0001193125-11-096832.txt : 20110414 0001193125-11-096832.hdr.sgml : 20110414 20110413205759 ACCESSION NUMBER: 0001193125-11-096832 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20110414 DATE AS OF CHANGE: 20110413 EFFECTIVENESS DATE: 20110501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Metropolitan Life Separate Account UL CENTRAL INDEX KEY: 0000858997 IRS NUMBER: 135581829 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-57320 FILM NUMBER: 11758150 BUSINESS ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2125788717 MAIL ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 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 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06025 FILM NUMBER: 11758151 BUSINESS ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 200 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10166 BUSINESS PHONE: 2125788717 MAIL ADDRESS: STREET 1: METROPOLITAN LIFE INSURANCE COMPANY STREET 2: 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 C000011872 MetFlex Flexible Premium Variable Life 485BPOS 1 d485bpos.txt METFLEX POST-EFFECTIVE AMENDMENT NO. 24 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 2011 REGISTRATION NOS. 033-57320 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. 24 [X] AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 52 [X] METROPOLITAN LIFE SEPARATE ACCOUNT UL (EXACT NAME OF REGISTRANT) METROPOLITAN LIFE INSURANCE COMPANY (NAME OF DEPOSITOR) 200 PARK AVENUE NEW YORK, NY 10166 (ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) ----------------- NICHOLAS D. LATRENTA, ESQ. EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL METROPOLITAN LIFE INSURANCE COMPANY 1095 AVENUE OF THE AMERICAS NEW YORK, NY 10036 (NAME AND ADDRESS OF AGENT FOR SERVICE) COPY TO: STEPHEN E. ROTH, ESQUIRE MARY E. PAYNE, 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 May 1, 2011 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. ================================================================================ METROPOLITAN LIFE INSURANCE COMPANY METROPOLITAN LIFE SEPARATE ACCOUNT UL METFLEX FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES SUPPLEMENT DATED MAY 1, 2011 TO PROSPECTUS DATED MAY 1, 2011 This supplement is prepared for owners of MetFlex C and MetFlex policies issued prior to January 1, 2009. It describes certain differences in the charges imposed under your Policy and the charges described in the Fee Table of the current MetFlex Exec prospectus. You should read and retain this supplement. METFLEX C POLICIES For MetFlex C Policies issued on or after May 1, 1996 and before August 1, 2000, the current sales charge imposed in Policy years 1 to 10 is up to 9% of the annual target premium paid, and the current administrative charge imposed is up to 1.05% of the annual target premium paid. For MetFlex C Policies issued before January 1, 2009, the current charge for cost of insurance for coverage under the term benefit ranges from $0.03 to $14.62 per $1,000 of the term insurance amount. The maximum charge for cost of insurance for coverage under both the base Policy and the term benefit ranges from $0.09 to $30.45 per $1,000 of term insurance amount. For MetFlex C Policies issued on or after May 1, 1996 and before August 1, 2000, the current mortality and expense risk charge is 0.60% in Policy years 1 to 9 and 0.30% thereafter. For MetFlex C Policies issued on or after August 1, 2000 and before January 1, 2009, the current mortality and expense risk charge is 0.48% in Policy years 1 to 9, 0.36% in Policy years 10 to 20, and 0.30% thereafter. For MetFlex C Policies issued on or after November 15, 2001 and before February 1, 2004 with the Enhanced Cash Surrender Value Rider, if you request a full cash withdrawal in the first seven Policy years, we will refund the amounts shown in Table B below: TABLE B
PORTION OF COST OF TERM INSURANCE CHARGES DEDUCTED PORTION OF DURING POLICY YEAR OF POLICY YEAR OF CUMULATIVE PREMIUM FULL CASH WITHDRAWAL FULL CASH WITHDRAWAL CHARGES TO BE REFUNDED* TO BE REFUNDED -------------------- ----------------------- -------------------------- 1 100% 75% 2 90% 50% 3 75% 25% 4 60% None 5 45% None 6 30% None 7 15% None 8 and later None None
* The percent shown is applied to the cumulative sales, tax, and administrative charges deducted from your premium. METFLEX POLICIES For MetFlex Policies issued on or after September 1, 1993 and before January 1, 2009, there is no current sales charge and the maximum sales charge imposed is 1.0% of annual target premium paid in all Policy years. The current administrative charge is up to 1.05% of annual target premium paid in any Policy year and the maximum administrative charge is up to 1.05% of all premiums paid in all Policy years. For MetFlex Policies issued before January 1, 2009, the maximum cost of term insurance charge ranges from $0.09 to $30.45 per $1,000 of the term insurance amount. The current mortality and expense risk charge is 0.60% in Policy years 1 to 9 and 0.30% thereafter. PROSPECTUS FOR METFLEX, A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY ("POLICY") ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY ("METLIFE") MAY 1, 2011 This prospectus provides you with important information about MetLife's MetFlex Policies. However, this prospectus is not the Policy. The Policy, rather, is a separate written agreement that MetLife issues to you. The Policy is designed to provide: .. Life insurance coverage .. Flexible premium payments .. A choice among three death benefit options .. A method of financing certain deferred compensation plans, post-retirement benefits and payroll deduction programs You may allocate premium payments to and transfer cash value among a fixed interest account ("Fixed Account") and the Metropolitan Life Separate Account UL investment divisions which invest in the following corresponding fund ("Fund") portfolios: AIM Variable Insurance Funds (Invesco Variable Insurance Funds) --------------------------------------------------------------- INVESCO V.I. GLOBAL REAL ESTATE FUND--SERIES I INVESCO V.I. GOVERNMENT SECURITIES FUND--SERIES II INVESCO V.I. INTERNATIONAL GROWTH FUND--SERIES I INVESCO VAN KAMPEN V.I. COMSTOCK FUND--SERIES II AllianceBernstein Variable Products Series Fund, Inc. ----------------------------------------------------- GLOBAL THEMATIC GROWTH PORTFOLIO--CLASS B INTERMEDIATE BOND PORTFOLIO--CLASS B INTERNATIONAL VALUE PORTFOLIO--CLASS A American Century Variable Portfolios, Inc.--Class I --------------------------------------------------- VP VISTA/SM/ FUND American Funds Insurance Series(R)--Class 2 ------------------------------------------- AMERICAN FUNDS GROWTH FUND AMERICAN FUNDS HIGH-INCOME BOND FUND AMERICAN FUNDS INTERNATIONAL FUND AMERICAN FUNDS U.S. GOVERNMENT/AAA-RATED SECURITIES FUND Dreyfus Variable Investment Fund--Service Shares ------------------------------------------------ INTERNATIONAL VALUE PORTFOLIO Fidelity(R) Variable Insurance Products --------------------------------------- ASSET MANAGER: GROWTH(R) PORTFOLIO--SERVICE CLASS CONTRAFUND(R) PORTFOLIO--SERVICE CLASS EQUITY-INCOME PORTFOLIO--SERVICE CLASS FREEDOM 2010 PORTFOLIO--INITIAL CLASS FREEDOM 2015 PORTFOLIO--INITIAL CLASS FREEDOM 2020 PORTFOLIO--INITIAL CLASS FREEDOM 2025 PORTFOLIO--INITIAL CLASS FREEDOM 2030 PORTFOLIO--INITIAL CLASS HIGH INCOME PORTFOLIO--INITIAL CLASS INVESTMENT GRADE BOND PORTFOLIO--SERVICE CLASS MID CAP PORTFOLIO--SERVICE CLASS 2 Franklin Templeton Variable Insurance Products Trust ---------------------------------------------------- MUTUAL GLOBAL DISCOVERY SECURITIES FUND--CLASS 2 TEMPLETON FOREIGN SECURITIES FUND--CLASS 1 TEMPLETON GLOBAL BOND SECURITIES FUND--CLASS 1 Goldman Sachs Variable Insurance Trust--Institutional Shares ------------------------------------------------------------ GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY FUND Janus Aspen Series ------------------ BALANCED PORTFOLIO--SERVICE SHARES ENTERPRISE PORTFOLIO--SERVICE SHARES FORTY PORTFOLIO--SERVICE SHARES JANUS PORTFOLIO--INSTITUTIONAL SHARES OVERSEAS PORTFOLIO--SERVICE SHARES Legg Mason Partners Variable Equity Trust ----------------------------------------- LEGG MASON INVESTMENT COUNSEL VARIABLE SOCIAL AWARENESS PORTFOLIO Met Investors Series Trust -------------------------- BLACKROCK LARGE CAP CORE PORTFOLIO--CLASS A MFS(R) RESEARCH INTERNATIONAL PORTFOLIO--CLASS B CLARION GLOBAL REAL ESTATE PORTFOLIO--CLASS B MORGAN STANLEY MID CAP GROWTH PORTFOLIO-- DREMAN SMALL CAP VALUE PORTFOLIO--CLASS A CLASS A HARRIS OAKMARK INTERNATIONAL PORTFOLIO--CLASS A PIMCO INFLATION PROTECTED BOND PORTFOLIO-- INVESCO SMALL CAP GROWTH PORTFOLIO--CLASS B CLASS A LAZARD MID CAP PORTFOLIO--CLASS B PIMCO TOTAL RETURN PORTFOLIO--CLASS A LEGG MASON CLEARBRIDGE AGGRESSIVE GROWTH PIONEER FUND PORTFOLIO--CLASS A PORTFOLIO--CLASS A T. ROWE PRICE LARGE CAP VALUE PORTFOLIO--CLASS A LORD ABBETT BOND DEBENTURE PORTFOLIO--CLASS A T. ROWE PRICE MID CAP GROWTH PORTFOLIO--CLASS B LORD ABBETT MID CAP VALUE PORTFOLIO--CLASS B THIRD AVENUE SMALL CAP VALUE PORTFOLIO--CLASS B METLIFE AGGRESSIVE STRATEGY PORTFOLIO--CLASS B
2 Metropolitan Series Fund, Inc. ------------------------------ ARTIO INTERNATIONAL STOCK PORTFOLIO--CLASS A METLIFE MID CAP STOCK INDEX PORTFOLIO--CLASS A BARCLAYS CAPITAL AGGREGATE BOND INDEX METLIFE MODERATE ALLOCATION PORTFOLIO--CLASS B PORTFOLIO--CLASS A METLIFE MODERATE TO AGGRESSIVE ALLOCATION BLACKROCK AGGRESSIVE GROWTH PORTFOLIO--CLASS A PORTFOLIO--CLASS B BLACKROCK BOND INCOME PORTFOLIO--CLASS A METLIFE STOCK INDEX PORTFOLIO--CLASS A BLACKROCK DIVERSIFIED PORTFOLIO--CLASS A MFS(R) TOTAL RETURN PORTFOLIO--CLASS B BLACKROCK LEGACY LARGE CAP GROWTH PORTFOLIO-- MFS(R) VALUE PORTFOLIO--CLASS A CLASS A MORGAN STANLEY EAFE(R) INDEX PORTFOLIO--CLASS A BLACKROCK MONEY MARKET PORTFOLIO--CLASS A NEUBERGER BERMAN GENESIS PORTFOLIO--CLASS A DAVIS VENTURE VALUE PORTFOLIO--CLASS A NEUBERGER BERMAN MID CAP VALUE PORTFOLIO-- FI VALUE LEADERS PORTFOLIO--CLASS A CLASS A JENNISON GROWTH PORTFOLIO--CLASS A OPPENHEIMER GLOBAL EQUITY PORTFOLIO--CLASS A LOOMIS SAYLES SMALL CAP CORE PORTFOLIO--CLASS A RUSSELL 2000(R) INDEX PORTFOLIO--CLASS A MET/ARTISAN MID CAP VALUE PORTFOLIO--CLASS B T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO-- METLIFE CONSERVATIVE ALLOCATION CLASS A PORTFOLIO--CLASS B T. ROWE PRICE SMALL CAP GROWTH PORTFOLIO-- METLIFE CONSERVATIVE TO MODERATE ALLOCATION CLASS A PORTFOLIO--CLASS B
MFS(R) Variable Insurance Trust--Service Class ---------------------------------------------- MFS(R) GLOBAL EQUITY SERIES MFS(R) HIGH INCOME SERIES MFS(R) NEW DISCOVERY SERIES Oppenheimer Variable Account Funds--Non-Service Shares ------------------------------------------------------ OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA PIMCO Variable Insurance Trust--Administrative Class ---------------------------------------------------- PIMCO ALL ASSET PORTFOLIO PIMCO LONG-TERM U.S. GOVERNMENT PORTFOLIO PIMCO LOW DURATION PORTFOLIO Pioneer Variable Contracts Trust -------------------------------- PIONEER EMERGING MARKETS VCT PORTFOLIO--CLASS II PIONEER MID CAP VALUE VCT PORTFOLIO--CLASS I Putnam Variable Trust--Class IB ------------------------------- PUTNAM VT INTERNATIONAL VALUE FUND Royce Capital Fund--Investment Class ------------------------------------ ROYCE MICRO-CAP PORTFOLIO ROYCE SMALL-CAP PORTFOLIO The Universal Institutional Funds, Inc.--Class I ------------------------------------------------ EMERGING MARKETS DEBT PORTFOLIO EMERGING MARKETS EQUITY PORTFOLIO Wells Fargo Variable Trust -------------------------- VT TOTAL RETURN BOND FUND 3 Certain Funds and/or Portfolios have been subject to a merger, substitution or name change. Please see Appendix A--"Additional Information Regarding the Funds." Separate prospectuses for the Metropolitan Series Fund, Inc., the Met Investors Series Trust, AIM Variable Insurance Funds (Invesco Variable Insurance Funds), the AllianceBernstein Variable Products Series Fund, Inc., American Century Variable Portfolios, Inc., American Funds Insurance Series(R), the Dreyfus Variable Investment Fund, Fidelity(R) Variable Insurance Products, the Franklin Templeton Variable Insurance Products Trust, the Goldman Sachs Variable Insurance Trust, the Janus Aspen Series, the Legg Mason Partners Variable Equity Trust, the MFS(R) Variable Insurance Trust, the Oppenheimer Variable Account Funds, the PIMCO Variable Insurance Trust, the Pioneer Variable Contracts Trust, the Putnam Variable Trust, the Royce Capital Fund, The Universal Institutional Funds, Inc. and the Wells Fargo Variable Trust (each a "Fund") are available from us by calling 1-908-253-1400. They describe in greater detail an investment in the portfolios listed above. Before purchasing a Policy, read the information in this prospectus and in the prospectus for each Fund. Keep these prospectuses for future reference. We do not guarantee how any of the portfolios will perform. Since the Fixed Account is not registered under the federal securities laws, this Prospectus contains only limited information about the Fixed Account. The Policy gives you more information on the operation of the Fixed Account. Policies issued in your state may provide different features and benefits from, and impose different costs than, those described in this Prospectus. Your actual Policy and any endorsements are the controlling documents. You should read the Policy carefully for any variations in your state. Neither the Securities and Exchange Commission ("SEC") nor any state securities authority has approved or disapproved of these securities, nor have they determined if this Prospectus is accurate or complete. Any representation otherwise is a criminal offense. This Prospectus does not constitute an offering in any jurisdiction where such offering may not lawfully be made. Interests in the Separate Account, the Fixed Account and the Portfolios are not deposits, 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. 4 TABLE OF CONTENTS
PAGE IN THIS SUBJECT PROSPECTUS ------- ---------- Contacting Us............................................... 6 Summary of Benefits and Risks............................... 6 Policy Benefits............................................ 6 Risks of a Policy.......................................... 7 Fee Tables.................................................. 9 Transaction Fees........................................... 9 Periodic Charges Other Than Portfolio Operating Expenses... 11 Portfolio Operating Expenses............................... 12 MetLife..................................................... 23 The Fixed Account.......................................... 24 Separate Account UL........................................ 24 The Funds.................................................. 25 The Portfolio Share Classes that We Offer................ 34 Substitution of Portfolios............................... 34 Voting Rights............................................ 35 Issuing a Policy............................................ 35 Payment and Allocation of Premiums.......................... 36 Paying Premiums............................................ 36 Maximum and Minimum Premium Payments....................... 36 Allocating Net Premiums.................................... 37 Insurance Proceeds.......................................... 37 Death Benefit Options...................................... 38 Minimum Death Benefit...................................... 39 Specified Face Amount...................................... 40 Income Plans............................................... 41 Cash Value, Transfers and Withdrawals....................... 42 Cash Value................................................. 42 Cash Value Transfers....................................... 42 Surrender and Withdrawal Privileges........................ 46 Benefit at Final Date...................................... 47 Loan Privileges............................................. 47 Optional Rider Benefits..................................... 49 Term Benefit............................................... 49 Charges and Deductions...................................... 50 Important Information Applicable to all Policy Charges and Deductions............................................... 50 Charges Deducted From Premiums............................. 51 Charges Included in the Monthly Deduction.................. 52 Charges for Certain Optional Rider Benefits................ 53 Variations in Charges...................................... 53 Portfolio Company Charges.................................. 54 Other Charges.............................................. 54 Policy Termination and Reinstatement........................ 54 Federal Tax Matters......................................... 55 Rights We Reserve........................................... 60 Other Policy Provisions..................................... 60 Sales of Policies........................................... 63 Legal Proceedings........................................... 65 Restrictions on Financial Transactions...................... 65 Independent Registered Public Accounting Firm............... 66 Financial Statements........................................ 66 Appendix A.................................................. 67
5 CONTACTING US [SIDEBAR:YOU CAN CONTACT US AT OUR DESIGNATED OFFICE.] You can communicate all of your requests, instructions and notifications to us by contacting us in writing at our Designated Office. We may require that certain requests, instructions and notifications be made on forms that we provide. These include: changing your beneficiary; taking a Policy loan; changing your death benefit option; taking a partial withdrawal; surrendering your Policy; making transfer requests (including elections with respect to the systematic investment strategies); or changing your premium allocations. Our Designated Office is MetLife--SBR, 501 Route 22, Bridgewater, NJ 08807. We may name additional or alternate Designated Offices. If we do, we will notify you in writing. SUMMARY OF BENEFITS AND RISKS This summary gives an overview of the Policy and is qualified by the more detailed information in the balance of this Prospectus and the Policy. MetLife issues the Policies. We offer the Policies to employers, employer sponsored plans, or other organizations or individuals associated with such employers, plans or organizations. We designed the Policies for financing nonqualified deferred compensation plans, other post-employment benefits, certain employer sponsored payroll deduction programs or other purposes. POLICY BENEFITS PREMIUM PAYMENT FLEXIBILITY. The Policy allows flexibility in making premium payments. The Policy will remain in force 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 Policy 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, including restrictions on "market timing" transactions (see "Cash Value, Transfers and Withdrawals"). 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 Policy is issued. You may also change the amount at any time after the first Policy year, subject to our rules and procedures. DEATH BENEFIT OPTIONS. Generally, you have a choice among three options. These range from an amount equal to the specified face amount to an amount equal to the specified face amount plus the policy cash value at the date of death. INCOME PLANS. The insurance proceeds can be paid under a variety of income plans that are available under the Policy. 6 SURRENDERS, PARTIAL WITHDRAWALS AND LOANS. Within certain limits, you may take partial withdrawals and loans from the Policy. You may also surrender your Policy for its cash surrender value. TAX ADVANTAGES. In general, you will not pay income taxes on any cash value that accrues in your Policy prior to a distribution. If you meet certain requirements, favorable distribution rules will apply. 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. In the case of employer-owned life insurance as defined in Section 101(j) of the Internal Revenue Code, the amount of the death benefit excludable from gross income is limited to premiums paid unless the Policy falls within certain specified exceptions and a notice and consent requirement is satisfied before the Policy is issued. As with any taxation matter, you should consult with and rely on the advice of your own tax advisor. TERM RIDER. This rider provides coverage on the insured to age 95. The amount of sales charge you pay will be less if coverage is obtained through this rider rather than as part of the Policy. The current charges for the cost of insurance are lower for coverage under the term rider than under the base Policy. For details, see "Optional Rider Benefits--Term Benefit." OTHER OPTIONAL RIDER BENEFITS. You may be eligible for certain other benefits provided by rider, subject to certain underwriting requirements and the payment of additional premiums. We will deduct any charges for the rider(s) (other than the charge for the interim term insurance rider) as part of the monthly deduction. RISKS OF A POLICY This Prospectus discusses the risks associated with purchasing the Policy. Prospectuses for the Funds discuss the risks associated with investment in the Fund described therein. Each of the Separate Account UL investment divisions that is available to you under the Policy 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 Policy fees and charges from your Policy's cash value, which can significantly reduce your Policy's cash value. During times of poor investment performance, these deductions may have an even greater impact on your Policy's cash value. It is possible to lose your full investment and your Policy 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 of 4%. SURRENDER AND WITHDRAWAL RISKS. The Policies 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 the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the Policy's cash value in the near future. 7 RISK OF POLICY TERMINATION. Your Policy 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 Policy 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 policy on which there is an outstanding loan may have adverse tax consequences. POLICY CHARGE AND EXPENSE INCREASE. We have the right to increase certain Policy charges. TAX LAW RISKS. We anticipate that the Policy should generally be deemed a life insurance contract under Federal tax law. The insurance proceeds payable upon death of the insured under the Policy will never be less than the minimum amount required for the Policy to be treated as life insurance under Section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. The guidance, however, with respect to Policies issued on a substandard risk basis, is not entirely clear. Assuming that a Policy 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 Policy's cash value until there is an actual distribution from the Policy. Moreover, insurance proceeds payable under the Policy 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. In the case of employer-owned life insurance as defined in Section 101(j), the amount of the death benefit excludable from gross income is limited to premiums paid unless the Policy falls within certain specified exceptions and a notice and consent requirement is satisfied before the Policy is issued. If you pay more than a certain amount of premiums, you may cause your Policy 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 Policy (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 Policy is not a modified endowment contract, distributions generally will be treated first as a return of basis or investment in the contract and then as taxable income. Moreover, loans will generally not be treated as distributions. Finally, neither distributions nor loans from a Policy that is not a modified endowment contract are subject to the 10% penalty tax. If your Policy is part of an equity split dollar arrangement under the economic benefit regime, there is a risk that some portion of the cash value may be taxed prior to any Policy distribution. 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. 8 FEE TABLES The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The charges set forth in the first two tables may vary by group, 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. Our variations in the charges will be made in accordance with our established and uniformly applied administrative procedures. Any variations in charges will be reasonable and will not be unfairly discriminatory to the interests of any Policy owner. In addition to the following tables, certain charges that we don't currently impose (but which we have the right to impose on your Policy in the future) are described under "Charges and Deductions--Other Charges," further back in this Prospectus. In certain cases, we have the right to increase our charges for new Policies, as well as for Policies already outstanding. The maximum charges in such cases are shown in the far right-hand columns of each of the first three tables below. TRANSACTION FEES This table describes the fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, or transfer cash value among the variable investment options or the Fixed Account.
WHEN CHARGE CURRENT AMOUNT MAXIMUM AMOUNT CHARGE IS DEDUCTED DEDUCTED WE CAN DEDUCT --------------------------------------------------------------------------------- Sales Charge/1,2/ On payment of POLICY YEARS 1 TO 10, POLICY YEARS 1 TO 10, premium up to 6.5% of annual up to 9% of annual target premium paid target premium paid POLICY YEARS 11 AND POLICY YEARS 11 AND LATER, up to 3% of LATER, same as annual target Current Amount for premium paid those years 0% on premiums 0% on premiums paid in excess of paid in excess of annual target annual target premium in all Policy premium in all Policy years years --------------------------------------------------------------------------------- Charge for average On payment of 2.25% of each Same as Current expected state and premium premium payment Amount local taxes attributable to premiums --------------------------------------------------------------------------------- Charge for expected On payment of 1.2% of each Same as Current federal taxes premium premium payment Amount attributable to premiums ---------------------------------------------------------------------------------
9
WHEN CHARGE CURRENT AMOUNT MAXIMUM AMOUNT CHARGE IS DEDUCTED DEDUCTED WE CAN DEDUCT --------------------------------------------------------------------------------------------- Administrative On payment of POLICY YEARS 1 TO 10, Up to 1.05% of Charge/1/ premium up to 0.55% of annual annual target target premium paid premium paid in all Policy years POLICY YEARS 11 AND LATER, up to 1.05% of 0.05% of premiums annual target paid in excess of premium paid annual target premium in all Policy 0.05% on premiums years paid in excess of annual target premium in all Policy years --------------------------------------------------------------------------------------------- Transfer Fee On transfer of cash Not currently $25 per transfer, and value among charged none for transfers investment divisions under Systematic or to or from the Investment Fixed Account Strategies --------------------------------------------------------------------------------------------- Interim Term On payment of first Highest: $13.93 per Highest: $24.65 per Insurance Benefit/3/ premium if rider is $1,000 of term $1,000 of term (applies only if you elected insurance amount insurance amount elected rider at issue) Lowest: $0.03 per Lowest: $0.04 per Highest and Lowest $1,000 of term $1,000 of term Charge Among All insurance amount insurance amount Possible Insureds Charge for unisex, $0.152 per $1,000 of $0.271 per $1,000 of issue age 47, term insurance term insurance nonsmoker, amount amount Guaranteed Issue underwriting class --------------------------------------------------------------------------------------------- Enhanced Cash On premium 0.25% of each Same as Current Surrender Value payments made premium payment Amount Rider/4/ during the first five made during the first Policy years five Policy years --------------------------------------------------------------------------------------------- Underwriting Charge On face amount Not currently Up to $3 per $1,000 (applies only if you increase charged of increase request an increase in your specified face amount)
-------- /1/ See "Charges and Deductions--Annual Target Premium" for a detailed discussion of the determination of the annual target premium. /2/ For Policies issued with the Refund of Sales Charge Rider, if you request a full cash withdrawal during the first five Policy years, we will refund any sales charges deducted within 365 days prior to the date the request is received at our Designated Office. This rider is not available in New Jersey. /3/ This charge varies based on individual characteristics of the insured or of individuals in the group that the charge was intended to cover, and may not be representative of the charge that you will pay. You can obtain more information about the 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 Policy based on various assumptions. /4/ For Policies issued with the Enhanced Cash Surrender Value Rider on or after February 1, 2004, if you request a full cash withdrawal during the first ten Policy years, we will refund (a) part of the cumulative charges we have deducted from your premium payments and (b) part of the cost of term insurance we have deducted in the current Policy year, as shown in Table A below. However, we will not pay this refund if the full cash withdrawal is related to an exchange pursuant to Section 1035 of the Internal Revenue Code. This rider is subject to state approval. 10 TABLE A
PORTION OF COST OF TERM INSURANCE CHARGES DEDUCTED PORTION OF DURING POLICY YEAR OF POLICY YEAR OF CUMULATIVE PREMIUM FULL CASH WITHDRAWAL FULL CASH WITHDRAWAL CHARGES TO BE REFUNDED* TO BE REFUNDED ----------------------------------------------------------------------- 1 100% 95% ----------------------------------------------------------------------- 2 95% 85% ----------------------------------------------------------------------- 3 90% 75% ----------------------------------------------------------------------- 4 85% 65% ----------------------------------------------------------------------- 5 80% 55% ----------------------------------------------------------------------- 6 75% 45% ----------------------------------------------------------------------- 7 70% 35% ----------------------------------------------------------------------- 8 65% 25% ----------------------------------------------------------------------- 9 60% 15% ----------------------------------------------------------------------- 10 55% 5% ----------------------------------------------------------------------- 11 and later None None -----------------------------------------------------------------------
* The percent shown is applied to the cumulative sales, tax, and administrative charges deducted from your premium. 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 Policy not including the fees and expenses of the Portfolios. PERIODIC CHARGES
MAXIMUM AMOUNT WE CAN CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED DEDUCT ----------------------------------------------------------------------------------------------------------- Cost of Term Insurance On each monthly Highest: $13.93 per Highest: $24.65 per for coverage under base anniversary of the Policy $1,000 of term insurance $1,000 of term insurance policy /1, 2/ amount amount Highest and Lowest Charge Among All Possible Lowest: $0.03 per $1,000 Lowest: $0.04 per $1,000 Insureds of term insurance amount of term insurance amount Charge for male, issue $0.152 per $1,000 of term $0.271 per $1,000 of term age 47, nonsmoker, insurance amount insurance amount Guaranteed Issue underwriting class ----------------------------------------------------------------------------------------------------------- Cost of Term Insurance On each monthly Highest: $10.44 per Highest: $24.65 per for coverage under the anniversary of the Policy $1,000 of term insurance $1,000 of term insurance term benefit /1, 2/ amount amount Highest and Lowest Charge Lowest: $0.02 per $1,000 Lowest: $0.04 per $1,000 Among All Possible of term insurance amount of term insurance amount Insureds Charge for male, issue $0.114 per $1,000 of term $0.271 per $1,000 of term age 47, nonsmoker, insurance amount insurance amount Guaranteed Issue underwriting class
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MAXIMUM AMOUNT WE CAN CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED DEDUCT ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- Mortality and Expense On each monthly Effective annual rate of Effective annual rate up Risk Charge /3/ anniversary of the Policy 0.40% of the cash value to 0.90% in the Separate Account. We intend to reduce this charge after Policy year 9 to 0.20% and after Policy year 20 to 0.10%. ----------------------------------------------------------------------------------------------------------- Loan Interest Spread/ 4/ Annually (or on loan Annual rate of 0.25% of Annual rate of 2% of the termination, if earlier) the loan amount loan amount
-------- /1/ The cost of term 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. See "Charges and Deductions--Cost of Term Insurance" for a more detailed discussion of factors affecting this charge. For Policies issued before January 1, 2009, the maximum cost of insurance charge ranges from $0.09 to $30.45 per $1,000 of term insurance amount. /2/ This charge varies based on individual characteristics of the insured or of individuals in the group that the charge was intended to cover, and may not be representative of the charge that you will pay. You can obtain more information about the 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 Policy, based on various assumptions. /3/ We are waiving the following amounts of the Mortality and Expense Risk Charge: 0.08% for the investment division investing in the BlackRock Large Cap Core Portfolio; and an amount equal to the underlying portfolio expenses that are in excess of 0.91% for the investment division investing in the Pioneer Fund Portfolio (Class A), in excess of 1.34% for the investment division investing in the Met/Artisan Mid Cap Value Portfolio (Class B), and in excess of 1.15% for the investment division investing in the Third Avenue Small Cap Value Portfolio (Class B). /4/ We charge interest on Policy 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. PORTFOLIO OPERATING EXPENSES Each of the Funds pays an investment management fee to its investment manager. Each of the Funds also incurs other direct expenses (see the applicable Fund 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. Most of the Funds offer various classes of shares, each of which has a different level of expenses, only one of which is available under a Policy. The available class of each Portfolio is specified in the expense table below and on the front cover pages of the Prospectus. The first table below shows the lowest and highest fees and expenses charged by any of the Portfolios for the fiscal year ended December 31, 2010.
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) 0.27% 1.70% -----------------------------------------------------------------
12 The table below describes the annual operating expenses for each Portfolio for the year ended December 31, 2010 as a percentage of the Portfolio's average daily net assets for the year.
----------------------------------------------------------------------------------- DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ----------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (INVESCO VARIABLE INSURANCE FUNDS) ----------------------------------------------------------------------------------- Invesco V.I. Global Real Estate Fund-- Series I 0.75% -- 0.45% -- 1.20% -- 1.20% ----------------------------------------------------------------------------------- Invesco V.I. Government Securities Fund-- Series II 0.46% 0.25% 0.30% -- 1.01% 0.16% 0.85%/1/ ----------------------------------------------------------------------------------- Invesco V.I. International Growth Fund--Series I 0.71% -- 0.33% -- 1.04% -- 1.04% ----------------------------------------------------------------------------------- Invesco Van Kampen V.I. Comstock Fund-- Series II 0.56% 0.25% 0.29% -- 1.10% 0.23% 0.87%/2/ ----------------------------------------------------------------------------------- ALLIANCE BERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ----------------------------------------------------------------------------------- Global Thematic Growth Portfolio-- Class B 0.75% 0.25% 0.24% -- 1.24% -- 1.24% ----------------------------------------------------------------------------------- Intermediate Bond Portfolio-- Class B 0.45% 0.25% 0.23% -- 0.93% -- 0.93% ----------------------------------------------------------------------------------- International Value Portfolio-- Class A 0.75% -- 0.10% -- 0.85% -- 0.85% ----------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.--CLASS I ----------------------------------------------------------------------------------- American Century VP Vista/SM/ Fund 1.00% -- 0.02% -- 1.02% -- 1.02% -----------------------------------------------------------------------------------
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------------------------------------------------------------------------------------ DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ------------------------------------------------------------------------------------ AMERICAN FUNDS INSURANCE SERIES(R)-- CLASS 2 ------------------------------------------------------------------------------------ American Funds Growth Fund 0.32% 0.25% 0.02% -- 0.59% -- 0.59% ------------------------------------------------------------------------------------ American Funds High- Income Bond Fund 0.46% 0.25% 0.02% -- 0.73% -- 0.73% ------------------------------------------------------------------------------------ American Funds International Fund 0.49% 0.25% 0.04% -- 0.78% -- 0.78% ------------------------------------------------------------------------------------ American Funds U.S. Government/ AAA-Rated Securities Fund 0.34% 0.25% 0.01% -- 0.60% -- 0.60%/3/ ------------------------------------------------------------------------------------ DREYFUS VARIABLE INVESTMENT FUND-- SERVICE SHARES ------------------------------------------------------------------------------------ International Value Portfolio 1.00% 0.25% 0.26% -- 1.51% -- 1.51% ------------------------------------------------------------------------------------ FIDELITY(R) VARIABLE INSURANCE PRODUCTS ------------------------------------------------------------------------------------ Asset Manager: Growth(R) Portfolio-- Service Class 0.56% 0.10% 0.19% -- 0.85% -- 0.85% ------------------------------------------------------------------------------------ Contrafund(R) Portfolio-- Service Class 0.56% 0.10% 0.09% -- 0.75% -- 0.75% ------------------------------------------------------------------------------------ Equity-Income Portfolio-- Service Class 0.46% 0.10% 0.10% -- 0.66% -- 0.66% ------------------------------------------------------------------------------------ Freedom 2010 Portfolio-- Initial Class -- -- -- 0.57% 0.57% -- 0.57% ------------------------------------------------------------------------------------ Freedom 2015 Portfolio-- Initial Class -- -- -- 0.57% 0.57% -- 0.57% ------------------------------------------------------------------------------------ Freedom 2020 Portfolio-- Initial Class -- -- -- 0.62% 0.62% -- 0.62% ------------------------------------------------------------------------------------ Freedom 2025 Portfolio-- Initial Class -- -- -- 0.64% 0.64% -- 0.64% ------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------ DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ------------------------------------------------------------------------------------ Freedom 2030 Portfolio-- Initial Class -- -- -- 0.66% 0.66% -- 0.66% ------------------------------------------------------------------------------------ High Income Portfolio-- Initial Class 0.57% -- 0.12% -- 0.69% -- 0.69% ------------------------------------------------------------------------------------ Investment Grade Bond Portfolio-- Service Class 0.32% 0.10% 0.11% -- 0.53% -- 0.53% ------------------------------------------------------------------------------------ Mid Cap Portfolio-- Service Class 2 0.56% 0.25% 0.10% -- 0.91% -- 0.91% ------------------------------------------------------------------------------------ FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST ------------------------------------------------------------------------------------ Mutual Global Discovery Securities Fund--Class 2 0.80% 0.25% 0.20% -- 1.25% -- 1.25% ------------------------------------------------------------------------------------ Templeton Foreign Securities Fund--Class 1 0.65% -- 0.14% 0.01% 0.80% 0.01% 0.79%/4/ ------------------------------------------------------------------------------------ Templeton Global Bond Securities Fund--Class 1 0.46% -- 0.09% -- 0.55% -- 0.55% ------------------------------------------------------------------------------------ GOLDMAN SACHS VARIABLE INSURANCE TRUST-- INSTITUTIONAL SHARES ------------------------------------------------------------------------------------ Goldman Sachs Structured Small Cap Equity Fund 0.75% -- 0.22% -- 0.97% -- 0.97% ------------------------------------------------------------------------------------ JANUS ASPEN SERIES ------------------------------------------------------------------------------------ Balanced Portfolio-- Service Shares 0.55% 0.25% 0.03% -- 0.83% -- 0.83% ------------------------------------------------------------------------------------ Enterprise Portfolio-- Service Shares 0.64% 0.25% 0.04% -- 0.93% -- 0.93% ------------------------------------------------------------------------------------ Forty Portfolio-- Service Shares 0.64% 0.25% 0.03% -- 0.92% -- 0.92% ------------------------------------------------------------------------------------ Janus Portfolio-- Institutional Shares 0.64% -- 0.06% -- 0.70% -- 0.70% ------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------ DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ------------------------------------------------------------------------------------ Overseas Portfolio-- Service Shares 0.64% 0.25% 0.04% -- 0.93% -- 0.93% ------------------------------------------------------------------------------------ LEGG MASON PARTNERS VARIABLE EQUITY TRUST ------------------------------------------------------------------------------------ Legg Mason Investment Counsel Variable Social Awareness Portfolio 0.69% -- 0.28% -- 0.97% -- 0.97% ------------------------------------------------------------------------------------ MET INVESTORS SERIES TRUST ------------------------------------------------------------------------------------ BlackRock Large Cap Core Portfolio-- Class A 0.59% -- 0.05% -- 0.64% -- 0.64% ------------------------------------------------------------------------------------ Clarion Global Real Estate Portfolio-- Class B 0.62% 0.25% 0.07% -- 0.94% -- 0.94% ------------------------------------------------------------------------------------ Dreman Small Cap Value Portfolio-- Class A 0.79% -- 0.08% -- 0.87% -- 0.87% ------------------------------------------------------------------------------------ Harris Oakmark International Portfolio-- Class A 0.78% -- 0.07% -- 0.85% 0.01% 0.84%/5/ ------------------------------------------------------------------------------------ Invesco Small Cap Growth Portfolio-- Class B 0.85% 0.25% 0.04% -- 1.14% 0.02% 1.12%/6/ ------------------------------------------------------------------------------------ Lazard Mid Cap Portfolio-- Class B 0.69% 0.25% 0.04% -- 0.98% -- 0.98% ------------------------------------------------------------------------------------ Legg Mason ClearBridge Aggressive Growth Portfolio-- Class A 0.64% -- 0.04% -- 0.68% -- 0.68% ------------------------------------------------------------------------------------ Lord Abbett Bond Debenture Portfolio-- Class A 0.50% -- 0.03% -- 0.53% -- 0.53% ------------------------------------------------------------------------------------ Lord Abbett Mid Cap Value Portfolio-- Class B 0.68% 0.25% 0.07% -- 1.00% -- 1.00% ------------------------------------------------------------------------------------
16
------------------------------------------------------------------------------------ DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ------------------------------------------------------------------------------------ MetLife Aggressive Strategy Portfolio-- Class B 0.09% 0.25% 0.02% 0.74% 1.10% 0.01% 1.09%/7/ ------------------------------------------------------------------------------------ MFS(R) Research International Portfolio-- Class B 0.69% 0.25% 0.09% -- 1.03% 0.03% 1.00%/8/ ------------------------------------------------------------------------------------ Morgan Stanley Mid Cap Growth Portfolio-- Class A 0.66% -- 0.14% -- 0.80% 0.02% 0.78%/9/ ------------------------------------------------------------------------------------ PIMCO Inflation Protected Bond Portfolio-- Class A 0.47% -- 0.04% -- 0.51% -- 0.51% ------------------------------------------------------------------------------------ PIMCO Total Return Portfolio-- Class A 0.48% -- 0.03% -- 0.51% -- 0.51% ------------------------------------------------------------------------------------ Pioneer Fund Portfolio-- Class A 0.64% -- 0.05% -- 0.69% 0.02% 0.67%/10/ ------------------------------------------------------------------------------------ T. Rowe Price Large Cap Value Portfolio-- Class A 0.57% -- 0.02% -- 0.59% -- 0.59%/11/ ------------------------------------------------------------------------------------ T. Rowe Price Mid Cap Growth Portfolio-- Class B 0.75% 0.25% 0.04% -- 1.04% -- 1.04% ------------------------------------------------------------------------------------ Third Avenue Small Cap Value Portfolio-- Class B 0.74% 0.25% 0.04% -- 1.03% -- 1.03% ------------------------------------------------------------------------------------ METROPOLITAN SERIES FUND, INC. ------------------------------------------------------------------------------------ Artio International Stock Portfolio-- Class A 0.82% -- 0.12% 0.02% 0.96% 0.05% 0.91%/12/ ------------------------------------------------------------------------------------ Barclays Capital Aggregate Bond Index Portfolio-- Class A 0.25% -- 0.03% -- 0.28% 0.01% 0.27%/13/ ------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------ DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ------------------------------------------------------------------------------------ BlackRock Aggressive Growth Portfolio-- Class A 0.73% -- 0.04% -- 0.77% -- 0.77% ------------------------------------------------------------------------------------ BlackRock Bond Income Portfolio-- Class A 0.37% -- 0.03% -- 0.40% 0.03% 0.37%/14/ ------------------------------------------------------------------------------------ BlackRock Diversified Portfolio-- Class A 0.46% -- 0.04% -- 0.50% -- 0.50% ------------------------------------------------------------------------------------ BlackRock Legacy Large Cap Growth Portfolio-- Class A 0.73% -- 0.04% -- 0.77% 0.02% 0.75%/15/ ------------------------------------------------------------------------------------ BlackRock Money Market Portfolio-- Class A 0.32% -- 0.02% -- 0.34% 0.01% 0.33%/16/ ------------------------------------------------------------------------------------ Davis Venture Value Portfolio-- Class A 0.70% -- 0.03% -- 0.73% 0.05% 0.68%/17/ ------------------------------------------------------------------------------------ FI Value Leaders Portfolio-- Class A 0.67% -- 0.06% -- 0.73% -- 0.73% ------------------------------------------------------------------------------------ Jennison Growth Portfolio-- Class A 0.62% -- 0.02% -- 0.64% 0.07% 0.57%/18/ ------------------------------------------------------------------------------------ Loomis Sayles Small Cap Core Portfolio-- Class A 0.90% -- 0.06% -- 0.96% 0.05% 0.91%/19/ ------------------------------------------------------------------------------------ Met/Artisan Mid Cap Value Portfolio-- Class B 0.81% 0.25% 0.03% -- 1.09% -- 1.09% ------------------------------------------------------------------------------------ MetLife Conservative Allocation Portfolio-- Class B 0.10% 0.25% 0.01% 0.55% 0.91% 0.01% 0.90%/20/ ------------------------------------------------------------------------------------ MetLife Conservative to Moderate Allocation Portfolio-- Class B 0.08% 0.25% 0.02% 0.61% 0.96% -- 0.96% ------------------------------------------------------------------------------------ MetLife Mid Cap Stock Index Portfolio-- Class A 0.25% -- 0.06% 0.01% 0.32% -- 0.32% ------------------------------------------------------------------------------------
18
------------------------------------------------------------------------------------- DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ------------------------------------------------------------------------------------- MetLife Moderate Allocation Portfolio-- Class B 0.06% 0.25% -- 0.66% 0.97% -- 0.97% ------------------------------------------------------------------------------------- MetLife Moderate to Aggressive Allocation Portfolio-- Class B 0.06% 0.25% 0.01% 0.71% 1.03% -- 1.03% ------------------------------------------------------------------------------------- MetLife Stock Index Portfolio-- Class A 0.25% -- 0.02% -- 0.27% 0.01% 0.26%/21/ ------------------------------------------------------------------------------------- MFS(R) Total Return Portfolio-- Class B 0.54% 0.25% 0.04% -- 0.83% -- 0.83% ------------------------------------------------------------------------------------- MFS(R) Value Portfolio-- Class A 0.71% -- 0.02% -- 0.73% 0.11% 0.62%/22/ ------------------------------------------------------------------------------------- Morgan Stanley EAFE(R) Index Portfolio-- Class A 0.30% -- 0.11% 0.01% 0.42% -- 0.42% ------------------------------------------------------------------------------------- Neuberger Berman Genesis Portfolio-- Class A 0.83% -- 0.06% -- 0.89% 0.02% 0.87%/23/ ------------------------------------------------------------------------------------- Neuberger Berman Mid Cap Value Portfolio-- Class A 0.65% -- 0.05% -- 0.70% -- 0.70% ------------------------------------------------------------------------------------- Oppenheimer Global Equity Portfolio-- Class A 0.53% -- 0.08% -- 0.61% -- 0.61% ------------------------------------------------------------------------------------- Russell 2000(R) Index Portfolio-- Class A 0.25% -- 0.07% 0.01% 0.33% -- 0.33% ------------------------------------------------------------------------------------- T. Rowe Price Large Cap Growth Portfolio-- Class A 0.60% -- 0.04% -- 0.64% -- 0.64% ------------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth Portfolio-- Class A 0.50% -- 0.07% -- 0.57% -- 0.57% -------------------------------------------------------------------------------------
19
------------------------------------------------------------------------------------- DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ------------------------------------------------------------------------------------- MFS(R) VARIABLE INSURANCE TRUST-- SERVICE CLASS ------------------------------------------------------------------------------------- MFS(R) Global Equity Series 1.00% 0.25% 0.38% -- 1.63% 0.23% 1.40%/24/ ------------------------------------------------------------------------------------- MFS(R) High Income Series 0.70% 0.25% 0.10% -- 1.05% -- 1.05% ------------------------------------------------------------------------------------- MFS(R) New Discovery Series 0.90% 0.25% 0.11% -- 1.26% -- 1.26% ------------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS-- NON-SERVICE SHARES ------------------------------------------------------------------------------------- Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA 0.70% -- 0.15% -- 0.85% 0.05% 0.80%/25/ ------------------------------------------------------------------------------------- PIMCO VARIABLE INSURANCE TRUST-- ADMINISTRATIVE CLASS ------------------------------------------------------------------------------------- PIMCO All Asset Portfolio 0.43% -- 0.15% 0.66% 1.24% 0.03% 1.21%/26/ ------------------------------------------------------------------------------------- PIMCO Long- Term U.S. Government Portfolio 0.48% -- 0.15% -- 0.63% -- 0.63% ------------------------------------------------------------------------------------- PIMCO Low Duration Portfolio 0.50% -- 0.15% -- 0.65% -- 0.65% ------------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST ------------------------------------------------------------------------------------- Pioneer Emerging Markets VCT Portfolio-- Class II 1.15% 0.25% 0.30% -- 1.70% -- 1.70% ------------------------------------------------------------------------------------- Pioneer Mid Cap Value VCT Portfolio-- Class I 0.65% -- 0.09% -- 0.74% -- 0.74% ------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST-- CLASS IB ------------------------------------------------------------------------------------- Putnam VT International Value Fund 0.70% 0.25% 0.21% -- 1.16% -- 1.16% -------------------------------------------------------------------------------------
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----------------------------------------------------------------------------------- DISTRIBU CONTRACTUAL TION FEE WAIVER NET AND/OR ACQUIRED TOTAL AND/OR TOTAL MANAGE- SERVICE FUND ANNUAL EXPENSE ANNUAL MENT (12B-1) OTHER FEES AND OPERATING REIMBUR- OPERATING FEE FEES EXPENSES EXPENSES EXPENSES SEMENT EXPENSES ----------------------------------------------------------------------------------- ROYCE CAPITAL FUND-- INVESTMENT CLASS ----------------------------------------------------------------------------------- Royce Micro-Cap Portfolio 1.25% -- 0.07% 0.05% 1.37% -- 1.37% ----------------------------------------------------------------------------------- Royce Small-Cap Portfolio 1.00% -- 0.06% -- 1.06% -- 1.06% ----------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC.-- CLASS I ----------------------------------------------------------------------------------- Emerging Markets Debt Portfolio 0.75% -- 0.33% -- 1.08% -- 1.08% ----------------------------------------------------------------------------------- Emerging Markets Equity Portfolio 1.22% -- 0.39% -- 1.61% 0.01% 1.60% ----------------------------------------------------------------------------------- WELLS FARGO VARIABLE TRUST ----------------------------------------------------------------------------------- VT Total Return Bond Fund 0.40% 0.25% 0.24% 0.01% 0.90% -- 0.90%/27/ -----------------------------------------------------------------------------------
