, now or hereafter, aid anyone in contesting any registration or application for registration of the Fidelity Trademarks by FMR Corp. 1 3. Company agrees to use the Fidelity Trademarks only in the form and manner approved by Fidelity and not to use any other trademark, service mark or registered trademark in combination with any of the Fidelity Trademarks without approval by Fidelity. 4. Company agrees that it will place all necessary and proper notices and legends in order to protect the interests of FMR Corp. and Fidelity therein pertaining to the Fidelity Trademarks on the Promotional Material including, but not limited to, symbols indicating trademarks, service marks and registered trademarks. Company will place such symbols and legends on the Promotional Material as requested by Fidelity or FMR Corp. upon receipt of notice of same from Fidelity or FMR Corp. 5. Company agrees that the nature and quality of all of the Promotional Material distributed by Company bearing the Fidelity Trademarks shall conform to standards set by, and be under the control of, Fidelity. 6. Company agrees to cooperate with Fidelity in facilitating Fidelity's control of the use of the Fidelity Trademarks and of the quality of the Promotional Material to permit reasonable inspection of samples of same by Fidelity and to supply Fidelity with reasonable quantities of samples of the Promotional Material upon request. 7. Company shall comply with all applicable laws and regulations and obtain any and all licenses or other necessary permits pertaining to the distribution of said Promotional Material. 8. Company agrees to notify Fidelity of any unauthorized use of the Fidelity Trademarks by others promptly as it comes to the attention of Company. Fidelity or FMR Corp. shall have the sole right and discretion to commence actions or other proceedings for infringement, unfair competition or the like involving the Fidelity Trademarks and Company shall cooperate in any such proceedings if so requested by Fidelity or FMR Corp. 9. This agreement shall continue in force until terminated by Fidelity. This agreement shall automatically terminate upon termination of the Master License Agreement. In addition, Fidelity shall have the right to terminate this agreement at any time upon notice to Company, with or without cause. Upon any such termination, Company agrees to cease immediately all use of the Fidelity Trademarks and shall destroy, at Company's expense, any and all materials in its possession bearing the Fidelity Trademarks, and agrees that all rights in the Fidelity Trademarks and in the goodwill connected therewith shall remain the property of FMR Corp. Unless so terminated by Fidelity, or extended by written agreement of the parties, this agreement shall expire on the termination of that certain Participation Agreement. 10. Company shall indemnify Fidelity and FMR Corp. and hold each of them harmless from and against any loss, damage, liability, cost or expense of any nature whatsoever, including without limitation, reasonable attorneys' fees and all court costs, arising out of use of the Fidelity Trademarks by Company. 2 11. In consideration for the promotion and advertising of Fidelity as a result of the distribution by Company of the Promotional Material, Company shall not pay any monies as a royalty to Fidelity for this license. 12. This agreement is not intended in any manner to modify the terms and conditions of the Participation Agreement. In the event of any conflict between the terms and conditions herein and thereof, the terms and conditions of the Participation Agreement shall control. 13. This agreement shall be interpreted according to the laws of the Commonwealth of Massachusetts. IN WITNESS WHEREOF, the parties hereunto set their hands and seals, and hereby execute this agreement, as of the date first above written. FIDELITY DISTRIBUTORS CORPORATION By: --------------------- Name: Bill Loehning Title: Executive Vice President Date: ------------- METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ----------------------- Name: Alan C. Leland, Jr. --------------------- Title: Vice President --------------------- 3 EXHIBIT A Int. Cl.: 36 Prior U.S. Cls.: 101 and 102 Reg. No. 1,481,040 United States Patent and Trademark Office Registered Mar. 15, 1988 ------------------------------------------------------------------ SERVICE MARK PRINCIPAL REGISTER [LOGO] FIDELITY INVESTMENTS FMR CORP. (MASSACHUSETTS CORPORATION) FIRST USE 2-22-1984; IN COMMERCE 82 DEVONSHIRE STREET 2-22-1984. BOSTON, MA 02109, ASSIGNEE OF FIDELITY NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT DISTRIBUTORS CORPORATION (MASSACHUSETTS TO USE "INVESTMENTS", APART FROM THE CORPORATION) BOSTON, MA 02109 MARK AS SHOWN. FOR: MUTUAL FUND AND STOCK BROKERAGE SER. NO. 641,707, FILED 1-28-1987 SERVICES, IN CLASS 36 (U.S. CLS. 101 RUSS HERMAN, EXAMINING ATTORNEY AND 102) 4 EX-99.(N) 3 dex99n.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Exhibit (n) CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the use in this Post-Effective Amendment No. 15/Amendment No. 37 to the Registration Statement Nos. 033-91226/811-06025 on Form N-6 of our report dated March 24, 2008, relating to the financial statements of each of the Investment Divisions of Metropolitan Life Separate Account UL and our report dated April 3, 2008, relating to the consolidated financial statements of Metropolitan Life Insurance Company (the "Company") (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the fact that the Company changed its method of accounting for 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), both appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the reference to us under the heading "Independent Registered Public Accounting Firm" in the Statement of Additional Information. /s/ DELOITTE & TOUCHE LLP Tampa, Florida April 18, 2008 EX-99.(R) 4 dex99r.txt POWERS OF ATTORNEY Metropolitan Life Insurance Company Power of Attorney James L. Lipscomb Executive Vice President and General Counsel KNOW ALL MEN BY THESE PRESENTS, that I, the General Counsel of Metropolitan Life Insurance Company, a New York company, do hereby designate Michele H. Abate, John E. Connolly, Jr., Myra L. Saul and Marie C. Swift, and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, as authorized under the attached powers of attorney as signed by the Board of Directors and Chairman of the Board on February 26, 2008 and Chief Financial Officer on March 6, 2008 and Chief Accounting Officer on March 10, 2008, and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of March, 2008. /s/ James L. Lipscomb ---------------------------------------- James L. Lipscomb METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney C. Robert Henrikson Chairman of Board, President and Chief Executive Officer KNOW ALL MEN BY THESE PRESENTS, that I, Chairman of Board, President and Chief Executive Officer of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ C. Robert Henrikson ---------------------------------------- C. Robert Henrikson METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Sylvia Mathews Burwell Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ Sylvia Mathews Burwell ---------------------------------------- Sylvia Mathews Burwell METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Burton A. Dole, Jr. Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ Burton A. Dole, Jr. ---------------------------------------- Burton A. Dole, Jr. METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Cheryl W. Grise Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ Cheryl W. Grise ---------------------------------------- Cheryl W. Grise METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney James R. Houghton Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ James R. Houghton ---------------------------------------- James R. Houghton METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney R. Glenn Hubbard Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ R. Glenn Hubbard ---------------------------------------- R. Glenn Hubbard METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Helene L. Kaplan Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ Helene L. Kaplan ---------------------------------------- Helene L. Kaplan METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney John M. Keane Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ John M. Keane ---------------------------------------- John M. Keane METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney James M. Kilts Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ James M. Kilts ---------------------------------------- James M. Kilts METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Charles M. Leighton Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ Charles M. Leighton ---------------------------------------- Charles M. Leighton METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Hugh B. Price Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ Hugh B. Price --------------------------------------- Hugh B. Price METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney David Satcher Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ David Satcher ---------------------------------------- David Satcher METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Kenton J. Sicchitano Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ Kenton J. Sicchitano ---------------------------------------- Kenton J. Sicchitano METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney William C. Steere, Jr. Director KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of February, 2008. /s/ William C. Steere, Jr. ---------------------------------------- William C. Steere, Jr. METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney William J. Wheeler Executive Vice President and Chief Financial Officer KNOW ALL MEN BY THESE PRESENTS, that I, Executive Vice President and Chief Financial Officer of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of March, 2008. /s/ William J. Wheeler ---------------------------------------- William J. Wheeler METROPOLITAN LIFE INSURANCE COMPANY Power of Attorney Joseph J. Prochaska, Jr. Executive Vice President and Chief Accounting Officer KNOW ALL MEN BY THESE PRESENTS, that I, Executive Vice President and Chief Accounting Officer of Metropolitan Life Insurance Company, a New York company, do hereby appoint the General Counsel and his designee(s), and each of them severally, my true and lawful attorney-in-fact, for me and in my name, place and stead to execute and file any instrument or document to be filed as part of or in connection with or in any way related to the Registration Statements and any and all amendments thereto, filed by said Company under the Securities Act of 1933 and/or the Investment Company Act of 1940, in connection with: . Metropolitan Life Separate Account UL (Equity Advantage VUL File No. 033-47927, Equity Advantage VUL File No. 333-147508, Equity Options File No. 333-40161, Advantage Equity Options File No. 333-131664, MetFlex File No. 033-57320, Group VUL File No. 033-91226, UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus and Financial Freedom Account File No. 002-90380, MetLife Settlement Plus File No. 333-80547, MetLife Income Security Plan File No. 333-43970, Preference Plus Select File No. 333-52366, MetLife Asset Builder File No. 333-69320, MetLife Financial Freedom Select File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897 and MLIC Variable Annuity), . The New England Variable Account (Zenith Accumulator File No. 333-11131), . New England Variable Annuity Fund I (File No. 333-11137), . New England Life Retirement Investment Account (Preference File No. 333-11133), . Separate Account No. 13 S (File No. 333-110185), . Security Equity Separate Account Twenty-Six (File No. 333-110183), and . Security Equity Separate Account Twenty-Seven (File No. 333-110184), . Paragon Separate Account A (Group American Plus File No. 333-133699 and AFIS File No. 333-133674), . Paragon Separate Account B (DWS Direct, Multi Manager Direct, Multi Manager II File No. 333-133675, DWS Commission, Multi Manager Commission, Morgan Stanley product, Putnam product, MFS product, Multi Manager Aon File No. 333-133671), . Paragon Separate Account C (Fidelity Direct File No. 333-133678 and Fidelity Commission File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672) . Metropolitan Life Variable Annuity Separate Account I (Flexible Premium Variable Deferred Annuity File No. 333-138114 and Flexible Premium Variable Annuity File No. 333-138112), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Variable Deferred Annuity File No. 333-138115 and Flexible Premium Variable Annuity File No. 333-138113), and to have full power and authority to do or cause to be done in my name, place and stead each and every act and thing necessary or appropriate in order to effectuate the same, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or any of them, may do or cause to be done by virtue hereof. Each said attorney-in-fact shall have power to act hereunder with or without the others. IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of March, 2008. /s/ Joseph J. Prochaska, Jr. ---------------------------------------- Joseph J. Prochaska, Jr. -----END PRIVACY-ENHANCED MESSAGE-----