-------- /1/ Total Annual Operating Expenses have been restated and reflect the reorganization of one or more affiliated investment companies into the Fund. The Fund's adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses to the extent necessary to limit net total annual fund operating expenses (excluding (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary or non-routine items; (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement) of Series II shares to 0.85% of average daily net assets. /2/ Total Annual Operating Expenses have been restated and reflect the reorganization of one or more affiliated investment companies into the Fund. The Fund's adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses to the extent necessary to limit net total annual fund operating expenses (excluding (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary or non-routine items; (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement) of Series II shares to 0.87% of average daily net assets. /3/ The Fund's management fee has been restated to reflect current management fees as reduced in an amendment to the Fund's Investment Advisory and Service Agreement effective January 1, 2011. /4/ The Fund's manager and administrator have agreed in advance to reduce their fees as a result of the Fund's investment in a Franklin Templeton money fund ("Sweep Money Fund"). This reduction will continue until at least April 30, 2012. /5/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.725% of the Portfolio's average daily net assets exceeding $1 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Trustees of the Portfolio. /6/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.83% of the Portfolio's average daily net assets from $250 million to $500 million. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Trustees of the Portfolio. /7/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 to April 30, 2012, to limit its fee and to reimburse expenses to the extent necessary to limit net operating expenses to 21 0.10%, excluding 12b-1 fees and acquired fund fees and expenses. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Trustees of the Portfolio. /8/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.55% of the Portfolio's average daily net assets exceeding $1.5 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Trustees of the Portfolio. /9/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.65% of the first $500 million of the Portfolio's average daily net assets plus 0.625% of such assets over $500 million. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Trustees of the Portfolio. /10/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.675% of the first $200 million of the Portfolio's average daily net assets plus 0.625% of such assets over $200 million up to $500 million plus 0.60% of such assets over $500 million up to $1 billion plus 0.575% of such assets over $1 billion up to $2 billion plus 0.55% of such assets over $2 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Trustees of the Portfolio. /11/ The Management Fee has been restated to reflect an amended advisory agreement, as if the fee had been in effect during the previous fiscal year. /12/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.78% for the first $900 million of the Portfolio's average daily net assets, 0.75% for the next $100 million, 0.725% for the next $500 million and 0.70% on amounts over $1.5 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /13/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.245% for the amounts over $500 million but less than $1 billion, 0.24% for the next $1 billion and 0.235% on amounts over $2 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /14/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.37% for the first $1 billion of the Portfolio's average daily net assets, 0.325% for the next $2.4 billion and 0.25% on amounts over $3.4 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /15/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.705% for the amounts over $300 million but less than $1 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /16/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.325% for the first $1 billion of the Portfolio's average daily net assets. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /17/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.75% for the first $50 million of the Portfolio's average daily net assets, 0.70% for the next $450 million, 0.65% for the next $4 billion and 0.625% on amounts over $4.5 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /18/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.65% for the first $300 million of the Portfolio's average daily net assets, 0.60% for the next $200 million, 0.55% for the next $500 million, 0.50% for the next $1 billion and 0.47% on amounts over $2 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /19/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.85% for the first $500 million of the Portfolio's average daily net assets and 0.80% on amounts over $500 million. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /20/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to waive fees or pay all expenses (other than acquired fund fees and expenses, brokerage costs, taxes, interest and any extraordinary expenses) so as to limit net operating expenses of the 22 Portfolio's Class B shares to 0.35% of average daily net assets. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /21/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.245% for the amounts over $500 million but less than $1 billion, 0.24% for the next $1 billion and 0.235% on amounts over $2 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /22/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, 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% on amounts over $1.5 billion. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /23/ MetLife Advisers, LLC has contractually agreed, for the period May 1, 2011 through April 30, 2012, to reduce the Management Fee for each Class of the Portfolio to the annual rate of 0.825% for the first $500 million of the Portfolio's average daily net assets. This arrangement may be modified or discontinued prior to April 30, 2012 only with the approval of the Board of Directors of the Portfolio. /24/ Effective May 1, 2011, MFS has agreed in writing to reduce its management fee to 0.90% of the fund's average daily net assets annually. In addition, MFS has agreed in writing to bear the fund's expenses, excluding interest, taxes, extraordinary expenses, brokerage and transaction costs and investment-related expenses (such as interest and borrowing expenses incurred in connection with the fund's investment activity), such that Net Total Annual Operating Expenses do not exceed 1.40% of the fund's average daily net assets annually for Service Class shares. These written agreements will continue until modified by a vote of the fund's Board of Trustees, but such agreements will continue until at least April 30, 2012. /25/ The Fund's manager has voluntarily agreed to limit the Fund's total annual operating expenses so that those expenses, as a percentage of daily net assets, will not exceed the annual rate of 0.80% for Non-Service Shares. This voluntary expense limitation may not be amended or withdrawn until one year after the date of the Fund's prospectus. /26/ PIMCO has contractually agreed, through May 1, 2012, to reduce its advisory fee to the extent that the underlying PIMCO fund expenses attributable to advisory and supervisory and administrative fees exceed 0.64% of the total assets invested in underlying PIMCO funds. /27/ The Fund's expenses have been adjusted from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. Certain Funds that have "Acquired Fund Fees and Expenses" are "fund of funds." Each "fund of funds" invests substantially all of its assets in other funds. Because the Fund invests in other underlying funds, the Fund will bear its pro rata portion of the operating expenses of the underlying funds in which it invests, including the management fee. See the Fund's prospectus for more information. The expense information regarding the Funds was provided by those Funds. Additional information about the management fees and expenses of the Funds can be obtained in Funds' prospectuses and Statements of Additional Information. FOR INFORMATION CONCERNING COMPENSATION PAID FOR THE SALE OF THE POLICIES, SEE "SALE OF POLICIES." METLIFE 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 has the legal obligation to pay all benefits and other amounts to which you are entitled under the terms of your Policy. 23 THE FIXED ACCOUNT The Fixed Account is part of our general assets that are not in any legally segregated separate accounts. Amounts in the Fixed Account are credited with interest at an effective annual rate of 4%. 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. Any partial amounts we remove from the Fixed Account (such as any portion of your Policy's monthly deduction that is allocable to the Fixed Account) will be taken from the most recently allocated amounts first. Any excess interest rate will be credited for at least 12 months before a new rate is credited. We can delay transfers, withdrawals, surrender and payment of Policy 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 Policy gives you more information on the operation of the Fixed Account. SEPARATE ACCOUNT UL The Separate Account receives premium payments from the Policy 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 creditors. Income and realized and unrealized capital gains and losses of the Separate Account are credited to the Separate Account without regard to any of our other income or capital gains and losses. 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. We are obligated to pay the death benefit under the Policy even if that amount exceeds the Policy's cash value in the Separate Account. The amount of the death benefit that exceeds the Policy's cash value in the Separate Account is paid from our general account. Death benefits paid from the general account are subject to the financial strength and claims-paying ability of the Company. For other life insurance policies and annuity contracts that we issue, we pay all amounts owed under the policies and contracts from the general account. MetLife is regulated as an insurance company under state law, which generally imposes restrictions on the amount and type of investments in the general account. However, there is no guarantee that we will be able to meet our claims-paying obligations. There are risks to purchasing any insurance product. [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. Amounts you allocate to each investment division receive the investment experience of the investment division, and you bear this investment risk. 24 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 YOU HAVE ALSO RECEIVED.] Each of the Funds is a "series" type of mutual fund, which is registered as an open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"). Each Fund is divided into Portfolios, each of which represents a different class of stock in which a corresponding investment division of the Separate Account invests. PROSPECTUSES FOR THE FUNDS ARE AVAILABLE BY CALLING 1-908-253-1400 OR THROUGH YOUR REGISTERED REPRESENTATIVE. You should read each Fund prospectus carefully. They contain information about each Fund and its Portfolios, including the investment objectives, strategies, risks and investment advisers that are associated with each 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. CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS. An investment adviser (other than our affiliate MetLife Advisers, LLC) or sub-adviser of a Portfolio or its affiliates, may make payments to us and/or certain of our affiliates. These payments may be used for a variety of purposes, including payment for expenses for certain administrative, marketing and support services with respect to the Policies and, in MetLife's role as intermediary, with respect to the Portfolios. We and our affiliates may profit from these payments. These payments may be derived, in whole or in part, from the advisory fee deducted from Portfolio assets. Policy owners, through their indirect investment in the Portfolios, bear the costs of these advisory fees (see the Fund prospectuses for more information). The amount of the payments we receive is based on a percentage of assets of the Portfolio attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some advisers or sub-advisers (or other affiliates) may pay us more than others. These percentages currently range up to .50%. 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 of our 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. We, and certain of our affiliated insurance companies, have joint ownership interests in our affiliated investment adviser MetLife Advisers, LLC, which is organized as a limited liability company. Our ownership interests in MetLife Advisers, 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 adviser. (See "Fee Tables--Portfolio Operating Expenses" for information on the management fees paid to the adviser and the Statement of Additional Information for the Funds for information on the management fees paid by the adviser to sub-advisers.) 25 Certain Funds have adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. A Fund's 12b-1 Plan, if any, is described in more detail in each Fund's prospectus. (See also "Fee Tables--Portfolio Operating Expenses.") Any payments we receive pursuant to those 12b-1 Plans are paid to us or our distributor. Payments under a Fund's 12b-1 Plan decrease the Portfolio's investment return. SELECTION OF THE PORTFOLIOS. We select the Portfolios offered through this Policy based on a number of criteria, including asset class coverage, the strength of the adviser's or subadviser's reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor we consider during the selection process is whether the Portfolio's adviser or subadviser is one of our affiliates or whether the Portfolio, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates. For additional information on these arrangements, see "Certain Payments We Receive with Regard to the Portfolios" above. In this regard, the profit distributions we receive from our affiliated investment advisers are a component of the total revenue that we consider in configuring the features and investment choices available in the variable insurance products that we and our affiliated insurance companies issue. Since we and our affiliated insurance companies may benefit more from the allocation of assets to Portfolios advised by our affiliates than those that are not, we may be more inclined to offer Portfolios advised by our affiliates in the variable insurance products we issue. In some cases, we may include Portfolios based on recommendations made by selling firms through which the Policy is sold. These selling firms may receive payments from the Portfolios they recommend and may benefit accordingly from the allocation of cash value to such Portfolios. We review the Portfolios periodically and may remove a Portfolio or limit its availability to new premium payments 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 owners. We make certain payments to American Funds Distributors, Inc., principal underwriter for the American Funds Insurance Series. (See "Sales of Policies.") 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 POLICY RESULTING FROM THE PERFORMANCE OF THE PORTFOLIOS YOU HAVE CHOSEN. As of the end of each Valuation Period (see "Valuation Period" description below in "Other Policy 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, which 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). .. Policy loans and loan repayments allocated to the Separate Account. .. Transfers to and among investment divisions. .. Withdrawals and surrenders taken from the Separate Account. 26 The adviser, any sub-adviser and investment objective of each Portfolio are as follows: AIM VARIABLE INSURANCE FUNDS (INVESCO VARIABLE INSURANCE FUNDS) ------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- Invesco V.I. Global Real Estate Seeks total return through growth of Invesco Advisers, Inc. Fund--Series I capital and current income. Subadviser: Invesco Asset Management Limited ------------------------------------------------------------------------------------------------------- Invesco V.I. Government Securities Seeks total return, comprised of Invesco Advisers, Inc. Fund--Series II current income and capital appreciation. ------------------------------------------------------------------------------------------------------- Invesco V.I. International Growth Seeks long-term growth of capital. Invesco Advisers, Inc. Fund--Series I ------------------------------------------------------------------------------------------------------- Invesco Van Kampen V.I. Comstock Seeks capital growth and income Invesco Advisers, Inc. Fund--Series II through investments in equity securities, including common stocks, preferred stocks and securities convertible into common and preferred stocks. ------------------------------------------------------------------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. ------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- Global Thematic Growth Seeks long-term growth of capital. AllianceBernstein L.P. Portfolio--Class B ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Intermediate Bond Portfolio--Class B To generate income and price AllianceBernstein L.P. appreciation without assuming what the Advisor considers undue risk. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- International Value Portfolio--Class A Seeks long-term growth of capital. AllianceBernstein L.P. ------------------------------------------------------------------------------------------------------- AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.--CLASS I ------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- VP Vista/SM/ Fund Seeks long-term capital growth. American Century Investment Management, Inc. ------------------------------------------------------------------------------------------------------- AMERICAN FUNDS INSURANCE SERIES(R)--CLASS 2 ------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- American Funds Growth Fund Seeks growth of capital. Capital Research and Management Company ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- American Funds High-Income Bond Fund Seeks a high level of current income. Capital Research and Its secondary objective is capital Management Company appreciation. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- American Funds International Fund Seeks long-term growth of capital. Capital Research and Management Company ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- American Funds U.S. Seeks a high level of current income Capital Research and Government/AAA-Rated Securities Fund consistent with preservation of Management Company capital. -------------------------------------------------------------------------------------------------------
27 DREYFUS VARIABLE INVESTMENT FUND--SERVICE SHARES ------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- International Value Portfolio Seeks long-term capital growth. The Dreyfus Corporation ------------------------------------------------------------------------------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS ------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- Asset Manager: Growth(R) Seeks to maximize total return by Fidelity Management & Portfolio--Service Class allocating its assets among stocks, Research Company bonds, short-term instruments, and Subadviser: FMR Co., Inc. other investments. Fidelity Investments Money Management, Inc. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Contrafund(R) Portfolio-- Service Seeks long-term capital appreciation. Fidelity Management & Class Research Company Subadviser: FMR Co., Inc. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Equity-Income Portfolio--Service Class Seeks reasonable income. The fund Fidelity Management & will also consider the potential for Research Company capital appreciation. The fund's goal Subadviser: FMR Co., Inc. is to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor's 500/SM/ Index (S&P 500(R)). ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Freedom 2010 Portfolio-- Initial Class Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Freedom 2015 Portfolio-- Initial Class Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Freedom 2020 Portfolio-- Initial Class Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Freedom 2025 Portfolio-- Initial Class Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Freedom 2030 Portfolio-- Initial Class Seeks high total return with a Strategic Advisers, Inc. secondary objective of principal preservation as the fund approaches its target date and beyond. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- High Income Portfolio-- Initial Class Seeks a high level of current income, Fidelity Management & while also considering growth of Research Company capital. Subadviser: FMR Co., Inc. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Investment Grade Bond Seeks as high a level of current Fidelity Management & Portfolio--Service Class income as is consistent with the Research Company preservation of capital. Subadviser: Fidelity Investments Money Management, Inc. -------------------------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER --------------------------------------------------------------------------------------------------------- Mid Cap Portfolio-- Service Class 2 Seeks long-term growth of capital. Fidelity Management & Research Company Subadviser: FMR Co., Inc. --------------------------------------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST --------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER --------------------------------------------------------------------------------------------------------- Mutual Global Discovery Securities Seeks capital appreciation. Franklin Mutual Advisers, Fund--Class 2 LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Templeton Foreign Securities Seeks long-term capital growth. Templeton Investment Fund--Class 1 Counsel, LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Templeton Global Bond Securities Seeks high current income, consistent Franklin Advisers, Inc. Fund--Class 1 with preservation of capital, with capital appreciation as a secondary consideration. --------------------------------------------------------------------------------------------------------- GOLDMAN SACHS VARIABLE INSURANCE TRUST--INSTITUTIONAL SHARES --------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER --------------------------------------------------------------------------------------------------------- Goldman Sachs Structured Small Cap Seeks long-term growth of capital. Goldman Sachs Asset Equity Fund Management, L.P. --------------------------------------------------------------------------------------------------------- JANUS ASPEN SERIES --------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER --------------------------------------------------------------------------------------------------------- Balanced Portfolio--Service Shares Seeks long-term capital growth, Janus Capital consistent with preservation of Management LLC capital and balanced by current income. --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Enterprise Portfolio--Service Shares Seeks long-term growth of capital. Janus Capital Management LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Forty Portfolio--Service Shares Seeks long-term growth of capital. Janus Capital Management LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Janus Portfolio--Institutional Shares Seeks long-term growth of capital. Janus Capital Management LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Overseas Portfolio--Service Shares Seeks long-term growth of capital. Janus Capital Management LLC --------------------------------------------------------------------------------------------------------- LEGG MASON PARTNERS VARIABLE EQUITY TRUST --------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER --------------------------------------------------------------------------------------------------------- Legg Mason Investment Counsel Seeks capital appreciation and Legg Mason Partners Variable Social Awareness Portfolio retention of net investment income. Fund Advisor, LLC Subadviser: Legg Mason Investment Counsel, LLC ---------------------------------------------------------------------------------------------------------
29 MET INVESTORS SERIES TRUST --------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER --------------------------------------------------------------------------------------------------------- BlackRock Large Cap Core Seeks long-term capital growth. MetLife Advisers, LLC Portfolio--Class A Subadviser: BlackRock Advisors, LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Clarion Global Real Estate Seeks total return through investment MetLife Advisers, LLC Portfolio--Class B in real estate securities, Subadviser: ING Clarion emphasizing both capital appreciation Real Estate Securities and current income. LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Dreman Small Cap Value Seeks capital appreciation. MetLife Advisers, LLC Portfolio--Class A Subadviser: Dreman Value Management, LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Harris Oakmark International Seeks long-term capital appreciation. MetLife Advisers, LLC Portfolio--Class A Subadviser: Harris Associates L.P. --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Invesco Small Cap Growth Seeks long-term growth of capital. MetLife Advisers, LLC Portfolio--Class B Subadviser: Invesco Advisers, Inc. --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Lazard Mid Cap Portfolio--Class B Seeks long-term growth of capital. MetLife Advisers, LLC Subadviser: Lazard Asset Management LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Legg Mason ClearBridge Aggressive Seeks capital appreciation. MetLife Advisers, LLC Growth Portfolio--Class A Subadviser: ClearBridge Advisors, LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Lord Abbett Bond Debenture Seeks high current income and the MetLife Advisers, LLC Portfolio--Class A opportunity for capital appreciation Subadviser: Lord, Abbett to produce a high total return. & Co. LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Lord Abbett Mid Cap Value Seeks capital appreciation through MetLife Advisers, LLC Portfolio--Class B investments primarily in equity Subadviser: Lord, Abbett securities which are believed to be & Co. LLC undervalued in the marketplace. --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- MetLife Aggressive Strategy Seeks growth of capital. MetLife Advisers, LLC Portfolio--Class B --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- MFS(R) Research International Seeks capital appreciation. MetLife Advisers, LLC Portfolio--Class B Subadviser: Massachusetts Financial Services Company --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Morgan Stanley Mid Cap Growth Seeks capital appreciation. MetLife Advisers, LLC Portfolio--Class A Subadviser: Morgan Stanley Investment Management Inc. --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- PIMCO Inflation Protected Bond Seeks maximum real return, consistent MetLife Advisers, LLC Portfolio--Class A with preservation of capital and Subadviser: Pacific prudent investment management. Investment Management Company LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- PIMCO Total Return Portfolio--Class A Seeks maximum total return, MetLife Advisers, LLC consistent with the preservation of Subadviser: Pacific capital and prudent investment Investment Management management. Company LLC --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Pioneer Fund Portfolio--Class A Seeks reasonable income and capital MetLife Advisers, LLC growth. Subadviser: Pioneer Investment Management, Inc. ---------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- T. Rowe Price Large Cap Value Seeks long-term capital appreciation MetLife Advisers, LLC Portfolio--Class A by investing in common stocks Subadviser: T. Rowe Price believed to be undervalued. Income is Associates, Inc. a secondary objective. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- T. Rowe Price Mid Cap Growth Seeks long-term growth of capital. MetLife Advisers, LLC Portfolio--Class B Subadviser: T. Rowe Price Associates, Inc. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Third Avenue Small Cap Value Seeks long-term capital appreciation. MetLife Advisers, LLC Portfolio--Class B Subadviser: Third Avenue Management LLC ------------------------------------------------------------------------------------------------------- METROPOLITAN SERIES FUND, INC. ------------------------------------------------------------------------------------------------------- Artio International Stock Seeks long-term growth of capital. MetLife Advisers, LLC Portfolio--Class A Subadviser: Artio Global Management, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Barclays Capital Aggregate Bond Index Seeks to equal the performance of the MetLife Advisers, LLC Portfolio--Class A Barclays Capital U.S. Aggregate Bond Subadviser: MetLife Index. Investment Advisors Company, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- BlackRock Aggressive Growth Seeks maximum capital appreciation. MetLife Advisers, LLC Portfolio--Class A Subadviser: BlackRock Advisors, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- BlackRock Bond Income Seeks a competitive total return MetLife Advisers, LLC Portfolio--Class A primarily from investing in Subadviser: BlackRock fixed-income securities. Advisors, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- BlackRock Diversified Seeks high total return MetLife Advisers, LLC Portfolio--Class A while attempting to limit investment Subadviser: BlackRock risk and preserve capital. Advisors, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- BlackRock Legacy Large Cap Growth Seeks long-term growth of capital. MetLife Advisers, LLC Portfolio--Class A Subadviser: BlackRock Advisors, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- BlackRock Money Market Seeks a high level of current income MetLife Advisers, LLC Portfolio--Class A consistent with preservation of Subadviser: BlackRock capital. Advisors, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Davis Venture Value Portfolio--Class A Seeks growth of capital. MetLife Advisers, LLC Subadviser: Davis Selected Advisers, L.P. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- FI Value Leaders Portfolio--Class A Seeks long-term growth of capital. MetLife Advisers, LLC Subadviser: Pyramis Global Advisors, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Jennison Growth Portfolio--Class A Seeks long-term growth of capital. MetLife Advisers, LLC Subadviser: Jennison Associates LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Loomis Sayles Small Cap Core Seeks long-term capital growth from MetLife Advisers, LLC Portfolio--Class A investments in common stocks or other Subadviser: Loomis, equity securities. Sayles & Company, L.P. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Met/Artisan Mid Cap Value Seeks long-term capital growth. MetLife Advisers, LLC Portfolio--Class B Subadviser: Artisan Partners Limited Partnership ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- MetLife Conservative Allocation Seeks high level of current income, MetLife Advisers, LLC Portfolio--Class B with growth of capital as a secondary objective. -------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER ------------------------------------------------------------------------------------------------------- MetLife Conservative to Moderate Seeks high total return in the form MetLife Advisers, LLC Allocation Portfolio--Class B of income and growth of capital, with a greater emphasis on income. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- MetLife Mid Cap Stock Index Seeks to equal the performance of the MetLife Advisers, LLC Portfolio--Class A Standard & Poor's MidCap 400(R) Subadviser: MetLife Composite Stock Price Index. Investment Advisors Company, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- MetLife Moderate Allocation Seeks a balance between a high level MetLife Advisers, LLC Portfolio--Class B of current income and growth of capital, with a greater emphasis on growth of capital. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- MetLife Moderate to Aggressive Seeks growth of capital. MetLife Advisers, LLC Allocation Portfolio--Class B ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- MetLife Stock Index Portfolio--Class A Seeks to equal the performance of the MetLife Advisers, LLC Standard & Poor's 500(R) Composite Subadviser: MetLife Stock Price Index. Investment Advisors Company, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- MFS(R) Total Return Portfolio--Class B Seeks a favorable total return MetLife Advisers, LLC through investment in a diversified Subadviser: Massachusetts portfolio. Financial Services Company ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- MFS(R) Value Portfolio--Class A Seeks capital appreciation. MetLife Advisers, LLC Subadviser: Massachusetts Financial Services Company ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Morgan Stanley EAFE(R) Index Seeks to equal the performance of the MetLife Advisers, LLC Portfolio--Class A MSCI EAFE(R) Index. Subadviser: MetLife Investment Advisors Company, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Neuberger Berman Genesis Seeks high total return, consisting MetLife Advisers, LLC Portfolio--Class A principally of capital appreciation. Subadviser: Neuberger Berman Management LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Neuberger Berman Mid Cap Value Seeks capital growth. MetLife Advisers, LLC Portfolio--Class A Subadviser: Neuberger Berman Management LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Oppenheimer Global Equity Seeks capital appreciation. MetLife Advisers, LLC Portfolio--Class A Subadviser: OppenheimerFunds, Inc. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Russell 2000(R) Index Seeks to equal the performance of the MetLife Advisers, LLC Portfolio--Class A Russell 2000(R) Index. Subadviser: MetLife Investment Advisors Company, LLC ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- T. Rowe Price Large Cap Growth Seeks long-term growth of capital MetLife Advisers, LLC Portfolio--Class A and, secondarily, dividend income. Subadviser: T. Rowe Price Associates, Inc. ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- T. Rowe Price Small Cap Growth Seeks long-term capital growth. MetLife Advisers, LLC Portfolio--Class A Subadviser: T. Rowe Price Associates, Inc. ------------------------------------------------------------------------------------------------------- MFS(R) VARIABLE INSURANCE TRUST--SERVICE CLASS ------------------------------------------------------------------------------------------------------- MFS(R) Global Equity Series Seeks capital appreciation. Massachusetts Financial Services Company -------------------------------------------------------------------------------------------------------
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-------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER -------------------------------------------------------------------------------------------------------- MFS(R) High Income Series Seeks total return with an emphasis Massachusetts Financial on high current income, but also Services Company considering capital appreciation. -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- MFS(R) New Discovery Series Seeks capital appreciation. Massachusetts Financial Services Company -------------------------------------------------------------------------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS--NON-SERVICE SHARES -------------------------------------------------------------------------------------------------------- Oppenheimer Main Street Small- & Seeks capital appreciation. OppenheimerFunds, Inc. Mid-Cap Fund(R)/VA -------------------------------------------------------------------------------------------------------- PIMCO VARIABLE INSURANCE TRUST--ADMINISTRATIVE CLASS -------------------------------------------------------------------------------------------------------- PIMCO All Asset Portfolio Seeks maximum real return consistent Pacific Investment with preservation of real capital and Management Company prudent investment management. LLC Subadviser: Research Affiliates, LLC -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- PIMCO Long-Term U.S. Government Seeks maximum total return, Pacific Investment Portfolio consistent with preservation of Management Company capital and prudent investment LLC management. -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- PIMCO Low Duration Portfolio Seeks maximum total return, Pacific Investment consistent with preservation of Management Company capital and prudent investment LLC management. -------------------------------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST -------------------------------------------------------------------------------------------------------- Pioneer Emerging Markets VCT Seeks long-term growth of capital. Pioneer Investment Portfolio--Class II Management, Inc. -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- Pioneer Mid Cap Value VCT Seeks capital appreciation Pioneer Investment Portfolio--Class I by investing in a diversified Management, Inc. portfolio of securities consisting primarily of common stocks. -------------------------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST--CLASS IB -------------------------------------------------------------------------------------------------------- Putnam VT International Value Fund Seeks capital growth. Current income Putnam Investment is a secondary objective. Management, LLC Subadviser: The Putnam Advisory Company, LLC -------------------------------------------------------------------------------------------------------- ROYCE CAPITAL FUND--INVESTMENT CLASS -------------------------------------------------------------------------------------------------------- Royce Micro-Cap Portfolio Seeks long-term growth of capital. Royce & Associates, LLC -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- Royce Small-Cap Portfolio Seeks long-term growth of capital. Royce & Associates, LLC --------------------------------------------------------------------------------------------------------
33 THE UNIVERSAL INSTITUTIONAL FUNDS, INC.--CLASS I --------------------------------------------------------------------------------------------------------- INVESTMENT ADVISER/ PORTFOLIO INVESTMENT OBJECTIVE SUBADVISER --------------------------------------------------------------------------------------------------------- Emerging Markets Debt Portfolio Seeks high total return by investing Morgan Stanley primarily in fixed income securities Investment Management of government and government-related Inc. issuers and, to a lesser extent, of corporate issuers in emerging market countries. --------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------- Emerging Markets Equity Portfolio Seeks long-term capital appreciation Morgan Stanley by investing primarily in Investment Management growth-oriented equity securities of Inc. issuers in emerging market countries. Subadvisers: Morgan Stanley Investment Management Company and Morgan Stanley Investment Management Limited --------------------------------------------------------------------------------------------------------- WELLS FARGO VARIABLE TRUST --------------------------------------------------------------------------------------------------------- VT Total Return Bond Fund Seeks total return, consisting of Wells Fargo Funds income and capital appreciation. Management, LLC Subadviser: Wells Capital Management Incorporated ---------------------------------------------------------------------------------------------------------
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 Policy. 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 Policy. SUBSTITUTION OF PORTFOLIOS If investment in the Portfolios or a particular Portfolio is no longer possible, 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. 34 VOTING RIGHTS [SIDEBAR: YOU CAN GIVE US VOTING INSTRUCTIONS ON SHARES OF EACH PORTFOLIO OF A FUND THAT ARE ATTRIBUTED TO YOUR POLICY.] 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 Policy based on your instructions. We will vote all shares in proportion to the instructions received. If we do not receive your instructions we will vote your shares in the same proportion as represented by the votes received from other owners. The effect of this proportional voting is that a small number of owners may control the outcome of a vote. 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 POLICY If you want to own a Policy, then you must complete an application, which must be received by the Designated Office. We reserve the right to reject an application for any reason permitted by law, and our acceptance of an application is subject to our insurance underwriting rules. We offer other variable life insurance policies that have different death benefits, policy features, Portfolio selections, and optional programs. However, these other policies also have different charges that would affect your performance and cash values. To obtain more information about these other policies, contact our Designated Office or your sales representative. There are three types of underwriting available under the Policy. We decide which type to use based on the total number of eligible possible insureds within the eligible group for whom a Policy could be purchased and the percentage of those insureds for whom a Policy is actually purchased. The three types of underwriting are: GUARANTEED ISSUE--requires the least evidence of insurability and rating classification SIMPLIFIED UNDERWRITING--requires more evidence of insurability and rating classification FULL UNDERWRITING--requires the most evidence of insurability and rating classification An insured who is a standard risk under Simplified Underwriting or Guaranteed Issue may have a higher cost of term insurance rate than would apply to the same insured under Full Underwriting. Generally, we will issue a Policy only for insureds that are age 70 or less (although we may decide to permit an insured that is older) that have provided evidence of insurability that we find acceptable. An "insured" is the person upon whose life we issue the Policy. For the purpose of computing the insured's age under the Policy, we start with the insured's age on the Date of Policy which is set forth in the Policy. Age under the Policy at any other time is then computed using that issue age and adding the number of full Policy years completed. The Date of Policy is usually the date the Policy application is approved and premiums are accepted. We use the Date of Policy to calculate the Policy 35 years (and Policy months and monthly anniversaries). To preserve a younger age for the insured, we may permit a Date of Policy that is earlier than the date the application is approved if there have been no material misrepresentations in the application. You may request that your Date of Policy be the same date the planned periodic premium is received. In these cases, you would incur a charge for insurance protection before insurance coverage starts. Insurance coverage under the Policy will generally begin at the time the application is approved. For coverage to be effective, the insured's health on the date of such approval must be the same as stated in the application and, in most states, we can require that the insured not have sought medical advice or treatment between the date of the application and the date of approval. PAYMENT AND ALLOCATION OF PREMIUMS [SIDEBAR: YOU CAN MAKE VOLUNTARY PLANNED PERIODIC PREMIUM PAYMENTS AND UNSCHEDULED PREMIUM PAYMENTS.] The payment of a given premium won't necessarily guarantee that your Policy will remain in force. Rather, this depends on your Policy's cash surrender value. PAYING PREMIUMS We accept premium payments made by check or cashier's check. We do not accept cash, money orders or traveler's checks. You can make premium payments, subject to certain limitations discussed below, through the: VOLUNTARY PLANNED PERIODIC PREMIUM SCHEDULE: You choose the schedule on your application. The schedule sets forth the amount of premiums, fixed payment intervals and the period of time that you intend to pay premiums. The schedule can be: (a) annual; (b) semi-annual; or (c) through another method to which we agree. After payment of the first planned periodic premium, you do not have to pay premiums in accordance with your voluntary planned period premium schedule. UNSCHEDULED PREMIUM PAYMENT OPTION: You also can make other premium payments at any time. Premium payments sent by regular U.S. mail should be addressed to: MetLife, P.O. Box 7369, Philadelphia, PA 19101-7369. Premium payments sent by express mail or courier service should be addressed to: MetLife, 101 N. Independence Mall East, Lock Box# 7369, Philadelphia, PA 19106. If you send premium payments or transaction requests to an address other than the one we have designated for receipt of such payments or requests, we may return the premium payment to you, or there may be a delay in applying the payment or transaction to your Policy. MAXIMUM AND MINIMUM PREMIUM PAYMENTS .. The first premium may not be less than the planned premium unless agreed to by us. .. After the first Policy year, your voluntary planned periodic payments must be at least $100, whether on an annual or semi-annual basis. .. Unscheduled premium payments must be at least $100 each. We may change this minimum amount on 90 days notice to you. 36 .. 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 Policy from terminating. We will let you make premium payments that would turn your Policy into a modified endowment contract, but we will tell you of this status in your annual statement, and if possible, we will tell you how to reverse the status. ("See Tax Matters--Modified Endowment Contracts.") .. We reserve the right not to sell a Policy to any group or individual associated with such group if the total amount of annual premium that is expected to be paid in connection with all Policies sold to the group or individuals associated with such group is less than $250,000. .. We may require evidence of insurability for premium payments that cause the minimum death benefit to exceed the death benefit then in effect under the death benefit option chosen. ALLOCATING NET PREMIUMS [SIDEBAR: NET PREMIUMS ARE YOUR PREMIUMS MINUS THE CHARGES DEDUCTED FROM YOUR PREMIUMS.] Your allocations of net premiums to the Fixed Account are effective as of the Investment Start Date. See "Investment Start Date" description below in "Other Policy Provisions--When Your Requests Become Effective." Your allocations of net premiums to the investment divisions of the Separate Account are effective as of the end of the free look period. See "Other Policy Provisions--Free Look Period." During the free look period, we allocate the net premium payments you allocated to the investment divisions to the BlackRock Money Market investment division. At the end of the free look period, we will allocate your cash value in that investment division among all the Separate Account investment divisions according to your net premium allocation instructions. For policies issued in California, we allocate net premiums to the investment divisions of the Separate Account as of the Investment Start Date. If you are age 60 or older, and you allocate 100% of your initial net premium to the BlackRock Money Market investment division in order to receive a refund of premiums should you cancel the Policy during the free look period, we will not automatically transfer your cash value or reallocate your future premiums once the free look period has ended. You must contact us to request a transfer or reallocation. You can instruct us to allocate your net premiums among the Fixed Account and the investment divisions. You can change your allocations (effective after the end of the free look period) at any time by giving us written notification at our Designated Office or in any other manner that we permit. If you have cash value of at least $60,000,000 in the Fixed Account for all Policies you own, we will have to give prior approval to any allocation of net premium or transfer of cash value to the Fixed Account. INSURANCE PROCEEDS If the Policy is in force, we will pay your beneficiary the insurance proceeds as of the end of the Valuation Period that includes the insured's date of death. We will pay this amount after we receive documents that we request as due proof of the insured's death. We will pay the proceeds in one sum, including either by check, by placing the amount in an account that earns interest, or by any other method of payment 37 that provides the beneficiary with immediate and full access to the proceeds, or under other settlement options that we may make available. None of these options vary with the investment performance of the Separate Account. More detailed information concerning settlement options is provided under "Income Plans" and on request from our Designated Office. We will pay interest on the proceeds as required by applicable state law. Unless otherwise requested and subject to state law, the Policy's death proceeds will generally be paid to the beneficiary through a settlement option called the Total Control Account. The Total Control Account is an interest-bearing account through which the beneficiary has immediate and full access to the proceeds, with unlimited draft writing privileges. We credit interest to the account at a rate that will not be less than a guaranteed minimum annual effective rate. You may also elect to have any Policy surrender proceeds paid into a Total Control Account established for you. 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 under the death benefit option or minimum death benefit that is in effect on the date of death; plus .. Any additional insurance proceeds provided by rider; minus .. Any unpaid Policy loans and accrued interest thereon, and any due and unpaid charges accruing during a grace period. DEATH BENEFIT OPTIONS [SIDEBAR: THE POLICY GENERALLY OFFERS A CHOICE OF THREE DEATH BENEFIT OPTIONS.] You can choose among three options. You select which option you want in the Policy application. The three options are: .. Option A: The death benefit is a level amount and equals the specified face amount of the Policy. .. Option B: The death benefit varies and equals the specified face amount of the Policy plus the cash value on the date of death. .. Option C: The death benefit varies and equals the specified face amount of the Policy plus the amount by which the Policy premiums paid exceed withdrawals made. There are issues that you should consider in choosing your death benefit option. For example, under Options B and C, the cash value or other amounts are added to the specified face amount. Therefore, the death benefit will generally be greater under these options than under Option A, for Policies with the same specified face amount and premium payments. By the same token, the cost of insurance will generally be greater under Options B and C than under Option A. [SIDEBAR: YOU CAN GENERALLY CHANGE YOUR DEATH BENEFIT OPTION.] You can change your death benefit option after the first Policy year, provided that: .. Your cash surrender value after the change would be enough to pay at least two monthly deductions. .. The specified face amount continues to be no less than the minimum we allow after a decrease. .. The total premiums you have paid do not exceed the then current maximum premium limitations permitted under Internal Revenue Service rules. 38 .. You provide evidence satisfactory to us of the insured's insurability, as we may require. Any change will be effective on the monthly anniversary on or immediately following the Date of Receipt of the request (or following the date we approve it if we require evidence of insurability). A change in death benefit option will cause us to automatically increase or decrease your specified face amount so that the amount of the death benefit is not changed on the effective date of the new death benefit option. Before you change your death benefit option you should consider the following: .. If the term insurance portion of your death benefit changes, as it may with a change from Option A to B or C and vice versa, the term insurance charge will also change. This will affect your cash value and, in some cases, the death benefit levels. .. If your specified face amount changes because of the change in death benefit option, consider also the issues presented by changing your specified face amount that are described under "Specified Face Amount," below. These issues include the possibility that your Policy would become a modified endowment contract; that you would receive a taxable distribution; and that the maximum premium amounts that you can pay would change. MINIMUM DEATH BENEFIT In no event will the Policy death benefit (plus the proceeds under any term rider on the insured's life) be lower than the minimum amount required to maintain the Policy as life insurance under the federal income tax laws as in effect on the date your Policy is issued. We determine this minimum by applying either the: I. Cash Value Accumulation Test or II. Guideline Premium/Cash Value Corridor Test. You choose the Cash Value Accumulation Test or the Guideline Premium/Cash Value Corridor Test before we issue your Policy, and the election cannot later be changed. Under the Cash Value Accumulation Test, your death benefit is never less than the amount of your Policy's cash value at the insured's date of death, multiplied by a factor set forth in your Policy. This factor varies depending upon the insured's age at the date of death, and it declines as the insured grows older. Under the Guideline Premium/Cash Value Corridor Test, there is a very similar minimum death benefit based on your Policy's cash value at the date of death. However, the factors set forth in your Policy are higher for the Guideline Premium/Cash Value Corridor Test (which results in a higher minimum death benefit, assuming the same cash value). Also, there are firm limits on the amount of premiums you can pay for the amount of coverage you have in force under the Guideline Premium/Cash Value Corridor Test, while the tax law imposes no such firm limits under the Cash Value Accumulation Test. Before choosing between these two Tests you should consider the following: .. The Cash Value Accumulation Test may allow you to pay a greater amount in premiums for the same amount of death benefit under federal income tax laws 39 and still qualify as life insurance. This is the case because the Policy will qualify as life insurance even though the Policy owner is paying a higher level of premium than allowed under the Guideline Premium/Cash Value Accumulation Test. However, the death benefit under the Cash Value Accumulation Test (and thus the monthly cost of term insurance) could be higher. You should ask for an illustration comparing results under both tests. We reserve the right to return any premium to the extent it would cause the death benefit to increase above certain limits. .. Increases in death benefits by operation of the Cash Value Accumulation Test will result in a higher monthly cost of term insurance. Such increases can also occur under the Guideline Premium/Cash Value Corridor Test, although this is less likely. .. Any advantage of the Cash Value Accumulation Test may be eliminated if premium payments exceed the 7-pay test limit. The 7-pay test sets a limit on the amount of premiums which may be paid under a policy during the 7-pay testing period (usually the first 7 Policy years after issue or after a material modification of the Policy) without incurring possible adverse tax consequences. If premiums paid exceed such limit during any 7-pay testing period, any partial withdrawals, Policy loan and other distributions may be subject to adverse federal income tax consequences. (See "Federal Tax Matters--Modified Endowment Contracts" below.) SPECIFIED FACE AMOUNT CHOOSING YOUR INITIAL SPECIFIED FACE AMOUNT The specified face amount is the basic amount of insurance specified in your Policy. The Minimum Initial Specified Face amount is the smallest amount of specified face amount for which a Policy may be issued. Currently this amount is $100,000. If the term insurance rider is purchased, the specified face amount and term rider amount are combined to determine the Minimum Initial Specified Face Amount. You should consider whether to take all of your coverage as specified face amount or whether to take some coverage, if available, under our term insurance benefit. The term insurance benefit provides coverage on the insured to age 95. You may purchase this rider, if available, only at the time of Policy issue. By electing to take part of your coverage under the term insurance rider, you can reduce the amount of sales charges and current cost of insurance charges that you otherwise would pay. For details, see "Optional Rider Benefits--Term Benefit." [SIDEMARK: YOU CAN GENERALLY INCREASE OR DECREASE YOUR POLICY'S SPECIFIED FACE AMOUNT.] CHANGING YOUR SPECIFIED FACE AMOUNT Generally, you may change your specified face amount at any time after the first Policy year subject to certain criteria specified below. Any change will be effective on: the monthly anniversary on or next following the (a) Date of Receipt of your request; or (b) if we require evidence of insurability, the date we approve your request. The Specified Face Amount of insurance may not be reduced to less than $100,000 during the first five Policy years or to less than $50,000 after the fifth Policy year. These minimums also apply to decreases that result from partial withdrawals or changes in death benefit options. If there have been previous specified face amount increases, any decreases in specified face amount will be made in the following order: (i) the specified face amount provided by the most recent increase; (ii) the next most recent increases successively; and (iii) the initial specified face amount. You may increase the specified face amount only 40 if the cash surrender value after the change is large enough to cover at least two monthly deductions based on your most recent cost of term insurance charge. Any increase may require that we receive additional evidence of insurability that is satisfactory to us. We may also impose a one-time underwriting charge. Before you change your specified face amount you should consider the following: .. The term insurance portion of your death benefit will change and so will the term insurance charge. This will affect the insurance charges, cash value and, in some cases, 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 Policy years, could then be taxed on an income first basis. .. The amount of additional premiums that the tax laws permit you to pay into your Policy may increase or decrease. The additional amount you can pay without causing your Policy to be a modified endowment contract for tax purposes may also increase or decrease. (See "Tax Matters--Modified Endowment Contracts.") .. In some circumstances, the Policy could become a modified endowment contract. .. For Policies issued on or after May 1, 1996 in connection with other than certain employer sponsored plans that became effective prior to August 1, 2000, the sales charge and the administration charge may change. This is because an increase or decrease in the specified face amount will result in an increase or decrease in the annual target premium on which these charges are based. INCOME PLANS [SIDEBAR: GENERALLY YOU CAN RECEIVE THE POLICY'S INSURANCE PROCEEDS, AMOUNTS PAYABLE AT THE FINAL DATE OR AMOUNTS PAID UPON SURRENDER UNDER AN INCOME PLAN INSTEAD OF IN A LUMP SUM.] The insurance proceeds can be paid under a variety of income plans that are available under the Policy. Generally, 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 .. Single Life Income--Guaranteed Return .. Joint and Survivor Life Income Before you choose an income plan you should consider: .. The tax consequences associated with the Policy proceeds, which can vary considerably, depending on whether a plan is chosen. You or your beneficiary should consult with a qualified tax adviser about tax consequences. .. That your Policy will terminate at the time you commence an income plan and you will receive a new contract, which describes the terms of the income plan. You should carefully review the terms of the new contract, because it contains important information about the terms and conditions of the income plan. .. That the rates of return we credit under these plans are not based on the investment performance of any of the Portfolios. 41 CASH VALUE, TRANSFERS AND WITHDRAWALS CASH VALUE [SIDEBAR: YOUR POLICY IS DESIGNED TO ALLOW YOU TO ACCUMULATE CASH VALUE.] Your Policy's cash value equals: .. The Fixed Account cash value, plus .. The Policy Loan Account cash value, plus .. The Separate Account cash value. Your Policy's cash surrender value equals your cash value minus any outstanding Policy loans (plus any accrued and unpaid loan interest). On your Investment Start Date, the Policy's cash value in an investment division will equal the portion of any net premium allocated to the investment division, reduced by the portion of any monthly deductions allocated to the Policy's cash value in that investment division. 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 [SIDEBAR: YOU CAN TRANSFER YOUR CASH VALUE AMONG THE INVESTMENT DIVISIONS AND THE FIXED ACCOUNT AT ANY TIME BEGINNING AFTER THE END OF THE FREE LOOK PERIOD.] The minimum amount you may transfer is $50 or, if less, the total amount in an investment option. You may make transfers at any time. The maximum amount that you may transfer or withdraw from the Fixed Account in any Policy year is the greater of $50 and 25% of the largest amount in the Fixed Account over the last four Policy years. This limit does not apply to a full surrender, any loans taken, or any transfers under a systematic investment strategy. We may also limit the number of investment options to which you may transfer cash value, and, under certain conditions, we may have to approve transfers to the Fixed Account. (See "Payment and Allocation of Premiums--Allocating Net Premiums.") MARKET TIMING: Frequent requests from Policy owners to transfer cash value may dilute the value of a Portfolio's shares if the frequent trading involves an attempt to take advantage of pricing inefficiencies created by a lag between a change in the value of the securities held by the Portfolio and the reflection of that change in the Portfolio's share price ("arbitrage trading"). Regardless of the existence of pricing inefficiencies, frequent transfers may also increase brokerage and administrative costs of the underlying Portfolios and may disrupt portfolio management strategy, requiring a Portfolio to 42 maintain a high cash position and possibly resulting in lost investment opportunities and forced liquidations ("disruptive trading"). Accordingly, arbitrage trading and disruptive trading activities (referred to collectively as "market timing") may adversely affect the long-term performance of the Portfolios, which may in turn adversely affect Policy owners and other persons who may have an interest in the Policies (E.G., beneficiaries). We have policies and procedures that attempt to detect and deter frequent transfers in situations where we determine there is a potential for arbitrage trading. Currently, we believe that such situations may be presented in the international, small-cap, and high-yield Portfolios (I.E., Artio International Stock Portfolio, Loomis Sayles Small Cap Core Portfolio, Morgan Stanley EAFE(R) Index Portfolio, Neuberger Berman Genesis Portfolio, Oppenheimer Global Equity Portfolio, Russell 2000(R) Index Portfolio, T. Rowe Price Small Cap Growth Portfolio, Lord Abbett Bond Debenture Portfolio, Harris Oakmark International Portfolio, Invesco Small Cap Growth Portfolio, MFS(R) Research International Portfolio, Third Avenue Small Cap Value Portfolio, Invesco V.I. Global Real Estate Fund, Invesco V.I. International Growth Fund, AllianceBernstein Global Thematic Growth Portfolio, AllianceBernstein International Value Portfolio, American Funds High-Income Bond Fund, American Funds International Fund, Dreyfus VIF International Value Portfolio, Fidelity(R) VIP High Income Portfolio, Franklin Templeton Mutual Global Discovery Securities Fund, Templeton Foreign Securities Fund, Templeton Global Bond Securities Fund, Janus Aspen Overseas Portfolio, MFS(R) Global Equity Series, MFS(R) High Income Series, MFS(R) New Discovery Series, Goldman Sachs Structured Small Cap Equity Fund, Clarion Global Real Estate Portfolio, Dreman Small Cap Value Portfolio, Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, Pioneer Emerging Markets VCT Portfolio, Putnam VT International Value Fund, Royce Micro-Cap Portfolio, Royce Small-Cap Portfolio, UIF Emerging Markets Debt Portfolio and UIF Emerging Markets Equity Portfolio) and we monitor transfer activity in those Funds (the "Monitored Portfolios"). In addition, as described below, we intend to treat all American Funds Insurance Series(R) portfolios ("American Funds portfolios") as Monitored Portfolios. We employ various means to monitor transfer activity, such as examining the frequency and size of transfers into and out of the Monitored Portfolios within given periods of time. For example, we currently monitor transfer activity to determine if, for each category of international, small-cap, and high-yield Portfolios, in a 12-month period there were, (1) six or more transfers involving the given category; (2) cumulative gross transfers involving the given category that exceed the current cash value; and (3) two or more "round-trips" involving any Monitored 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 Funds 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. 43 AMERICAN FUNDS MONITORING POLICY. As a condition to making their portfolios available in our products, American Funds requires us to treat all American Funds portfolios as Monitored Portfolios under our current market timing and excessive trading policies and procedures. Further, American Funds requires us to impose additional specified monitoring criteria for all American Funds portfolios available under the Policy, regardless of the potential for arbitrage trading. We are required to monitor transfer activity in American Funds portfolios to determine if there were two or more transfers in followed by transfers out, in each case of a certain dollar amount or greater, in any 30-day period. A first violation of the American Funds monitoring policy will result in a written notice of violation; each additional violation will result in the imposition of a six-month restriction, during which period we will require all transfer requests to or from an American Funds portfolio to be submitted with an original signature. Further, as Monitored Portfolios, all American Funds portfolios also will be subject to our current market timing and excessive trading policies, procedures and restrictions (described below), and transfer restrictions may be imposed upon a violation of either monitoring policy. Our policies and procedures may result in transfer restrictions being applied to deter market timing. Currently, when we detect transfer activity in the Monitored Portfolios that exceeds our current transfer limits, or other transfer activity that we believe may be harmful to other Policy owners or other persons who have an interest in the Policies, we require all future transfer requests to or from any Monitored Portfolios or other identified portfolios under that Policy to be submitted with an original signature. Transfers made under one of the systematic investment strategies described below are not treated as transfers when we evaluate trading patterns for market timing. The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective, such as the decision to monitor only those Portfolios that we believe are susceptible to arbitrage trading, or the determination of the transfer limits. Our ability to detect and/or restrict such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by Policy owners to avoid such detection. Our ability to restrict such transfer activity may also be limited by provisions of the Policy. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Policy owners and other persons with interests in the Policies. We do not accommodate market timing in any Portfolios and there are no arrangements in place to permit any Policy owner to engage in market timing; we apply our policies and procedures without exception, waiver, or special arrangement. The Portfolios may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares, and we reserve the right to enforce these policies and procedures. For example, Portfolios may assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period. The prospectuses for the Portfolios describe any such policies and procedures, which may be more or less restrictive than the policies and procedures we have adopted. Although we may not have the contractual authority or the operational capacity to apply the frequent trading policies and procedures of the Portfolios, we have entered into a written agreement, as required by SEC regulation, with each Portfolio or its principal underwriter that obligates us to provide to the 44 Portfolio promptly upon request certain information about the trading activity of individual Policy owners, and to execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific Policy owners who violate the frequent trading policies established by the Portfolio. In addition, Policy owners and other persons with interests in the Policies should be aware that the purchase and redemption orders received by the Portfolios generally are "omnibus" orders from intermediaries such as retirement plans or separate accounts funding variable insurance 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 Policy 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 Policy owners engaged in disruptive trading activity, the Portfolio may reject the entire omnibus order. In accordance with applicable law, we reserve the right to modify or terminate the transfer privilege at any time. We also reserve the right to defer or restrict the transfer privilege at any time that we are unable to purchase or redeem shares of any of the Portfolios, including any refusal or restriction on purchases or redemptions of their shares as a result of their own policies and procedures on market timing activities (even if an entire omnibus order is rejected due to the market timing activity of a single Policy owner). You should read the Fund prospectuses for more details. SYSTEMATIC INVESTMENT STRATEGIES: You can choose one of four currently available strategies described below. You can also change or cancel your choice at any time. .. EQUITY GENERATOR(R). Allows you to transfer the interest earned on amounts in the Fixed Account in any Policy month equal to at least $20 to the MetLife Stock Index investment division or the BlackRock Aggressive Growth investment division. The transfer will be made at the beginning of the Policy month following the Policy month in which the interest was earned. .. EQUALIZER/ SM/. Allows you to periodically equalize amounts in your Fixed Account and either the MetLife Stock Index investment division or the BlackRock Aggressive Growth 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 Policy anniversary. .. REBALANCER(R). 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 at the beginning of each quarter. .. ALLOCATOR/ SM/. Allows you to systematically transfer money from the BlackRock Money Market investment division to the Fixed Account and/or any investment division(s). When you elect the Allocator, you must have enough cash value in the BlackRock Money Market investment division to enable the election to be in effect for three months. The election can be to transfer each month: 45 .. A specific amount, until the cash value in the BlackRock Money Market investment division is exhausted. .. A specific amount for a specific number of months. .. 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. TRANSFERS BY TELEPHONE: Subject to our market timing procedures, we may, if permitted by state law, decide in the future to allow you to make transfer requests, changes to Systematic Investment Strategies and changes to allocations of future net premium by phone. We may also allow you to authorize your sales representative to make such requests. The following procedures would apply: .. We must have received your authorization in writing satisfactory to us, to act on instructions from any person that claims to be you or your sales representative, as applicable, as long as that person follows our procedures. .. We will institute reasonable procedures to confirm that instructions we receive are genuine. Our procedures will include receiving from the caller your personalized data. Any telephone instructions that we reasonably believe to be genuine are your responsibility, including losses arising from such instructions. Because telephone transactions may be available to anyone who provides certain information about you and your Policy, you should protect that information. We may not be able to verify that you are the person providing telephone instructions, or that you have authorized any such person to act for you. .. All telephone calls will be recorded. .. You will receive a written confirmation of any transaction. .. Neither the Separate Account nor we will be liable for any loss, expense or cost arising out of a telephone request if we reasonably believed the request to be genuine. Telephone, facsimile, and computer systems may not always be available. Any telephone, facsimile, or computer system, whether it is yours, your service provider's, your sales representative's, or ours, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request by writing to our Designated Office. SURRENDER AND WITHDRAWAL PRIVILEGES [SIDEBAR: YOU CAN SURRENDER YOUR POLICY FOR ITS CASH SURRENDER VALUE.] We may ask you to return the Policy before we honor your request to surrender your Policy. You can choose to have the proceeds paid in a single sum, or under an income plan. If the insured dies after you surrender the Policy but before the end of the Policy month in which you surrendered the Policy, we will pay your beneficiary an amount equal to the difference between the Policy's death benefit and its cash value, computed as of the surrender date. You can make partial withdrawals if: .. the withdrawal would not result in the cash surrender value being less than sufficient to pay 2 monthly deductions; 46 .. the withdrawal is at least $250; .. the withdrawal would not result in total premiums paid exceeding any then current maximum premium limitation determined by Internal Revenue Code rules; and .. the withdrawal would not result in your specified face amount falling below the minimum allowable amount after a decrease, as described under "Insurance Proceeds--Specified Amount--Changing Your Specified Face Amount," above. 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 Policy. We will deduct your withdrawal from the Fixed Account and the investment divisions in the same proportion that the Policy's cash value in each such option bears to the total cash value of the Policy in the Fixed Account and the investment divisions. We may withhold payment of surrender, withdrawal or loan proceeds if any portion of those proceeds would be derived from a check 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 check has been or will be collected. We will not delay payment longer than necessary for us to verify that payment has been or will be collected. You 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. Before surrendering your Policy or requesting a partial withdrawal, you should consider the following: .. Amounts received may be taxable as income and, if your Policy is a modified endowment contract, subject to certain tax penalties. (See "Tax Matters--Modified Endowment Contracts.") .. Your Policy could become a modified endowment contract. .. For partial withdrawals, your death benefit will decrease, generally by the amount of the withdrawal. .. For partial withdrawals, your specified face amount may also decrease. For Option A Policies, your specified face amount will decrease by the amount of the withdrawal. For Option B Policies, a withdrawal will not decrease the specified face amount. For Option C Policies, your specified face amount will decrease by the amount, if any, by which cumulative withdrawals exceed cumulative premiums paid. In some cases you may be better off taking a Policy loan, rather than a partial withdrawal. BENEFIT AT FINAL DATE The Final Date is the Policy anniversary on which the insured is Age 95. Subject to certain conditions, we will allow you to extend that date where permitted by state law. If the insured is living on the Final Date, we will pay you the cash surrender value of the Policy. You can receive the cash surrender value in a single sum, in an account that earns interest, or under an available income plan. LOAN PRIVILEGES [SIDEBAR: YOU CAN BORROW FROM US AND USE YOUR POLICY AS SECURITY FOR THE LOAN.] The amount of each loan must be: .. At least $250. .. No more than the greater of the cash surrender value less two monthly deductions and 75% of the cash surrender value (unless state law requires a different percentage to be applied, as set forth in your Policy) when added to all other outstanding Policy loans. 47 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 as the Policy's cash value in each such option bears to the total cash value of the Policy in the Fixed Account and the investment divisions. .. Transfer such cash value to the Policy 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 Policy loans, determined by us. This percentage charge will not exceed 2%, and the minimum rate we will credit to the Policy Loan Account will be 4% per year. At least once a year, we will transfer any interest earned in your Policy 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. We will tell you the initial interest rate that applies to your loan and mail you advance notices of any increases applicable to existing loans. The interest rate charged for a Policy year will never be more than the maximum allowed by law and will generally be the greater of: .. The published monthly average for the calendar month ending two months before the start of such year; and .. The guaranteed rate used to credit interest to the cash value allocated to the Fixed Account for the Policy, plus no more than 1%. The published monthly average means (a) Moody's Corporate Bond Yield Average Monthly Average Corporates, as published by Moody's Investors Service, Inc. or any successor service; or (b) If the Moody's average is not published, a substantially similar average established by regulation issued by the insurance supervisory official of the state in which your Policy is delivered. Your interest payments are due at the end of each Policy year and if you don't pay the amount within 31 days after it is due, we will treat it as a new Policy loan, which will be taken from the Fixed Account and the investment divisions by the same method as other loans. Repaying your loans (plus accrued interest) is done by sending in payments at least equal to $25. 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, except that amounts borrowed from the Fixed Account will be repaid to the Fixed Account first. Before taking a Policy loan you should consider the following: .. Interest payments on loans are generally not deductible for tax purposes. .. Under certain situations, Policy loans could be considered taxable distributions. .. Amounts held in your Policy 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 your Policy or if we terminate your Policy, or at the Final Date, any outstanding loan amounts (plus accrued interest) will be taxed as a distribution. (See "Federal Tax Matters--Loans" below.) .. A Policy loan increases the chances of our terminating your Policy due to insufficient cash value. We will terminate your Policy 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 61 days of the monthly anniversary. 48 .. Your Policy's death proceeds will be reduced by any unpaid loan (plus any accrued and unpaid loan interest). 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) (other than the charge for the interim term insurance rider) as part of the monthly deduction. Generally, we currently make the following benefits available by rider: . Accelerated Death . Term Insurance Benefit/1/ Benefit/2/ ----------------------------------------------------- . Interim Term Insurance . Enhanced Cash Benefit Surrender Value Rider/3/ ----------------------------------------------------- -------- /1/ Payment under this rider may affect eligibility for benefits under state or federal law. This rider is currently not available in New Jersey. /2/ This rider is discussed in more detail under "Term Benefit" below. /3/ This rider may be attached at issue if you request it, but not thereafter. 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. These riders may not be available in all states. You should also consider: .. That the addition of certain riders can restrict your ability to exercise certain rights under the Policy. .. That the amount of benefits provided under the rider is not based on investment performance of a separate account; but, if the Policy terminates because of poor investment performance or any other reason, the riders generally will also terminate. .. That there are tax consequences. You should also consult with your tax advisor before purchasing one of the riders. TERM BENEFIT You have the flexibility to include, at Policy issue, a rider that provides a term benefit ("Term Rider"). The availability of the Term Rider is also subject to governmental approval in your state. The Term Rider is a rider to the Policy that, like the base Policy, provides coverage on the insured to age 95. You may purchase this rider, if available, only at Policy issue. Nevertheless, if you purchase the Term Rider, the amount of coverage under the rider will automatically increase and decrease with any changes to your specified face amount under the Policy, so that the ratio between the Policy's specified face amount and the amount of Term Rider coverage will always remain the same as you originally selected. In almost all respects, coverage taken under the Term Rider has exactly the same effect as coverage taken as specified face amount under the Policy. An important difference, however, is that the sales charge depends on the amount of the coverage provided under the base policy. The amount of Term Rider will impact the sales charge. Thus, in comparing two Policies with identical total insurance amounts, the one with the greater portion provided by the 49 Term Rider will have a lower sales charge. Conversely, the Policy with the higher amount provided under the base policy will have a higher sales charge. Additionally, the cost of term insurance rates currently applicable to coverage provided under the Term Rider are lower than those currently charged for coverage under the base policy. Therefore, the larger the portion of coverage provided under the Term Rider, the lower the overall cost of insurance. Again comparing two Policies with identical total insurance amounts, the cost of insurance will be lower under the Policy with the higher portion of coverage provided under the Term Rider. To summarize, the lower sales charge and lower anticipated current cost of term insurance rates resulting from a greater portion of total coverage provided by the Term Rider will result in better overall performance under the Policy. You may elect to have up to 95% of your total coverage provided by the Term Rider. We are able to make these favorable terms available under the Term Rider largely because our costs of selling it (principally the commissions we pay) are lower than under the base policy. See "Sales of Policies". CHARGES AND DEDUCTIONS IMPORTANT INFORMATION APPLICABLE TO ALL POLICY CHARGES AND DEDUCTIONS [SIDEBAR: CAREFULLY REVIEW THE FEE TABLES IN THIS PROSPECTUS WHICH SET FORTH THE CHARGES THAT YOU PAY UNDER YOUR POLICY.] The charges discussed in the paragraphs that follow are all included in the Fee Tables on pages 9 to 21 of this Prospectus. You should refer to these Fee Tables for information about the rates and amounts of such charges, as well as other information that is not covered below. The Policy 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 . the death benefit, cash, and loan benefits under provide: the Policy . investment options, including premium allocations . administration of elective options . the distribution of reports to Policy owners Costs and expenses we incur:. costs associated with processing and underwriting applications, and with issuing and administering the Policy (including any riders) . overhead and other expenses for providing services and benefits . sales and marketing expenses . other costs of doing business, such as collecting premiums, maintaining records, processing claims, effecting transactions, and paying federal, state, and local premium and other taxes and fees 50 Risks we assume: . that the cost of term 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 Policies exceed the charges we deduct We may profit from the charges, including the cost of term insurance charge and the mortality and expense risk charge. Any distinctions we make about the specific purposes of the different charges are imprecise, and we are free to keep and use our revenues or profits for any other purpose, including paying any of our costs and expenses in connection with the Policies. Our revenues from any particular charge may be more or less than any costs or expenses that charge may be intended primarily to cover. The following sets forth additional information about Policy charges. CHARGES DEDUCTED FROM PREMIUMS ANNUAL TARGET PREMIUM: We use the concept of annual target premium to determine certain limits on sales and administrative charges (discussed immediately below). We define the annual target premium to be: For Policies issued prior to May 1, 1996 or issued in connection with certain employer sponsored plans that became effective prior to August 1, 2000, 50% of the estimated annual amount which satisfied the 7-Pay test under federal tax law based on the issue age of the insured and the initial specified face amount. (See "Federal Tax Matters--Modified Endowment Contracts".) For all other Policies, 100% of the estimated annual amount that satisfied the 7-Pay test based on the issue age of the insured, the specified face amount of insurance of the base Policy only (excluding the Term Rider) and standard underwriting class. For such Policies, the annual target premium amount is increased and decreased proportionately for increases and decreases in the specified face amount of the Policy. This could, in turn, increase or decrease sales and administrative charges. SALES CHARGE: We deduct this charge primarily to help pay the cost of compensating sales representatives and other direct and indirect expenses of distributing the Policies. The charge is assessed directly against each premium. For premiums received in Policy years 1 through 10, the current rate is up to 6.5% of the premium paid until the total payments in each such year equal the annual target premium, and for Policy years 11 and later the rate we charge is up to 3% of each premium until the total payments in the year equal the annual target premium. No sales charge is or will be assessed against any premiums paid in any Policy year in excess of a total equal to the annual target premium. The maximum rate we can charge for premiums received up to a total equal to the annual target premium during Policy years 1 through 10 is 9%, and the maximum for Policy years 11 and later is the same as currently charged in those years. ADMINISTRATIVE CHARGE: We incur expenses in the administration of the Policy, including our underwriting and start-up expenses. We deduct up to 1.05% (currently, this deduction is .55% in Policy years 1-10) of each premium payment primarily to cover this expense up to a total of payments in any 51 Policy year equal to the annual target premium, and .05% on any excess payments in any Policy year exceeding that total amount. Our charge will never exceed this rate. CHARGE FOR AVERAGE EXPECTED STATE AND LOCAL TAXES ATTRIBUTABLE TO PREMIUMS: We make this charge to reimburse us for the state premium taxes that we must pay on premiums we receive. Premium taxes vary from state to state and currently range from 0 to 3.5%. Our charge of 2.25% approximates the average tax rate we expect to pay on premiums we receive from all states. 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 1.2% 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. CHARGE FOR INTERIM TERM INSURANCE BENEFIT: This charge is deducted only from your initial premium payment, and only if you elect the interim term insurance benefit. The interim term insurance benefit provides temporary initial life insurance coverage on the insured prior to the time that coverage under the Policy takes effect. This coverage is provided by adding a "rider" and is subject to several conditions and limitations. The charge for this benefit is described in the rider form. This charge is primarily to compensate us for the risk that the insured will die while coverage under this rider is in force. LOAN INTEREST SPREAD: We charge interest on Policy 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 charge is guaranteed to never exceed 2%. CHARGES INCLUDED IN THE MONTHLY DEDUCTION We allocate the monthly deduction (except for the monthly mortality and expense risk charge) among the Fixed Account and each investment division of the Separate Account in the same proportion as the Policy's cash value in each such option bears to the total cash value of the Policy in the Fixed Account and the investment divisions. We deduct the monthly deductions as of each monthly anniversary, commencing with the Date of Policy. .. COST OF TERM INSURANCE. This charge varies monthly based on many factors. Each month, we determine the charge by multiplying your cost of insurance rates by the term insurance amount. This is the amount that we are at risk if the insured dies. The term insurance amount is the death benefit at the beginning of the Policy month divided by a discount factor to account for an assumed return during the month; minus the cash value at the beginning of the Policy month after deduction of all other applicable charges. Factors that affect the term insurance amount include the specified face amount, the cash value and the death benefit option you choose (generally, the term insurance amount will be higher for Options B and C). The term insurance rate is based on our expectations as to future experience, taking into account the insured's sex (if permitted by law and applicable under your Policy), age, underwriting class and rate class. The rates will never exceed the guaranteed rates. The guaranteed rates are 52 based on certain 2001 Commissioners Standard Ordinary Mortality Tables. For Policies issued prior to January 1, 2009, the guaranteed rates are based on the corresponding 1980 Commissioners Standard Ordinary Mortality Tables. Our current rates are lower than the maximums in most cases. We review our rates periodically and may adjust them, but we will apply the same rates to everyone who has had their Policy for the same amount of time and who is the same age, sex and rate class. As a general rule, the cost of insurance rate increases each year you own your Policy, as the insured's age increases. Rate class relates to the level of mortality risk we assume with respect to an insured. It can be the standard rate class, or one that is higher (and may be divided by smoking status). The insured's rate class will affect your cost of term insurance. You can also have more than one rate class in effect, if the insured's rate class has changed and you change your specified face amount. A better rate class will lower the cost of term insurance on your entire Policy and a worse rate class will affect the portion of your cost of term insurance charge attributable to the specified face amount increase. .. MORTALITY AND EXPENSE RISK CHARGE. We make this monthly charge primarily to compensate us for mortality risks that insureds may live for a shorter period than we expect; and expense risks that our issuing and administrative expenses may be higher than we expect. This monthly charge is allocated proportionately to the cash value in each investment division of the Separate Account. The maximum rate we may charge is equivalent to an effective annual rate of .90% of the cash value in the Separate Account. CHARGES FOR CERTAIN OPTIONAL RIDER BENEFITS The charge for an optional benefit that you add by rider to your Policy will generally be deducted as part of the monthly deduction. This includes the charge for the following rider: .. Term Benefit The purpose of the charge for each rider is primarily to compensate us for our direct and indirect costs and risks in providing that rider. The charge we deduct for any such additional benefits you can add by rider is described in the rider form. VARIATIONS IN CHARGES We may vary a charge by group, 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. Our variations in the charges will be made in accordance with our established and uniformly applied administrative procedures. We consider a variety of factors in determining charges, including but not limited to: .. The nature of the group and its organizational framework .. The method by which sales will be made to the individuals associated with the group .. The facility by which premiums will be paid .. The group's capabilities with respect to administrative tasks .. Our anticipated persistency of the Policies 53 .. The size of the group and the number or years it has been in existence .. The aggregate amount of premiums we expect to be paid on the Policies owned by the group or by individuals associated with the group Any variations in charges will be reasonable and will not be unfairly discriminatory to the interests of any Policy owner. 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 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. CASH VALUE TRANSFERS. We do not currently charge for any transfer amounts. Except for transfers under Systematic Investment Strategies, we reserve the right to assess up to a $25 charge in the future against all transfers. Currently, transfers are not taxable transactions. POLICY TERMINATION AND REINSTATEMENT TERMINATION: We will terminate your Policy without any cash surrender value if: .. The cash surrender value is less than the monthly deduction; and .. We do not receive a sufficient premium payment within the 61-day grace period to cover the monthly deduction. We will mail you notice if any grace period starts. REINSTATEMENT: Upon your request, we will reinstate your Policy (without reinstating any amounts in a Policy loan account), subject to certain terms and conditions that the Policy provides. We must receive your request within 3 years (or any longer period required by state law) after the end of the grace period and before the Final Date. You also must provide us: .. A written application for reinstatement (the date we approve the application will be the effective date of the reinstatement). .. Evidence of insurability that we find satisfactory. .. An additional premium amount that the Policy prescribes for this purpose. 54 FEDERAL TAX MATTERS [SIDEBAR: YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR TO FIND OUT HOW TAXES CAN AFFECT YOUR BENEFITS AND RIGHTS UNDER YOUR POLICY.] The following is a brief summary of some tax rules that may apply to your Policy. 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 Policy 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 your Policy. Such consultation is especially important before you make unscheduled premium payments, change your specified face amount, change your death benefit option, change coverage provided by riders, take a loan or withdrawal, or assign or surrender the Policy. Under current federal income tax law, the taxable portion of distributions from variable life policies 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 herein is not intended to (and cannot) be used by anyone to avoid IRS penalties. It is intended to support the sale of the Policy. The Policy owner should seek tax advice based on the Policy owner's particular circumstances from an independent tax adviser. 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. .. In the case of employer-owned life insurance as defined in Section 101(j), the amount of the death benefit excludable from gross income is limited to premiums paid unless the Policy falls within certain specified exceptions and a notice and consent requirement is satisfied before the Policy is issued. Certain specified exceptions are based on the status of an employee as highly compensated or recently employed. There are also exceptions for Policy proceeds paid to an employee's heirs. These exceptions only apply if proper notice is given to the insured employee and consent is received from the insured employee before the issuance of the Policy. These rules apply to Policies issued August 18, 2006 and later and also apply to policies issued before August 18, 2006 after a material increase in the death benefit or other material change. An IRS reporting requirement applies to employer-owned life insurance subject to these rules. Because these rules are complex and will affect the tax treatment of death benefits, it is advisable to consult tax counsel. The death benefit will also be taxable in the case of a transfer-for-value unless certain exceptions apply. .. The death proceeds may be subject to federal estate tax: (i) if paid to the insured's estate or (ii) if paid to a different beneficiary if the insured possessed incidents of ownership at or within three years before death. .. If you die before the insured, the value of your Policy (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. Please consult your tax adviser for the applicable estate tax rates for 2010. .. The insurance proceeds payable upon death of the insured will never be less than the minimum amount required for the Policy issued on a standard risk basis to be treated as life insurance under Section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. The rules with respect to Policies issued on a substandard risk basis are not entirely clear. 55 CASH VALUE (IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT CONTRACT) .. You are generally not taxed on your cash value until you withdraw it or surrender your Policy or receive a distribution (such as 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 Policy years, when a distribution may be subject to tax on an income-out-first basis if there is a gain in your Policy (which is generally when your cash value exceeds the cumulative premiums you paid). Finally, if your Policy is part of an equity split dollar arrangement taxed under the economic benefit regime, you should consult a tax adviser to see whether any portion of the cash value will be taxed prior to any Policy distribution. LOANS .. Loan amounts you receive will generally not be subject to income tax, unless your Policy is or becomes a modified endowment contract, is exchanged or terminates. .. Interest on loans is generally not deductible. For businesses that own a Policy, at least part of the interest deduction unrelated to the Policy may be disallowed unless the insured is a 20% owner, officer, director or employee of the business. .. If your Policy terminates (upon surrender, cancellation, lapse, the Final Date or, in most cases, exchanges) while any Policy loan is outstanding, the amount of the loan plus accrued interest thereon will be deemed to be a "distribution" to you. Any such distribution will have the same tax consequences as any other Policy distribution. Thus, there will generally be federal income tax payable on the amount by which withdrawals and loans exceed the premiums paid to date. In the case of an exchange, any outstanding Policy loan will generally be taxed to the extent of any Policy gain. Please be advised that amounts borrowed and withdrawn reduce the Policy's cash value and any remaining Policy cash value 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 Policy is issued, or after a material change in the Policy, exceed tax law limits referred to as the "7-pay test." Material changes in the Policy include changes in the level of benefits and certain other changes to your Policy after the issue date. Reductions in benefits during a 7-pay period also may cause your Policy 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 Policies as to premiums and benefits, the individual circumstances of each Policy will determine whether it is classified as a MEC. If your Policy is considered a modified endowment contract the following applies: .. The death benefit will still generally be income tax free to your beneficiary, to the extent discussed above. .. Amounts withdrawn or distributed before the insured'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 your Policy). 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. 56 .. An additional 10% income tax generally applies to the taxable portion of the amounts received before age 591/2 except generally if you are disabled or if the distribution is part of a series of substantially equal periodic payments made over life expectancy. The foregoing exceptions to the 10% MEC additional tax generally does not apply to a corporate owned Policy. .. If a Policy becomes a modified endowment contract, distributions that occur during the Policy year will be taxed as distributions from a modified endowment contract. In addition, distributions from a Policy within two years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a Policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. DIVERSIFICATION In order for your Policy to qualify as life insurance, we must comply with certain diversification standards with respect to the investments underlying the Policy. 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 Policy owners of gains under their Policies. If Portfolio shares are sold directly to tax-qualified retirement plans that later lose their tax-qualified status, or to non-qualified plans, there could be adverse consequences under the diversification rules. INVESTOR CONTROL In some circumstances, owners of variable policies who retain excessive control over the investment of the underlying Separate Account assets 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 Policies, we believe that the Owner of a Policy should not be treated as an owner of the assets in our Separate Account. We reserve the right to modify the Policies to bring them into conformity with applicable standards should such modification be necessary to prevent Owners of the Policies from being treated as the owners of the underlying Separate Account assets. ESTATE, GIFT AND GENERATION-SKIPPING TRANSFER TAXES The transfer of the Policy or the designation of a beneficiary may have Federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes. When the insured dies, the death proceeds will generally be includable in the Policy owner's estate for purposes of the Federal estate tax if the Policy owner was the insured. If the Policy owner was not the insured, the fair market value of the Policy would be included in the Policy owner's estate upon the Policy owner's death. The Policy would not be includable in the insured's estate if the insured neither retained incidents of ownership at death nor had given up ownership within three years before death. Moreover, under certain circumstances, the Internal Revenue Code may impose a "generation-skipping transfer tax" when all or part of a life insurance policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Policy owner. Regulations issued under the Internal Revenue Code may require us to deduct the tax from your Policy, or from any applicable payment, and pay it directly to the IRS. Qualified tax advisers should be consulted concerning the estate and gift tax consequences of Policy ownership and distributions under Federal, state and 57 local law. The individual situation of each Policy owner or beneficiary will determine the extent, if any, to which Federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of Policy proceeds will be treated for purposes of Federal, state and local estate, inheritance, generation-skipping and other taxes. Under previous law, the estate tax applicable exclusion gradually rose to $3.5 million per person in 2009 and was repealed in 2010 with a modified carryover basis for heirs. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "2010 Act") has reinstated the estate and generation-skipping transfer taxes through the end of 2012 with lower top rates and larger exemptions. The 2010 Act raises the applicable exclusion amount to $5,000,000. The top tax rate is set at 35%. A special irrevocable election was provided for estates of decedents who died in 2010. These estates may generally choose between the reinstated estate tax and the carryover basis rules which were in effect in 2010. It is not known if Congress will make the temporary changes of the 2010 Act permanent, enact permanent repeal of the estate and the generation-skipping transfer taxes or otherwise modify the estate tax or generation-skipping transfer tax rules for years after 2012. The complexity of the tax law, along with uncertainty as to how it might be modified in coming years, underscores the importance of seeking guidance from a qualified adviser to help ensure that your estate plan adequately addresses your needs and those of your beneficiaries under all possible scenarios. WITHHOLDING To the extent that Policy distributions are taxable, they are generally subject to withholding for the recipient's Federal income tax liability. Recipients can generally elect however, not to have tax withheld from distributions. LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS Policy Owners that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from life insurance policies at a 30% rate, unless a lower treaty rate applies. In addition, Policy Owners may be subject to state and/or municipal taxes and taxes that may be imposed by the Policy Owner's country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding taxation with respect to a Policy purchase. BUSINESS USES OF POLICY Businesses can use the Policies in various arrangements, including nonqualified deferred compensation or salary continuation plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. If you are purchasing the Policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser. 58 There may be an indirect tax upon the income in the Policy or the proceeds of a Policy under the Federal corporate alternative minimum tax, if you are subject to that tax. The IRS has issued guidance on split dollar insurance plans. A tax adviser should be consulted with respect to this guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. The Sarbanes-Oxley Act of 2002 (the "Act"), which was signed into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on exchanges in the United States, from extending, directly or indirectly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted as applying to split-dollar life insurance policies for directors and executive officers of such companies, since at least some such arrangements can arguably be viewed as involving a loan from the employer for at least some purposes. Any affected business contemplating the payment of a premium on an existing policy, or the purchase of a new policy in connection with a split dollar life insurance arrangement should consult legal counsel. Split dollar insurance plans that provide deferred compensation may be subject to rules governing deferred compensation arrangements. Failure to adhere to these rules will result in adverse tax consequences. A tax adviser should be consulted with respect to such plans. In the case of a business-owned Policy, the provisions of Section 101(j) of the Code may limit the amount of the death benefit excludable from gross income unless a specified exception applies and a notice and consent requirement is satisfied, as discussed above. CHANGES TO TAX RULES AND INTERPRETATIONS Changes in applicable tax rules and interpretations can adversely affect the tax treatment of your Policy. These changes may take effect retroactively. We reserve the right to amend the Policy 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 Policy benefits and rights. 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. 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 59 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. We may be entitled to certain tax benefits related to the assets of the Separate Account. These tax benefits which may include foreign tax credits and corporate dividends received deductions, are not passed back to the Separate Account or to Policy owners since we are the owner of the assets from which the tax benefits are derived. RIGHTS WE RESERVE We reserve the right to make certain changes if we believe the changes are in the best interest of our Policy owners or would help carry out the purposes of the Policy. We will make these changes in the manner permitted by applicable law and only after getting 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 Policy's guaranteed maximum charges. .. Making any necessary technical changes to the Policy 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 POLICY PROVISIONS [SIDEBAR: CAREFULLY REVIEW YOUR POLICY, WHICH CONTAINS A FULL DISCUSSION OF ALL ITS PROVISIONS.] FREE LOOK PERIOD You can return the Policy during this period. The period ends on the later of: .. 10 days after you receive the Policy (unless state law requires a longer period); and .. the date we receive a receipt signed by you. If you return your Policy, 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. 60 FOR POLICIES ISSUED IN CALIFORNIA: If you are age 60 or older, you may cancel the Policy within 30 days after you receive it. If you elected on the Policy application to allocate 100% of your initial net premium to the BlackRock Money Market investment division, we will refund the premiums you paid; if you elected to allocate your initial net premium to the other investment divisions and/or the Fixed Account, we will refund the Policy's cash value. SUICIDE If the insured commits suicide within the first two Policy years (or any other period required by state law), your 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 insured commits suicide within two years of such increase. ASSIGNMENT AND CHANGE IN OWNERSHIP You can assign your Policy as collateral if you notify us in writing. The assignment or release of the assignment is effective when it is recorded at the Designated 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 adviser 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. .. Change in death benefit option. .. Transfers among investment divisions (including those through Systematic Investment Strategies, which are confirmed quarterly). .. Partial withdrawals. .. Loan amounts you request. .. Loan repayments and premium payments. If your premium payments are made through a systematic payment method, we will not send you any confirmation in addition to the one you receive from your employer. We will also send you an annual statement within 30 days after a Policy year. That 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 Policy loans. .. Automatic loans to pay interest. .. 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 61 time is at the end of the Valuation Period during which we receive them at our Designated 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. Valuation Date is each day on which the New York Stock Exchange is open for trading. 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). The end of the free look period is the effective time of the premium allocation instructions you make in your Policy application (and any changes in allocation or transfer requests you make on or before the end of the free look period). Your Investment Start Date is the date the first net premium is applied to the Fixed Account and/or the Separate Account and is the later of (1) the Date of Policy and (2) the Date of Receipt of your first premium payment. The effective date of your Systematic Investment Strategies will be that set forth in the strategy chosen. 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 Policy owners, and who simultaneously makes the same request or series of requests on behalf of other Policy owners. 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 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 Policy months (or within 24 Policy 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 Policy 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. 62 SALES OF POLICIES 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"). FINRA provides background information about broker-dealers and their registered representatives through FINRA BrokerCheck. You may contact the FINRA BrokerCheck Hotline at 1-800-289-9999, or log on to www.finra.org. An investor brochure that includes information describing FINRA BrokerCheck is available through the Hotline or on-line. The Policies 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 Policies may also be sold through licensed life insurance sales representatives associated with unaffiliated broker-dealers with which MLIDC enters into a selling agreement. We reimburse MLIDC for expenses MLIDC incurs in distributing the Policies, e.g., commissions payable to broker-dealers who sell the Policies, including our affiliated broker-dealers. The payments described below do not result in a charge against the Policy in addition to the charges already described elsewhere in this prospectus. We may require all or part of the compensation to be returned to us if you do not continue the Policy for at least five years. MetLife sales representatives are sales representatives registered through MSI. MetLife sales representatives may be career sales representatives who are employees of MetLife or brokers who are not employees of MetLife. A MetLife sales representative, or a sales representative of our affiliate New England Securities Corporation ("NES"), receives cash payments for the products the representative sells and services based on a "gross dealer concession" model. The gross dealer concession for the Policies varies based on the Policy year and on whether the amount of premiums paid in a Policy year is greater or less than the Policy's Target Premium. The Target Premium is shown in your Policy. In the first Policy year, the gross dealer concession is 28% of premiums paid up to the amount of the Target Premium, and 2.5% of premiums paid in excess of the Target Premium; in Policy years 2 through 4, the gross dealer concession is 8.25% of premiums paid up to the amount of the Target Premium and 2.5% of any excess; in Policy year 5 and later, the gross dealer concession is 2.5% of all premiums paid; and in Policy year 8 and thereafter a gross dealer concession of 0.1% is paid on the Policy's cash value. A sales representative may be entitled to all or a portion of the gross dealer concession for selling and servicing the Policy based on a formula that takes into consideration the amount of proprietary products that the sales representative sells and services. Proprietary products are products issued by us and our affiliates. Because sales of proprietary products are a factor in determining the percentage of gross dealer concession to which a sales representative is entitled, sales representatives have an incentive to favor the sale of the Policies over other similar products issued by non-affiliates. 63 For Policies sold by representatives of other affiliated and unaffiliated broker dealers, MLIDC pays commissions to the broker-dealer with which the representative is registered. The commissions paid to the broker-dealer are generally not expected to exceed, on a present value basis, the aggregate amount of compensation that is paid with respect to sales made through our sales representatives. (Total compensation includes payments that we make to our business unit or the business unit of our affiliate that is responsible for the operation of the distribution systems though which the Policy is sold.) Broker-dealers pay their sales representatives all or a portion of the commissions received for their sales of the Policies. The portion of the commissions that the broker-dealer passes through to its sales representatives is determined in accordance with the broker-dealer's internal compensation program. MetLife sales representatives and their managers (and the sales representatives and managers of our affiliates) may also be eligible for cash compensation such as bonuses, equity awards (for example, stock options), training allowances, supplemental salary, financing arrangements, marketing support, medical and other insurance benefits, retirement benefits, non-qualified deferred compensation plans and other benefits. The amount of this additional cash compensation is based primarily on the amount of proprietary products sold. Sales representatives must meet a minimum level of sales of proprietary products in order to maintain their employment status with us and in order to be eligible for most of the cash compensation listed above. Managers may be eligible for additional cash compensation based on the performance (with emphasis on the sale of proprietary products) of the sales representatives that the manager supervises. Receipt of this additional cash compensation may provide sales representatives and their managers with an incentive to favor the sale of proprietary products over similar products issued by non-affiliates. MetLife sales representatives and their managers (and the sales representatives and managers of our affiliates) are also eligible for various non-cash compensation programs that we offer such as conferences, trips, prizes, and awards. Other payments may be made for other services that do not directly involve the sale of products. These services may include the recruitment and training of personnel, production of promotional literature, and similar services. MLIDC also enters into selling agreements with other unaffiliated broker-dealers for the sale of the Policies and other variable insurance products, i.e., annuity contracts and life insurance policies, that we and our affiliates issue. MLIDC may pay additional compensation to certain of these broker-dealers, including marketing allowances, introduction fees, persistency payments, preferred status fees and industry conference fees. Marketing allowances are periodic payments to certain broker-dealers based on cumulative periodic (usually quarterly) sales of these variable insurance products. Introduction fees are payments to broker-dealers in connection with the addition of these variable products to the broker-dealer's line of investment products, including expenses relating to establishing the data communications systems necessary for the broker-dealer to offer, sell and administer these products. Persistency payments are periodic payments based on account and/or cash values of these variable insurance products. Preferred status fees are paid to obtain preferred treatment of these products in broker-dealers' marketing programs, which may include marketing services, participation in marketing meetings, listings in data resources and increased access to their sales representatives. Industry conference fees are amounts paid to cover in part the costs associated with sales conferences and educational seminars for broker-dealers' sales representatives. 64 The additional types of compensation discussed above are not offered to all broker-dealers. The terms of any particular agreement governing compensation may vary among broker-dealers and the amounts may be significant. We and MLIDC may enter into similar arrangements with our affiliates MSI, New England Securities Corporation, Walnut Street Securities, Inc. and Tower Square Securities, Inc. The prospect of receiving, or the receipt of, additional compensation as described above may provide broker-dealers or their representatives with an incentive to favor sales of the Policies over other variable insurance policies (or other investments) with respect to which the broker-dealer does not receive additional compensation, or lower levels of additional compensation. You may wish to take such payment arrangements into account when considering and evaluating any recommendation relating to the Policies. For more information about any such arrangements, ask your sales representative for further information about what your sales representative and the broker-dealer for which he or she works may receive in connection with your purchase of a Policy. We retain consultants who provide technical training and sales support to MetLife and our other affiliated sales representatives with respect to certain business planning strategies that may involve the sale of life insurance. We pay these consultants fees that are not conditioned on the sale of any insurance products. These consultants may also provide services directly to our clients for a fee. We pay American Funds Distributors, Inc., the principal underwriter for the American Funds Insurance Series, a percentage of all premiums allocated to the American Funds Growth Fund, the American Funds International Fund, the American Funds High-Income Bond Fund and the American Funds U.S. Government/AAA Rated Securities Fund for the services it provides in marketing the Portfolios' shares in connection with the Policies. LEGAL PROCEEDINGS In the ordinary course of business, MetLife, similar to other life insurance companies, is involved in lawsuits (including class action lawsuits), arbitrations and other legal proceedings. Also, from time to time, state and federal regulators or other officials conduct formal and informal examinations or undertake other actions dealing with various aspects of the financial services and insurance industries. In some legal proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. It is not possible to predict with certainty the ultimate outcome of any pending legal proceeding or regulatory action. However, MetLife does not believe any such action or proceeding will have a material adverse effect upon the Separate Account or upon the ability of MetLife Investors Distribution Company to perform its contract with the Separate Account or of MetLife to meet its obligations under the Policies. RESTRICTIONS ON FINANCIAL TRANSACTIONS Applicable laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to reject a premium payment and/ or block or "freeze" your Policy. If these laws apply in a particular situation, 65 we would not be allowed to process any request for withdrawals, surrenders, or death benefits, make transfers, or continue making payments under your death benefit option until instructions are received from the appropriate regulator. We also may be required to provide additional information about you or your Policy to government regulators. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The financial statements and financial highlights comprising each of the Investment Divisions of Metropolitan Life Separate Account UL included in this Prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements and financial highlights have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is Two World Financial Center, New York, New York 10281-1414. FINANCIAL STATEMENTS The financial statements comprising each of the Investment Divisions of the Separate Account are attached to this Prospectus. You can find the financial statements of MetLife in the Statement of Additional Information. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy. 66 APPENDIX A ADDITIONAL INFORMATION REGARDING THE FUNDS Certain Portfolios and Funds were subject to a merger, substitution or other change. The chart below identifies the former name and new name of these Portfolios, and where applicable, the former name and new name of the Fund of which the Portfolio is a part. PORTFOLIO NAME CHANGE
FORMER NAME NEW NAME ------------------------------------- ------------------------------------- MET INVESTORS SERIES TRUST MET INVESTORS SERIES TRUST Lord Abbett Growth and Income T. Rowe Price Large Cap Value Portfolio Portfolio ------------------------------------- ------------------------------------- OPPENHEIMER VARIABLE ACCOUNT FUNDS OPPENHEIMER VARIABLE ACCOUNT FUNDS Oppenheimer Main Street Small Cap Oppenheimer Main Street Small- & Fund(R)/VA Mid- Cap Fund(R)/VA
PORTFOLIO MERGERS
FORMER PORTFOLIO NEW PORTFOLIO ------------------------------------- ------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM VARIABLE INSURANCE FUNDS (INVESCO VARIABLE INSURANCE FUNDS) (INVESCO VARIABLE INSURANCE FUNDS) Invesco Van Kampen V.I. Government Invesco V.I. Government Securities Fund Fund ------------------------------------- ------------------------------------- MET INVESTORS SERIES TRUST MET INVESTORS SERIES TRUST Legg Mason Value Equity Portfolio Legg Mason ClearBridge Aggressive Growth Portfolio METROPOLITAN SERIES FUND, INC. MET INVESTORS SERIES TRUST MetLife Aggressive Allocation MetLife Aggressive Strategy Portfolio Portfolio
PORTFOLIO SUBSTITUTION
FORMER PORTFOLIO NEW PORTFOLIO -------------------------------------- ------------------------------------- DELAWARE VIP TRUST MET INVESTORS SERIES TRUST Delaware VIP Small Cap Value Series Third Avenue Small Cap Value Portfolio
SHARE CLASS EXCHANGE
FORMER PORTFOLIO - SHARE CLASS NEW PORTFOLIO - SHARE CLASS ------------------------------------- ------------------------------------- MET INVESTORS SERIES TRUST MET INVESTORS SERIES TRUST Legg Mason ClearBridge Aggressive Legg Mason ClearBridge Aggressive Growth Portfolio--Class B Growth Portfolio--Class A
67 In order to help you understand how the Policy's values would vary over time under different sets of assumptions, we will provide you with personalized illustrations of death benefits, cash surrender values and cash values upon request. These will be based on the age and insurance risk characteristics of the person insured under the Policy 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 without charge. We have filed an example of such an illustration as an exhibit to the registration statement referred to below. Additional information about the Policy and the Separate Account can be found in the Statement of Additional Information. This Prospectus incorporates by reference all of the information contained in the Statement of Additional Information, which is legally part of this Prospectus. You may obtain, without charge, a copy of the Statement of Additional Information or a personalized illustration of death benefits, cash surrender values and cash values, by calling us at 1-908-253-1400 or contacting us through our website at www.metlife.com/sbr. Information about the Policy and the Separate Account, including the Statement of Additional Information, is available for viewing and copying at the SEC's Public Reference Room in Washington, D.C. Information about the operation of the public reference room may be obtained by calling the SEC at 202-942-8090. 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 68 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Policy Owners of Metropolitan Life Separate Account UL and Board of Directors of Metropolitan Life Insurance Company We have audited the accompanying statements of assets and liabilities of Metropolitan Life Separate Account UL (the "Separate Account") of Metropolitan Life Insurance Company (the "Company") comprising each of the individual Investment Divisions listed in Note 2.A. as of December 31, 2010, the related statements of operations and changes in net assets for the respective stated periods in the three years then ended, and the financial highlights in Note 8 for the respective stated periods in the five years then ended. These financial statements and financial highlights are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights 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 and financial highlights 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 investments owned as of December 31, 2010, by correspondence with the custodian or mutual fund companies. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights 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, 2010, the results of their operations and changes in their net assets for the respective stated periods in the three years then ended, and the financial highlights for the respective stated periods in the five years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Tampa, Florida March 31, 2011 This page is intentionally left blank. METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2010 MSF BLACKROCK MSF BLACKROCK MSF METLIFE MSF ARTIO DIVERSIFIED AGGRESSIVE GROWTH STOCK INDEX INTERNATIONAL STOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 263,102,792 $ 200,141,320 $ 671,764,338 $ 45,766,808 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company -- 205 -- 68 ------------------- ------------------- ------------------- ------------------- Total Assets 263,102,792 200,141,525 671,764,338 45,766,876 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 476 -- 12,373 -- ------------------- ------------------- ------------------- ------------------- Total Liabilities 476 -- 12,373 -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 263,102,316 $ 200,141,525 $ 671,751,965 $ 45,766,876 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 1 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 MSF MSF T. ROWE PRICE MSF OPPENHEIMER NEUBERGER BERMAN SMALL CAP GROWTH GLOBAL EQUITY MSF MFS VALUE MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 87,990,296 $ 43,706,628 $ 54,046,050 $ 77,987,777 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company 14,570 -- 6,800 32 ------------------- ------------------- ------------------- ------------------- Total Assets 88,004,866 43,706,628 54,052,850 77,987,809 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company -- 58 -- -- ------------------- ------------------- ------------------- ------------------- Total Liabilities -- 58 -- -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 88,004,866 $ 43,706,570 $ 54,052,850 $ 77,987,809 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 2 MSF MSF T. ROWE PRICE MSF BARCLAYS CAPITAL MSF MORGAN STANLEY MSF RUSSELL MSF JENNISON NEUBERGER BERMAN LARGE CAP GROWTH AGGREGATE BOND INDEX EAFE INDEX 2000 INDEX GROWTH GENESIS INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- $ 45,774,309 $ 114,484,199 $ 65,360,236 $ 56,596,283 $ 15,400,256 $ 78,718,305 -- -- -- -- -- -- 778 556 7,593 -- 8,145 -- ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- 45,775,087 114,484,755 65,367,829 56,596,283 15,408,401 78,718,305 ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- -- -- -- 56 -- 209 ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- -- -- -- 56 -- 209 ------------------- -------------------- ------------------- ------------------- ------------------- ------------------- $ 45,775,087 $ 114,484,755 $ 65,367,829 $ 56,596,227 $ 15,408,401 $ 78,718,096 =================== ==================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 3 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 MSF METLIFE MSF LOOMIS SAYLES MSF BLACKROCK MSF DAVIS MID CAP STOCK INDEX SMALL CAP GROWTH LARGE CAP VALUE VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 65,795,207 $ 7,430,424 $ 12,899,195 $ 57,904,626 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company 855 17 -- 5,992 ------------------- ------------------- ------------------- ------------------- Total Assets 65,796,062 7,430,441 12,899,195 57,910,618 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company -- -- 58 -- ------------------- ------------------- ------------------- ------------------- Total Liabilities -- -- 58 -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 65,796,062 $ 7,430,441 $ 12,899,137 $ 57,910,618 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 4 MSF WESTERN MSF BLACKROCK ASSET MANAGEMENT MSF LOOMIS SAYLES LEGACY LARGE CAP MSF BLACKROCK MSF FI MSF MET/ARTISAN STRATEGIC BOND SMALL CAP CORE GROWTH BOND INCOME VALUE LEADERS MID CAP VALUE OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 18,282,804 $ 7,322,522 $ 84,862,621 $ 6,488,970 $ 46,594,384 $ 23,786,569 -- -- -- -- -- -- 26 1 215 -- 6,757 -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 18,282,830 7,322,523 84,862,836 6,488,970 46,601,141 23,786,569 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 46 -- -- 38 -- 67 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 46 -- -- 38 -- 67 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 18,282,784 $ 7,322,523 $ 84,862,836 $ 6,488,932 $ 46,601,141 $ 23,786,502 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 5 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 MSF WESTERN MSF METLIFE ASSET MANAGEMENT MSF BLACKROCK MSF MFS CONSERVATIVE U.S. GOVERNMENT MONEY MARKET TOTAL RETURN ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 16,633,677 $ 29,829,068 $ 7,708,232 $ 4,036,490 Accrued dividends -- 58 -- -- Due from Metropolitan Life Insurance Company -- -- 40 6 ------------------- ------------------- ------------------- ------------------- Total Assets 16,633,677 29,829,126 7,708,272 4,036,496 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 26 10,790 -- -- ------------------- ------------------- ------------------- ------------------- Total Liabilities 26 10,790 -- -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 16,633,651 $ 29,818,336 $ 7,708,272 $ 4,036,496 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 6 MSF METLIFE MSF METLIFE CONSERVATIVE TO MSF METLIFE MODERATE TO MSF METLIFE MODERATE ALLOCATION MODERATE ALLOCATION AGGRESSIVE ALLOCATION AGGRESSIVE ALLOCATION JANUS ASPEN JANUS JANUS ASPEN BALANCED INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- --------------------- --------------------- ------------------- -------------------- $ 6,925,753 $ 37,214,364 $ 65,064,142 $ 13,599,650 $ 7,832,027 $ 2,526,893 -- -- -- -- -- -- -- -- -- -- -- -- ------------------- ------------------- --------------------- --------------------- ------------------- -------------------- 6,925,753 37,214,364 65,064,142 13,599,650 7,832,027 2,526,893 ------------------- ------------------- --------------------- --------------------- ------------------- -------------------- 52 33 73 1 25 34 ------------------- ------------------- --------------------- --------------------- ------------------- -------------------- 52 33 73 1 25 34 ------------------- ------------------- --------------------- --------------------- ------------------- -------------------- $ 6,925,701 $ 37,214,331 $ 65,064,069 $ 13,599,649 $ 7,832,002 $ 2,526,859 =================== =================== ===================== ===================== =================== ====================
The accompanying notes are an integral part of these financial statements. 7 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 INVESCO V.I. INVESCO V.I. JANUS ASPEN FORTY JANUS ASPEN OVERSEAS GLOBAL REAL ESTATE INTERNATIONAL GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- -------------------- ------------------- -------------------- ASSETS: Investments at fair value $ 1,212,504 $ 375,924 $ 1,597,811 $ 272,422 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company 264 -- -- -- ------------------- -------------------- ------------------- -------------------- Total Assets 1,212,768 375,924 1,597,811 272,422 ------------------- -------------------- ------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company -- 73 700 11 ------------------- -------------------- ------------------- -------------------- Total Liabilities -- 73 700 11 ------------------- -------------------- ------------------- -------------------- NET ASSETS $ 1,212,768 $ 375,851 $ 1,597,111 $ 272,411 =================== ==================== =================== ====================
The accompanying notes are an integral part of these financial statements. 8 FTVIPT FTVIPT ALLIANCEBERNSTEIN INVESCO V.I. INVESCO V.I. FTVIPT TEMPLETON MUTUAL GLOBAL TEMPLETON GLOBAL GLOBAL GOVERNMENT VAN KAMPEN COMSTOCK FOREIGN SECURITIES DISCOVERY SECURITIES BOND SECURITIES THEMATIC GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- $ 105,717 $ 32,084 $ 9,245,237 $ 967,460 $ 3,730 $ 119,520 -- -- -- -- -- -- -- -- -- -- -- -- ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- 105,717 32,084 9,245,237 967,460 3,730 119,520 ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- 4 -- 543 128 2 32 ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- 4 -- 543 128 2 32 ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- $ 105,713 $ 32,084 $ 9,244,694 $ 967,332 $ 3,728 $ 119,488 =================== =================== =================== ==================== =================== ===================
The accompanying notes are an integral part of these financial statements. 9 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 ALLIANCEBERNSTEIN ALLIANCEBERNSTEIN FIDELITY VIP FIDELITY VIP ASSET INTERMEDIATE BOND INTERNATIONAL VALUE CONTRAFUND MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 43,368 $ 1,357 $ 2,677,586 $ 1,905,663 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 43,368 1,357 2,677,586 1,905,663 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 103 -- 213 55 ------------------- ------------------- ------------------- ------------------- Total Liabilities 103 -- 213 55 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 43,265 $ 1,357 $ 2,677,373 $ 1,905,608 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 10 FIDELITY VIP INVESTMENT FIDELITY VIP FIDELITY VIP FIDELITY VIP FIDELITY VIP GRADE BOND EQUITY-INCOME HIGH INCOME FIDELITY VIP MID CAP FREEDOM 2010 FREEDOM 2020 INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- $ 535,348 $ 202,704 $ 4,568 $ 462,038 $ 31,863 $ 738,709 -- -- -- -- -- -- -- -- -- -- -- -- ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- 535,348 202,704 4,568 462,038 31,863 738,709 ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- 4 14 3 7 3 7 ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- 4 14 3 7 3 7 ------------------- ------------------- ------------------- -------------------- ------------------- ------------------- $ 535,344 $ 202,690 $ 4,565 $ 462,031 $ 31,860 $ 738,702 =================== =================== =================== ==================== =================== ===================
The accompanying notes are an integral part of these financial statements. 11 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 AMERICAN FUNDS FIDELITY VIP AMERICAN FUNDS AMERICAN FUNDS GLOBAL SMALL FREEDOM 2030 GROWTH GROWTH-INCOME CAPITALIZATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 108,198 $ 127,437,891 $ 73,861,244 $ 67,405,396 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 108,198 127,437,891 73,861,244 67,405,396 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 7 36 50 43 ------------------- ------------------- ------------------- ------------------- Total Liabilities 7 36 50 43 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 108,191 $ 127,437,855 $ 73,861,194 $ 67,405,353 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 12 AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS U.S. GOVERNMENT/AAA MIST T. ROWE PRICE MIST MFS RESEARCH MIST PIMCO BOND INTERNATIONAL RATED SECURITIES MID CAP GROWTH INTERNATIONAL TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 4,365,046 $ 809,630 $ 37,834 $ 21,234,919 $ 13,920,146 $ 46,602,305 -- -- -- -- -- -- -- -- -- -- 672 -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 4,365,046 809,630 37,834 21,234,919 13,920,818 46,602,305 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 15 5 4 11 -- 43 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 15 5 4 11 -- 43 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 4,365,031 $ 809,625 $ 37,830 $ 21,234,908 $ 13,920,818 $ 46,602,262 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 13 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 MIST RCM MIST LORD ABBETT MIST LAZARD MIST INVESCO TECHNOLOGY BOND DEBENTURE MID CAP SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 16,113,864 $ 27,673,394 $ 5,585,177 $ 4,469,864 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company 22 336 -- 34 ------------------- ------------------- ------------------- ------------------- Total Assets 16,113,886 27,673,730 5,585,177 4,469,898 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company -- -- 53 -- ------------------- ------------------- ------------------- ------------------- Total Liabilities -- -- 53 -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 16,113,886 $ 27,673,730 $ 5,585,124 $ 4,469,898 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 14 MIST MIST LEGG HARRIS OAKMARK MASON CLEARBRIDGE MIST LORD ABBETT MIST CLARION MIST MORGAN STANLEY MIST LORD ABBETT INTERNATIONAL AGGRESSIVE GROWTH GROWTH AND INCOME GLOBAL REAL ESTATE MID CAP GROWTH MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 31,544,692 $ 7,832,599 $ 6,220,899 $ 21,155,496 $ 203,751,581 $ 111,198 -- -- -- -- -- -- 6 -- 3,162 5,068 3,350 -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 31,544,698 7,832,599 6,224,061 21,160,564 203,754,931 111,198 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 23 -- -- -- 8 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 23 -- -- -- 8 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 31,544,698 $ 7,832,576 $ 6,224,061 $ 21,160,564 $ 203,754,931 $ 111,190 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 15 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 MIST THIRD AVENUE MIST OPPENHEIMER MIST LEGG MASON MIST SSGA SMALL CAP VALUE CAPITAL APPRECIATION VALUE EQUITY GROWTH ETF INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- -------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 1,575,617 $ 1,779,584 $ 4,606,141 $ 2,679,337 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company -- 27 -- 44 ------------------- -------------------- ------------------- ------------------- Total Assets 1,575,617 1,779,611 4,606,141 2,679,381 ------------------- -------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 28 -- 39 -- ------------------- -------------------- ------------------- ------------------- Total Liabilities 28 -- 39 -- ------------------- -------------------- ------------------- ------------------- NET ASSETS $ 1,575,589 $ 1,779,611 $ 4,606,102 $ 2,679,381 =================== ==================== =================== ===================
The accompanying notes are an integral part of these financial statements. 16 MIST MIST MIST SSGA GROWTH PIMCO INFLATION MIST BLACKROCK MIST DREMAN AMERICAN FUNDS AND INCOME ETF PROTECTED BOND LARGE CAP CORE MIST JANUS FORTY SMALL CAP VALUE BALANCED ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 3,818,872 $ 8,812,603 $ 309,489,156 $ 14,254,609 $ 27,493 $ 427,408 -- -- -- -- -- -- 35 -- 380 46 -- -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 3,818,907 8,812,603 309,489,536 14,254,655 27,493 427,408 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 65 -- -- 4 2 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -- 65 -- -- 4 2 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 3,818,907 $ 8,812,538 $ 309,489,536 $ 14,254,655 $ 27,489 $ 427,406 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 17 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 MIST MIST AMERICAN FUNDS AMERICAN FUNDS MIST MET/FRANKLIN MIST MET/FRANKLIN GROWTH ALLOCATION MODERATE ALLOCATION INCOME MUTUAL SHARES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 706,302 $ 250,096 $ 151,294 $ 57,045 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 706,302 250,096 151,294 57,045 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 2 2 2 3 ------------------- ------------------- ------------------- ------------------- Total Liabilities 2 2 2 3 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 706,300 $ 250,094 $ 151,292 $ 57,042 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 18 MIST MET/FRANKLIN TEMPLETON FOUNDING MIST MET/TEMPLETON AMERICAN DELAWARE VIP DREYFUS VIF STRATEGY GROWTH MIST PIONEER FUND CENTURY VP VISTA SMALL CAP VALUE INTERNATIONAL VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 260,281 $ 48,494 $ 245,287 $ 69,257 $ 385,135 $ 231,499 -- -- -- -- -- -- -- -- 573 4,898 1 -- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 260,281 48,494 245,860 74,155 385,136 231,499 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 1 2 -- -- -- 35 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- 1 2 -- -- -- 35 ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 260,280 $ 48,492 $ 245,860 $ 74,155 $ 385,136 $ 231,464 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 19 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2010 GOLDMAN SACHS GOLDMAN SACHS STRUCTURED MFS VIT MFS VIT MID CAP VALUE SMALL CAP EQUITY HIGH INCOME GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 367,130 $ 51,282 $ 132,571 $ 226,835 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company -- -- -- -- ------------------- ------------------- ------------------- ------------------- Total Assets 367,130 51,282 132,571 226,835 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 41 30 462 41 ------------------- ------------------- ------------------- ------------------- Total Liabilities 41 30 462 41 ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 367,089 $ 51,252 $ 132,109 $ 226,794 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 20 MFS VIT MFS VIT WELLS FARGO VT PIONEER VCT PIONEER VCT NEW DISCOVERY VALUE TOTAL RETURN BOND EMERGING MARKETS MID CAP VALUE ROYCE MICRO-CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- $ 134,934 $ 79,100 $ 1,081,377 $ 983,753 $ 99,492 $ 348,710 -- -- -- -- -- -- -- -- 38 413 -- -- ------------------- ----- ------------- ------------------- ------------------- ------------------- ------------------- 134,934 79,100 1,081,415 984,166 99,492 348,710 ------------------- ----- ------------- ------------------- ------------------- ------------------- ------------------- 11 5 -- -- 14 1 ------------------- ----- ------------- ------------------- ------------------- ------------------- ------------------- 11 5 -- -- 14 1 ------------------- ----- ------------- ------------------- ------------------- ------------------- ------------------- $ 134,923 $ 79,095 $ 1,081,415 $ 984,166 $ 99,478 $ 348,709 =================== =================== =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 21 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONCLUDED) DECEMBER 31, 2010 UIF EMERGING UIF EMERGING PIMCO VIT ROYCE SMALL-CAP MARKETS DEBT MARKETS EQUITY LOW DURATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value $ 393,156 $ 7,345 $ 197,670 $ 762,323 Accrued dividends -- -- -- -- Due from Metropolitan Life Insurance Company -- -- -- 208 ------------------- ------------------- ------------------- ------------------- Total Assets 393,156 7,345 197,670 762,531 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company 14 2 1 -- ------------------- ------------------- ------------------- ------------------- Total Liabilities 14 2 1 -- ------------------- ------------------- ------------------- ------------------- NET ASSETS $ 393,142 $ 7,343 $ 197,669 $ 762,531 =================== =================== =================== ===================
The accompanying notes are an integral part of these financial statements. 22 This page is intentionally left blank. METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MSF BLACKROCK DIVERSIFIED INVESTMENT DIVISION ------------------------------------------------------------- 2010 2009 2008 --------------- ---------------------------- ---------------- INVESTMENT INCOME: Dividends $ 4,856,230 $ 12,214,068 $ 8,110,111 --------------- ---------------------------- ---------------- EXPENSES: Mortality and expense risk charges 2,202,890 2,044,120 2,489,583 --------------- ---------------------------- ---------------- Total expenses 2,202,890 2,044,120 2,489,583 --------------- ---------------------------- ---------------- Net investment income (loss) 2,653,340 10,169,948 5,620,528 --------------- ---------------------------- ---------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 3,156,956 Realized gains (losses) on sale of investments (1,951,136) (4,609,576) (1,882,360) --------------- ---------------------------- ---------------- Net realized gains (losses) (1,951,136) (4,609,576) 1,274,596 --------------- ---------------------------- ---------------- Change in unrealized gains (losses) on investments 20,635,275 31,028,944 (90,018,067) --------------- ---------------------------- ---------------- Net realized and change in unrealized gains (losses) on investments 18,684,139 26,419,368 (88,743,471) --------------- ---------------------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 21,337,479 $ 36,589,316 $ (83,122,943) =============== ============================ ================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 24 MSF BLACKROCK AGGRESSIVE GROWTH MSF METLIFE STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------------- ------------------------------------------------------------ 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- $ 125,813 $ 309,682 $ -- $ 10,671,016 $ 13,698,992 $ 12,272,736 --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- 1,617,041 1,367,142 1,837,501 4,862,670 4,016,527 5,062,149 --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- 1,617,041 1,367,142 1,837,501 4,862,670 4,016,527 5,062,149 --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- (1,491,228) (1,057,460) (1,837,501) 5,808,346 9,682,465 7,210,587 --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- -- -- -- -- 10,241,628 26,321,788 451,106 (3,328,441) 740,184 (5,405,568) (11,218,400) (1,738,927) --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- 451,106 (3,328,441) 740,184 (5,405,568) (976,772) 24,582,861 --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- 26,312,677 66,805,065 (115,833,611) 82,259,608 112,925,652 (312,125,621) --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- 26,763,783 63,476,624 (115,093,427) 76,854,040 111,948,880 (287,542,760) --------------- ---------------------- ------------------- --------------- -------------------------- ----------------- $ 25,272,555 $ 62,419,164 $ (116,930,928) $ 82,662,386 $ 121,631,345 $ (280,332,173) =============== ====================== =================== =============== ========================== =================
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, 2010, 2009, AND 2008 MSF ARTIO INTERNATIONAL STOCK INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ------------------ INVESTMENT INCOME: Dividends $ 672,423 $ 284,863 $ 1,797,231 -------------- ---------------------- ------------------ EXPENSES: Mortality and expense risk charges 360,189 333,983 477,710 -------------- ---------------------- ------------------ Total expenses 360,189 333,983 477,710 -------------- ---------------------- ------------------ Net investment income (loss) 312,234 (49,120) 1,319,521 -------------- ---------------------- ------------------ NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 6,924,494 Realized gains (losses) on sale of investments (1,030,425) (2,053,375) (470,754) -------------- ---------------------- ------------------ Net realized gains (losses) (1,030,425) (2,053,375) 6,453,740 -------------- ---------------------- --- -------------- Change in unrealized gains (losses) on investments 3,370,719 10,298,349 (39,671,178) -------------- ---------------------- ------------------ Net realized and change in unrealized gains (losses) on investments 2,340,294 8,244,974 (33,217,438) -------------- ---------------------- ------------------ Net increase (decrease) in net assets resulting from operations $ 2,652,528 $ 8,195,854 $ (31,897,917) ============== ====================== ==================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 26 MSF T. ROWE PRICE SMALL CAP GROWTH MSF OPPENHEIMER GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------------- ----------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ $ -- $ 200,547 $ -- $ 612,821 $ 852,361 $ 913,382 --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ 769,902 477,748 578,209 297,201 258,416 333,397 --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ 769,902 477,748 578,209 297,201 258,416 333,397 --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ (769,902) (277,201) (578,209) 315,620 593,945 579,985 --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ -- 1,576,442 14,302,639 -- -- 1,578,466 562,971 (1,108,337) (118,445) 362,727 (362,452) 228,413 --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ 562,971 468,105 14,184,194 362,727 (362,452) 1,806,879 --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ 22,601,563 19,138,611 (44,529,670) 5,192,068 11,124,292 (23,254,667) --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ 23,164,534 19,606,716 (30,345,476) 5,554,795 10,761,840 (21,447,788) --------------- ---------------------- ------------------ ----------- ---------------------- ------------------ $ 22,394,632 $ 19,329,515 $ (30,923,685) $ 5,870,415 $ 11,355,785 $ (20,867,803) =============== ====================== ================== =========== ====================== ==================
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, 2010, 2009, AND 2008 MSF MFS VALUE INVESTMENT DIVISION ------------------------------------------------------ 2010 2009 2008 -------------- ---------------------- ---------------- INVESTMENT INCOME: Dividends $ 713,180 $ -- $ 994,357 -------------- ---------------------- ---------------- EXPENSES: Mortality and expense risk charges 457,584 360,654 433,021 -------------- ---------------------- ---------------- Total expenses 457,584 360,654 433,021 -------------- ---------------------- ---------------- Net investment income (loss) 255,596 (360,654) 561,336 -------------- ---------------------- ---------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 11,141,028 Realized gains (losses) on sale of investments (425,864) (877,734) (6,522,665) -------------- ---------------------- ---------------- Net realized gains (losses) (425,864) (877,734) 4,618,363 -------------- ---------------------- ---------------- Change in unrealized gains (losses) on investments 5,358,513 9,493,542 (26,124,726) -------------- ---------------------- ---------------- Net realized and change in unrealized gains (losses) on investments 4,932,649 8,615,808 (21,506,363) -------------- ---------------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 5,188,245 $ 8,255,154 $ (20,945,027) ============== ====================== ================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 28 MSF NEUBERGER BERMAN MID CAP VALUE MSF T. ROWE PRICE LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------------- -------------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ $ 569,862 $ 813,259 $ 575,882 $ 113,187 $ 224,945 $ 256,837 --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ 570,197 440,022 576,904 373,672 295,919 353,556 --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ 570,197 440,022 576,904 373,672 295,919 353,556 --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ (335) 373,237 (1,022) (260,485) (70,974) (96,719) --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ -- 16,184 827,106 -- -- 2,456,006 12,235 (1,401,599) (361,462) 253,453 (485,740) 109,779 --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ 12,235 (1,385,415) 465,644 253,453 (485,740) 2,565,785 --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ 15,949,723 21,838,137 (39,787,375) 6,370,252 13,392,122 (24,832,884) --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ 15,961,958 20,452,722 (39,321,731) 6,623,705 12,906,382 (22,267,099) --------------- ---------------------- ------------------ -------------- ---------------------- ------------------ $ 15,961,623 $ 20,825,959 $ (39,322,753) $ 6,363,220 $ 12,835,408 $ (22,363,818) =============== ====================== ================== ============== ====================== ==================
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, 2010, 2009, AND 2008 MSF BARCLAYS CAPITAL AGGREGATE BOND INDEX INVESTMENT DIVISION --------------------------------------------------- 2010 2009 2008 ----------- ---------------------- ---------------- INVESTMENT INCOME: Dividends $ 4,039,520 $ 5,910,030 $ 4,492,337 ----------- ---------------------- ---------------- EXPENSES: Mortality and expense risk charges 904,600 732,517 746,783 ----------- ---------------------- ---------------- Total expenses 904,600 732,517 746,783 ----------- ---------------------- ---------------- Net investment income (loss) 3,134,920 5,177,513 3,745,554 ----------- ---------------------- ---------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 613,564 195,723 578,961 ----------- ---------------------- ---------------- Net realized gains (losses) 613,564 195,723 578,961 ----------- ---------------------- ---------------- Change in unrealized gains (losses) on investments 1,607,603 (1,139,158) 873,489 ----------- ---------------------- ---------------- Net realized and change in unrealized gains (losses) on investments 2,221,167 (943,435) 1,452,450 ----------- ---------------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 5,356,087 $ 4,234,078 $ 5,198,004 =========== ====================== ================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 30 MSF MORGAN STANLEY EAFE INDEX MSF RUSSELL 2000 INDEX INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------------- ---------------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- $ 1,568,147 $ 2,127,820 $ 1,719,052 $ 547,888 $ 812,284 $ 619,536 -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- 524,541 418,461 488,801 378,183 318,144 395,877 -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- 524,541 418,461 488,801 378,183 318,144 395,877 -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- 1,043,606 1,709,359 1,230,251 169,705 494,140 223,659 -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- -- 345,458 2,375,115 -- 1,106,089 2,430,488 (236,046) (800,654) 523,799 (66,857) (1,035,970) (448,303) -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- (236,046) (455,196) 2,898,914 (66,857) 70,119 1,982,185 -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- 3,674,685 11,844,795 (35,342,222) 11,828,973 9,093,620 (21,357,274) -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- 3,438,639 11,389,599 (32,443,308) 11,762,116 9,163,739 (19,375,089) -------------- ---------------------- ------------------ --------------- ------------------------- ---------------- $ 4,482,245 $ 13,098,958 $ (31,213,057) $ 11,931,821 $ 9,657,879 $ (19,151,430) ============== ====================== ================== =============== ========================= ================
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, 2010, 2009, AND 2008 MSF JENNISON GROWTH INVESTMENT DIVISION -------------- ---------------------- --------------- 2010 2009 2008 -------------- ---------------------- --------------- INVESTMENT INCOME: Dividends $ 82,750 $ 21,249 $ 321,658 -------------- ---------------------- --------------- EXPENSES: Mortality and expense risk charges 116,354 96,459 112,222 -------------- ---------------------- --------------- Total expenses 116,354 96,459 112,222 -------------- ---------------------- --------------- Net investment income (loss) (33,604) (75,210) 209,436 -------------- ---------------------- --------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 1,109,205 Realized gains (losses) on sale of investments 17,747 (140,559) (8,418) -------------- ---------------------- --------------- Net realized gains (losses) 17,747 (140,559) 1,100,787 -------------- ---------------------- --------------- Change in unrealized gains (losses) on investments 1,535,759 4,015,386 (7,064,823) -------------- ---------------------- --------------- Net realized and change in unrealized gains (losses) on investments 1,553,506 3,874,827 (5,964,036) -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations $ 1,519,902 $ 3,799,617 $ (5,754,600) ============== ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 32 MSF NEUBERGER BERMAN GENESIS MSF METLIFE MID CAP STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------------- ------------------------------------------------------ 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ------------------ ------------ ---------------------- ------------------ $ 353,007 $ 663,127 $ 450,385 $ 562,548 $ 810,735 $ 771,366 --------------- ---------------------- ------------------ ------------ ---------------------- ------------------ 628,387 512,489 713,800 473,626 374,527 446,840 --------------- ---------------------- ------------------ ------------ ---------------------- ------------------ 628,387 512,489 713,800 473,626 374,527 446,840 --------------- ---------------------- ------------------ ------------ ---------------------- ------------------ (275,380) 150,638 (263,415) 88,922 436,208 324,526 --------------- ---------------------- ------------------ ------------ ---------------------- ------------------ -- -- 8,172,204 70,909 1,783,617 5,083,631 (2,085,738) (2,703,187) (2,015,489) 177,461 (1,475,288) (306,285) --------------- ---------------------- ------------------ ------------ ---------------------- ------------------ (2,085,738) (2,703,187) 6,156,715 248,370 308,329 4,777,346 --------------- ---------------------- --- -------------- ------------ ---------------------- --- -------------- 15,927,942 10,045,644 (44,228,185) 12,893,844 13,600,526 (28,232,883) --------------- ---------------------- --- -------------- ------------ ---------------------- --- -------------- 13,842,204 7,342,457 (38,071,470) 13,142,214 13,908,855 (23,455,537) --------------- ---------------------- --- -------------- ------------ ---------------------- --- -------------- $ 13,566,824 $ 7,493,095 $ (38,334,885) $ 13,231,136 $ 14,345,063 $ (23,131,011) =============== ====================== ================== ============ ====================== ==================
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, 2010, 2009, AND 2008 MSF LOOMIS SAYLES SMALL CAP GROWTH INVESTMENT DIVISION ------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ----------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- -------------- ---------------------- ----------------- EXPENSES: Mortality and expense risk charges 51,755 39,304 48,690 -------------- ---------------------- ----------------- Total expenses 51,755 39,304 48,690 -------------- ---------------------- ----------------- Net investment income (loss) (51,755) (39,304) (48,690) -------------- ---------------------- ----------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 589,617 Realized gains (losses) on sale of investments (47,680) (219,528) (127,526) -------------- ---------------------- ----------------- Net realized gains (losses) (47,680) (219,528) 462,091 -------------- ---------------------- ----------------- Change in unrealized gains (losses) on investments 1,843,398 1,519,136 (3,371,627) -------------- ---------------------- ----------------- Net realized and change in unrealized gains (losses) on investments 1,795,718 1,299,608 (2,909,536) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 1,743,963 $ 1,260,304 $ (2,958,226) ============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 34 MSF BLACKROCK LARGE CAP VALUE MSF DAVIS VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------- ------------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- $ 122,314 $ 155,310 $ 93,435 $ 534,093 $ 679,120 $ 686,382 -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- 95,279 81,859 96,194 444,758 366,383 433,758 -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- 95,279 81,859 96,194 444,758 366,383 433,758 -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- 27,035 73,451 (2,759) 89,335 312,737 252,624 -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- -- -- 181,207 -- -- 285,719 (263,466) (513,587) (190,470) 191,969 (723,952) (1,167) -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- (263,466) (513,587) (9,263) 191,969 (723,952) 284,552 -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- 1,265,453 1,615,283 (4,899,187) 5,562,556 12,907,686 (24,908,606) -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- 1,001,987 1,101,696 (4,908,450) 5,754,525 12,183,734 (24,624,054) -------------- ---------------------- ----------------- ----------- -------------------------- ---------------- $ 1,029,022 $ 1,175,147 $ (4,911,209) $ 5,843,860 $ 12,496,471 $ (24,371,430) ============== ====================== ================= =========== ========================== ================
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, 2010, 2009, AND 2008 MSF LOOMIS SAYLES SMALL CAP CORE INVESTMENT DIVISION ------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ----------------- INVESTMENT INCOME: Dividends $ 14,765 $ 34,048 $ -- -------------- ---------------------- ----------------- EXPENSES: Mortality and expense risk charges 127,370 100,553 116,679 -------------- ---------------------- ----------------- Total expenses 127,370 100,553 116,679 -------------- ---------------------- ----------------- Net investment income (loss) (112,605) (66,505) (116,679) -------------- ---------------------- ----------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 2,223,393 Realized gains (losses) on sale of investments (55,224) (439,969) (217,249) -------------- ---------------------- ----------------- Net realized gains (losses) (55,224) (439,969) 2,006,144 -------------- ---------------------- ----------------- Change in unrealized gains (losses) on investments 4,065,140 3,809,050 (7,889,493) -------------- ---------------------- ----------------- Net realized and change in unrealized gains (losses) on investments 4,009,916 3,369,081 (5,883,349) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 3,897,311 $ 3,302,576 $ (6,000,028) ============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 36 MSF BLACKROCK LEGACY LARGE CAP GROWTH MSF BLACKROCK BOND INCOME INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------- ---------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- $ 14,175 $ 29,634 $ 18,838 $ 3,345,493 $ 5,731,533 $ 4,557,033 -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- 52,945 35,213 37,105 675,543 651,039 710,910 -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- 52,945 35,213 37,105 675,543 651,039 710,910 -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- (38,770) (5,579) (18,267) 2,669,950 5,080,494 3,846,123 -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- -- -- -- -- -- -- 75,641 (146,284) (120,478) 24,746 (553,787) (261,951) -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- 75,641 (146,284) (120,478) 24,746 (553,787) (261,951) -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- 1,107,022 1,684,656 (1,924,420) 3,372,816 2,142,811 (7,357,146) -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- 1,182,663 1,538,372 (2,044,898) 3,397,562 1,589,024 (7,619,097) -------------- ---------------------- ----------------- ----------- ---------------------- ----------------- $ 1,143,893 $ 1,532,793 $ (2,063,165) $ 6,067,512 $ 6,669,518 $ (3,772,974) ============== ====================== ================= =========== ====================== =================
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, 2010, 2009, AND 2008 MSF FI VALUE LEADERS INVESTMENT DIVISION ---------------------------------------------------- 2010 2009 2008 ------------ ----------------------- --------------- INVESTMENT INCOME: Dividends $ 90,469 $ 128,519 $ 109,493 ------------ ----------------------- --------------- EXPENSES: Mortality and expense risk charges 48,155 38,405 47,319 ------------ ----------------------- --------------- Total expenses 48,155 38,405 47,319 ------------ ----------------------- --------------- Net investment income (loss) 42,314 90,114 62,174 ------------ ----------------------- --------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 594,849 Realized gains (losses) on sale of investments (145,291) (259,906) (183,807) ------------ ----------------------- --------------- Net realized gains (losses) (145,291) (259,906) 411,042 ------------ ----------------------- --------------- Change in unrealized gains (losses) on investments 885,079 1,128,894 (3,184,937) ------------ ----------------------- --------------- Net realized and change in unrealized gains (losses) on investments 739,788 868,988 (2,773,895) ------------ ----------------------- --------------- Net increase (decrease) in net assets resulting from operations $ 782,102 $ 959,102 $ (2,711,721) ============ ======================= ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 38 MSF MET/ARTISAN MID CAP VALUE MSF WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------------- ------------------------------------------------------------ 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- $ 314,548 $ 390,395 $ 164,568 $ 1,333,421 $ 1,175,403 $ 717,999 -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- 362,293 295,816 374,696 182,131 148,016 147,435 -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- 362,293 295,816 374,696 182,131 148,016 147,435 -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- (47,745) 94,579 (210,128) 1,151,290 1,027,387 570,564 -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- -- -- 5,071,026 -- 518,778 105,934 (887,093) (2,074,439) (724,686) 71,403 (136,510) (211,377) -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- (887,093) (2,074,439) 4,346,340 71,403 382,268 (105,443) -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- 6,661,231 14,134,862 (29,274,257) 1,196,007 3,433,572 (3,452,504) -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- 5,774,138 12,060,423 (24,927,917) 1,267,410 3,815,840 (3,557,947) -------------- ---------------------- ------------------ ----------- ---------------------- ------------------------- $ 5,726,393 $ 12,155,002 $ (25,138,045) $ 2,418,700 $ 4,843,227 $ (2,987,383) ============== ====================== ================== =========== ====================== =========================
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, 2010, 2009, AND 2008 MSF WESTERN ASSET MANAGEMENT U.S. GOVERNMENT INVESTMENT DIVISION ----------------------------------------------- 2010 2009 2008 --------- ---------------------- -------------- INVESTMENT INCOME: Dividends $ 448,826 $ 714,343 $ 678,587 --------- ---------------------- -------------- EXPENSES: Mortality and expense risk charges 134,214 131,035 132,608 --------- ---------------------- -------------- Total expenses 134,214 131,035 132,608 --------- ---------------------- -------------- Net investment income (loss) 314,612 583,308 545,979 --------- ---------------------- -------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 47,316 -- -- Realized gains (losses) on sale of investments 1,727 (89,029) (26,281) --------- ---------------------- -------------- Net realized gains (losses) 49,043 (89,029) (26,281) --------- ---------------------- -------------- Change in unrealized gains (losses) on investments 435,726 44,105 (712,221) --------- ---------------------- -------------- Net realized and change in unrealized gains (losses) on investments 484,769 (44,924) (738,502) --------- ---------------------- -------------- Net increase (decrease) in net assets resulting from operations $ 799,381 $ 538,384 $ (192,523) ========= ====================== ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 40 MSF BLACKROCK MONEY MARKET MSF MFS TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ---------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------ ----------------------- --------------- $ 3,600 $ 269,650 $ 1,783,326 $ 217,114 $ 230,711 $ 192,751 ------------- ---------------------- ------------- ------------ ----------------------- --------------- 304,506 280,999 287,148 86,631 51,498 44,824 ------------- ---------------------- ------------- ------------ ----------------------- --------------- 304,506 280,999 287,148 86,631 51,498 44,824 ------------- ---------------------- ------------- ------------ ----------------------- --------------- (300,906) (11,349) 1,496,178 130,483 179,213 147,927 ------------- ---------------------- ------------- ------------ ----------------------- --------------- -- -- -- -- -- 418,385 -- -- -- (99,947) (173,243) (118,819) ------------- ---------------------- ------------- ------------ ----------------------- --------------- -- -- -- (99,947) (173,243) 299,566 ------------- ---------------------- --- --------- ------------ ----------------------- --------------- -- -- -- 568,242 937,515 (1,824,737) ------------- ---------------------- --- --------- ------------ ----------------------- --------------- -- -- -- 468,295 764,272 (1,525,171) ------------- ---------------------- --- --------- ------------ ----------------------- --------------- $ (300,906) $ (11,349) $ 1,496,178 $ 598,778 $ 943,485 $ (1,377,244) ============= ====================== ============= ============ ======================= ===============
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, 2010, 2009, AND 2008 MSF METLIFE CONSERVATIVE ALLOCATION INVESTMENT DIVISION ------------------------------------------------ 2010 2009 2008 --------- ---------------------- --------------- INVESTMENT INCOME: Dividends $ 102,209 $ 56,682 $ 27,593 --------- ---------------------- --------------- EXPENSES: Mortality and expense risk charges 21,942 14,419 17,503 --------- ---------------------- --------------- Total expenses 21,942 14,419 17,503 --------- ---------------------- --------------- Net investment income (loss) 80,267 42,263 10,090 --------- ---------------------- --------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- 10,668 19,805 Realized gains (losses) on sale of investments 46,459 (4,941) (164,759) --------- ---------------------- --------------- Net realized gains (losses) 46,459 5,727 (144,954) --------- ---------------------- --------------- Change in unrealized gains (losses) on investments 119,161 276,504 (182,260) --------- ---------------------- --------------- Net realized and change in unrealized gains (losses) on investments 165,620 282,231 (327,214) --------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations $ 245,887 $ 324,494 $ (317,124) ========= ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 42 MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MSF METLIFE MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ---------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------- ---------------------- ----------------- ----------- ---------------------- ----------------- $ 193,442 $ 133,159 $ 46,035 $ 877,469 $ 699,782 $ 202,771 --------- ---------------------- ----------------- ----------- ---------------------- ----------------- 46,556 35,274 30,609 264,549 193,170 165,213 --------- ---------------------- ----------------- ----------- ---------------------- ----------------- 46,556 35,274 30,609 264,549 193,170 165,213 --------- ---------------------- ----------------- ----------- ---------------------- ----------------- 146,886 97,885 15,426 612,920 506,612 37,558 --------- ---------------------- ----------------- ----------- ---------------------- ----------------- -- 27,807 39,596 -- 337,203 246,852 32,319 (95,953) (49,375) 17,779 (340,090) (436,886) --------- ---------------------- ----------------- ----------- ---------------------- ----------------- 32,319 (68,146) (9,779) 17,779 (2,887) (190,034) --------- ---------------------- ----------------- ----------- ---------------------- ----------------- 421,073 828,280 (847,823) 3,378,733 5,007,760 (6,087,839) --------- ---------------------- ----------------- ----------- ---------------------- ----------------- 453,392 760,134 (857,602) 3,396,512 5,004,873 (6,277,873) --------- ---------------------- ----------------- ----------- ---------------------- ----------------- $ 600,278 $ 858,019 $ (842,176) $ 4,009,432 $ 5,511,485 $ (6,240,315) ========= ====================== ================= =========== ====================== =================
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, 2010, 2009, AND 2008 MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION INVESTMENT DIVISION -------------- ---------------------- ---------------- 2010 2009 2008 -------------- ---------------------- ---------------- INVESTMENT INCOME: Dividends $ 1,283,219 $ 1,144,971 $ 302,200 -------------- ---------------------- ---------------- EXPENSES: Mortality and expense risk charges 486,295 365,479 318,359 -------------- ---------------------- ---------------- Total expenses 486,295 365,479 318,359 -------------- ---------------------- ---------------- Net investment income (loss) 796,924 779,492 (16,159) -------------- ---------------------- ---------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- 560,846 559,864 Realized gains (losses) on sale of investments (102,509) (694,062) (384,363) -------------- ---------------------- ---------------- Net realized gains (losses) (102,509) (133,216) 175,501 -------------- ---------------------- ---------------- Change in unrealized gains (losses) on investments 7,116,457 10,602,923 (15,640,562) -------------- ---------------------- ---------------- Net realized and change in unrealized gains (losses) on investments 7,013,948 10,469,707 (15,465,061) -------------- ---------------------- ---------------- Net increase (decrease) in net assets resulting from operations $ 7,810,872 $ 11,249,199 $ (15,481,220) ============== ====================== ================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 44 MSF METLIFE AGGRESSIVE ALLOCATION JANUS ASPEN JANUS INVESTMENT DIVISION INVESTMENT DIVISION -------------- ---------------------- --- ------------- ------------ ---------------------- --------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ----------------- ------------ ---------------------- --------------- $ 132,688 $ 195,883 $ 61,269 $ 73,809 $ 28,575 $ 45,216 -------------- ---------------------- ----------------- ------------ ---------------------- --------------- 96,768 72,698 71,617 226,951 22,889 28,896 -------------- ---------------------- ----------------- ------------ ---------------------- --------------- 96,768 72,698 71,617 226,951 22,889 28,896 -------------- ---------------------- ----------------- ------------ ---------------------- --------------- 35,920 123,185 (10,348) (153,142) 5,686 16,320 -------------- ---------------------- ----------------- ------------ ---------------------- --------------- -- 14,230 224,171 -- -- -- (132,924) (331,533) (133,321) 52,158 (31,201) 49,473 -------------- ---------------------- ----------------- ------------ ---------------------- --------------- (132,924) (317,303) 90,850 52,158 (31,201) 49,473 -------------- ---------------------- ----------------- ------------ ---------------------- --------------- 1,845,829 2,668,257 (4,222,544) 848,330 1,662,317 (3,051,413) -------------- ---------------------- ----------------- ------------ ---------------------- --------------- 1,712,905 2,350,954 (4,131,694) 900,488 1,631,116 (3,001,940) -------------- ---------------------- ----------------- ------------ ---------------------- --------------- $ 1,748,825 $ 2,474,139 $ (4,142,042) $ 747,346 $ 1,636,802 $ (2,985,620) ============== ====================== ================= ============ ====================== ===============
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, 2010, 2009, AND 2008 JANUS ASPEN BALANCED INVESTMENT DIVISION ------------------------------------------- 2010 2009 2008 --------- -------------------- ------------ INVESTMENT INCOME: Dividends $ 54,166 $ 14,836 $ 3,357 --------- -------------------- ------------ EXPENSES: Mortality and expense risk charges 23,474 1,929 361 --------- -------------------- ------------ Total expenses 23,474 1,929 361 --------- -------------------- ------------ Net investment income (loss) 30,692 12,907 2,996 --------- -------------------- ------------ NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- 18,519 2,380 Realized gains (losses) on sale of investments 26,581 655 1,314 --------- -------------------- ------------ Net realized gains (losses) 26,581 19,174 3,694 --------- -------------------- ------------ Change in unrealized gains (losses) on investments 90,252 93,262 (21,788) --------- -------------------- ------------ Net realized and change in unrealized gains (losses) on investments 116,833 112,436 (18,094) --------- -------------------- ------------ Net increase (decrease) in net assets resulting from operations $ 147,525 $ 125,343 $ (15,098) ========= ==================== ============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 46 JANUS ASPEN FORTY JANUS ASPEN OVERSEAS INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------- --------------------------------------------- 2010 2009 2008 2010 2009 2008 (a) -------------- ---------------------- ------------- ----------- -------------------- ------------ $ 2,433 $ 81 $ 53 $ 1,609 $ 413 $ -- -------------- ---------------------- ------------- ----------- -------------------- ------------ 16,448 2,129 2,353 817 355 44 -------------- ---------------------- ------------- ----------- -------------------- ------------ 16,448 2,129 2,353 817 355 44 -------------- ---------------------- ------------- ----------- -------------------- ------------ (14,015) (2,048) (2,300) 792 58 (44) -------------- ---------------------- ------------- ----------- -------------------- ------------ -- -- -- -- 3,372 -- 14,051 (78,622) (93,936) 4,218 23,192 (177) -------------- ---------------------- ------------- ----------- -------------------- ------------ 14,051 (78,622) (93,936) 4,218 26,564 (177) -------------- ---------------------- ------------- ----------- -------------------- ------------ 47,707 310,554 (295,412) 62,994 37,885 (18,504) -------------- ---------------------- ------------- ----------- -------------------- ------------ 61,758 231,932 (389,348) 67,212 64,449 (18,681) -------------- ---------------------- ------------- ----------- -------------------- ------------ $ 47,743 $ 229,884 $ (391,648) $ 68,004 $ 64,507 $ (18,725) ============== ====================== ============= =========== ==================== ============
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, 2010, 2009, AND 2008 INVESCO V.I. GLOBAL REAL ESTATE INVESTMENT DIVISION ------------ ---------------------------------------- 2010 2009 2008 ------------ ---------------------- ----------------- INVESTMENT INCOME: Dividends $ 71,976 $ -- $ 127,467 ------------ ---------------------- ----------------- EXPENSES: Mortality and expense risk charges 39,431 5,813 10,120 ------------ ---------------------- ----------------- Total expenses 39,431 5,813 10,120 ------------ ---------------------- ----------------- Net investment income (loss) 32,545 (5,813) 117,347 ------------ ---------------------- ----------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 197,001 Realized gains (losses) on sale of investments (130,047) (698,156) (258,510) ------------ ---------------------- ----------------- Net realized gains (losses) (130,047) (698,156) (61,509) ------------ ---------------------- ----------------- Change in unrealized gains (losses) on investments 289,353 1,038,943 (1,334,686) ------------ ---------------------- ----------------- Net realized and change in unrealized gains (losses) on investments 159,306 340,787 (1,396,195) ------------ ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 191,851 $ 334,974 $ (1,278,848) ============ ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 48 INVESCO V.I. INTERNATIONAL GROWTH INVESCO V.I. GOVERNMENT INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ --------------------------------------------------- 2010 2009 (b) 2010 2009 2008 ----------- ------------------------------ ---------- -------------------------- ---------- $ 4,364 $ 242 $ 164 $ 3,817 $ 2,019 ----------- ------------------------------ ---------- -------------------------- ---------- 783 29 265 208 143 ----------- ------------------------------ ---------- -------------------------- ---------- 783 29 265 208 143 ----------- ------------------------------ ---------- -------------------------- ---------- 3,581 213 (101) 3,609 1,876 ----------- ------------------------------ ---------- -------------------------- ---------- -- -- -- -- -- 1,465 34 (188) (289) (1,270) ----------- ------------------------------ ---------- -------------------------- ---------- 1,465 34 (188) (289) (1,270) ----------- ------------------------------ ---------- -------------------------- ---------- 26,537 2,258 4,107 (2,868) (983) ----------- ------------------------------ ---------- -------------------------- ---------- 28,002 2,292 3,919 (3,157) (2,253) ----------- ------------------------------ ---------- -------------------------- ---------- $ 31,583 $ 2,505 $ 3,818 $ 452 $ (377) =========== ============================== ========== ========================== ===========
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, 2010, 2009, AND 2008 INVESCO V.I. VAN KAMPEN COMSTOCK FTVIPT TEMPLETON FOREIGN SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ---------------------- ------------ ---------------------- --------------- 2010 (c) 2010 2009 2008 ---------------------- ------------ ---------------------- --------------- INVESTMENT INCOME: Dividends $ -- $ 164,170 $ 239,754 $ 202,235 ---------------------- ------------ ---------------------- --------------- EXPENSES: Mortality and expense risk charges -- 239,041 28,000 35,755 ---------------------- ------------ ---------------------- --------------- Total expenses -- 239,041 28,000 35,755 ---------------------- ------------ ---------------------- --------------- Net investment income (loss) -- (74,871) 211,754 166,480 ---------------------- ------------ ---------------------- --------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 268,234 731,763 Realized gains (losses) on sale of investments 53 (50,450) (421,623) 3,883 ---------------------- ------------ ---------------------- --------------- Net realized gains (losses) 53 (50,450) (153,389) 735,646 ---------------------- ------------ ---------------------- --------------- Change in unrealized gains (losses) on investments 45 614,425 2,059,948 (4,855,241) ---------------------- ------------ ---------------------- --------------- Net realized and change in unrealized gains (losses) on investments 98 563,975 1,906,559 (4,119,595) ---------------------- ------------ ---------------------- --------------- Net increase (decrease) in net assets resulting from operations $ 98 $ 489,104 $ 2,118,313 $ (3,953,115) ====================== ============ ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 50 FTVIPT TEMPLETON FTVIPT MUTUAL GLOBAL DISCOVERY SECURITIES GLOBAL BOND SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ --------------------------------- 2010 2009 2008 2010 2009 (d) ----------- ---------------------- ------------- ---------- ---------------------- $ 10,103 $ 7,899 $ 47,911 $ 60 $ -- ----------- ---------------------- ------------- ---------- ---------------------- 2,866 4,787 8,447 89 4 ----------- ---------------------- ------------- ---------- ---------------------- 2,866 4,787 8,447 89 4 ----------- ---------------------- ------------- ---------- ---------------------- 7,237 3,112 39,464 (29) (4) ----------- ---------------------- ------------- ---------- ---------------------- -- 18,638 89,758 10 -- (4,189) (456,806) (11,513) 4,591 5 ----------- ---------------------- ------------- ---------- ---------------------- (4,189) (438,168) 78,245 4,601 5 ----------- ---------------------- ------------- ---------- ---------------------- 81,592 609,659 (759,844) (171) 239 ----------- ---------------------- ------------- ---------- ---------------------- 77,403 171,491 (681,599) 4,430 244 ----------- ---------------------- ------------- ---------- ---------------------- $ 84,640 $ 174,603 $ (642,135) $ 4,401 $ 240 =========== ====================== ============= ========== ======================
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, 2010, 2009, AND 2008 ALLIANCEBERNSTEIN GLOBAL THEMATIC GROWTH INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 ---------- ---------------------- ---------------------- INVESTMENT INCOME: Dividends $ 1,486 $ -- $ -- ---------- ---------------------- ---------------------- EXPENSES: Mortality and expense risk charges 310 370 223 ---------- ---------------------- ---------------------- Total expenses 310 370 223 ---------- ---------------------- ---------------------- Net investment income (loss) 1,176 (370) (223) ---------- ---------------------- ---------------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 8,379 (2,773) (414) ---------- ---------------------- ---------------------- Net realized gains (losses) 8,379 (2,773) (414) ---------- ---------------------- ---------------------- Change in unrealized gains (losses) on investments 1,480 45,397 (37,457) ---------- ---------------------- ---------------------- Net realized and change in unrealized gains (losses) on investments 9,859 42,624 (37,871) ---------- ---------------------- ---------------------- Net increase (decrease) in net assets resulting from operations $ 11,035 $ 42,254 $ (38,094) ========== ====================== ======================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 52 ALLIANCEBERNSTEIN ALLIANCEBERNSTEIN INTERMEDIATE BOND INTERNATIONAL VALUE FIDELITY VIP CONTRAFUND INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------------- ------------------------------------------------------- 2010 2009 (e) 2010 (f) 2010 2009 2008 -------------- ----------------------- ------------------- ------------ -------------------------- --------------- $ 2,177 $ 763 $ 31 $ 27,427 $ 43,475 $ 24,698 -------------- ----------------------- ------------------- ------------ -------------------------- --------------- 139 71 2 17,497 12,639 11,393 -------------- ----------------------- ------------------- ------------ -------------------------- --------------- 139 71 2 17,497 12,639 11,393 -------------- ----------------------- ------------------- ------------ -------------------------- --------------- 2,038 692 29 9,930 30,836 13,305 -------------- ----------------------- ------------------- ------------ -------------------------- --------------- -- -- -- 1,114 957 76,672 2,172 716 1 (218,742) (199,492) (319,330) -------------- ----------------------- ------------------- ------------ -------------------------- --------------- 2,172 716 1 (217,628) (198,535) (242,658) -------------- ----------------------- ------------------- ------------ -------------------------- --------------- (1,393) 2,187 88 648,547 1,136,586 (1,292,698) -------------- ----------------------- ------------------- ------------ -------------------------- --------------- 779 2,903 89 430,919 938,051 (1,535,356) -------------- ----------------------- ------------------- ------------ -------------------------- --------------- $ 2,817 $ 3,595 $ 118 $ 440,849 $ 968,887 $ (1,522,051) ============== ======================= =================== ============ ========================== ===============
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, 2010, 2009, AND 2008 FIDELITY VIP ASSET MANAGER: GROWTH INVESTMENT DIVISION ------------------------------------------------ 2010 2009 2008 --------- ---------------------- ----------- INVESTMENT INCOME: Dividends $ 19,264 $ 22,283 $ 22,937 --------- ---------------------- --------------- EXPENSES: Mortality and expense risk charges 11,265 6,417 5,926 --------- ---------------------- --------------- Total expenses 11,265 6,417 5,926 --------- ---------------------- --------------- Net investment income (loss) 7,999 15,866 17,011 --------- ---------------------- --------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 5,857 3,095 910 Realized gains (losses) on sale of investments 31,417 (19,280) 8,025 --------- ---------------------- --------------- Net realized gains (losses) 37,274 (16,185) 8,935 --------- ---------------------- --------------- Change in unrealized gains (losses) on investments 201,872 427,179 (532,156) --------- ---------------------- --------------- Net realized and change in unrealized gains (losses) on investments 239,146 410,994 (523,221) --------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations $ 247,145 $ 426,860 $ (506,210) ========= ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 54 FIDELITY VIP INVESTMENT GRADE BOND FIDELITY VIP EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------------- ------------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- $ 18,206 $ 10,680 $ 2,038 $ 3,327 $ 4,739 $ 20,119 -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- 4,314 369 535 838 1,051 3,772 -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- 4,314 369 535 838 1,051 3,772 -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- 13,892 10,311 1,503 2,489 3,688 16,347 -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- 5,814 654 40 -- -- 931 17,651 3,233 13,627 (5,418) (392,905) (282,918) -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- 23,465 3,887 13,667 (5,418) (392,905) (281,987) -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- (13,312) (1,678) (8,842) 31,745 405,695 (292,885) -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- 10,153 2,209 4,825 26,327 12,790 (574,872) -------------- ---------------------- ------------------ ----------- ----------------------------- ------------- $ 24,045 $ 12,520 $ 6,328 $ 28,816 $ 16,478 $ (558,525) ============== ====================== ================== =========== ============================= =============
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, 2010, 2009, AND 2008 FIDELITY VIP HIGH INCOME INVESTMENT DIVISION ------------------------------------ 2010 2009 (b) ------------ ----------------------- INVESTMENT INCOME: Dividends $ 340 $ 2,882 ------------ ----------------------- EXPENSES: Mortality and expense risk charges 30 33 ------------ ----------------------- Total expenses 30 33 ------------ ----------------------- Net investment income (loss) 310 2,849 ------------ ----------------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- Realized gains (losses) on sale of investments (227) 11 ------------ ----------------------- Net realized gains (losses) (227) 11 ------------ ----------------------- Change in unrealized gains (losses) on investments 801 (647) ------------ ----------------------- Net realized and change in unrealized gains (losses) on investments 574 (636) ------------ ----------------------- Net increase (decrease) in net assets resulting from operations $ 884 $ 2,213 ============ =======================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 56 FIDELITY VIP MID CAP FIDELITY VIP FREEDOM 2010 INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ---------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) -------------- ---------------------- ----------- ----------- --------------------------- ------------ $ 502 $ 119 $ 49 $ 654 $ 529 $ 828 -------------- ---------------------- ----------- ----------- --------------------------- ------------ 5,209 142 35 109 72 26 -------------- ---------------------- ----------- ----------- --------------------------- ------------ 5,209 142 35 109 72 26 -------------- ---------------------- ----------- ----------- --------------------------- ------------ (4,707) (23) 14 545 457 802 -------------- ---------------------- ----------- ----------- --------------------------- ------------ 1,027 129 -- 470 190 721 2,077 613 (70) 67 (1,846) (176) -------------- ---------------------- ----------- ----------- --------------------------- ------------ 3,104 742 (70) 537 (1,656) 545 -------------- ---------------------- ----------- ----------- --------------------------- ------------ 83,723 13,131 (10,714) 2,036 3,793 (2,956) -------------- ---------------------- ----------- ----------- --------------------------- ------------ 86,827 13,873 (10,784) 2,573 2,137 (2,411) -------------- ---------------------- ----------- ----------- --------------------------- ------------ $ 82,120 $ 13,850 $ (10,770) $ 3,118 $ 2,594 $ (1,609) ============== ====================== =========== =========== =========================== ============
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, 2010, 2009, AND 2008 FIDELITY VIP FREEDOM 2020 INVESTMENT DIVISION ---------------------------------------------------- 2010 2009 2008 (a) ----------- ---------------------------- ----------- INVESTMENT INCOME: Dividends $ 15,231 $ 19,275 $ 1,266 ----------- ---------------------------- ----------- EXPENSES: Mortality and expense risk charges 2,551 2,094 49 ----------- ---------------------------- ----------- Total expenses 2,551 2,094 49 ----------- ---------------------------- ----------- Net investment income (loss) 12,680 17,181 1,217 ----------- ---------------------------- ----------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 5,440 10,109 1,384 Realized gains (losses) on sale of investments 2,838 (11,027) (106) ----------- ---------------------------- ----------- Net realized gains (losses) 8,278 (918) 1,278 ----------- ---------------------------- ----------- Change in unrealized gains (losses) on investments 70,032 149,817 (11,135) ----------- ---------------------------- ----------- Net realized and change in unrealized gains (losses) on investments 78,310 148,899 (9,857) ----------- ---------------------------- ----------- Net increase (decrease) in net assets resulting from operations $ 90,990 $ 166,080 $ (8,640) =========== ============================ ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 58 FIDELITY VIP FREEDOM 2030 AMERICAN FUNDS GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- --------------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 ----------- ------------------------- ----------- --------------- ------------------------ ---------------- $ 2,018 $ 624 $ 669 $ 832,401 $ 607,594 $ 916,946 ----------- ------------------------- ----------- --------------- ------------------------ ---------------- 364 112 17 953,940 768,579 908,181 ----------- ------------------------- ----------- --------------- ------------------------ ---------------- 364 112 17 953,940 768,579 908,181 ----------- ------------------------- ----------- --------------- ------------------------ ---------------- 1,654 512 652 (121,539) (160,985) 8,765 ----------- ------------------------- ----------- --------------- ------------------------ ---------------- 680 329 1,202 -- -- 12,124,971 710 38 (88) (328,082) (1,821,468) (207,564) ----------- ------------------------- ----------- --------------- ------------------------ ---------------- 1,390 367 1,114 (328,082) (1,821,468) 11,917,407 ----------- ------------------------- ----------- --------------- ------------------------ ---------------- 11,839 6,395 (3,051) 19,817,938 31,985,158 (70,192,654) ----------- ------------------------- ----------- --------------- ------------------------ ---------------- 13,229 6,762 (1,937) 19,489,856 30,163,690 (58,275,247) ----------- ------------------------- ----------- --------------- ------------------------ ---------------- $ 14,883 $ 7,274 $ (1,285) $ 19,368,317 $ 30,002,705 $ (58,266,482) =========== ========================= =========== =============== ======================== ================
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, 2010, 2009, AND 2008 AMERICAN FUNDS GROWTH-INCOME INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ------------------ INVESTMENT INCOME: Dividends $ 1,018,183 $ 922,229 $ 1,175,716 -------------- ---------------------- ------------------ EXPENSES: Mortality and expense risk charges 564,494 475,319 559,000 -------------- ---------------------- ------------------ Total expenses 564,494 475,319 559,000 -------------- ---------------------- ------------------ Net investment income (loss) 453,689 446,910 616,716 -------------- ---------------------- ------------------ NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 4,335,077 Realized gains (losses) on sale of investments (336,443) (956,152) (236,359) -------------- ---------------------- ------------------ Net realized gains (losses) (336,443) (956,152) 4,098,718 -------------- ---------------------- ------------------ Change in unrealized gains (losses) on investments 6,948,053 15,943,649 (34,739,655) -------------- ---------------------- ------------------ Net realized and change in unrealized gains (losses) on investments 6,611,610 14,987,497 (30,640,937) -------------- ---------------------- ------------------ Net increase (decrease) in net assets resulting from operations $ 7,065,299 $ 15,434,407 $ (30,024,221) ============== ====================== ==================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 60 AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION AMERICAN FUNDS BOND INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------- ------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ---------------- ------------ ---------------------- ------------- $ 1,031,490 $ 125,985 $ -- $ 126,810 $ 116,930 $ 196,489 --------------- ---------------------- ---------------- ------------ ---------------------- ------------- 493,443 372,082 466,291 32,377 28,070 28,355 --------------- ---------------------- ---------------- ------------ ---------------------- ------------- 493,443 372,082 466,291 32,377 28,070 28,355 --------------- ---------------------- ---------------- ------------ ---------------------- ------------- 538,047 (246,097) (466,291) 94,433 88,860 168,134 --------------- ---------------------- ---------------- ------------ ---------------------- ------------- -- -- 7,571,704 -- -- 8,541 (386,466) (2,366,209) (694,299) (8,911) (91,981) (86,900) --------------- ---------------------- ---------------- ------------ ---------------------- ------------- (386,466) (2,366,209) 6,877,405 (8,911) (91,981) (78,359) --------------- ---------------------- ---------------- ------------ ---------------------- ------------- 11,810,164 23,159,810 (44,244,505) 122,161 381,938 (446,834) --------------- ---------------------- ---------------- ------------ ---------------------- ------------- 11,423,698 20,793,601 (37,367,100) 113,250 289,957 (525,193) --------------- ---------------------- ---------------- ------------ ---------------------- ------------- $ 11,961,745 $ 20,547,504 $ (37,833,391) $ 207,683 $ 378,817 $ (357,059) =============== ====================== ================ ============ ====================== =============
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, 2010, 2009, AND 2008 AMERICAN FUNDS INTERNATIONAL INVESTMENT DIVISION ------------------------------------------------- 2010 2009 2008 (a) -------------- ------------------- -------------- INVESTMENT INCOME: Dividends $ 13,328 $ 1,021 $ 1,123 -------------- ------------------- -------------- EXPENSES: Mortality and expense risk charges 9,546 222 48 -------------- ------------------- -------------- Total expenses 9,546 222 48 -------------- ------------------- -------------- Net investment income (loss) 3,782 799 1,075 -------------- ------------------- -------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- 255 -- Realized gains (losses) on sale of investments (608) 1,282 (88) -------------- ------------------- -------------- Net realized gains (losses) (608) 1,537 (88) -------------- ------------------- -------------- Change in unrealized gains (losses) on investments 46,566 19,842 (13,968) -------------- ------------------- -------------- Net realized and change in unrealized gains (losses) on investments 45,958 21,379 (14,056) -------------- ------------------- -------------- Net increase (decrease) in net assets resulting from operations $ 49,740 $ 22,178 $ (12,981) ============== =================== ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 62 AMERICAN FUNDS U.S. GOVERNMENT/AAA RATED SECURITIES MIST T. ROWE PRICE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------ ----------------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- $ 683 $ 2,005 $ 745 $ -- $ -- $ 10,159 ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- 596 265 36 150,122 115,483 131,625 ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- 596 265 36 150,122 115,483 131,625 ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- 87 1,740 709 (150,122) (115,483) (121,466) ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- 193 505 -- -- -- 1,828,446 450 619 1 131,367 (381,122) (329,119) ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- 643 1,124 1 131,367 (381,122) 1,499,327 ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- 1,804 (1,799) 862 4,580,355 5,596,487 (8,808,387) ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- 2,447 (675) 863 4,711,722 5,215,365 (7,309,060) ---------- ---------------------- ------------------------ -------------- ---------------------- ----------------- $ 2,534 $ 1,065 $ 1,572 $ 4,561,600 $ 5,099,882 $ (7,430,526) ========== ====================== ======================== ============== ====================== =================
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, 2010, 2009, AND 2008 MIST MFS RESEARCH INTERNATIONAL INVESTMENT DIVISION ------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ----------------- INVESTMENT INCOME: Dividends $ 240,942 $ 369,327 $ 256,943 -------------- ---------------------- ----------------- EXPENSES: Mortality and expense risk charges 106,709 89,063 103,390 -------------- ---------------------- ----------------- Total expenses 106,709 89,063 103,390 -------------- ---------------------- ----------------- Net investment income (loss) 134,233 280,264 153,553 -------------- ---------------------- ----------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 1,302,185 Realized gains (losses) on sale of investments (545,005) (1,024,253) (411,130) -------------- ---------------------- ----------------- Net realized gains (losses) (545,005) (1,024,253) 891,055 -------------- ---------------------- ----------------- Change in unrealized gains (losses) on investments 1,743,808 3,897,065 (7,755,181) -------------- ---------------------- ----------------- Net realized and change in unrealized gains (losses) on investments 1,198,803 2,872,812 (6,864,126) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 1,333,036 $ 3,153,076 $ (6,710,573) ============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 64 MIST PIMCO TOTAL RETURN MIST RCM TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ----------------------------------------------------- 2010 2009 2008 2010 2009 2008 ----------- ----------------------- -------------- -------------- ---------------------- --------------- $ 1,634,551 $ 2,762,595 $ 1,327,240 $ -- $ -- $ 1,349,744 ----------- ----------------------- -------------- -------------- ---------------------- --------------- 360,915 310,295 283,126 111,175 82,504 88,892 ----------- ----------------------- -------------- -------------- ---------------------- --------------- 360,915 310,295 283,126 111,175 82,504 88,892 ----------- ----------------------- -------------- -------------- ---------------------- --------------- 1,273,636 2,452,300 1,044,114 (111,175) (82,504) 1,260,852 ----------- ----------------------- -------------- -------------- ---------------------- --------------- 236,060 1,566,277 807,479 -- -- 2,816,232 238,435 10,564 (11,712) (54,192) (600,648) (702,139) ----------- ----------------------- -------------- -------------- ---------------------- --------------- 474,495 1,576,841 795,767 (54,192) (600,648) 2,114,093 ----------- ----------------------- -------------- -------------- ---------------------- --------------- 1,426,113 1,911,046 (1,944,451) 3,551,862 5,182,655 (9,308,569) ----------- ----------------------- -------------- -------------- ---------------------- --------------- 1,900,608 3,487,887 (1,148,684) 3,497,670 4,582,007 (7,194,476) ----------- ----------------------- -------------- -------------- ---------------------- --------------- $ 3,174,244 $ 5,940,187 $ (104,570) $ 3,386,495 $ 4,499,503 $ (5,933,624) =========== ======================= ============== ============== ====================== ===============
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, 2010, 2009, AND 2008 MIST LORD ABBETT BOND DEBENTURE INVESTMENT DIVISION ---------------------------------------------------- 2010 2009 2008 ----------- ---------------------- ----------------- INVESTMENT INCOME: Dividends $ 1,718,530 $ 1,572,315 $ 901,666 ----------- ---------------------- ----------------- EXPENSES: Mortality and expense risk charges 316,284 180,909 160,256 ----------- ---------------------- ----------------- Total expenses 316,284 180,909 160,256 ----------- ---------------------- ----------------- Net investment income (loss) 1,402,246 1,391,406 741,410 ----------- ---------------------- ----------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 312,735 Realized gains (losses) on sale of investments 240,525 (126,749) (153,114) ----------- ---------------------- ----------------- Net realized gains (losses) 240,525 (126,749) 159,621 ----------- ---------------------- ----------------- Change in unrealized gains (losses) on investments 1,315,427 5,411,601 (5,045,528) ----------- ---------------------- ----------------- Net realized and change in unrealized gains (losses) on investments 1,555,952 5,284,852 (4,885,907) ----------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 2,958,198 $ 6,676,258 $ (4,144,497) =========== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 66 MIST LAZARD MID CAP MIST INVESCO SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ----------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- $ 51,856 $ 51,729 $ 55,298 $ -- $ -- $ -- -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 40,421 32,462 39,050 30,507 22,254 24,205 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 40,421 32,462 39,050 30,507 22,254 24,205 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 11,435 19,267 16,248 (30,507) (22,254) (24,205) -------------- ---------------------- --------------- ------------ ---------------------- ----------------- -- -- 338,409 -- -- 254,249 (93,933) (283,748) (302,807) (15,371) (84,509) (56,467) -------------- ---------------------- --------------- ------------ ---------------------- ----------------- (93,933) (283,748) 35,602 (15,371) (84,509) 197,782 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 1,108,654 1,519,608 (2,239,073) 887,599 919,328 (1,510,157) -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 1,014,721 1,235,860 (2,203,471) 872,228 834,819 (1,312,375) -------------- ---------------------- --------------- ------------ ---------------------- ----------------- $ 1,026,156 $ 1,255,127 $ (2,187,223) $ 841,721 $ 812,565 $ (1,336,580) ============== ====================== =============== ============ ====================== =================
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, 2010, 2009, AND 2008 MIST HARRIS OAKMARK INTERNATIONAL INVESTMENT DIVISION -------------- ---------------------- --- -------------- 2010 2009 2008 -------------- ---------------------- ------------------ INVESTMENT INCOME: Dividends $ 576,287 $ 1,589,352 $ 427,414 -------------- ---------------------- ------------------ EXPENSES: Mortality and expense risk charges 232,976 170,663 185,029 -------------- ---------------------- ------------------ Total expenses 232,976 170,663 185,029 -------------- ---------------------- ------------------ Net investment income (loss) 343,311 1,418,689 242,385 -------------- ---------------------- ------------------ NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 3,659,339 Realized gains (losses) on sale of investments (312,283) (1,294,657) (984,052) -------------- ---------------------- ------------------ Net realized gains (losses) (312,283) (1,294,657) 2,675,287 -------------- ---------------------- ------------------ Change in unrealized gains (losses) on investments 4,235,035 8,897,628 (13,913,907) -------------- ---------------------- ------------------ Net realized and change in unrealized gains (losses) on investments 3,922,752 7,602,971 (11,238,620) -------------- ---------------------- ------------------ Net increase (decrease) in net assets resulting from operations $ 4,266,063 $ 9,021,660 $ (10,996,235) ============== ====================== ==================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 68 MIST LEGG MASON CLEARBRIDGE AGGRESSIVE GROWTH MIST LORD ABBETT GROWTH AND INCOME INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ----------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- $ 4,315 $ 6,856 $ 943 $ 65,246 $ 104,472 $ 96,064 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 57,953 47,276 57,519 134,790 18,231 25,528 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 57,953 47,276 57,519 134,790 18,231 25,528 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- (53,638) (40,420) (56,576) (69,544) 86,241 70,536 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- -- -- 54,432 -- -- 543,774 (57,251) (166,346) (72,581) (79,021) (261,167) (71,592) -------------- ---------------------- --------------- ------------ ---------------------- ----------------- (57,251) (166,346) (18,149) (79,021) (261,167) 472,182 -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 1,583,027 1,815,976 (3,076,964) 921,874 894,542 (2,888,440) -------------- ---------------------- --------------- ------------ ---------------------- ----------------- 1,525,776 1,649,630 (3,095,113) 842,853 633,375 (2,416,258) -------------- ---------------------- --------------- ------------ ---------------------- ----------------- $ 1,472,138 $ 1,609,210 $ (3,151,689) $ 773,309 $ 719,616 $ (2,345,722) ============== ====================== =============== ============ ====================== =================
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, 2010, 2009, AND 2008 MIST CLARION GLOBAL REAL ESTATE INVESTMENT DIVISION ------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ----------------- INVESTMENT INCOME: Dividends $ 1,558,222 $ 496,210 $ 332,725 -------------- ---------------------- ----------------- EXPENSES: Mortality and expense risk charges 166,255 119,529 140,313 -------------- ---------------------- ----------------- Total expenses 166,255 119,529 140,313 -------------- ---------------------- ----------------- Net investment income (loss) 1,391,967 376,681 192,412 -------------- ---------------------- ----------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 1,614,459 Realized gains (losses) on sale of investments (571,095) (1,092,248) (667,437) -------------- ---------------------- ----------------- Net realized gains (losses) (571,095) (1,092,248) 947,022 -------------- ---------------------- ----------------- Change in unrealized gains (losses) on investments 1,969,823 5,493,585 (9,433,208) -------------- ---------------------- ----------------- Net realized and change in unrealized gains (losses) on investments 1,398,728 4,401,337 (8,486,186) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations $ 2,790,695 $ 4,778,018 $ (8,293,774) ============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 70 MIST MORGAN STANLEY MID CAP GROWTH MIST LORD ABBETT MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- -------------- ----------- ---------------------- -------------- $ 28 $ -- $ 345 $ 568 $ 1,893 $ 197 --------------- ---------------------- -------------- ----------- ---------------------- -------------- 957,621 870 78 369 335 312 --------------- ---------------------- -------------- ----------- ---------------------- -------------- 957,621 870 78 369 335 312 --------------- ---------------------- -------------- ----------- ---------------------- -------------- (957,593) (870) 267 199 1,558 (115) --------------- ---------------------- -------------- ----------- ---------------------- -------------- -- -- 2,390 -- -- 5,229 336,382 1,780 (81) 3,236 (38,897) (14,654) --------------- ---------------------- -------------- ----------- ---------------------- -------------- 336,382 1,780 2,309 3,236 (38,897) (9,425) --------------- ---------------------- -------------- ----------- ---------------------- -------------- 31,775,159 75,648 (17,251) 19,769 57,059 (38,556) --------------- ---------------------- -------------- ----------- ---------------------- -------------- 32,111,541 77,428 (14,942) 23,005 18,162 (47,981) --------------- ---------------------- -------------- ----------- ---------------------- -------------- $ 31,153,948 $ 76,558 $ (14,675) $ 23,204 $ 19,720 $ (48,096) =============== ====================== ============== =========== ====================== ==============
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, 2010, 2009, AND 2008 MIST THIRD AVENUE SMALL CAP VALUE INVESTMENT DIVISION ------------------------------------------------ 2010 2009 2008 --------- ---------------------- --------------- INVESTMENT INCOME: Dividends $ 12,822 $ 3,058 $ 2,384 --------- ---------------------- --------------- EXPENSES: Mortality and expense risk charges 11,741 2,219 1,496 --------- ---------------------- --------------- Total expenses 11,741 2,219 1,496 --------- ---------------------- --------------- Net investment income (loss) 1,081 839 888 --------- ---------------------- --------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- 2,838 21,799 Realized gains (losses) on sale of investments 42,370 (17,013) (21,646) --------- ---------------------- --------------- Net realized gains (losses) 42,370 (14,175) 153 --------- ---------------------- --------------- Change in unrealized gains (losses) on investments 198,929 152,916 (119,764) --------- ---------------------- --------------- Net realized and change in unrealized gains (losses) on investments 241,299 138,741 (119,611) --------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations $ 242,380 $ 139,580 $ (118,723) ========= ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 72 MIST OPPENHEIMER CAPITAL APPRECIATION MIST LEGG MASON VALUE EQUITY INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------- ----------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------ ---------------------- --------------- ------------ ---------------------- ----------------- $ 10,876 $ -- $ 40,326 $ 93,044 $ 60,620 $ 12,937 ------------ ---------------------- --------------- ------------ ---------------------- ----------------- 13,539 10,277 9,700 35,652 28,252 33,929 ------------ ---------------------- --------------- ------------ ---------------------- ----------------- 13,539 10,277 9,700 35,652 28,252 33,929 ------------ ---------------------- --------------- ------------ ---------------------- ----------------- (2,663) (10,277) 30,626 57,392 32,368 (20,992) ------------ ---------------------- --------------- ------------ ---------------------- ----------------- -- -- 295,189 -- -- 176,346 (39,996) (109,001) (106,123) (148,382) (273,743) (135,383) ------------ ---------------------- --------------- ------------ ---------------------- ----------------- (39,996) (109,001) 189,066 (148,382) (273,743) 40,963 ------------ ---------------------- --------------- ------------ ---------------------- ----------------- 190,578 558,202 (860,586) 390,845 1,354,429 (3,108,496) ------------ ---------------------- --------------- ------------ ---------------------- ----------------- 150,582 449,201 (671,520) 242,463 1,080,686 (3,067,533) ------------ ---------------------- --------------- ------------ ---------------------- ----------------- $ 147,919 $ 438,924 $ (640,894) $ 299,855 $ 1,113,054 $ (3,088,525) ============ ====================== =============== ============ ====================== =================
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, 2010, 2009, AND 2008 MIST SSGA GROWTH ETF INVESTMENT DIVISION ----------------------------------------------- 2010 2009 2008 --------- ----------------------- ------------- INVESTMENT INCOME: Dividends $ 34,185 $ 15,419 $ 9,041 --------- ----------------------- ------------- EXPENSES: Mortality and expense risk charges 17,903 8,413 4,512 --------- ----------------------- ------------- Total expenses 17,903 8,413 4,512 --------- ----------------------- ------------- Net investment income (loss) 16,282 7,006 4,529 --------- ----------------------- ------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 11,307 Realized gains (losses) on sale of investments 12,378 (20,730) (32,358) --------- ----------------------- ------------- Net realized gains (losses) 12,378 (20,730) (21,051) --------- ----------------------- ------------- Change in unrealized gains (losses) on investments 271,601 309,775 (210,490) --------- ----------------------- ------------- Net realized and change in unrealized gains (losses) on investments 283,979 289,045 (231,541) --------- ----------------------- ------------- Net increase (decrease) in net assets resulting from operations $ 300,261 $ 296,051 $ (227,012) ========= ======================= =============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 74 MIST SSGA GROWTH AND INCOME ETF MIST PIMCO INFLATION PROTECTED BOND INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ------------------------------------------------ 2010 2009 2008 2010 2009 2008 --------- ------------------- --------------- --------- ---------------------- --------------- $ 35,130 $ 13,156 $ 7,559 $ 210,729 $ 247,574 $ 129,679 --------- ------------------- --------------- --------- ---------------------- --------------- 22,837 6,883 3,301 64,055 52,710 34,082 --------- ------------------- --------------- --------- ---------------------- --------------- 22,837 6,883 3,301 64,055 52,710 34,082 --------- ------------------- --------------- --------- ---------------------- --------------- 12,293 6,273 4,258 146,674 194,864 95,597 --------- ------------------- --------------- --------- ---------------------- --------------- 115 -- 8,201 220,376 -- 6,847 16,043 3,801 (45,016) 60,903 (46,474) (100,879) --------- ------------------- --------------- --------- ---------------------- --------------- 16,158 3,801 (36,815) 281,279 (46,474) (94,032) --------- ------------------- --------------- --------- ---------------------- --------------- 322,318 204,020 (94,558) 130,473 877,182 (678,454) --------- ------------------- --------------- --------- ---------------------- --------------- 338,476 207,821 (131,373) 411,752 830,708 (772,486) --------- ------------------- --------------- --------- ---------------------- --------------- $ 350,769 $ 214,094 $ (127,115) $ 558,426 $ 1,025,572 $ (676,889) ========= =================== =============== ========= ====================== ===============
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 -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST BLACKROCK LARGE CAP CORE INVESTMENT DIVISION ---------------------------------------------------------- 2010 2009 2008 --------------- ---------------------- ------------------- INVESTMENT INCOME: Dividends $ 3,848,840 $ 4,180,146 $ 2,475,191 --------------- ---------------------- ------------------- EXPENSES: Mortality and expense risk charges 2,233,231 2,047,270 2,792,458 --------------- ---------------------- ------------------- Total expenses 2,233,231 2,047,270 2,792,458 --------------- ---------------------- ------------------- Net investment income (loss) 1,615,609 2,132,876 (317,267) --------------- ---------------------- ------------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 16,168,718 Realized gains (losses) on sale of investments (7,248,214) (10,716,690) (6,439,384) --------------- ---------------------- ------------------- Net realized gains (losses) (7,248,214) (10,716,690) 9,729,334 --------------- ---------------------- ------------------- Change in unrealized gains (losses) on investments 38,497,976 54,384,062 (169,653,539) --------------- ---------------------- ------------------- Net realized and change in unrealized gains (losses) on investments 31,249,762 43,667,372 (159,924,205) --------------- ---------------------- ------------------- Net increase (decrease) in net assets resulting from operations $ 32,865,371 $ 45,800,248 $ (160,241,472) =============== ====================== ===================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 76 MIST JANUS FORTY MIST DREMAN SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ----------------------------------------------------------- 2010 2009 2008 2010 2009 2008 (a) -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- $ 219,796 $ -- $ 306,277 $ 172 $ 1 $ -- -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- 99,823 75,162 57,079 220 428 -- -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- 99,823 75,162 57,079 220 428 -- -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- 119,973 (75,162) 249,198 (48) (427) -- -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- -- -- 132,557 -- -- -- (41,591) (540,105) (167,618) 403 58,177 (10) -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- (41,591) (540,105) (35,061) 403 58,177 (10) -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- 1,120,682 3,887,171 (4,523,728) 3,392 2,844 6 -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- 1,079,091 3,347,066 (4,558,789) 3,795 61,021 (4) -------------- ---------------------- --------------- ------------- ---------------------- ---------------------- $ 1,199,064 $ 3,271,904 $ (4,309,591) $ 3,747 $ 60,594 $ (4) ============== ====================== =============== ============= ====================== ======================
The accompanying notes are an integral part of these financial statements. 77 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST AMERICAN FUNDS BALANCED ALLOCATION INVESTMENT DIVISION ----------------------------------------------- 2010 2009 2008 (a) ----------- ---------------------- ------------ INVESTMENT INCOME: Dividends $ 3,146 $ -- $ 368 ----------- ---------------------- ------------ EXPENSES: Mortality and expense risk charges -- -- -- ----------- ---------------------- ------------ Total expenses -- -- -- ----------- ---------------------- ------------ Net investment income (loss) 3,146 -- 368 ----------- ---------------------- ------------ NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 117 -- 1 Realized gains (losses) on sale of investments 1,705 (28) (91) ----------- ---------------------- ------------ Net realized gains (losses) 1,822 (28) (90) ----------- ---------------------- ------------ Change in unrealized gains (losses) on investments 26,193 14,667 (1,781) ----------- ---------------------- ------------ Net realized and change in unrealized gains (losses) on investments 28,015 14,639 (1,871) ----------- ---------------------- ------------ Net increase (decrease) in net assets resulting from operations $ 31,161 $ 14,639 $ (1,503) =========== ====================== ============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 78 MIST AMERICAN FUNDS GROWTH ALLOCATION MIST AMERICAN FUNDS MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------------- ------------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- $ 2,434 $ -- $ 644 $ 2,501 $ -- $ 165 ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- -- -- -- -- -- -- ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- -- -- -- -- -- -- ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- 2,434 -- 644 2,501 -- 165 ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- -- -- -- -- -- -- 5,990 1,298 12 646 370 (29) ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- 5,990 1,298 12 646 370 (29) ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- 79,550 20,909 (48) 16,902 11,101 (130) ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- 85,540 22,207 (36) 17,548 11,471 (159) ----------- ------------------- ----------------------------- ----------- ------------------- ----------------------- $ 87,974 $ 22,207 $ 608 $ 20,049 $ 11,471 $ 6 =========== =================== ============================= =========== =================== =======================
The accompanying notes are an integral part of these financial statements. 79 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST MET/FRANKLIN INCOME INVESTMENT DIVISION ------------------------------------------------ 2010 2009 2008 (a) ----------- ------------------------ ----------- INVESTMENT INCOME: Dividends $ 3,216 $ -- $ 469 ----------- ------------------------ ----------- EXPENSES: Mortality and expense risk charges -- -- -- ----------- ------------------------ ----------- Total expenses -- -- -- ----------- ------------------------ ----------- Net investment income (loss) 3,216 -- 469 ----------- ------------------------ ----------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions 433 -- -- Realized gains (losses) on sale of investments 390 54 (63) ----------- ------------------------ ----------- Net realized gains (losses) 823 54 (63) ----------- ------------------------ ----------- Change in unrealized gains (losses) on investments 10,272 9,507 (2,459) ----------- ------------------------ ----------- Net realized and change in unrealized gains (losses) on investments 11,095 9,561 (2,522) ----------- ------------------------ ----------- Net increase (decrease) in net assets resulting from operations $ 14,311 $ 9,561 $ (2,053) =========== ======================== ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 80 MIST MET/FRANKLIN MUTUAL SHARES MIST MET/FRANKLIN TEMPLETON FOUNDING STRATEGY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ -------------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ---------- ---------------------- -------------- -------- ------------------- --------------------------- $ -- $ -- $ 234 $ -- $ -- $ 207 ---------- ---------------------- -------------- -------- ------------------- --------------------------- -- -- -- -- -- -- ---------- ---------------------- -------------- -------- ------------------- --------------------------- -- -- -- -- -- -- ---------- ---------------------- -------------- -------- ------------------- --------------------------- -- -- 234 -- -- 207 ---------- ---------------------- -------------- -------- ------------------- --------------------------- 577 -- -- 1 -- -- 106 (91) (83) 1,545 565 (21) ---------- ---------------------- -------------- -------- ------------------- --------------------------- 683 (91) (83) 1,546 565 (21) ---------- ---------------------- -------------- -------- ------------------- --------------------------- 4,077 4,710 (2,584) 23,230 14,572 (146) ---------- ---------------------- -------------- -------- ------------------- --------------------------- 4,760 4,619 (2,667) 24,776 15,137 (167) ---------- ---------------------- -------------- -------- ------------------- --------------------------- $ 4,760 $ 4,619 $ (2,433) $ 24,776 $ 15,137 $ 40 ========== ====================== ============== ======== =================== ===========================
The accompanying notes are an integral part of these financial statements. 81 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST MET/TEMPLETON GROWTH INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 (a) ---------- ---------------------- ---------------------- INVESTMENT INCOME: Dividends $ 305 $ 2 $ 18 ---------- ---------------------- ---------------------- EXPENSES: Mortality and expense risk charges -- -- -- ---------- ---------------------- ---------------------- Total expenses -- -- -- ---------- ---------------------- ---------------------- Net investment income (loss) 305 2 18 ---------- ---------------------- ---------------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 125 (60) (39) ---------- ---------------------- ---------------------- Net realized gains (losses) 125 (60) (39) ---------- ---------------------- ---------------------- Change in unrealized gains (losses) on investments 3,904 3,117 (322) ---------- ---------------------- ---------------------- Net realized and change in unrealized gains (losses) on investments 4,029 3,057 (361) ---------- ---------------------- ---------------------- Net increase (decrease) in net assets resulting from operations $ 4,334 $ 3,059 $ (343) ========== ====================== ======================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 82 MIST PIONEER FUND AMERICAN CENTURY VP VISTA INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------ ----------------------------------------- 2010 2009 (d) 2010 2009 2008 ----------- --------------- -------------- ---------------------------- ------------ $ 1,987 $ -- $ -- $ -- $ -- ----------- --------------- -------------- ---------------------------- ------------ 982 580 519 472 285 ----------- --------------- -------------- ---------------------------- ------------ 982 580 519 472 285 ----------- --------------- -------------- ---------------------------- ------------ 1,005 (580) (519) (472) (285) ----------- --------------- -------------- ---------------------------- ------------ -- -- -- -- 1,116 6,067 1,986 12,351 (47,927) (912) ----------- --------------- -------------- ---------------------------- ------------ 6,067 1,986 12,351 (47,927) 204 ----------- --------------- -------------- ---------------------------- ------------ 25,716 48,304 (1,947) 67,433 (65,328) ----------- --------------- -------------- ---------------------------- ------------ 31,783 50,290 10,404 19,506 (65,124) ----------- --------------- -------------- ---------------------------- ------------ $ 32,788 $ 49,710 $ 9,885 $ 19,034 $ (65,409) =========== =============== ============== ============================ ============
The accompanying notes are an integral part of these financial statements. 83 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 DELAWARE VIP SMALL CAP VALUE INVESTMENT DIVISION ----------------------------------------------------- 2010 2009 2008 -------------- ---------------------- --------------- INVESTMENT INCOME: Dividends $ 980 $ 4,242 $ 4,853 -------------- ---------------------- --------------- EXPENSES: Mortality and expense risk charges 1,541 1,544 4,658 -------------- ---------------------- --------------- Total expenses 1,541 1,544 4,658 -------------- ---------------------- --------------- Net investment income (loss) (561) 2,698 195 -------------- ---------------------- --------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 70,050 Realized gains (losses) on sale of investments 10,618 (324,068) (158,860) -------------- ---------------------- --------------- Net realized gains (losses) 10,618 (324,068) (88,810) -------------- ---------------------- --------------- Change in unrealized gains (losses) on investments 49,508 372,833 (269,207) -------------- ---------------------- --------------- Net realized and change in unrealized gains (losses) on investments 60,126 48,765 (358,017) -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations $ 59,565 $ 51,463 $ (357,822) ============== ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 84 DREYFUS VIF INTERNATIONAL VALUE GOLDMAN SACHS MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION -------------- ---------------------- --- ----------- ----------- ---------------------- --- ----------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- --------------- ----------- ---------------------- --------------- $ 3,367 $ 10,533 $ 10,713 $ 2,264 $ 5,173 $ 13,616 -------------- ---------------------- --------------- ----------- ---------------------- --------------- 876 1,264 2,366 1,356 2,426 5,676 -------------- ---------------------- --------------- ----------- ---------------------- --------------- 876 1,264 2,366 1,356 2,426 5,676 -------------- ---------------------- --------------- ----------- ---------------------- --------------- 2,491 9,269 8,347 908 2,747 7,940 -------------- ---------------------- --------------- ----------- ---------------------- --------------- -- -- 92,929 -- -- 2,438 (14,086) (185,176) (67,586) (13,608) (540,331) (114,620) -------------- ---------------------- --------------- ----------- ---------------------- --------------- (14,086) (185,176) 25,343 (13,608) (540,331) (112,182) -------------- ---------------------- --------------- ----------- ---------------------- --------------- 19,382 238,024 (268,322) 84,633 633,578 (486,662) -------------- ---------------------- --------------- ----------- ---------------------- --------------- 5,296 52,848 (242,979) 71,025 93,247 (598,844) -------------- ---------------------- --------------- ----------- ---------------------- --------------- $ 7,787 $ 62,117 $ (234,632) $ 71,933 $ 95,994 $ (590,904) ============== ====================== =============== =========== ====================== ===============
The accompanying notes are an integral part of these financial statements. 85 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION --------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ------------------- INVESTMENT INCOME: Dividends $ 254 $ 724 $ 447 -------------- ---------------------- ------------------- EXPENSES: Mortality and expense risk charges 154 173 255 -------------- ---------------------- ------------------- Total expenses 154 173 255 -------------- ---------------------- ------------------- Net investment income (loss) 100 551 192 -------------- ---------------------- ------------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 113 Realized gains (losses) on sale of investments (7,335) (17,708) (35,096) -------------- ---------------------- ------------------- Net realized gains (losses) (7,335) (17,708) (34,983) -------------- ---------------------- ------------------- Change in unrealized gains (losses) on investments 18,632 28,044 (655) -------------- ---------------------- ------------------- Net realized and change in unrealized gains (losses) on investments 11,297 10,336 (35,638) -------------- ---------------------- ------------------- Net increase (decrease) in net assets resulting from operations $ 11,397 $ 10,887 $ (35,446) ============== ====================== ===================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 86 MFS VIT HIGH INCOME MFS VIT GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ------------------------------------------------- 2010 2009 2008 2010 2009 2008 ---------- ------------------- -------------- ----------- ------------------------ ------------ $ 8,657 $ 933 $ 1,656 $ 1,232 $ 1,242 $ 480 ---------- ------------------- -------------- ----------- ------------------------ ------------ 457 273 62 598 238 255 ---------- ------------------- -------------- ----------- ------------------------ ------------ 457 273 62 598 238 255 ---- ----- ------------------- ---- --------- ---- ------ ------------------------ ------------ 8,200 660 1,594 634 1,004 225 ---------- ------------------- -------------- ----------- ------------------------ ------------ -- -- -- -- -- 4,968 680 326 (3,105) 183 (11,994) (670) ---------- ------------------- -------------- ----------- ------------------------ ------------ 680 326 (3,105) 183 (11,994) 4,298 ---------- ------------------- -------------- ----------- ------------------------ ------------ 7,331 21,466 (1,097) 19,523 27,307 (30,617) ---------- ------------------- -------------- ----------- ------------------------ ------------ 8,011 21,792 (4,202) 19,706 15,313 (26,319) ---------- ------------------- -------------- ----------- ------------------------ ------------ $ 16,211 $ 22,452 $ (2,608) $ 20,340 $ 16,317 $ (26,094) ========== =================== ============== =========== ======================== ============
The accompanying notes are an integral part of these financial statements. 87 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MFS VIT NEW DISCOVERY INVESTMENT DIVISION ------------------------------------------------------ 2010 2009 2008 -------------- ------------------------ -------------- INVESTMENT INCOME: Dividends $ -- $ -- $ -- -------------- ------------------------ -------------- EXPENSES: Mortality and expense risk charges 340 27 11 -------------- ------------------------ -------------- Total expenses 340 27 11 -------------- ------------------------ -------------- Net investment income (loss) (340) (27) (11) -------------- ------------------------ -------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- 561 Realized gains (losses) on sale of investments 544 1,560 (22) -------------- ------------------------ -------------- Net realized gains (losses) 544 1,560 539 -------------- ------------------------ -------------- Change in unrealized gains (losses) on investments 28,843 3,314 (1,817) -------------- ------------------------ -------------- Net realized and change in unrealized gains (losses) on investments 29,387 4,874 (1,278) -------------- ------------------------ -------------- Net increase (decrease) in net assets resulting from operations $ 29,047 $ 4,847 $ (1,289) ============== ======================== ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 88 MFS VIT VALUE WELLS FARGO VT TOTAL RETURN BOND INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ --------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ----------- ----------- ------------------- ------------- $ 969 $ 803 $ 10,331 $ 29,774 $ 18,789 $ 7,542 ------------- ---------------------- ----------- ----------- ------------------- ------------- 293 257 302 6,709 1,892 619 ------------- ---------------------- ----------- ----------- ------------------- ------------- 293 257 302 6,709 1,892 619 ------------- ---------------------- ----------- ----------- ------------------- ------------- 676 546 10,029 23,065 16,897 6,923 ------------- ---------------------- ----------- ----------- ------------------- ------------- -- -- 42,245 23,602 2,046 -- (552) (1,224) (23,850) 10,857 3,173 (532) ------------- ---------------------- ----------- ----------- ------------------- ------------- (552) (1,224) 18,395 34,459 5,219 (532) ------------- ---------------------- ----------- ----------- ------------------- ------------- 7,585 14,082 (26,364) (12,496) 23,526 (2,943) ------------- ---------------------- ----------- ----------- ------------------- ------------- 7,033 12,858 (7,969) 21,963 28,745 (3,475) ------------- ---------------------- ----------- ----------- ------------------- ------------- $ 7,709 $ 13,404 $ 2,060 $ 45,028 $ 45,642 $ 3,448 ============= ====================== =========== =========== =================== =============
The accompanying notes are an integral part of these financial statements. 89 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 PIONEER VCT EMERGING MARKETS INVESTMENT DIVISION ----------------------------------------------- 2010 2009 2008 (a) ------------ ------------------- -------------- INVESTMENT INCOME: Dividends $ 3,039 $ 5,200 $ -- ------------ ------------------- -------------- EXPENSES: Mortality and expense risk charges 13,622 1,999 141 ------------ ------------------- -------------- Total expenses 13,622 1,999 141 ------------ ------------------- -------------- Net investment income (loss) (10,583) 3,201 (141) ------------ ------------------- -------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- -- Realized gains (losses) on sale of investments 75,682 8,989 (554) ------------ ------------------- -------------- Net realized gains (losses) 75,682 8,989 (554) ------------ ------------------- -------------- Change in unrealized gains (losses) on investments 68,690 311,181 (40,541) ------------ ------------------- -------------- Net realized and change in unrealized gains (losses) on investments 144,372 320,170 (41,095) ------------ ------------------- -------------- Net increase (decrease) in net assets resulting from operations $ 133,789 $ 323,371 $ (41,236) ============ =================== ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 90 PIONEER VCT MID CAP VALUE ROYCE MICRO-CAP ROYCE SMALL-CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------- --------------------------------------------------------------- 2010 2009 (b) 2010 (f) 2010 2009 (g) ----------- ------------------------- ---------------------- -------------- ------------------------- $ 801 $ -- $ 5,659 $ 425 $ -- ----------- ------------------------- ---------------------- -------------- ------------------------- 297 34 619 1,285 57 ----------- ------------------------- ---------------------- -------------- ------------------------- 297 34 619 1,285 57 ----------- ------------------------- ---------------------- -------------- ------------------------- 504 (34) 5,040 (860) (57) ----------- ------------------------- ---------------------- -------------- ------------------------- -- -- -- -- -- 313 32 197 2,111 16 ----------- ------------------------- ---------------------- -------------- ------------------------- 313 32 197 2,111 16 ----------- ------------------------- ---------------------- -------------- ------------------------- 14,039 2,439 61,964 63,066 2,984 ----------- ------------------------- ---------------------- -------------- ------------------------- 14,352 2,471 62,161 65,177 3,000 ----------- ------------------------- ---------------------- -------------- ------------------------- $ 14,856 $ 2,437 $ 67,201 $ 64,317 $ 2,943 =========== ========================= ====================== ============== =========================
The accompanying notes are an integral part of these financial statements. 91 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 UIF EMERGING MARKETS DEBT INVESTMENT DIVISION -------------------------------- 2010 2009 (g) -------- ----------------------- INVESTMENT INCOME: Dividends $ 318 $ 74 -------- ----------------------- EXPENSES: Mortality and expense risk charges 31 6 -------- ----------------------- Total expenses 31 6 -------- ----------------------- Net investment income (loss) 287 68 -------- ----------------------- NET REALIZED AND CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions -- -- Realized gains (losses) on sale of investments 87 32 -------- ----------------------- Net realized gains (losses) 87 32 -------- ----------------------- Change in unrealized gains (losses) on investments 318 95 -------- ----------------------- Net realized and change in unrealized gains (losses) on investments 405 127 -------- ----------------------- Net increase (decrease) in net assets resulting from operations $ 692 $ 195 ======== =======================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 92 UIF EMERGING MARKETS EQUITY PIMCO VIT LOW DURATION INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------- ---------------------------------- 2010 2009 (g) 2010 2009 (d) ----------- --------------------------- ----------- ---------------------- $ 758 $ -- $ 12,187 $ 11,216 ----------- --------------------------- ----------- ---------------------- 520 17 2,779 1,731 ----------- --------------------------- ----------- ---------------------- 520 17 2,779 1,731 ----------- --------------------------- ----------- ---------------------- 238 (17) 9,408 9,485 ----------- --------------------------- ----------- ---------------------- -- -- 2,469 32,906 899 480 260 180 ----------- --------------------------- ----------- ---------------------- 899 480 2,729 33,086 ----------- --------------------------- ----------- ---------------------- 38,992 1,146 23,685 1,601 ----------- --------------------------- ----------- ---------------------- 39,891 1,626 26,414 34,687 ----------- --------------------------- ----------- ---------------------- $ 40,129 $ 1,609 $ 35,822 $ 44,172 =========== =========================== =========== ======================
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 FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MSF BLACKROCK DIVERSIFIED INVESTMENT DIVISION -------------------------------------------------------------- 2010 2009 2008 ---------------- ---------------------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 2,653,340 $ 10,169,948 $ 5,620,528 Net realized gains (losses) (1,951,136) (4,609,576) 1,274,596 Change in unrealized gains (losses) on investments 20,635,275 31,028,944 (90,018,067) ---------------- ---------------------------- ---------------- Net increase (decrease) in net assets resulting from operations 21,337,479 36,589,316 (83,122,943) ---------------- ---------------------------- ---------------- POLICY TRANSACTIONS: Premium payments received from policy owners 29,469,771 32,386,040 36,312,304 Net transfers (including fixed account) (2,059,076) (4,711,176) (7,645,743) Policy charges (23,701,241) (25,234,205) (25,234,783) Transfers for policy benefits and terminations (19,336,433) (17,354,140) (18,838,290) ---------------- ---------------------------- ---------------- Net increase (decrease) in net assets resulting from policy transactions (15,626,979) (14,913,481) (15,406,512) ---------------- ---------------------------- ---------------- Net increase (decrease) in net assets 5,710,500 21,675,835 (98,529,455) NET ASSETS: Beginning of year 257,391,816 235,715,981 334,245,436 ---------------- ---------------------------- ---------------- End of year $ 263,102,316 $ 257,391,816 $ 235,715,981 ================ ============================ ================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 94 MSF BLACKROCK AGGRESSIVE GROWTH MSF METLIFE STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------------- ------------------------------------------------------------ 2010 2009 2008 2010 2009 2008 ---------------- ---------------------- ------------------- ---------------- -------------------------- ---------------- $ (1,491,228) $ (1,057,460) $ (1,837,501) $ 5,808,346 $ 9,682,465 $ 7,210,587 451,106 (3,328,441) 740,184 (5,405,568) (976,772) 24,582,861 26,312,677 66,805,065 (115,833,611) 82,259,608 112,925,652 (312,125,621) ---------------- ---------------------- ------------------- ---------------- -------------------------- ---------------- 25,272,555 62,419,164 (116,930,928) 82,662,386 121,631,345 (280,332,173) ---------------- ---------------------- ------------------- ---------------- -------------------------- ---------------- 18,632,365 20,361,017 22,493,319 86,739,358 95,757,402 104,846,071 (3,158,688) (3,469,034) (1,853,857) (12,182,904) (18,281,346) (10,320,663) (13,928,346) (14,222,944) (14,747,697) (41,866,793) (43,260,398) (45,394,792) (14,208,996) (11,832,605) (14,745,615) (41,307,628) (30,750,386) (44,256,002) ---------------- ---------------------- ------------------- ---------------- -------------------------- ---------------- (12,663,665) (9,163,566) (8,853,850) (8,617,967) 3,465,272 4,874,614 ---------------- ---------------------- ------------------- ---------------- -------------------------- ---------------- 12,608,890 53,255,598 (125,784,778) 74,044,419 125,096,617 (275,457,559) 187,532,635 134,277,037 260,061,815 597,707,546 472,610,929 748,068,488 ---------------- ---------------------- ------------------- ---------------- -------------------------- ---------------- $ 200,141,525 $ 187,532,635 $ 134,277,037 $ 671,751,965 $ 597,707,546 $ 472,610,929 ================ ====================== =================== ================ ========================== ================
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, 2010, 2009, AND 2008 MSF ARTIO INTERNATIONAL STOCK INVESTMENT DIVISION ---------------------------------------------------------------- 2010 2009 2008 --------------- -------------------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 312,234 $ (49,120) $ 1,319,521 Net realized gains (losses) (1,030,425) (2,053,375) 6,453,740 Change in unrealized gains (losses) on investments 3,370,719 10,298,349 (39,671,178) --------------- -------------------------------- --------------- Net increase (decrease) in net assets resulting from operations 2,652,528 8,195,854 (31,897,917) --------------- -------------------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 5,258,777 5,947,335 6,916,925 Net transfers (including fixed account) (592,663) (1,694,751) (1,195,679) Policy charges (3,227,781) (3,532,211) (3,925,209) Transfers for policy benefits and terminations (3,487,847) (2,746,693) (3,608,501) --------------- -------------------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (2,049,514) (2,026,320) (1,812,464) --------------- -------------------------------- --------------- Net increase (decrease) in net assets 603,014 6,169,534 (33,710,381) NET ASSETS: Beginning of year 45,163,862 38,994,328 72,704,709 --------------- -------------------------------- --------------- End of year $ 45,766,876 $ 45,163,862 $ 38,994,328 =============== ================================ ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 96 MSF T. ROWE PRICE SMALL CAP GROWTH MSF OPPENHEIMER GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------------- --------------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ $ (769,902) $ (277,201) $ (578,209) $ 315,620 $ 593,945 $ 579,985 562,971 468,105 14,184,194 362,727 (362,452) 1,806,879 22,601,563 19,138,611 (44,529,670) 5,192,068 11,124,292 (23,254,667) --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ 22,394,632 19,329,515 (30,923,685) 5,870,415 11,355,785 (20,867,803) --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ 6,679,778 7,344,778 8,304,333 3,921,178 4,170,777 4,811,674 (365,817) (1,819,482) (1,832,472) 130,181 (1,832,917) (1,307,371) (4,469,032) (4,555,731) (4,567,009) (2,449,571) (2,484,658) (2,551,030) (5,044,716) (3,780,276) (4,436,137) (2,648,050) (1,971,254) (2,513,495) --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ (3,199,787) (2,810,711) (2,531,285) (1,046,262) (2,118,051) (1,560,222) --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ 19,194,845 16,518,804 (33,454,970) 4,824,153 9,237,733 (22,428,025) 68,810,021 52,291,217 85,746,187 38,882,417 29,644,684 52,072,709 --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ $ 88,004,866 $ 68,810,021 $ 52,291,217 $ 43,706,570 $ 38,882,417 $ 29,644,684 =============== ====================== ================== =============== ====================== ==================
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, 2010, 2009, AND 2008 MSF MFS VALUE INVESTMENT DIVISION ------------------------------------------------------ 2010 2009 2008 --------------- ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 255,596 $ (360,654) $ 561,336 Net realized gains (losses) (425,864) (877,734) 4,618,363 Change in unrealized gains (losses) on investments 5,358,513 9,493,542 (26,124,726) --------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations 5,188,245 8,255,154 (20,945,027) --------------- ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 6,966,530 7,793,992 9,258,644 Net transfers (including fixed account) 37,691 (1,188,905) (2,421,442) Policy charges (3,542,869) (3,789,583) (4,038,000) Transfers for policy benefits and terminations (3,962,238) (2,718,079) (2,767,928) --------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (500,886) 97,424 31,274 --------------- ---------------------- --------------- Net increase (decrease) in net assets 4,687,359 8,352,579 (20,913,753) NET ASSETS: Beginning of year 49,365,491 41,012,912 61,926,665 --------------- ---------------------- --------------- End of year $ 54,052,850 $ 49,365,491 $ 41,012,912 =============== ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 98 MSF NEUBERGER BERMAN MID CAP VALUE MSF T. ROWE PRICE LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------------- --------------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ $ (335) $ 373,237 $ (1,022) $ (260,485) $ (70,974) $ (96,719) 12,235 (1,385,415) 465,644 253,453 (485,740) 2,565,785 15,949,723 21,838,137 (39,787,375) 6,370,252 13,392,122 (24,832,884) --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ 15,961,623 20,825,959 (39,322,753) 6,363,220 12,835,408 (22,363,818) --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ 8,746,908 9,917,985 12,028,118 4,102,715 5,247,409 6,714,567 (311,273) (2,538,823) (1,512,789) (1,629,305) (479,252) (722,396) (4,935,922) (4,785,680) (5,289,330) (2,739,632) (3,146,728) (3,279,014) (5,431,326) (3,527,386) (3,842,875) (2,842,508) (2,638,815) (2,458,005) --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ (1,931,613) (933,904) 1,383,124 (3,108,730) (1,017,386) 255,152 --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ 14,030,010 19,892,055 (37,939,629) 3,254,490 11,818,022 (22,108,666) 63,957,799 44,065,744 82,005,373 42,520,597 30,702,575 52,811,241 --------------- ---------------------- ------------------ --------------- ---------------------- ------------------ $ 77,987,809 $ 63,957,799 $ 44,065,744 $ 45,775,087 $ 42,520,597 $ 30,702,575 =============== ====================== ================== =============== ====================== ==================
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, 2010, 2009, AND 2008 MSF BARCLAYS CAPITAL AGGREGATE BOND INDEX INVESTMENT DIVISION ---------------- ---------------------- --------------- 2010 2009 2008 ---------------- ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 3,134,920 $ 5,177,513 $ 3,745,554 Net realized gains (losses) 613,564 195,723 578,961 Change in unrealized gains (losses) on investments 1,607,603 (1,139,158) 873,489 ---------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations 5,356,087 4,234,078 5,198,004 ---------------- ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 13,651,933 15,575,764 17,571,072 Net transfers (including fixed account) 4,296,224 5,185,787 (10,724,107) Policy charges (7,836,195) (8,703,722) (8,741,597) Transfers for policy benefits and terminations (7,334,933) (6,465,006) (11,706,897) ---------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions 2,777,029 5,592,822 (13,601,529) ---------------- ---------------------- --------------- Net increase (decrease) in net assets 8,133,116 9,826,901 (8,403,525) NET ASSETS: Beginning of year 106,351,639 96,524,738 104,928,263 ---------------- ---------------------- --------------- End of year $ 114,484,755 $ 106,351,639 $ 96,524,738 ================ ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 100 MSF MORGAN STANLEY EAFE INDEX MSF RUSSELL 2000 INDEX INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------------- --------------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ------------------ --------------- ------------------------- --------------- $ 1,043,606 $ 1,709,359 $ 1,230,251 $ 169,705 $ 494,140 $ 223,659 (236,046) (455,196) 2,898,914 (66,857) 70,119 1,982,185 3,674,685 11,844,795 (35,342,222) 11,828,973 9,093,620 (21,357,274) --------------- ---------------------- ------------------ --------------- ------------------------- --------------- 4,482,245 13,098,958 (31,213,057) 11,931,821 9,657,879 (19,151,430) --------------- ---------------------- ------------------ --------------- ------------------------- --------------- 7,898,110 9,558,645 11,532,998 6,030,913 6,872,994 7,965,817 2,327,295 (1,404,247) 1,253,714 (1,459,730) (966,184) (1,376,858) (3,885,302) (4,356,028) (4,798,345) (3,188,654) (3,197,900) (3,405,238) (4,368,376) (2,974,891) (3,419,820) (3,961,411) (2,569,871) (2,830,521) --------------- ---------------------- ------------------ --------------- ------------------------- --------------- 1,971,727 823,479 4,568,547 (2,578,882) 139,039 353,200 --------------- ---------------------- ------------------ --------------- ------------------------- --------------- 6,453,972 13,922,437 (26,644,510) 9,352,939 9,796,918 (18,798,230) 58,913,857 44,991,420 71,635,930 47,243,288 37,446,370 56,244,600 --------------- ---------------------- ------------------ --------------- ------------------------- --------------- $ 65,367,829 $ 58,913,857 $ 44,991,420 $ 56,596,227 $ 47,243,288 $ 37,446,370 =============== ====================== ================== =============== ========================= ===============
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, 2010, 2009, AND 2008 MSF JENNISON GROWTH INVESTMENT DIVISION ----------------------------------------------------- 2010 2009 2008 --------------- ---------------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (33,604) $ (75,210) $ 209,436 Net realized gains (losses) 17,747 (140,559) 1,100,787 Change in unrealized gains (losses) on investments 1,535,759 4,015,386 (7,064,823) --------------- ---------------------- -------------- Net increase (decrease) in net assets resulting from operations 1,519,902 3,799,617 (5,754,600) --------------- ---------------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 1,601,194 1,719,206 1,982,892 Net transfers (including fixed account) 598,866 (143,027) (361,588) Policy charges (946,786) (963,364) (951,173) Transfers for policy benefits and terminations (838,122) (752,854) (843,478) --------------- ---------------------- -------------- Net increase (decrease) in net assets resulting from policy transactions 415,152 (140,039) (173,347) --------------- ---------------------- -------------- Net increase (decrease) in net assets 1,935,054 3,659,578 (5,927,947) NET ASSETS: Beginning of year 13,473,347 9,813,769 15,741,716 --------------- ---------------------- -------------- End of year $ 15,408,401 $ 13,473,347 $ 9,813,769 =============== ====================== ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 102 MSF NEUBERGER BERMAN GENESIS MSF METLIFE MID CAP STOCK INDEX INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------------------- --------------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ------------------------------- --------------- --------------- ---------------------- ------------------ $ (275,380) $ 150,638 $ (263,415) $ 88,922 $ 436,208 $ 324,526 (2,085,738) (2,703,187) 6,156,715 248,370 308,329 4,777,346 15,927,942 10,045,644 (44,228,185) 12,893,844 13,600,526 (28,232,883) --------------- ------------------------------- --------------- --------------- ---------------------- ------------------ 13,566,824 7,493,095 (38,334,885) 13,231,136 14,345,063 (23,131,011) --------------- ------------------------------- --------------- --------------- ---------------------- ------------------ 9,951,447 11,539,415 13,840,463 7,250,885 8,322,995 9,503,166 (1,640,139) (1,847,368) (4,686,927) 173,240 (1,733,152) 922,808 (5,140,082) (5,408,103) (6,294,459) (3,916,122) (3,929,463) (4,174,112) (5,453,013) (4,050,199) (5,526,338) (4,634,928) (4,046,727) (6,346,919) --------------- ------------------------------- --------------- --------------- ---------------------- ------------------ (2,281,787) 233,745 (2,667,261) (1,126,925) (1,386,348) (95,057) --------------- ------------------------------- --------------- --------------- ---------------------- ------------------ 11,285,037 7,726,840 (41,002,146) 12,104,211 12,958,716 (23,226,068) 67,433,059 59,706,219 100,708,365 53,691,851 40,733,135 63,959,203 --------------- ------------------------------- --------------- --------------- ---------------------- --- -------------- $ 78,718,096 $ 67,433,059 $ 59,706,219 $ 65,796,062 $ 53,691,851 $ 40,733,135 =============== =============================== =============== =============== ====================== ==================
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, 2010, 2009, AND 2008 MSF LOOMIS SAYLES SMALL CAP GROWTH INVESTMENT DIVISION ------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (51,755) $ (39,304) $ (48,690) Net realized gains (losses) (47,680) (219,528) 462,091 Change in unrealized gains (losses) on investments 1,843,398 1,519,136 (3,371,627) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations 1,743,963 1,260,304 (2,958,226) -------------- ---------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 919,140 988,520 1,143,026 Net transfers (including fixed account) 81,273 (173,065) (232,983) Policy charges (421,055) (408,126) (445,177) Transfers for policy benefits and terminations (486,248) (281,193) (339,761) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions 93,110 126,136 125,105 -------------- ---------------------- ----------------- Net increase (decrease) in net assets 1,837,073 1,386,440 (2,833,121) NET ASSETS: Beginning of year 5,593,368 4,206,928 7,040,049 -------------- ---------------------- ----------------- End of year $ 7,430,441 $ 5,593,368 $ 4,206,928 ============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 104 MSF BLACKROCK LARGE CAP VALUE MSF DAVIS VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------------- ---------------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- -------------------- --------------- -------------------------- --------------- $ 27,035 $ 73,451 $ (2,759) $ 89,335 $ 312,737 $ 252,624 (263,466) (513,587) (9,263) 191,969 (723,952) 284,552 1,265,453 1,615,283 (4,899,187) 5,562,556 12,907,686 (24,908,606) --------------- ---------------------- -------------------- --------------- -------------------------- --------------- 1,029,022 1,175,147 (4,911,209) 5,843,860 12,496,471 (24,371,430) --------------- ---------------------- -------------------- --------------- -------------------------- --------------- 2,157,901 2,432,547 2,920,669 8,027,444 9,217,297 10,613,485 (183,197) 29,524 905,258 (908,212) (601,386) 154,312 (871,019) (969,741) (1,106,269) (3,883,974) (4,013,443) (4,201,518) (957,459) (514,960) (512,125) (3,941,742) (2,327,459) (2,743,331) --------------- ---------------------- -------------------- --------------- -------------------------- --------------- 146,226 977,370 2,207,533 (706,484) 2,275,010 3,822,948 --------------- ---------------------- -------------------- --------------- -------------------------- --------------- 1,175,248 2,152,517 (2,703,676) 5,137,376 14,771,480 (20,548,482) 11,723,889 9,571,372 12,275,048 52,773,242 38,001,762 58,550,244 --------------- ---------------------- -------------------- --------------- -------------------------- --------------- $ 12,899,137 $ 11,723,889 $ 9,571,372 $ 57,910,618 $ 52,773,242 $ 38,001,762 =============== ====================== ==================== =============== ========================== ===============
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, 2010, 2009, AND 2008 MSF LOOMIS SAYLES SMALL CAP CORE INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 --------------- ---------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (112,605) $ (66,505) $ (116,679) Net realized gains (losses) (55,224) (439,969) 2,006,144 Change in unrealized gains (losses) on investments 4,065,140 3,809,050 (7,889,493) --------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations 3,897,311 3,302,576 (6,000,028) --------------- ---------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 2,076,395 2,435,828 2,662,737 Net transfers (including fixed account) (491,792) (114,204) 421,215 Policy charges (1,025,327) (1,044,037) (1,093,210) Transfers for policy benefits and terminations (999,217) (789,008) (727,927) --------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions (439,941) 488,579 1,262,815 --------------- ---------------------- ----------------- Net increase (decrease) in net assets 3,457,370 3,791,155 (4,737,213) NET ASSETS: Beginning of year 14,825,414 11,034,259 15,771,472 --------------- ---------------------- ----------------- End of year $ 18,282,784 $ 14,825,414 $ 11,034,259 =============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 106 MSF BLACKROCK LEGACY LARGE CAP GROWTH MSF BLACKROCK BOND INCOME INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------- ------------------------------------------------------------ 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ----------------- --------------- ---------------------------- --------------- $ (38,770) $ (5,579) $ (18,267) $ 2,669,950 $ 5,080,494 $ 3,846,123 75,641 (146,284) (120,478) 24,746 (553,787) (261,951) 1,107,022 1,684,656 (1,924,420) 3,372,816 2,142,811 (7,357,146) -------------- ---------------------- ----------------- --------------- ---------------------------- --------------- 1,143,893 1,532,793 (2,063,165) 6,067,512 6,669,518 (3,772,974) -------------- ---------------------- ----------------- --------------- ---------------------------- --------------- 1,127,304 1,097,152 1,197,008 8,520,413 9,587,028 10,790,630 39,075 217,819 1,571,610 406,620 (2,591,044) (3,035,916) (499,832) (460,694) (466,831) (6,604,181) (7,385,796) (7,121,758) (438,412) (223,463) (276,284) (5,946,761) (5,845,823) (7,310,990) -------------- ---------------------- ----------------- --------------- ---------------------------- --------------- 228,135 630,814 2,025,503 (3,623,909) (6,235,635) (6,678,034) -------------- ---------------------- ----------------- --------------- ---------------------------- --------------- 1,372,028 2,163,607 (37,662) 2,443,603 433,883 (10,451,008) 5,950,495 3,786,888 3,824,550 82,419,233 81,985,350 92,436,358 -------------- ---------------------- ----------------- --------------- ---------------------------- --------------- $ 7,322,523 $ 5,950,495 $ 3,786,888 $ 84,862,836 $ 82,419,233 $ 81,985,350 ============== ====================== ================= =============== ============================ ===============
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, 2010, 2009, AND 2008 MSF FI VALUE LEADERS INVESTMENT DIVISION ----------------------------------------------------- 2010 2009 2008 -------------- ----------------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 42,314 $ 90,114 $ 62,174 Net realized gains (losses) (145,291) (259,906) 411,042 Change in unrealized gains (losses) on investments 885,079 1,128,894 (3,184,937) -------------- ----------------------- -------------- Net increase (decrease) in net assets resulting from operations 782,102 959,102 (2,711,721) -------------- ----------------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 997,133 1,137,076 1,366,282 Net transfers (including fixed account) 41,388 (112,167) (339,700) Policy charges (451,311) (473,372) (540,376) Transfers for policy benefits and terminations (361,541) (254,916) (291,811) -------------- ----------------------- -------------- Net increase (decrease) in net assets resulting from policy transactions 225,669 296,621 194,395 -------------- ----------------------- -------------- Net increase (decrease) in net assets 1,007,771 1,255,723 (2,517,326) NET ASSETS: Beginning of year 5,481,161 4,225,438 6,742,764 -------------- ----------------------- -------------- End of year $ 6,488,932 $ 5,481,161 $ 4,225,438 ============== ======================= ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 108 MSF MET/ARTISAN MID CAP VALUE MSF WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------------------- ------------------------------------------------------------ 2010 2009 2008 2010 2009 2008 --------------- -------------------------------- --------------- --------------- ---------------------- --------------------- $ (47,745) $ 94,579 $ (210,128) $ 1,151,290 $ 1,027,387 $ 570,564 (887,093) (2,074,439) 4,346,340 71,403 382,268 (105,443) 6,661,231 14,134,862 (29,274,257) 1,196,007 3,433,572 (3,452,504) --------------- -------------------------------- --------------- --------------- ---------------------- --------------------- 5,726,393 12,155,002 (25,138,045) 2,418,700 4,843,227 (2,987,383) --------------- -------------------------------- --------------- --------------- ---------------------- --------------------- 6,389,633 7,222,155 8,854,520 2,832,832 3,046,053 3,632,344 (144,561) (2,763,216) (1,996,000) 1,156,919 35,565 (873,301) (3,135,232) (3,172,696) (3,462,919) (1,584,202) (1,611,112) (1,570,638) (3,307,007) (2,344,946) (2,411,660) (1,617,829) (1,198,113) (1,108,566) --------------- -------------------------------- --------------- --------------- ---------------------- --------------------- (197,167) (1,058,703) 983,941 787,720 272,393 79,839 --------------- -------------------------------- --------------- --------------- ---------------------- --------------------- 5,529,226 11,096,299 (24,154,104) 3,206,420 5,115,620 (2,907,544) 41,071,915 29,975,616 54,129,720 20,580,082 15,464,462 18,372,006 --------------- -------------------------------- --------------- --------------- ---------------------- --------------------- $ 46,601,141 $ 41,071,915 $ 29,975,616 $ 23,786,502 $ 20,580,082 $ 15,464,462 =============== ================================ =============== =============== ====================== =====================
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, 2010, 2009, AND 2008 MSF WESTERN ASSET MANAGEMENT U.S. GOVERNMENT INVESTMENT DIVISION ------------------------------------------------------ 2010 2009 2008 --------------- ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 314,612 $ 583,308 $ 545,979 Net realized gains (losses) 49,043 (89,029) (26,281) Change in unrealized gains (losses) on investments 435,726 44,105 (712,221) --------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations 799,381 538,384 (192,523) --------------- ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 2,331,803 2,652,804 3,041,844 Net transfers (including fixed account) (168,918) 3,368,164 (439,337) Policy charges (1,312,750) (1,485,448) (1,426,939) Transfers for policy benefits and terminations (1,375,135) (4,351,515) (1,143,545) --------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (525,000) 184,006 32,023 --------------- ---------------------- --------------- Net increase (decrease) in net assets 274,381 722,389 (160,500) NET ASSETS: Beginning of year 16,359,270 15,636,881 15,797,381 --------------- ---------------------- --------------- End of year $ 16,633,651 $ 16,359,270 $ 15,636,881 =============== ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 110 MSF BLACKROCK MONEY MARKET MSF MFS TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------------- ----------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ----------------------------- --------------- -------------- ----------------------- -------------- $ (300,906) $ (11,349) $ 1,496,178 $ 130,483 $ 179,213 $ 147,927 -- -- -- (99,947) (173,243) 299,566 -- -- -- 568,242 937,515 (1,824,737) --------------- ----------------------------- --------------- -------------- ----------------------- -------------- (300,906) (11,349) 1,496,178 598,778 943,485 (1,377,244) --------------- ----------------------------- --------------- -------------- ----------------------- -------------- 14,816,043 8,264,492 7,147,517 952,924 1,270,198 1,252,582 (13,160,154) (31,859,828) (3,230,345) (93,026) 999,337 209,612 (1,340,285) (1,914,002) (1,791,374) (506,572) (577,409) (544,548) (5,424,880) (2,515,809) (3,755,019) (377,989) (362,991) (228,375) --------------- ----------------------------- --------------- -------------- ----------------------- -------------- (5,109,276) (28,025,147) (1,629,221) (24,663) 1,329,135 689,271 --------------- ----------------------------- --------------- -------------- ----------------------- -------------- (5,410,182) (28,036,496) (133,043) 574,115 2,272,620 (687,973) 35,228,518 63,265,014 63,398,057 7,134,157 4,861,537 5,549,510 --------------- ----------------------------- --------------- -------------- ----------------------- -------------- $ 29,818,336 $ 35,228,518 $ 63,265,014 $ 7,708,272 $ 7,134,157 $ 4,861,537 =============== ============================= =============== ============== ======================= ==============
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 -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MSF METLIFE CONSERVATIVE ALLOCATION INVESTMENT DIVISION ----------------------------------------------------- 2010 2009 2008 -------------- ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 80,267 $ 42,263 $ 10,090 Net realized gains (losses) 46,459 5,727 (144,954) Change in unrealized gains (losses) on investments 119,161 276,504 (182,260) -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations 245,887 324,494 (317,124) -------------- ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 467,696 374,777 277,237 Net transfers (including fixed account) 1,892,409 493,401 917,176 Policy charges (296,178) (222,010) (193,582) Transfers for policy benefits and terminations (461,555) (132,555) (117,612) -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions 1,602,372 513,613 883,219 -------------- ---------------------- --------------- Net increase (decrease) in net assets 1,848,259 838,107 566,095 NET ASSETS: Beginning of year 2,188,237 1,350,130 784,035 -------------- ---------------------- --------------- End of year $ 4,036,496 $ 2,188,237 $ 1,350,130 ============== ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 112 MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MSF METLIFE MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- -------------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- -------------- --------------- ---------------------- ----------------- $ 146,886 $ 97,885 $ 15,426 $ 612,920 $ 506,612 $ 37,558 32,319 (68,146) (9,779) 17,779 (2,887) (190,034) 421,073 828,280 (847,823) 3,378,733 5,007,760 (6,087,839) -------------- ---------------------- -------------- --------------- ---------------------- ----------------- 600,278 858,019 (842,176) 4,009,432 5,511,485 (6,240,315) -------------- ---------------------- -------------- --------------- ---------------------- ----------------- 1,013,491 1,081,983 1,068,633 5,949,225 6,448,156 6,618,762 1,079,782 990,434 821,833 3,305,318 2,562,902 3,791,639 (573,007) (588,201) (557,733) (2,798,394) (2,812,947) (2,810,307) (457,386) (298,169) (249,480) (2,041,425) (1,454,530) (1,220,615) -------------- ---------------------- -------------- --------------- ---------------------- ----------------- 1,062,880 1,186,047 1,083,253 4,414,724 4,743,580 6,379,479 -------------- ---------------------- -------------- --------------- ---------------------- ----------------- 1,663,158 2,044,066 241,077 8,424,156 10,255,066 139,164 5,262,543 3,218,477 2,977,400 28,790,175 18,535,109 18,395,945 -------------- ---------------------- -------------- --------------- ---------------------- ----------------- $ 6,925,701 $ 5,262,543 $ 3,218,477 $ 37,214,331 $ 28,790,175 $ 18,535,109 ============== ====================== ============== =============== ====================== =================
The accompanying notes are an integral part of these financial statements. 113 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION INVESTMENT DIVISION --------------- ---------------------- --------------- 2010 2009 2008 --------------- ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 796,924 $ 779,492 $ (16,159) Net realized gains (losses) (102,509) (133,216) 175,501 Change in unrealized gains (losses) on investments 7,116,457 10,602,923 (15,640,562) --------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations 7,810,872 11,249,199 (15,481,220) --------------- ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 13,837,630 16,058,041 18,467,427 Net transfers (including fixed account) 655,595 (778,406) 5,509,124 Policy charges (5,100,587) (5,739,610) (6,415,360) Transfers for policy benefits and terminations (4,588,662) (2,211,947) (1,143,926) --------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions 4,803,976 7,328,078 16,417,265 --------------- ---------------------- --------------- Net increase (decrease) in net assets 12,614,848 18,577,277 936,045 NET ASSETS: Beginning of year 52,449,221 33,871,944 32,935,899 --------------- ---------------------- --------------- End of year $ 65,064,069 $ 52,449,221 $ 33,871,944 =============== ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 114 MSF METLIFE AGGRESSIVE ALLOCATION JANUS ASPEN JANUS INVESTMENT DIVISION INVESTMENT DIVISION --------------- ---------------------------------------- ---------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- ----------------- -------------- ---------------------- -------------- $ 35,920 $ 123,185 $ (10,348) $ (153,142) $ 5,686 $ 16,320 (132,924) (317,303) 90,850 52,158 (31,201) 49,473 1,845,829 2,668,257 (4,222,544) 848,330 1,662,317 (3,051,413) --------------- ---------------------- ----------------- -------------- ---------------------- -------------- 1,748,825 2,474,139 (4,142,042) 747,346 1,636,802 (2,985,620) --------------- ---------------------- ----------------- -------------- ---------------------- -------------- 2,868,443 3,280,605 3,819,292 635,005 658,401 663,301 306,772 (255,947) 697,397 (58,773) 8,858 122,598 (1,017,478) (1,143,655) (1,345,001) (122,027) (310,790) (245,583) (952,529) (607,225) (323,045) -- (1,693) (135,708) --------------- ---------------------- ----------------- -------------- ---------------------- -------------- 1,205,208 1,273,778 2,848,643 454,205 354,776 404,608 --------------- ---------------------- ----------------- -------------- ---------------------- -------------- 2,954,033 3,747,917 (1,293,399) 1,201,551 1,991,578 (2,581,012) 10,645,616 6,897,699 8,191,098 6,630,451 4,638,873 7,219,885 --------------- ---------------------- ----------------- -------------- ---------------------- -------------- $ 13,599,649 $ 10,645,616 $ 6,897,699 $ 7,832,002 $ 6,630,451 $ 4,638,873 =============== ====================== ================= ============== ====================== ==============
The accompanying notes are an integral part of these financial statements. 115 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 JANUS ASPEN BALANCED INVESTMENT DIVISION --------------------------------------------------- 2010 2009 2008 -------------- ----------------------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 30,692 $ 12,907 $ 2,996 Net realized gains (losses) 26,581 19,174 3,694 Change in unrealized gains (losses) on investments 90,252 93,262 (21,788) -------------- ----------------------- ------------ Net increase (decrease) in net assets resulting from operations 147,525 125,343 (15,098) -------------- ----------------------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 500,783 116,443 43,848 Net transfers (including fixed account) 426,734 1,020,529 144,876 Policy charges (30,577) (15,717) (4,348) Transfers for policy benefits and terminations (8,070) (2,543) (2,904) -------------- ----------------------- ------------ Net increase (decrease) in net assets resulting from policy transactions 888,870 1,118,712 181,472 -------------- ----------------------- ------------ Net increase (decrease) in net assets 1,036,395 1,244,055 166,374 NET ASSETS: Beginning of year 1,490,464 246,409 80,035 -------------- ----------------------- ------------ End of year $ 2,526,859 $ 1,490,464 $ 246,409 ============== ======================= ============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 116 JANUS ASPEN FORTY JANUS ASPEN OVERSEAS INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ------------------------------------------------ 2010 2009 2008 2010 2009 2008 (a) -------------- ---------------------- ------------ ------------ ----------------------- ----------- $ (14,015) $ (2,048) $ (2,300) $ 792 $ 58 $ (44) 14,051 (78,622) (93,936) 4,218 26,564 (177) 47,707 310,554 (295,412) 62,994 37,885 (18,504) -------------- ---------------------- ------------ ------------ ----------------------- ----------- 47,743 229,884 (391,648) 68,004 64,507 (18,725) -------------- ---------------------- ------------ ------------ ----------------------- ----------- 190,160 165,769 22,794 61,601 9,283 38 46,953 209,535 641,922 175,192 11,467 45,738 (16,395) (23,392) (14,473) (7,034) (3,624) (400) (6,634) (106,150) (302,227) (4,005) (25,524) (667) -------------- ---------------------- ------------ ------------ ----------------------- ----------- 214,084 245,762 348,016 225,754 (8,398) 44,709 -------------- ---------------------- ------------ ------------ ----------------------- ----------- 261,827 475,646 (43,632) 293,758 56,109 25,984 950,941 475,295 518,927 82,093 25,984 -- -------------- ---------------------- ------------ ------------ ----------------------- ----------- $ 1,212,768 $ 950,941 $ 475,295 $ 375,851 $ 82,093 $ 25,984 ============== ====================== ============ ============ ======================= ===========
The accompanying notes are an integral part of these financial statements. 117 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 INVESCO V.I. GLOBAL REAL ESTATE INVESTMENT DIVISION ---------------------------------------------------------------- 2010 2009 2008 -------------- ---------------------------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 32,545 $ (5,813) $ 117,347 Net realized gains (losses) (130,047) (698,156) (61,509) Change in unrealized gains (losses) on investments 289,353 1,038,943 (1,334,686) -------------- ---------------------------------- -------------- Net increase (decrease) in net assets resulting from operations 191,851 334,974 (1,278,848) -------------- ---------------------------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 3,708 143,426 125,102 Net transfers (including fixed account) (63,773) (367,827) 28,052 Policy charges (14,537) (55,212) (71,189) Transfers for policy benefits and terminations (26,660) (3,924) 80,702 -------------- ---------------------------------- -------------- Net increase (decrease) in net assets resulting from policy transactions (101,262) (283,537) 162,667 -------------- ---------------------------------- -------------- Net increase (decrease) in net assets 90,589 51,437 (1,116,181) NET ASSETS: Beginning of year 1,506,522 1,455,085 2,571,266 -------------- ---------------------------------- -------------- End of year $ 1,597,111 $ 1,506,522 $ 1,455,085 ============== ================================== ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 118 INVESCO V.I. INVESCO V.I. INTERNATIONAL GROWTH INVESCO V.I. GOVERNMENT VAN KAMPEN COMSTOCK INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------ --------------------------------------- ---------------------------------- 2010 2009 (b) 2010 2009 2008 2010 (c) ------------ ----------------------- ------------ -------------------------- ----------- ---------------------- $ 3,581 $ 213 $ (101) $ 3,609 $ 1,876 $ -- 1,465 34 (188) (289) (1,270) 53 26,537 2,258 4,107 (2,868) (983) 45 ------------ ----------------------- ------------ -------------------------- ----------- ---------------------- 31,583 2,505 3,818 452 (377) 98 ------------ ----------------------- ------------ -------------------------- ----------- ---------------------- 43,890 -- 23,483 51,159 30,742 -- 184,805 16,392 (1,622) 10,279 444 31,986 (4,422) (495) (5,001) (7,970) (6,986) -- (1,805) (42) -- (411) (15,013) -- ------------ ----------------------- ------------ -------------------------- ----------- ---------------------- 222,468 15,855 16,860 53,057 9,187 31,986 ------------ ----------------------- ------------ -------------------------- ----------- ---------------------- 254,051 18,360 20,678 53,509 8,810 32,084 18,360 -- 85,035 31,526 22,716 -- ------------ ----------------------- ------------ -------------------------- ----------- ---------------------- $ 272,411 $ 18,360 $ 105,713 $ 85,035 $ 31,526 $ 32,084 ============ ======================= ============ ========================== =========== ======================
The accompanying notes are an integral part of these financial statements. 119 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 FTVIPT TEMPLETON FOREIGN SECURITIES INVESTMENT DIVISION ------------------------------------------------------- 2010 2009 2008 -------------- ---------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (74,871) $ 211,754 $ 166,480 Net realized gains (losses) (50,450) (153,389) 735,646 Change in unrealized gains (losses) on investments 614,425 2,059,948 (4,855,241) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations 489,104 2,118,313 (3,953,115) -------------- ---------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 834,212 807,327 773,781 Net transfers (including fixed account) 220,184 (284,673) 350,298 Policy charges (165,900) (372,860) (323,164) Transfers for policy benefits and terminations (68,047) (189,134) (355,256) -------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions 820,449 (39,340) 445,659 -------------- ---------------------- ----------------- Net increase (decrease) in net assets 1,309,553 2,078,973 (3,507,456) NET ASSETS: Beginning of year 7,935,141 5,856,168 9,363,624 -------------- ---------------------- ----------------- End of year $ 9,244,694 $ 7,935,141 $ 5,856,168 ============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 120 FTVIPT MUTUAL GLOBAL DISCOVERY SECURITIES FTVIPT TEMPLETON GLOBAL BOND SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------ ------------------------------------------ 2010 2009 2008 2010 2009 (d) ------------ ---------------------- ------------------ ---------- ------------------------------- $ 7,237 $ 3,112 $ 39,464 $ (29) $ (4) (4,189) (438,168) 78,245 4,601 5 81,592 609,659 (759,844) (171) 239 ------------ ---------------------- ------------------ ---------- ------------------------------- 84,640 174,603 (642,135) 4,401 240 ------------ ---------------------- ------------------ ---------- ------------------------------- 97,464 291,315 407,392 9,303 -- (79,267) (1,354,085) 463,793 (9,428) 3,614 (17,879) (31,930) (44,076) (736) (140) (141) (32,906) (55,518) (3,516) (10) ------------ ---------------------- ------------------ ---------- ------------------------------- 177 (1,127,606) 771,591 (4,377) 3,464 ------------ ---------------------- ------------------ ---------- ------------------------------- 84,817 (953,003) 129,456 24 3,704 882,515 1,835,518 1,706,062 3,704 -- ------------ ---------------------- ------------------ ---------- ------------------------------- $ 967,332 $ 882,515 $ 1,835,518 $ 3,728 $ 3,704 ============ ====================== ================== ========== ===============================
The accompanying notes are an integral part of these financial statements. 121 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 ALLIANCEBERNSTEIN GLOBAL THEMATIC GROWTH INVESTMENT DIVISION --------------------------------------------------- 2010 2009 2008 ------------ ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,176 $ (370) $ (223) Net realized gains (losses) 8,379 (2,773) (414) Change in unrealized gains (losses) on investments 1,480 45,397 (37,457) ------------ ---------------------- --------------- Net increase (decrease) in net assets resulting from operations 11,035 42,254 (38,094) ------------ ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 1,269 21,200 5,432 Net transfers (including fixed account) (20,468) 29,509 30,492 Policy charges (1,852) (2,499) (913) Transfers for policy benefits and terminations -- (10,407) (567) ------------ ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions (21,051) 37,803 34,444 ------------ ---------------------- --------------- Net increase (decrease) in net assets (10,016) 80,057 (3,650) NET ASSETS: Beginning of year 129,504 49,447 53,097 ------------ ---------------------- --------------- End of year $ 119,488 $ 129,504 $ 49,447 ============ ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 122 ALLIANCEBERNSTEIN ALLIANCEBERNSTEIN INTERMEDIATE BOND INTERNATIONAL VALUE FIDELITY VIP CONTRAFUND INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------------- -------------------------------------------------------- 2010 2009 (e) 2010 (f) 2010 2009 2008 ----------- -------------------------- ---------------------- -------------- -------------------------- -------------- $ 2,038 $ 692 $ 29 $ 9,930 $ 30,836 $ 13,305 2,172 716 1 (217,628) (198,535) (242,658) (1,393) 2,187 88 648,547 1,136,586 (1,292,698) ----------- -------------------------- ---------------------- -------------- -------------------------- -------------- 2,817 3,595 118 440,849 968,887 (1,522,051) ----------- -------------------------- ---------------------- -------------- -------------------------- -------------- 3,570 13,019 -- 166,923 431,847 540,486 9,880 23,126 1,252 (1,821,221) 898,388 269,458 (1,055) (590) (13) (86,557) (99,153) (91,935) (255) (10,842) -- (10,806) (139,114) (170,946) ----------- -------------------------- ---------------------- -------------- -------------------------- -------------- 12,140 24,713 1,239 (1,751,661) 1,091,968 547,063 ----------- -------------------------- ---------------------- -------------- -------------------------- -------------- 14,957 28,308 1,357 (1,310,812) 2,060,855 (974,988) 28,308 -- -- 3,988,185 1,927,330 2,902,318 ----------- -------------------------- ---------------------- -------------- -------------------------- -------------- $ 43,265 $ 28,308 $ 1,357 $ 2,677,373 $ 3,988,185 $ 1,927,330 =========== ========================== ====================== ============== ========================== ==============
The accompanying notes are an integral part of these financial statements. 123 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 FIDELITY VIP ASSET MANAGER: GROWTH INVESTMENT DIVISION ------------------------------------------------------ 2010 2009 2008 -------------- ---------------------- ---------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 7,999 $ 15,866 $ 17,011 Net realized gains (losses) 37,274 (16,185) 8,935 Change in unrealized gains (losses) on investments 201,872 427,179 (532,156) -------------- ---------------------- ---------------- Net increase (decrease) in net assets resulting from operations 247,145 426,860 (506,210) -------------- ---------------------- ---------------- POLICY TRANSACTIONS: Premium payments received from policy owners 168,558 240,196 167,675 Net transfers (including fixed account) (53,668) 256,106 79,494 Policy charges (58,088) (64,669) (45,464) Transfers for policy benefits and terminations (120,774) (44,925) (46,018) -------------- ---------------------- ---------------- Net increase (decrease) in net assets resulting from policy transactions (63,972) 386,708 155,687 -------------- ---------------------- ---------------- Net increase (decrease) in net assets 183,173 813,568 (350,523) NET ASSETS: Beginning of year 1,722,435 908,867 1,259,390 -------------- ---------------------- ---------------- End of year $ 1,905,608 $ 1,722,435 $ 908,867 ============== ====================== ================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 124 FIDELITY VIP INVESTMENT GRADE BOND FIDELITY VIP EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------- ------------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------ ---------------------- --------------- ------------ ----------------------------- ------------ $ 13,892 $ 10,311 $ 1,503 $ 2,489 $ 3,688 $ 16,347 23,465 3,887 13,667 (5,418) (392,905) (281,987) (13,312) (1,678) (8,842) 31,745 405,695 (292,885) ------------ ---------------------- --------------- ------------ ----------------------------- ------------ 24,045 12,520 6,328 28,816 16,478 (558,525) ------------ ---------------------- --------------- ------------ ----------------------------- ------------ 829 4,336 5,021 37,251 60,293 140,670 281,430 183,821 (563,563) (103,500) (169,930) 350,624 (4,910) (4,482) (5,850) (5,643) (10,922) (27,027) -- (5,946) (250,607) -- (227,954) (544,605) ------------ ---------------------- --------------- ------------ ----------------------------- ------------ 277,349 177,729 (814,999) (71,892) (348,513) (80,338) ------------ ---------------------- --------------- ------------ ----------------------------- ------------ 301,394 190,249 (808,671) (43,076) (332,035) (638,863) 233,950 43,701 852,372 245,766 577,801 1,216,664 ------------ ---------------------- --------------- ------------ ----------------------------- ------------ $ 535,344 $ 233,950 $ 43,701 $ 202,690 $ 245,766 $ 577,801 ============ ====================== =============== ============ ============================= ============
The accompanying notes are an integral part of these financial statements. 125 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 FIDELITY VIP HIGH INCOME INVESTMENT DIVISION ------------------------ --------- 2010 2009 (b) ---------- ----------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 310 $ 2,849 Net realized gains (losses) (227) 11 Change in unrealized gains (losses) on investments 801 (647) ---------- ----------------------- Net increase (decrease) in net assets resulting from operations 884 2,213 ---------- ----------------------- POLICY TRANSACTIONS: Premium payments received from policy owners -- 16,782 Net transfers (including fixed account) (36,834) 22,156 Policy charges (252) (236) Transfers for policy benefits and terminations (148) -- ---------- ----------------------- Net increase (decrease) in net assets resulting from policy transactions (37,234) 38,702 ---------- ----------------------- Net increase (decrease) in net assets (36,350) 40,915 NET ASSETS: Beginning of year 40,915 -- ---------- ----------------------- End of year $ 4,565 $ 40,915 ========== =======================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 126 FIDELITY VIP MID CAP FIDELITY VIP FREEDOM 2010 INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ ---------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ------------ ----------------------- ----------- ----------- ---------------------------- ----------- $ (4,707) $ (23) $ 14 $ 545 $ 457 $ 802 3,104 742 (70) 537 (1,656) 545 83,723 13,131 (10,714) 2,036 3,793 (2,956) ------------ ----------------------- ----------- ----------- ---------------------------- ----------- 82,120 13,850 (10,770) 3,118 2,594 (1,609) ------------ ----------------------- ----------- ----------- ---------------------------- ----------- 95,232 3,949.00 -- 2,793 1,353 339 77,140 192,734 43,089 12,520 (12,215) 26,580 (3,824) (835) (179) -- -- -- (4,506) (25,654) (315) (1,119) (753) (1,741) ------------ ----------------------- ----------- ----------- ---------------------------- ----------- 164,042 170,194 42,595 14,194 (11,615) 25,178 ------------ ----------------------- ----------- ----------- ---------------------------- ----------- 246,162 184,044 31,825 17,312 (9,021) 23,569 215,869 31,825 -- 14,548 23,569 -- ------------ ----------------------- ----------- ----------- ---------------------------- ----------- $ 462,031 $ 215,869 $ 31,825 $ 31,860 $ 14,548 $ 23,569 ============ ======================= =========== =========== ============================ ===========
The accompanying notes are an integral part of these financial statements. 127 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 FIDELITY VIP FREEDOM 2020 INVESTMENT DIVISION ------------ ---------------------------- ----------- 2010 2009 2008 (a) ------------ ---------------------------- ----------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 12,680 $ 17,181 $ 1,217 Net realized gains (losses) 8,278 (918) 1,278 Change in unrealized gains (losses) on investments 70,032 149,817 (11,135) ------------ ---------------------------- ----------- Net increase (decrease) in net assets resulting from operations 90,990 166,080 (8,640) ------------ ---------------------------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners 10,953 2,536 344 Net transfers (including fixed account) 1,108 449,027 46,772 Policy charges (7,298) (5,925) (315) Transfers for policy benefits and terminations (5,562) (928) (440) ------------ ---------------------------- ----------- Net increase (decrease) in net assets resulting from policy transactions (799) 444,710 46,361 ------------ ---------------------------- ----------- Net increase (decrease) in net assets 90,191 610,790 37,721 NET ASSETS: Beginning of year 648,511 37,721 -- ------------ ---------------------------- ----------- End of year $ 738,702 $ 648,511 $ 37,721 ============ ============================ ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 128 FIDELITY VIP FREEDOM 2030 AMERICAN FUNDS GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- --------------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 ------------ ---------------------------- ----------- ---------------- ------------------------ --------------- $ 1,654 $ 512 $ 652 $ (121,539) $ (160,985) $ 8,765 1,390 367 1,114 (328,082) (1,821,468) 11,917,407 11,839 6,395 (3,051) 19,817,938 31,985,158 (70,192,654) ------------ ---------------------------- ----------- ---------------- ------------------------ --------------- 14,883 7,274 (1,285) 19,368,317 30,002,705 (58,266,482) ------------ ---------------------------- ----------- ---------------- ------------------------ --------------- 3,169 1,286 109 16,677,167 18,769,815 22,132,573 62,506 2,573 22,132 (1,005,842) (2,195,305) 5,909,829 (1,042) (28) -- (8,182,015) (8,384,980) (9,064,293) (3,063) (754) 431 (8,617,264) (5,510,035) (5,469,352) ------------ ---------------------------- ----------- ---------------- ------------------------ --------------- 61,570 3,077 22,672 (1,127,954) 2,679,495 13,508,757 ------------ ---------------------------- ----------- ---------------- ------------------------ --------------- 76,453 10,351 21,387 18,240,363 32,682,200 (44,757,725) 31,738 21,387 -- 109,197,492 76,515,292 121,273,017 ------------ ---------------------------- ----------- ---------------- ------------------------ --------------- $ 108,191 $ 31,738 $ 21,387 $ 127,437,855 $ 109,197,492 $ 76,515,292 ============ ============================ =========== ================ ======================== ===============
The accompanying notes are an integral part of these financial statements. 129 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 AMERICAN FUNDS GROWTH-INCOME INVESTMENT DIVISION --------------------------------------------------------------- 2010 2009 2008 --------------- ------------------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 453,689 $ 446,910 $ 616,716 Net realized gains (losses) (336,443) (956,152) 4,098,718 Change in unrealized gains (losses) on investments 6,948,053 15,943,649 (34,739,655) --------------- ------------------------------- --------------- Net increase (decrease) in net assets resulting from operations 7,065,299 15,434,407 (30,024,221) --------------- ------------------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 10,334,758 11,825,982 13,919,840 Net transfers (including fixed account) (240,405) (1,377,002) (337,648) Policy charges (5,117,228) (5,387,634) (5,766,937) Transfers for policy benefits and terminations (4,718,644) (3,569,007) (3,550,594) --------------- ------------------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions 258,481 1,492,340 4,264,661 --------------- ------------------------------- --------------- Net increase (decrease) in net assets 7,323,780 16,926,746 (25,759,560) NET ASSETS: Beginning of year 66,537,414 49,610,668 75,370,228 --------------- ------------------------------- --------------- End of year $ 73,861,194 $ 66,537,414 $ 49,610,668 =============== =============================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 130 AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION AMERICAN FUNDS BOND INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------ ---------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- ---------------------- --------------- -------------- ---------------------- -------------- $ 538,047 $ (246,097) $ (466,291) $ 94,433 $ 88,860 $ 168,134 (386,466) (2,366,209) 6,877,405 (8,911) (91,981) (78,359) 11,810,164 23,159,810 (44,244,505) 122,161 381,938 (446,834) --------------- ---------------------- --------------- -------------- ---------------------- -------------- 11,961,745 20,547,504 (37,833,391) 207,683 378,817 (357,059) --------------- ---------------------- --------------- -------------- ---------------------- -------------- 8,529,505 9,330,898 11,097,448 724,857 777,097 813,635 (976,366) (1,354,960) 87,246 320,665 (59,617) 63,592 (4,049,658) (3,968,778) (4,406,590) (330,299) (371,335) (377,262) (4,114,157) (2,381,130) (2,679,242) (318,517) (107,448) (182,193) --------------- ---------------------- --------------- -------------- ---------------------- -------------- (610,676) 1,626,030 4,098,862 396,706 238,697 317,772 --------------- ---------------------- --------------- -------------- ---------------------- -------------- 11,351,069 22,173,534 (33,734,529) 604,389 617,514 (39,287) 56,054,284 33,880,750 67,615,279 3,760,642 3,143,128 3,182,415 --------------- ---------------------- --------------- -------------- ---------------------- -------------- $ 67,405,353 $ 56,054,284 $ 33,880,750 $ 4,365,031 $ 3,760,642 $ 3,143,128 =============== ====================== =============== ============== ====================== ==============
The accompanying notes are an integral part of these financial statements. 131 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 AMERICAN FUNDS INTERNATIONAL INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 (a) ------------ ------------------------------- ----------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 3,782 $ 799 $ 1,075 Net realized gains (losses) (608) 1,537 (88) Change in unrealized gains (losses) on investments 46,566 19,842 (13,968) ------------ ------------------------------- ----------- Net increase (decrease) in net assets resulting from operations 49,740 22,178 (12,981) ------------ ------------------------------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners 196,875 22,210 -- Net transfers (including fixed account) 113,293 416,930 57,452 Policy charges (7,689) (1,457) (246) Transfers for policy benefits and terminations (7,938) (38,651) (91) ------------ ------------------------------- ----------- Net increase (decrease) in net assets resulting from policy transactions 294,541 399,032 57,115 ------------ ------------------------------- ----------- Net increase (decrease) in net assets 344,281 421,210 44,134 NET ASSETS: Beginning of year 465,344 44,134 -- ------------ ------------------------------- ----------- End of year $ 809,625 $ 465,344 $ 44,134 ============ =============================== ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 132 AMERICAN FUNDS U.S. GOVERNMENT/AAA RATED SECURITIES MIST T. ROWE PRICE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------ -------------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 ------------- ---------------------- ----------------- --------------- ---------------------- ----------------- $ 87 $ 1,740 $ 709 $ (150,122) $ (115,483) $ (121,466) 643 1,124 1 131,367 (381,122) 1,499,327 1,804 (1,799) 862 4,580,355 5,596,487 (8,808,387) ------------- ---------------------- ----------------- --------------- ---------------------- ----------------- 2,534 1,065 1,572 4,561,600 5,099,882 (7,430,526) ------------- ---------------------- ----------------- --------------- ---------------------- ----------------- 7,825 43,406 -- 2,269,288 2,540,664 3,106,587 (50,106) 40,706 33,514 264,028 (25,606) 478,281 (10,089) (8,355) (181) (1,184,611) (1,208,476) (1,260,749) (2,565) (21,474) (22) (1,448,078) (796,500) (1,115,075) ------------- ---------------------- ----------------- --------------- ---------------------- ----------------- (54,935) 54,283 33,311 (99,373) 510,083 1,209,044 ------------- ---------------------- ----------------- --------------- ---------------------- ----------------- (52,401) 55,348 34,883 4,462,227 5,609,964 (6,221,482) 90,231 34,883 -- 16,772,681 11,162,717 17,384,199 ------------- ---------------------- ----------------- --------------- ---------------------- ----------------- $ 37,830 $ 90,231 $ 34,883 $ 21,234,908 $ 16,772,681 $ 11,162,717 ============= ====================== ================= =============== ====================== =================
The accompanying notes are an integral part of these financial statements. 133 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST MFS RESEARCH INTERNATIONAL INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 --------------- ---------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 134,233 $ 280,264 $ 153,553 Net realized gains (losses) (545,005) (1,024,253) 891,055 Change in unrealized gains (losses) on investments 1,743,808 3,897,065 (7,755,181) --------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations 1,333,036 3,153,076 (6,710,573) --------------- ---------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 1,870,809 2,210,375 2,439,035 Net transfers (including fixed account) (766,625) (550,815) 2,279,426 Policy charges (802,613) (902,498) (971,130) Transfers for policy benefits and terminations (892,543) (545,950) (852,116) --------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions (590,972) 211,112 2,895,215 --------------- ---------------------- ----------------- Net increase (decrease) in net assets 742,064 3,364,188 (3,815,358) NET ASSETS: Beginning of year 13,178,754 9,814,566 13,629,924 --------------- ---------------------- ----------------- End of year $ 13,920,818 $ 13,178,754 $ 9,814,566 =============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 134 MIST PIMCO TOTAL RETURN MIST RCM TECHNOLOGY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------------- ----------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------------- -------------------------- --------------- --------------- ---------------------- -------------- $ 1,273,636 $ 2,452,300 $ 1,044,114 $ (111,175) $ (82,504) $ 1,260,852 474,495 1,576,841 795,767 (54,192) (600,648) 2,114,093 1,426,113 1,911,046 (1,944,451) 3,551,862 5,182,655 (9,308,569) --------------- -------------------------- --------------- --------------- ---------------------- -------------- 3,174,244 5,940,187 (104,570) 3,386,495 4,499,503 (5,933,624) --------------- -------------------------- --------------- --------------- ---------------------- -------------- 5,334,220 5,672,803 6,020,557 1,602,041 1,674,647 1,927,758 3,101,158 2,447,477 960,679 7,146 1,430,181 (675,929) (3,135,341) (3,246,181) (2,840,352) (958,684) (886,510) (820,489) (3,692,336) (3,035,028) (2,205,736) (1,144,160) (618,269) (607,497) --------------- -------------------------- --------------- --------------- ---------------------- -------------- 1,607,701 1,839,070 1,935,148 (493,657) 1,600,049 (176,157) --------------- -------------------------- --------------- --------------- ---------------------- -------------- 4,781,945 7,779,258 1,830,578 2,892,838 6,099,552 (6,109,781) 41,820,317 34,041,059 32,210,481 13,221,048 7,121,496 13,231,277 --------------- -------------------------- --------------- --------------- ---------------------- -------------- $ 46,602,262 $ 41,820,317 $ 34,041,059 $ 16,113,886 $ 13,221,048 $ 7,121,496 =============== ========================== =============== =============== ====================== ==============
The accompanying notes are an integral part of these financial statements. 135 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST LORD ABBETT BOND DEBENTURE INVESTMENT DIVISION -------------------------------------------------------- 2010 2009 2008 --------------- ---------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,402,246 $ 1,391,406 $ 741,410 Net realized gains (losses) 240,525 (126,749) 159,621 Change in unrealized gains (losses) on investments 1,315,427 5,411,601 (5,045,528) --------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations 2,958,198 6,676,258 (4,144,497) --------------- ---------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 2,523,009 2,703,439 3,044,630 Net transfers (including fixed account) (548,415) 2,036,045 (840,812) Policy charges (1,509,898) (1,703,902) (1,532,129) Transfers for policy benefits and terminations (1,782,906) (1,226,776) (1,240,893) --------------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions (1,318,210) 1,808,806 (569,204) --------------- ---------------------- ----------------- Net increase (decrease) in net assets 1,639,988 8,485,064 (4,713,701) NET ASSETS: Beginning of year 26,033,742 17,548,678 22,262,379 --------------- ---------------------- ----------------- End of year $ 27,673,730 $ 26,033,742 $ 17,548,678 =============== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 136 MIST LAZARD MID CAP MIST INVESCO SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- -------------------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- -------------- -------------- -------------------------------- -------------- $ 11,435 $ 19,267 $ 16,248 $ (30,507) $ (22,254) $ (24,205) (93,933) (283,748) 35,602 (15,371) (84,509) 197,782 1,108,654 1,519,608 (2,239,073) 887,599 919,328 (1,510,157) -------------- ---------------------- -------------- -------------- -------------------------------- -------------- 1,026,156 1,255,127 (2,187,223) 841,721 812,565 (1,336,580) -------------- ---------------------- -------------- -------------- -------------------------------- -------------- 700,574 796,272 992,305 471,774 525,764 623,838 24,219 (267,754) 293,008 164,724 214,625 84,613 (347,953) (346,321) (394,747) (216,436) (223,502) (237,487) (387,630) (290,206) (365,399) (184,521) (124,073) (180,449) -------------- ---------------------- -------------- -------------- -------------------------------- -------------- (10,790) (108,009) 525,167 235,541 392,814 290,515 -------------- ---------------------- -------------- -------------- -------------------------------- -------------- 1,015,366 1,147,118 (1,662,056) 1,077,262 1,205,379 (1,046,065) 4,569,758 3,422,640 5,084,696 3,392,636 2,187,257 3,233,322 -------------- ---------------------- -------------- -------------- -------------------------------- -------------- $ 5,585,124 $ 4,569,758 $ 3,422,640 $ 4,469,898 $ 3,392,636 $ 2,187,257 ============== ====================== ============== ============== ================================ ==============
The accompanying notes are an integral part of these financial statements. 137 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST HARRIS OAKMARK INTERNATIONAL INVESTMENT DIVISION --------------------------------------------------------- 2010 2009 2008 --------------- ---------------------- ------------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 343,311 $ 1,418,689 $ 242,385 Net realized gains (losses) (312,283) (1,294,657) 2,675,287 Change in unrealized gains (losses) on investments 4,235,035 8,897,628 (13,913,907) --------------- ---------------------- ------------------ Net increase (decrease) in net assets resulting from operations 4,266,063 9,021,660 (10,996,235) --------------- ---------------------- ------------------ POLICY TRANSACTIONS: Premium payments received from policy owners 4,074,673 4,204,850 5,154,234 Net transfers (including fixed account) 669,473 154,538 (2,283,317) Policy charges (1,796,257) (1,715,379) (1,786,246) Transfers for policy benefits and terminations (2,128,605) (1,050,988) (944,552) --------------- ---------------------- ------------------ Net increase (decrease) in net assets resulting from policy transactions 819,284 1,593,020 140,119 --------------- ---------------------- ------------------ Net increase (decrease) in net assets 5,085,347 10,614,681 (10,856,116) NET ASSETS: Beginning of year 26,459,351 15,844,670 26,700,786 --------------- ---------------------- ------------------ End of year $ 31,544,698 $ 26,459,351 $ 15,844,670 =============== ====================== ==================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 138 MIST LEGG MASON CLEARBRIDGE AGGRESSIVE GROWTH MIST LORD ABBETT GROWTH AND INCOME INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- ------------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- -------------- -------------- ---------------------- ----------------- $ (53,638) $ (40,420) $ (56,576) $ (69,544) $ 86,241 $ 70,536 (57,251) (166,346) (18,149) (79,021) (261,167) 472,182 1,583,027 1,815,976 (3,076,964) 921,874 894,542 (2,888,440) -------------- ---------------------- -------------- -------------- ---------------------- ----------------- 1,472,138 1,609,210 (3,151,689) 773,309 719,616 (2,345,722) -------------- ---------------------- -------------- -------------- ---------------------- ----------------- 897,883 1,020,767 1,253,068 427,886 455,197 479,313 (116,646) (178,569) (80,248) (66,707) (56,090) (17,411) (490,095) (500,322) (526,115) (66,379) (175,840) (146,058) (464,163) (374,454) (342,790) (7,059) (15,683) (23,697) -------------- ---------------------- -------------- -------------- ---------------------- ----------------- (173,021) (32,578) 303,915 287,741 207,584 292,147 -------------- ---------------------- -------------- -------------- ---------------------- ----------------- 1,299,117 1,576,632 (2,847,774) 1,061,050 927,200 (2,053,575) 6,533,459 4,956,827 7,804,601 5,163,011 4,235,811 6,289,386 -------------- ---------------------- -------------- -------------- ---------------------- ----------------- $ 7,832,576 $ 6,533,459 $ 4,956,827 $ 6,224,061 $ 5,163,011 $ 4,235,811 ============== ====================== ============== ============== ====================== =================
The accompanying notes are an integral part of these financial statements. 139 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST CLARION GLOBAL REAL ESTATE INVESTMENT DIVISION ------------------------------------------------------------------ 2010 2009 2008 --------------- ---------------------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,391,967 $ 376,681 $ 192,412 Net realized gains (losses) (571,095) (1,092,248) 947,022 Change in unrealized gains (losses) on investments 1,969,823 5,493,585 (9,433,208) --------------- ---------------------------------- --------------- Net increase (decrease) in net assets resulting from operations 2,790,695 4,778,018 (8,293,774) --------------- ---------------------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 3,115,895 3,655,037 4,540,759 Net transfers (including fixed account) (6,843) (802,883) 360,392 Policy charges (1,331,035) (1,374,865) (1,606,318) Transfers for policy benefits and terminations (1,474,613) (714,297) (908,507) --------------- ---------------------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions 303,404 762,992 2,386,326 --------------- ---------------------------------- --------------- Net increase (decrease) in net assets 3,094,099 5,541,010 (5,907,448) NET ASSETS: Beginning of year 18,066,465 12,525,455 18,432,903 --------------- ---------------------------------- --------------- End of year $ 21,160,564 $ 18,066,465 $ 12,525,455 =============== ================================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 140 MIST MORGAN STANLEY MID CAP GROWTH MIST LORD ABBETT MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------ -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ---------------- ---------------------- -------------- ------------ ---------------------- -------------- $ (957,593) $ (870) $ 267 $ 199 $ 1,558 $ (115) 336,382 1,780 2,309 3,236 (38,897) (9,425) 31,775,159 75,648 (17,251) 19,769 57,059 (38,556) ---------------- ---------------------- -------------- ------------ ---------------------- -------------- 31,153,948 76,558 (14,675) 23,204 19,720 (48,096) ---------------- ---------------------- -------------- ------------ ---------------------- -------------- 16,409,129 13,014 31 6,334 75,266 6,403 174,856,480 208,259 36 (18,047) (77,923) 79,533 (9,530,730) (2,906) (162) (3,822) (4,803) (4,269) (9,440,323) (5,098) (1) -- (590) (8,220) ---------------- ---------------------- -------------- ------------ ---------------------- -------------- 172,294,556 213,269 (96) (15,535) (8,050) 73,447 ---------------- ---------------------- -------------- ------------ ---------------------- -------------- 203,448,504 289,827 (14,771) 7,669 11,670 25,351 306,427 16,600 31,371 103,521 91,851 66,500 ---------------- ---------------------- -------------- ------------ ---------------------- -------------- $ 203,754,931 $ 306,427 $ 16,600 $ 111,190 $ 103,521 $ 91,851 ================ ====================== ============== ============ ====================== ==============
The accompanying notes are an integral part of these financial statements. 141 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST THIRD AVENUE SMALL CAP VALUE INVESTMENT DIVISION ----------------------------------------------------- 2010 2009 2008 -------------- ---------------------- --------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,081 $ 839 $ 888 Net realized gains (losses) 42,370 (14,175) 153 Change in unrealized gains (losses) on investments 198,929 152,916 (119,764) -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from operations 242,380 139,580 (118,723) -------------- ---------------------- --------------- POLICY TRANSACTIONS: Premium payments received from policy owners 152,265 57,631 48,914 Net transfers (including fixed account) 298,003 486,247 30,930 Policy charges (17,684) (12,877) (11,149) Transfers for policy benefits and terminations (369) (13,418) (87,205) -------------- ---------------------- --------------- Net increase (decrease) in net assets resulting from policy transactions 432,215 517,583 (18,510) -------------- ---------------------- --------------- Net increase (decrease) in net assets 674,595 657,163 (137,233) NET ASSETS: Beginning of year 900,994 243,831 381,064 -------------- ---------------------- --------------- End of year $ 1,575,589 $ 900,994 $ 243,831 ============== ====================== ===============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 142 MIST OPPENHEIMER CAPITAL APPRECIATION MIST LEGG MASON VALUE EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ------------------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- --------------- -------------- ------------------------------- -------------- $ (2,663) $ (10,277) $ 30,626 $ 57,392 $ 32,368 $ (20,992) (39,996) (109,001) 189,066 (148,382) (273,743) 40,963 190,578 558,202 (860,586) 390,845 1,354,429 (3,108,496) -------------- ---------------------- --------------- -------------- ------------------------------- -------------- 147,919 438,924 (640,894) 299,855 1,113,054 (3,088,525) -------------- ---------------------- --------------- -------------- ------------------------------- -------------- 304,670 338,372 373,345 741,153 817,337 938,630 (75,809) 205,296 325,069 90,931 (92,993) 186,585 (119,410) (126,102) (131,344) (323,856) (317,442) (346,212) (109,397) (66,149) (40,306) (302,171) (208,119) (338,027) -------------- ---------------------- --------------- -------------- ------------------------------- -------------- 54 351,417 526,764 206,057 198,783 440,976 -------------- ---------------------- --------------- -------------- ------------------------------- -------------- 147,973 790,341 (114,130) 505,912 1,311,837 (2,647,549) 1,631,638 841,297 955,427 4,100,190 2,788,353 5,435,902 -------------- ---------------------- --------------- -------------- ------------------------------- -------------- $ 1,779,611 $ 1,631,638 $ 841,297 $ 4,606,102 $ 4,100,190 $ 2,788,353 ============== ====================== =============== ============== =============================== ==============
The accompanying notes are an integral part of these financial statements. 143 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST SSGA GROWTH ETF INVESTMENT DIVISION --------------------------------------------------- 2010 2009 2008 -------------- ----------------------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 16,282 $ 7,006 $ 4,529 Net realized gains (losses) 12,378 (20,730) (21,051) Change in unrealized gains (losses) on investments 271,601 309,775 (210,490) -------------- ----------------------- ------------ Net increase (decrease) in net assets resulting from operations 300,261 296,051 (227,012) -------------- ----------------------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 426,740 229,022 168,313 Net transfers (including fixed account) 479,704 921,197 (72,658) Policy charges (144,844) (75,749) (43,964) Transfers for policy benefits and terminations (171,487) (38,845) (6,807) -------------- ----------------------- ------------ Net increase (decrease) in net assets resulting from policy transactions 590,113 1,035,626 44,884 -------------- ----------------------- ------------ Net increase (decrease) in net assets 890,374 1,331,676 (182,128) NET ASSETS: Beginning of year 1,789,007 457,331 639,459 -------------- ----------------------- ------------ End of year $ 2,679,381 $ 1,789,007 $ 457,331 ============== ======================= ============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 144 MIST SSGA GROWTH AND INCOME ETF MIST PIMCO INFLATION PROTECTED BOND INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ------------------------------------------------------ 2010 2009 2008 2010 2009 2008 -------------- ---------------------- --------------- -------------- ---------------------- ---------------- $ 12,293 $ 6,273 $ 4,258 $ 146,674 $ 194,864 $ 95,597 16,158 3,801 (36,815) 281,279 (46,474) (94,032) 322,318 204,020 (94,558) 130,473 877,182 (678,454) -------------- ---------------------- --------------- -------------- ---------------------- ---------------- 350,769 214,094 (127,115) 558,426 1,025,572 (676,889) -------------- ---------------------- --------------- -------------- ---------------------- ---------------- 471,109 200,034 163,517 1,208,996 1,284,337 878,509 1,821,735 921,708 17,087 587,680 842,827 4,986,265 (188,226) (67,668) (43,029) (577,592) (561,645) (339,089) (217,589) (23,508) (19,484) (699,416) (379,813) (237,169) -------------- ---------------------- --------------- -------------- ---------------------- ---------------- 1,887,029 1,030,566 118,091 519,668 1,185,706 5,288,516 -------------- ---------------------- --------------- -------------- ---------------------- ---------------- 2,237,798 1,244,660 (9,024) 1,078,094 2,211,278 4,611,627 1,581,109 336,449 345,473 7,734,444 5,523,166 911,539 -------------- ---------------------- --------------- -------------- ---------------------- ---------------- $ 3,818,907 $ 1,581,109 $ 336,449 $ 8,812,538 $ 7,734,444 $ 5,523,166 ============== ====================== =============== ============== ====================== ================
The accompanying notes are an integral part of these financial statements. 145 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST BLACKROCK LARGE CAP CORE INVESTMENT DIVISION ----------------------------------------------------------- 2010 2009 2008 ---------------- ---------------------- ------------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 1,615,609 $ 2,132,876 $ (317,267) Net realized gains (losses) (7,248,214) (10,716,690) 9,729,334 Change in unrealized gains (losses) on investments 38,497,976 54,384,062 (169,653,539) ---------------- ---------------------- ------------------- Net increase (decrease) in net assets resulting from operations 32,865,371 45,800,248 (160,241,472) ---------------- ---------------------- ------------------- POLICY TRANSACTIONS: Premium payments received from policy owners 34,809,861 38,206,877 42,625,658 Net transfers (including fixed account) (2,767,361) (5,847,879) (7,982,176) Policy charges (25,759,862) (26,968,042) (28,104,995) Transfers for policy benefits and terminations (21,236,249) (18,412,707) (24,473,418) ---------------- ---------------------- ------------------- Net increase (decrease) in net assets resulting from policy transactions (14,953,611) (13,021,751) (17,934,931) ---------------- ---------------------- ------------------- Net increase (decrease) in net assets 17,911,760 32,778,497 (178,176,403) NET ASSETS: Beginning of year 291,577,776 258,799,279 436,975,682 ---------------- ---------------------- ------------------- End of year $ 309,489,536 $ 291,577,776 $ 258,799,279 ================ ====================== ===================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 146 MIST JANUS FORTY MIST DREMAN SMALL CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------------- ------------------------------------------------------------- 2010 2009 2008 2010 2009 2008 (a) --------------- ---------------------- -------------- ----------- ------------------------------ ------------------ $ 119,973 $ (75,162) $ 249,198 $ (48) $ (427) $ -- (41,591) (540,105) (35,061) 403 58,177 (10) 1,120,682 3,887,171 (4,523,728) 3,392 2,844 6 --------------- ---------------------- -------------- ----------- ------------------------------ ------------------ 1,199,064 3,271,904 (4,309,591) 3,747 60,594 (4) --------------- ---------------------- -------------- ----------- ------------------------------ ------------------ 2,241,409 2,031,808 1,649,448 2,082 412 -- 410,883 1,027,089 7,003,261 6,849 240,274 114 (908,738) (846,828) (590,128) (2,325) (5,500) -- (788,374) (298,955) (325,545) -- (278,764) 10 --------------- ---------------------- -------------- ----------- ------------------------------ ------------------ 955,180 1,913,115 7,737,036 6,606 (43,578) 124 --------------- ---------------------- -------------- ----------- ------------------------------ ------------------ 2,154,244 5,185,018 3,427,445 10,353 17,016 120 12,100,411 6,915,393 3,487,948 17,136 120 -- --------------- ---------------------- -------------- ----------- ------------------------------ ------------------ $ 14,254,655 $ 12,100,411 $ 6,915,393 $ 27,489 $ 17,136 $ 120 =============== ====================== ============== =========== ============================== ==================
The accompanying notes are an integral part of these financial statements. 147 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST AMERICAN FUNDS BALANCED ALLOCATION INVESTMENT DIVISION -------------------------------------------------- 2010 2009 2008 (a) ------------ ---------------------- -------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 3,146 $ -- $ 368 Net realized gains (losses) 1,822 (28) (90) Change in unrealized gains (losses) on investments 26,193 14,667 (1,781) ------------ ---------------------- -------------- Net increase (decrease) in net assets resulting from operations 31,161 14,639 (1,503) ------------ ---------------------- -------------- POLICY TRANSACTIONS: Premium payments received from policy owners 105,391 30,361 302 Net transfers (including fixed account) 89,836 167,911 12,281 Policy charges (11,710) (9,727) (973) Transfers for policy benefits and terminations -- (563) -- ------------ ---------------------- -------------- Net increase (decrease) in net assets resulting from policy transactions 183,517 187,982 11,610 ------------ ---------------------- --- ---------- Net increase (decrease) in net assets 214,678 202,621 10,107 NET ASSETS: Beginning of year 212,728 10,107 -- ------------ ---------------------- -------------- End of year $ 427,406 $ 212,728 $ 10,107 ============ ====================== ==============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 148 MIST AMERICAN FUNDS GROWTH ALLOCATION MIST AMERICAN FUNDS MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- -------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ------------ ---------------------- -------------- ------------ ---------------------- -------------- $ 2,434 $ -- $ 644 $ 2,501 $ -- $ 165 5,990 1,298 12 646 370 (29) 79,550 20,909 (48) 16,902 11,101 (130) ------------ ---------------------- -------------- ------------ ---------------------- -------------- 87,974 22,207 608 20,049 11,471 6 ------------ ---------------------- -------------- ------------ ---------------------- -------------- 355,048 87,422 2,162 103,657 36,169 3,061 223,657 36,431 14,336 70,020 57,483 2,966 (93,195) (24,118) (1,358) (37,265) (13,816) (1,421) (2,170) (2,703) (1) (2,260) (21) (5) ------------ ---------------------- -------------- ------------ ---------------------- -------------- 483,340 97,032 15,139 134,152 79,815 4,601 ------------ ---------------------- -------------- ------------ ---------------------- -------------- 571,314 119,239 15,747 154,201 91,286 4,607 134,986 15,747 -- 95,893 4,607 -- ------------ ---------------------- -------------- ------------ ---------------------- -------------- $ 706,300 $ 134,986 $ 15,747 $ 250,094 $ 95,893 $ 4,607 ============ ====================== ============== ============ ====================== ==============
The accompanying notes are an integral part of these financial statements. 149 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST MET/FRANKLIN INCOME INVESTMENT DIVISION ---------------------------------------------------- 2010 2009 2008 (a) ------------ --------------------------- ----------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 3,216 $ -- $ 469 Net realized gains (losses) 823 54 (63) Change in unrealized gains (losses) on investments 10,272 9,507 (2,459) ------------ --------------------------- ----------- Net increase (decrease) in net assets resulting from operations 14,311 9,561 (2,053) ------------ --------------------------- ----------- POLICY TRANSACTIONS: Premium payments received from policy owners 28,894 13,515 2,138 Net transfers (including fixed account) 66,675 19,688 20,690 Policy charges (12,613) (6,238) (1,315) Transfers for policy benefits and terminations (1,480) (482) 1 ------------ --------------------------- ----------- Net increase (decrease) in net assets resulting from policy transactions 81,476 26,483 21,514 ------------ --------------------------- ----------- Net increase (decrease) in net assets 95,787 36,044 19,461 NET ASSETS: Beginning of year 55,505 19,461 -- ------------ --------------------------- ----------- End of year $ 151,292 $ 55,505 $ 19,461 ============ =========================== ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 150 MIST MET/FRANKLIN MUTUAL SHARES MIST MET/FRANKLIN TEMPLETON FOUNDING STRATEGY INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------- ------------------------------------------------ 2010 2009 2008 (a) 2010 2009 2008 (a) ------------- ---------------------- -------------- ------------ ---------------------- ------------ $ -- $ -- $ 234 $ -- $ -- $ 207 683 (91) (83) 1,546 565 (21) 4,077 4,710 (2,584) 23,230 14,572 (146) ------------- ---------------------- -------------- ------------ ---------------------- ------------ 4,760 4,619 (2,433) 24,776 15,137 40 ------------- ---------------------- -------------- ------------ ---------------------- ------------ 13,024 8,704 4,224 25,504 18,400 940 22,360 6,499 7,195 21,917 159,413 10,164 (6,571) (3,313) (946) (6,972) (7,871) (459) (811) (293) 24 -- (705) (4) ------------- ---------------------- -------------- ------------ ---------------------- ------------ 28,002 11,597 10,497 40,449 169,237 10,641 ------------- ---------------------- -------------- ------------ ---------------------- ------------ 32,762 16,216 8,064 65,225 184,374 10,681 24,280 8,064 -- 195,055 10,681 -- ------------- ---------------------- -------------- ------------ ---------------------- ------------ $ 57,042 $ 24,280 $ 8,064 $ 260,280 $ 195,055 $ 10,681 ============= ====================== ============== ============ ====================== ============
The accompanying notes are an integral part of these financial statements. 151 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MIST MET/TEMPLETON GROWTH INVESTMENT DIVISION --------------------------------------------------- 2010 2009 2008 (a) ----------- ---------------------------- ---------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 305 $ 2 $ 18 Net realized gains (losses) 125 (60) (39) Change in unrealized gains (losses) on investments 3,904 3,117 (322) ----------- ---------------------------- ---------- Net increase (decrease) in net assets resulting from operations 4,334 3,059 (343) ----------- ---------------------------- ---------- POLICY TRANSACTIONS: Premium payments received from policy owners 18,420 14,327 1,057 Net transfers (including fixed account) 12,049 2,568 2,915 Policy charges (5,335) (3,419) (442) Transfers for policy benefits and terminations (173) (526) 1 ----------- ---------------------------- ---------- Net increase (decrease) in net assets resulting from policy transactions 24,961 12,949 3,531 ----------- ---------------------------- ---------- Net increase (decrease) in net assets 29,295 16,009 3,188 NET ASSETS: Beginning of year 19,197 3,188 -- ----------- ---------------------------- ---------- End of year $ 48,492 $ 19,197 $ 3,188 =========== ============================ ==========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 152 MIST PIONEER FUND AMERICAN CENTURY VP VISTA INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------- ----------------------------------------- 2010 2009 (d) 2010 2009 2008 ------------ ------------ ----------- ---------------------------- ------------ $ 1,005 $ (580) $ (519) $ (472) $ (285) 6,067 1,986 12,351 (47,927) 204 25,716 48,304 (1,947) 67,433 (65,328) ------------ ------------ ----------- ---------------------------- ------------ 32,788 49,710 9,885 19,034 (65,409) ------------ ------------ ----------- ---------------------------- ------------ 4,871 9,778 13,202 110,074.00 13,124.00 (26,206) 197,145 (83,499) (53,969) 106,780 (4,729) (2,535) (2,550) (4,572) (3,919) -- (14,962) (9,338) (3,305) (516) ------------ ------------ ----------- ---------------------------- ------------ (26,064) 189,426 (82,185) 48,228 115,469 ------------ ------------ ----------- ---------------------------- ------------ 6,724 239,136 (72,300) 67,262 50,060 239,136 -- 146,455 79,193 29,133 ------------ ------------ ----------- ---------------------------- ------------ $ 245,860 $ 239,136 $ 74,155 $ 146,455 $ 79,193 ============ ============ =========== ============================ ============
The accompanying notes are an integral part of these financial statements. 153 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 DELAWARE VIP SMALL CAP VALUE INVESTMENT DIVISION --------------------------------------------------------- 2010 2009 2008 ------------ ------------------------------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (561) $ 2,698 $ 195 Net realized gains (losses) 10,618 (324,068) (88,810) Change in unrealized gains (losses) on investments 49,508 372,833 (269,207) ------------ ------------------------------- ------------ Net increase (decrease) in net assets resulting from operations 59,565 51,463 (357,822) ------------ ------------------------------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 10,701 60,157 119,309 Net transfers (including fixed account) 93,641 (501,693) 78,642 Policy charges (6,802) (11,186) (21,619) Transfers for policy benefits and terminations -- (5,015) (210,049) ------------ ------------------------------- ------------ Net increase (decrease) in net assets resulting from policy transactions 97,540 (457,737) (33,717) ------------ ------------------------------- ------------ Net increase (decrease) in net assets 157,105 (406,274) (391,539) NET ASSETS: Beginning of year 228,031 634,305 1,025,844 ------------ ------------------------------- ------------ End of year $ 385,136 $ 228,031 $ 634,305 ============ =============================== ============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 154 DREYFUS VIF INTERNATIONAL VALUE GOLDMAN SACHS MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------------------ -------------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------ ---------------------------------- ------------ ------------ ------------------------------ ------------ $ 2,491 $ 9,269 $ 8,347 $ 908 $ 2,747 $ 7,940 (14,086) (185,176) 25,343 (13,608) (540,331) (112,182) 19,382 238,024 (268,322) 84,633 633,578 (486,662) ------------ ---------------------------------- ------------ ------------ ------------------------------ ------------ 7,787 62,117 (234,632) 71,933 95,994 (590,904) ------------ ---------------------------------- ------------ ------------ ------------------------------ ------------ 955 28,115 2,055 -- -- 205,990 (65,938) (85,562) 3,974 (23,223) (667,539) 102,395 (3,082) (8,707) (12,689) (7,848) (13,708) (27,133) -- (45,781) (118,241) (2,114) (214) 12,539 ------------ ---------------------------------- ------------ ------------ ------------------------------ ------------ (68,065) (111,935) (124,901) (33,185) (681,461) 293,791 ------------ ---------------------------------- ------------ ------------ ------------------------------ ------------ (60,278) (49,818) (359,533) 38,748 (585,467) (297,113) 291,742 341,560 701,093 328,341 913,808 1,210,921 ------------ ---------------------------------- ------------ ------------ ------------------------------ ------------ $ 231,464 $ 291,742 $ 341,560 $ 367,089 $ 328,341 $ 913,808 ============ ================================== ============ ============ ============================== ============
The accompanying notes are an integral part of these financial statements. 155 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION ---------------------------------------------------- 2010 2009 2008 ----------- ---------------------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 100 $ 551 $ 192 Net realized gains (losses) (7,335) (17,708) (34,983) Change in unrealized gains (losses) on investments 18,632 28,044 (655) ----------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from operations 11,397 10,887 (35,446) ----------- ---------------------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 4,077 12,573 1,613 Net transfers (including fixed account) (33,283) 4,125 25,177 Policy charges (1,447) (1,545) (2,152) Transfers for policy benefits and terminations -- (4,928) (74,323) ----------- ---------------------- ----------------- Net increase (decrease) in net assets resulting from policy transactions (30,653) 10,225 (49,685) ----------- ---------------------- ----------------- Net increase (decrease) in net assets (19,256) 21,112 (85,131) NET ASSETS: Beginning of year 70,508 49,396 134,527 ----------- ---------------------- ----------------- End of year $ 51,252 $ 70,508 $ 49,396 =========== ====================== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 156 MFS VIT HIGH INCOME MFS VIT GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------ ---------------------- ---------- ------------ ------------------------ ----------- $ 8,200 $ 660 $ 1,594 $ 634 $ 1,004 $ 225 680 326 (3,105) 183 (11,994) 4,298 7,331 21,466 (1,097) 19,523 27,307 (30,617) ------------ ---------------------- ---------- ------------ ------------------------ ----------- 16,211 22,452 (2,608) 20,340 16,317 (26,094) ------------ ---------------------- ---------- ------------ ------------------------ ----------- -- 3,777 696 28,453 20,456 16,644 (706) 90,405 (8,416) 103,015 (9,035) 8,770 (1,293) (684) (180) (2,360) (1,544) (2,425) -- (1,164) (8,325) (1,538) (5,469) (3,305) ------------ ---------------------- ---------- ------------ ------------------------ ----------- (1,999) 92,334 (16,225) 127,570 4,408 19,684 ------------ ---------------------- ---------- ------------ ------------------------ ----------- 14,212 114,786 (18,833) 147,910 20,725 (6,410) 117,897 3,111 21,944 78,884 58,159 64,569 ------------ ---------------------- ---------- ------------ ------------------------ ----------- $ 132,109 $ 117,897 $ 3,111 $ 226,794 $ 78,884 $ 58,159 ============ ====================== ========== ============ ======================== ===========
The accompanying notes are an integral part of these financial statements. 157 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 MFS VIT NEW DISCOVERY INVESTMENT DIVISION ------------------------------------------------ 2010 2009 2008 ------------ ------------------------ ---------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (340) $ (27) $ (11) Net realized gains (losses) 544 1,560 539 Change in unrealized gains (losses) on investments 28,843 3,314 (1,817) ------------ ------------------------ ---------- Net increase (decrease) in net assets resulting from operations 29,047 4,847 (1,289) ------------ ------------------------ ---------- POLICY TRANSACTIONS: Premium payments received from policy owners 8,926 564 -- Net transfers (including fixed account) 94,362 (83) -- Policy charges (2,441) (178) (37) Transfers for policy benefits and terminations -- (2,063) (1) ------------ ------------------------ ---------- Net increase (decrease) in net assets resulting from policy transactions 100,847 (1,760) (38) ------------ ------------------------ ---------- Net increase (decrease) in net assets 129,894 3,087 (1,327) NET ASSETS: Beginning of year 5,029 1,942 3,269 ------------ ------------------------ ---------- End of year $ 134,923 $ 5,029 $ 1,942 ============ ======================== ==========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 158 MFS VIT VALUE WELLS FARGO VT TOTAL RETURN BOND INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ---------------------------------------------------- 2010 2009 2008 2010 2009 2008 ----------- ---------------------- ----------- -------------- ---------------------- -------------- $ 676 $ 546 $ 10,029 $ 23,065 $ 16,897 $ 6,923 (552) (1,224) 18,395 34,459 5,219 (532) 7,585 14,082 (26,364) (12,496) 23,526 (2,943) ----------- ---------------------- ----------- -------------- ---------------------- -------------- 7,709 13,404 2,060 45,028 45,642 3,448 ----------- ---------------------- ----------- -------------- ---------------------- -------------- -- -- (5,064) 158,432 124,039 41,989 -- -- 55,984 386,034 234,843 50,132 (2,613) (2,736) (3,817) (15,907) (14,024) (4,589) (2) (1) (31,762) (26,909) (39,437) (20,785) ----------- ---------------------- ----------- -------------- ---------------------- -------------- (2,615) (2,737) 15,341 501,650 305,421 66,747 ----------- ---------------------- ----------- -------------- ---------------------- -------------- 5,094 10,667 17,401 546,678 351,063 70,195 74,001 63,334 45,933 534,737 183,674 113,479 ----------- ---------------------- ----------- -------------- ---------------------- -------------- $ 79,095 $ 74,001 $ 63,334 $ 1,081,415 $ 534,737 $ 183,674 =========== ====================== =========== ============== ====================== ==============
The accompanying notes are an integral part of these financial statements. 159 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 PIONEER VCT EMERGING MARKETS INVESTMENT DIVISION --------------------------------------------------------- 2010 2009 2008 (a) ------------ ------------------------------- ------------ INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ (10,583) $ 3,201 $ (141) Net realized gains (losses) 75,682 8,989 (554) Change in unrealized gains (losses) on investments 68,690 311,181 (40,541) ------------ ------------------------------- ------------ Net increase (decrease) in net assets resulting from operations 133,789 323,371 (41,236) ------------ ------------------------------- ------------ POLICY TRANSACTIONS: Premium payments received from policy owners 102,565 70,484 25 Net transfers (including fixed account) 72,459 258,993 213,338 Policy charges (14,156) (19,519) (1,388) Transfers for policy benefits and terminations (82,614) (15,065) (16,880) ------------ ------------------------------- ------------ Net increase (decrease) in net assets resulting from policy transactions 78,254 294,893 195,095 ------------ ------------------------------- ------------ Net increase (decrease) in net assets 212,043 618,264 153,859 NET ASSETS: Beginning of year 772,123 153,859 -- ------------ ------------------------------- ------------ End of year $ 984,166 $ 772,123 $ 153,859 ============ =============================== ============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 160 PIONEER VCT MID CAP VALUE ROYCE MICRO-CAP ROYCE SMALL-CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------- ---------------------- --------------------------- 2010 2009 (b) 2010 (f) 2010 2009 (g) ----------- ---------------- ---------------------- ------------ -------------- $ 504 $ (34) $ 5,040 $ (860) $ (57) 313 32 197 2,111 16 14,039 2,439 61,964 63,066 2,984 ----------- ---------------- ---------------------- ------------ -------------- 14,856 2,437 67,201 64,317 2,943 ----------- ---------------- ---------------------- ------------ -------------- 7,217 -- 53,592 22,886 13,726 59,471 19,671 236,555 257,401 42,530 (3,451) (582) (4,223) (6,872) (728) (18) (123) (4,416) (3,061) -- ----------- ---------------- ---------------------- ------------ -------------- 63,219 18,966 281,508 270,354 55,528 ----------- ---------------- ---------------------- ------------ -------------- 78,075 21,403 348,709 334,671 58,471 21,403 -- -- 58,471 -- ----------- ---------------- ---------------------- ------------ -------------- $ 99,478 $ 21,403 $ 348,709 $ 393,142 $ 58,471 =========== ================ ====================== ============ ==============
The accompanying notes are an integral part of these financial statements. 161 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008 UIF EMERGING MARKETS DEBT INVESTMENT DIVISION ---------------------------- 2010 2009 (g) ---------- ----------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss) $ 287 $ 68 Net realized gains (losses) 87 32 Change in unrealized gains (losses) on investments 318 95 ---------- ----------------- Net increase (decrease) in net assets resulting from operations 692 195 ---------- ----------------- POLICY TRANSACTIONS: Premium payments received from policy owners 2,057 803 Net transfers (including fixed account) -- 6,688 Policy charges (1,064) (131) Transfers for policy benefits and terminations (89) (1,808) ---------- ----------------- Net increase (decrease) in net assets resulting from policy transactions 904 5,552 ---------- ----------------- Net increase (decrease) in net assets 1,596 5,747 NET ASSETS: Beginning of year 5,747 -- ---------- ----------------- End of year $ 7,343 $ 5,747 ========== =================
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. The accompanying notes are an integral part of these financial statements. 162 UIF EMERGING MARKETS EQUITY PIMCO VIT LOW DURATION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------ ------------------------- 2010 2009 (g) 2010 2009 (d) ------------ ----------------- ------------ ------------ $ 238 $ (17) $ 9,408 $ 9,485 899 480 2,729 33,086 38,992 1,146 23,685 1,601 ------------ ----------------- ------------ ------------ 40,129 1,609 35,822 44,172 ------------ ----------------- ------------ ------------ 2,451 803 -- -- 157,781 6,231 32 696,037 (6,947) (1,164) (8,069) (3,966) (1,388) (1,836) -- (1,497) ------------ ----------------- ------------ ------------ 151,897 4,034 (8,037) 690,574 ------------ ----------------- ------------ ------------ 192,026 5,643 27,785 734,746 5,643 -- 734,746 -- ------------ ----------------- ------------ ------------ $ 197,669 $ 5,643 $ 762,531 $ 734,746 ============ ================= ============ ============
The accompanying notes are an integral part of these financial statements. 163 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 (Invesco Variable Insurance Funds) ("Invesco V.I.")+ Franklin Templeton Variable Insurance Products Trust("FTVIPT") AllianceBernstein Variable Products Series Fund, Inc. ("AllianceBernstein") Fidelity Variable Insurance Products ("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 Variable Investment Fund ("Dreyfus VIF") Goldman Sachs Variable Insurance Trust ("Goldman Sachs") MFS Variable Insurance Trust ("MFS VIT") Wells Fargo Variable Trust ("Wells Fargo VT") Oppenheimer Variable Account Funds ("Oppenheimer VA") Pioneer Variable Contracts Trust ("Pioneer VCT") Putnam Variable Trust ("Putnam VT") Royce Capital Fund ("Royce") The Universal Institutional Funds, Inc. ("UIF") PIMCO Variable Insurance Trust ("PIMCO VIT") Legg Mason Partners Variable Equity Trust ("LMPVET") +Formerly named AIM Variable Insurance Funds ("AIM V.I.) *See Note 5 for discussion of additional information on related party transactions. NAME CHANGES: The following portfolios were affected by a trust name change during the year ended December 31, 2010: FORMER NAME NEW NAME ---------------------------------- --------------------------------------- AIM V.I. Global Real Estate Fund Invesco V.I. Global Real Estate Fund AIM V.I. International Growth Fund Invesco V.I. International Growth Fund
REORGANIZATION: During the year ended December 31, 2010, all of the portfolios of the Van Kampen Life Investment Trust ("Van Kampen LIT") were reorganized into portfolios of Invesco V.I.. As a result of the reorganization, the following name change occurred: FORMER TRUST NEW TRUST ----------------------------------------------------- ---------------------------- Van Kampen LIT Government Portfolio Invesco V.I. Government Fund
164 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONTINUED) The assets of each of the Investment Divisions 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. 2. LIST OF INVESTMENT DIVISIONS A. Premium payments, less any applicable charges, 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 had net assets as of December 31, 2010: MSF BlackRock Diversified Investment Division MSF BlackRock Aggressive Growth Investment Division MSF MetLife Stock Index Investment Division MSF Artio International Stock Investment Division MSF T. Rowe Price Small Cap Growth Investment Division MSF Oppenheimer Global Equity Investment Division MSF MFS Value Investment Division MSF Neuberger Berman Mid Cap Value Investment Division MSF T. Rowe Price Large Cap Growth Investment Division MSF Barclays Capital Aggregate Bond Index Investment Division MSF Morgan Stanley EAFE Index Investment Division MSF Russell 2000 Index Investment Division MSF Jennison Growth Investment Division MSF Neuberger Berman Genesis Investment Division MSF MetLife Mid Cap Stock Index Investment Division MSF Loomis Sayles Small Cap Growth Investment Division MSF BlackRock Large Cap Value Investment Division MSF Davis Venture Value Investment Division MSF Loomis Sayles Small Cap Core Investment Division MSF BlackRock Legacy Large Cap Growth Investment Division MSF BlackRock Bond Income Investment Division MSF FI Value Leaders Investment Division MSF Met/Artisan Mid Cap 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* Janus Aspen Janus Investment Division Janus Aspen Balanced Investment Division Janus Aspen Forty Investment Division Janus Aspen Overseas Investment Division Invesco V.I. Global Real Estate Investment Division Invesco V.I. International Growth Investment Division Invesco V.I. Government Investment Division Invesco V.I. Van Kampen Comstock Investment Division** FTVIPT Templeton Foreign Securities Investment Division FTVIPT Mutual Global Discovery Securities Investment Division FTVIPT Templeton Global Bond Securities Investment Division AllianceBernstein Global Thematic Growth Investment Division AllianceBernstein Intermediate Bond Investment Division AllianceBernstein International Value 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 Fidelity VIP High Income Investment Division 165 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. LIST OF INVESTMENT DIVISIONS -- (CONTINUED) Fidelity VIP Mid Cap Investment Division Fidelity VIP Freedom 2010 Investment Division Fidelity VIP Freedom 2020 Investment Division Fidelity VIP Freedom 2030 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 American Funds International Investment Division American Funds U.S. Government/AAA Rated Securities 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 Invesco Small Cap Growth Investment Division* MIST Harris Oakmark International Investment Division MIST Legg Mason ClearBridge Aggressive Growth Investment Division* MIST Lord Abbett Growth and Income Investment Division MIST Clarion Global Real Estate Investment Division* MIST Morgan Stanley 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 SSgA Growth ETF Investment Division MIST SSgA 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 MIST Dreman Small Cap Value Investment Division MIST American Funds Balanced Allocation Investment Division MIST American Funds Growth Allocation Investment Division MIST American Funds Moderate Allocation Investment Division MIST Met/Franklin Income Investment Division MIST Met/Franklin Mutual Shares Investment Division MIST Met/Franklin Templeton Founding Strategy Investment Division MIST Met/Templeton Growth Investment Division MIST Pioneer Fund Investment Division American Century VP Vista Investment Division Delaware VIP Small Cap Value Investment Division Dreyfus VIF International Value Investment Division Goldman Sachs Mid Cap Value Investment Division Goldman Sachs Structured Small Cap Equity Investment Division MFS VIT High Income Investment Division MFS VIT Global Equity Investment Division MFS VIT New Discovery Investment Division MFS VIT Value Investment Division Wells Fargo VT Total Return Bond Investment Division Pioneer VCT Emerging Markets Investment Division Pioneer VCT Mid Cap Value Investment Division Royce Micro-Cap Investment Division** Royce Small-Cap Investment Division UIF Emerging Markets Debt Investment Division UIF Emerging Markets Equity Investment Division PIMCO VIT Low Duration 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. ** This Investment Division began operations during the year ended December 31, 2010. 166 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. LIST OF INVESTMENT DIVISIONS -- (CONCLUDED) B. The following Investment Divisions had no net assets as of December 31, 2010: Janus Aspen Enterprise Investment Division Fidelity VIP Freedom 2015 Investment Division Fidelity VIP Freedom 2025 Investment Division Fidelity VIP Freedom 2040 Investment Division Fidelity VIP Freedom 2050 Investment Division American Funds High-Income Bond Investment Division Oppenheimer VA Main Street Small Cap Investment Division Putnam VT International Value Investment Division PIMCO VIT Long-Term U.S. Government Investment Division LMPVET Investment Counsel Variable Social Awareness Investment Division 3. PORTFOLIO CHANGES The following Investment Divisions ceased operations during the year ended December 31, 2010: MSF FI Mid Cap Opportunities Investment Division Janus Aspen Perkins Mid Cap Value Investment Division Wells Fargo VT Money Market Investment Division The operations of the Investment Divisions were affected by the following changes that occurred during the year ended December 31, 2010: NAME CHANGES: FORMER NAME NEW NAME -------------------------------------------- ----------------------------------------------- (MSF) BlackRock Strategic Value Portfolio (MSF) Neuberger Berman Genesis Portfolio (MIST) Met/AIM Small Cap Growth Portfolio (MIST) Invesco Small Cap Growth Portfolio (MIST) Legg Mason Partners Aggressive Growth (MIST) Legg Mason ClearBridge Aggressive Growth Portfolio Portfolio (MIST) Van Kampen Mid Cap Growth Portfolio (MIST) Morgan Stanley Mid Cap Growth Portfolio Putnam VT International Growth and Income Fund Putnam VT International Value Fund MERGERS: FORMER PORTFOLIO NEW PORTFOLIO -------------------------------------------- ----------------------------------------------- (MSF) FI Mid Cap Opportunities Portfolio (MIST) Morgan Stanley Mid Cap Growth Portfolio SUBSTITUTIONS: FORMER PORTFOLIO NEW PORTFOLIO -------------------------------------------- ----------------------------------------------- Janus Aspen Perkins Mid Cap Value Portfolio (MSF) Met/Artisan Mid Cap Value Portfolio LIQUIDATIONS: (Wells Fargo VT) Money Market Fund
4. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable for variable life separate accounts registered as unit investment trusts. 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 average cost of the investment sold. Income from dividends and realized gain distributions are recorded on the ex-distribution date. 167 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) SECURITY VALUATION The Investment Divisions' investment in shares of the portfolio, series or fund of the Trusts is valued at fair value based on the closing net asset value ("NAV") or price per share as determined by the Trusts as of the end of the year. All changes in fair value are recorded as changes in unrealized gains (losses) on investments in the statements of operations of the applicable Investment Divisions. The Separate Account defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Separate Account prioritizes the inputs to fair valuation techniques and allows for the use of unobservable inputs to the extent that observable inputs are not available. The Separate Account has categorized its assets based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset's classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are as follows: Level 1 Unadjusted quoted prices in active markets for identical assets. Level 2 Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets. Each Investment Division invests in shares of open-end mutual funds which calculate a daily NAV based on the value of the underlying securities in their portfolios. As a result, and as required by law, shares of open-end mutual funds are purchased and redeemed at their quoted daily NAV as reported by the Trusts at the close of each business day. On that basis, the inputs used to value all shares held by the Separate Account, which are measured at fair value on a recurring basis, are classified as Level 2. 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 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 and a state premium tax charge from premiums before amounts are allocated to the Separate Account. The Company also deducts a federal income tax charge before amounts are allocated to the Separate Account. This federal income tax charge is imposed to recover a portion of the federal income tax adjustment attributable to policy acquisition expenses. Net premiums are reported as payments received from policy owners on the statements of changes in net assets of the applicable Investment Divisions and are credited as accumulation units. NET TRANSFERS Funds transferred by the policy owner into or out of the Investment Divisions within the Separate Account or into or out of the fixed account (an investment option in the Company's general account) are recorded on a net basis as net transfers in the statements of changes in net assets of the applicable Investment Divisions. 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. 168 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. SIGNIFICANT ACCOUNTING POLICIES -- (CONCLUDED) ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 2010, the Separate Account adopted new guidance that requires new disclosures about significant transfers in and/or out of Levels 1 and 2 of the fair value hierarchy and activity in Level 3. In addition, this guidance provides clarification of existing disclosure requirements about the level of disaggregation and inputs and valuation techniques. The adoption of this guidance did not have an impact on the Separate Account's financial statements. Effective December 31, 2009, the Separate Account adopted new guidance on: (i) measuring the fair value of investments in certain entities that calculate a NAV per share; (ii) how investments within its scope would be classified in the fair value hierarchy; and (iii) enhanced disclosure requirements about the nature and risks of investments measured at fair value on a recurring or non-recurring basis. As a result, the Separate Account classified all of its investments, which utilize a NAV to measure fair value, as Level 2 in the fair value hierarchy. Effective April 1, 2009, the Separate Account adopted prospectively new guidance, which establishes general standards for accounting and disclosures of events that occur subsequent to the statements of assets and liabilities date but before financial statements are issued, as revised in February 2010. The Separate Account has provided the required disclosures, if any, in its financial statements. Effective January 1, 2008, the Separate Account adopted new fair value measurements guidance which defines fair value, establishes a consistent framework for measuring fair value, establishes a fair value hierarchy based on the observability of inputs used to measure fair value, and requires enhanced disclosures about fair value measurements and applied this guidance prospectively to assets measured at fair value. The adoption of this guidance did not have an impact on the fair value of items measured at fair value or each of the Investment Divisions. 5. EXPENSES AND RELATED PARTY TRANSACTIONS The following annual Separate Account charge paid to the Company, 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 of the applicable Investment Divisions: 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 the risk that expenses incurred in issuing and administering the Policies will exceed the amounts realized from the administrative charges assessed against the Policies. The table below represents the range of effective annual rates for the respective charge for the year ended December 31, 2010: Mortality and Expense Risk 0.00% - 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, a mortality and expense risk charge ranging from 0.30% to 0.90% is assessed through the redemption of units on a monthly basis and recorded as mortality and expense risk charges in the statements of operations of the applicable Investment Divisions. Charges outlined in the section below are paid to the Company and are recorded as policy charges in the accompanying statements of changes in net assets of the applicable Investment Divisions. Policy charges that are assessed through the redemption of units generally include: Cost of Insurance ("COI") charges, administrative charges, a policy fee, and charges for benefits provided by rider, if any. The COI charge is the primary charge under the policy for the death benefit provided by the Company which may vary by policy based on underwriting criteria. Administrative charges range from $0 to $35 and are assessed monthly. For some Policies, a surrender 169 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. EXPENSES AND RELATED PARTY TRANSACTIONS -- (CONTINUED) charge is imposed if the policy is partially or fully surrendered within the specified surrender charge period that ranges from $3.75 to $38.25 for every $1,000 of the policy face amount. Surrender charges for other Policies are equal to the lesser of the maximum surrender charge premium or the premiums actually paid in the first two policy years. For these policies, 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, 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. Most policies offer optional benefits that can be added to the policy by rider. The change for riders that provide life insurance benefits can range from $0.01 to $37.98 per $1,000 of coverage and the charge for riders providing benefits in the event of disability can range from $0.00 to $61.44 per $100 of the benefit provided. Certain investments in the various portfolios of the MIST and MSF Trusts hold shares that are managed by MetLife Advisers, LLC, which acts in the capacity of investment advisor and is an indirect affiliate of the Company. On May 1, 2009, Met Investors Advisory, LLC, an indirect affiliate of the Company and previous manager of the MIST Trust, merged into MetLife Advisers, LLC. 170 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. STATEMENTS OF INVESTMENTS FOR THE YEAR ENDED AS OF DECEMBER 31, 2010 DECEMBER 31, 2010 ----------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ----------- ----------- ------------- -------------- MSF BlackRock Diversified Investment Division 263,102,792 268,324,200 8,518,236 21,488,733 MSF BlackRock Aggressive Growth Investment Division 200,141,319 170,847,464 2,338,781 16,490,360 MSF MetLife Stock Index Investment Division 671,764,339 679,315,457 47,048,203 49,869,268 MSF Artio International Stock Investment Division 45,766,808 52,665,450 2,105,704 3,842,700 MSF T. Rowe Price Small Cap Growth Investment Division 87,990,296 66,021,182 2,318,086 6,301,609 MSF Oppenheimer Global Equity Investment Division 43,706,628 35,376,212 3,249,970 3,980,518 MSF MFS Value Investment Division 54,046,050 55,792,485 3,693,963 3,946,394 MSF Neuberger Berman Mid Cap Value Investment Division 77,987,777 67,436,921 3,294,311 5,225,572 MSF T. Rowe Price Large Cap Growth Investment Division 45,774,309 36,407,154 1,214,090 4,584,444 MSF Barclays Capital Aggregate Bond Index Investment Division 114,484,199 110,654,732 22,625,306 16,711,144 MSF Morgan Stanley EAFE Index Investment Division 65,360,237 60,626,260 10,748,813 7,741,327 MSF Russell 2000 Index Investment Division 56,596,282 49,485,716 4,271,448 6,680,460 MSF Jennison Growth Investment Division 15,400,256 13,605,225 1,735,188 1,361,813 MSF Neuberger Berman Genesis Investment Division 78,718,305 99,041,535 2,239,658 4,796,586 MSF MetLife Mid Cap Stock Index Investment Division 65,795,207 56,653,792 4,558,217 5,525,712 MSF Loomis Sayles Small Cap Growth Investment Division 7,430,424 6,878,793 588,154 546,779 MSF BlackRock Large Cap Value Investment Division 12,899,194 14,304,257 1,366,630 1,193,468 MSF Davis Venture Value Investment Division 57,904,627 50,308,964 3,532,125 4,155,257 MSF Loomis Sayles Small Cap Core Investment Division 18,282,803 16,393,945 779,792 1,332,319 MSF BlackRock Legacy Large Cap Growth Investment Division 7,322,522 5,895,870 955,624 766,286 MSF BlackRock Bond Income Investment Division 84,862,620 83,847,599 6,783,042 7,737,220 MSF FI Value Leaders Investment Division 6,488,970 7,523,326 768,915 500,892 MSF Met/Artisan Mid Cap Value Investment Division 46,594,385 56,288,922 3,730,063 3,981,454 MSF Western Asset Management Strategic Bond Opportunities Investment Division 23,786,570 22,267,556 3,765,318 1,826,322 MSF Western Asset Management U.S. Government Investment Division 16,633,677 16,548,496 1,730,763 1,893,816 MSF BlackRock Money Market Investment Division 29,829,020 29,829,068 39,085,331 44,495,834 MSF MFS Total Return Investment Division 7,708,232 7,889,884 2,150,016 2,044,235 MSF MetLife Conservative Allocation Investment Division 4,036,489 3,791,063 2,451,236 768,583 MSF MetLife Conservative to Moderate Allocation Investment Division 6,925,754 6,362,162 2,108,320 898,546 MSF MetLife Moderate Allocation Investment Division 37,214,363 34,152,850 7,290,820 2,263,141 MSF MetLife Moderate to Aggressive Allocation Investment Division 65,064,142 61,678,297 9,000,879 3,399,802 MSF MetLife Aggressive Allocation Investment Division 13,599,650 13,167,631 2,449,050 1,207,936 Janus Aspen Janus Investment Division 7,832,027 6,292,276 709,475 408,399 Janus Aspen Balanced Investment Division 2,526,892 2,362,915 1,410,141 490,563 Janus Aspen Forty Investment Division 1,212,504 1,058,636 374,848 175,085 Janus Aspen Overseas Investment Division 375,925 293,550 246,705 20,135 Invesco V.I. Global Real Estate Investment Division 1,597,827 1,900,541 281,030 349,677 Invesco V.I. International Growth Investment Division 272,423 243,626 348,070 122,011 Invesco V.I. Government Investment Division 105,716 105,181 26,124 9,364 Invesco V.I. Van Kampen Comstock Investment Division (a) 32,084 32,039 62,391 30,405 FTVIPT Templeton Foreign Securities Investment Division 9,245,237 9,032,570 1,298,784 553,148 FTVIPT Mutual Global Discovery Securities Investment Division 967,459 928,349 735,899 728,462 FTVIPT Templeton Global Bond Securities Investment Division 3,730 3,662 454,211 458,606 AllianceBernstein Global Thematic Growth Investment Division 119,520 104,051 64,878 84,747 AllianceBernstein Intermediate Bond Investment Division 43,368 43,089 44,107 29,920 AllianceBernstein International Value Investment Division 1,357 1,269 1,284 16
171 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. STATEMENTS OF INVESTMENTS -- (CONTINUED) FOR THE YEAR ENDED AS OF DECEMBER 31, 2010 DECEMBER 31, 2010 ----------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ----------- ----------- ------------- -------------- Fidelity VIP Contrafund Investment Division 2,677,586 2,605,414 618,817 2,359,396 Fidelity VIP Asset Manager: Growth Investment Division 1,905,664 1,601,398 350,953 401,055 Fidelity VIP Investment Grade Bond Investment Division 535,348 551,922 1,216,749 919,692 Fidelity VIP Equity-Income Investment Division 202,703 193,458 83,560 152,960 Fidelity VIP High Income Investment Division 4,567 4,414 340 37,262 Fidelity VIP Mid Cap Investment Division 462,037 375,898 192,649 32,284 Fidelity VIP Freedom 2010 Investment Division 31,863 28,990 16,287 1,077 Fidelity VIP Freedom 2020 Investment Division 738,709 529,995 32,723 15,399 Fidelity VIP Freedom 2030 Investment Division 108,197 93,015 106,748 42,841 American Funds Growth Investment Division 127,437,891 119,191,240 6,233,209 7,482,387 American Funds Growth-Income Investment Division 73,861,244 74,149,207 4,134,198 3,422,111 American Funds Global Small Capitalization Investment Division 67,405,396 64,151,822 4,775,557 4,848,239 American Funds Bond Investment Division 4,365,047 4,437,363 1,139,102 647,988 American Funds International Investment Division 809,630 757,190 390,086 91,760 American Funds U.S. Government/AAA Rated Securities Investment Division 37,834 36,967 8,716 63,369 MIST T. Rowe Price Mid Cap Growth Investment Division 21,234,919 17,018,549 1,810,217 2,059,741 MIST MFS Research International Investment Division 13,920,147 15,302,568 1,608,825 2,067,653 MIST PIMCO Total Return Investment Division 46,602,304 43,438,571 7,076,844 3,959,479 MIST RCM Technology Investment Division 16,113,864 13,729,827 2,790,890 3,395,885 MIST Lord Abbett Bond Debenture Investment Division 27,673,394 24,784,731 3,982,725 3,898,865 MIST Lazard Mid Cap Investment Division 5,585,178 5,824,017 595,846 595,212 MIST Invesco Small Cap Growth Investment Division 4,469,864 3,908,949 797,813 592,803 MIST Harris Oakmark International Investment Division 31,544,693 32,145,832 3,407,788 2,246,052 MIST Legg Mason ClearBridge Aggressive Growth Investment Division 7,832,598 7,150,010 471,892 698,228 MIST Lord Abbett Growth and Income Investment Division 6,220,900 6,986,138 501,908 286,976 MIST Clarion Global Real Estate Investment Division 21,155,496 25,452,280 3,370,800 1,679,748 MIST Morgan Stanley Mid Cap Growth Investment Division 203,751,581 171,918,595 181,166,153 9,832,558 MIST Lord Abbett Mid Cap Value Investment Division 111,198 82,410 7,623 22,956 MIST Third Avenue Small Cap Value Investment Division 1,575,617 1,361,005 877,330 444,016 MIST Oppenheimer Capital Appreciation Investment Division . 1,779,584 1,857,024 282,601 285,229 MIST Legg Mason Value Equity Investment Division 4,606,141 6,034,715 636,784 373,208 MIST SSgA Growth ETF Investment Division 2,679,337 2,306,484 875,750 269,381 MIST SSgA Growth and Income ETF Investment Division 3,818,872 3,386,885 2,220,868 321,444 MIST PIMCO Inflation Protected Bond Investment Division 8,812,603 8,434,527 2,469,861 1,583,040 MIST BlackRock Large Cap Core Investment Division 309,489,156 381,618,294 6,951,054 20,284,505 MIST Janus Forty Investment Division 14,254,609 13,582,405 2,738,764 1,663,638 MIST Dreman Small Cap Value Investment Division 27,494 21,252 10,026 3,466 MIST American Funds Balanced Allocation Investment Division 427,409 388,329 209,126 22,345 MIST American Funds Growth Allocation Investment Division 706,302 605,891 546,597 60,823 MIST American Funds Moderate Allocation Investment Division 250,096 222,223 144,861 8,208 MIST Met/Franklin Income Investment Division 151,295 133,975 90,123 4,997 MIST Met/Franklin Mutual Shares Investment Division 57,045 50,842 31,238 2,657 MIST Met/Franklin Templeton Founding Strategy Investment Division 260,281 222,625 56,837 16,387 MIST Met/Templeton Growth Investment Division 48,494 41,795 26,766 1,499 MIST Pioneer Fund Investment Division 245,287 171,267 6,857 31,995 American Century VP Vista Investment Division 69,257 61,694 60,206 147,832 Delaware VIP Small Cap Value Investment Division 385,135 354,726 261,673 164,693 Dreyfus VIF International Value Investment Division 231,499 264,043 7,776 73,348 Goldman Sachs Mid Cap Value Investment Division 367,130 410,086 2,264 34,533
172 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. STATEMENTS OF INVESTMENTS -- (CONCLUDED) FOR THE YEAR ENDED AS OF DECEMBER 31, 2010 DECEMBER 31, 2010 ----------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) --------- ------------- ------------- -------------- Goldman Sachs Structured Small Cap Equity Investment Division 51,282 46,862 4,341 34,881 MFS VIT High Income Investment Division 132,571 105,302 10,141 3,882 MFS VIT Global Equity Investment Division 226,835 210,592 201,962 73,751 MFS VIT New Discovery Investment Division 134,934 104,942 105,171 4,660 MFS VIT Value Investment Division 79,100 85,643 969 2,907 Wells Fargo VT Total Return Bond Investment Division 1,081,377 1,071,578 920,218 371,858 Pioneer VCT Emerging Markets Investment Division 983,753 644,423 292,305 225,049 Pioneer VCT Mid Cap Value Investment Division 99,492 83,013 68,084 4,348 Royce Micro-Cap Investment Division (b) 348,711 286,746 291,230 4,681 Royce Small-Cap Investment Division 393,157 327,107 433,307 163,799 UIF Emerging Markets Debt Investment Division 7,345 6,932 3,126 1,934 UIF Emerging Markets Equity Investment Division 197,671 157,533 160,270 8,134 PIMCO VIT Low Duration Investment Division 762,323 737,037 14,655 10,848
(a) For the period May 3, 2010 to December 31, 2010. (b) Commenced November 10, 2008 and began transactions in 2010. 173 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: MSF BLACKROCK DIVERSIFIED MSF BLACKROCK AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------- ---------------------- ------------- Units beginning of year 11,480,151 12,136,197 12,715,624 9,655,662 10,226,808 10,673,487 Units issued and transferred from other funding options 7,504,390 5,841,981 3,715,948 5,730,219 4,486,979 2,758,625 Units redeemed and transferred to other funding options (8,158,313) (6,498,027) (4,295,375) (6,375,375) (5,058,125) (3,205,304) ------------- ---------------------- ------------- ------------- ---------------------- ------------- Units end of year 10,826,228 11,480,151 12,136,197 9,010,506 9,655,662 10,226,808
MSF T. ROWE PRICE SMALL CAP GROWTH MSF OPPENHEIMER GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- ------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------- ---------------------- ------------ Units beginning of year 4,272,691 4,498,247 4,692,085 2,111,250 2,250,790 2,347,437 Units issued and transferred from other funding options 2,453,679 1,930,920 1,202,595 1,375,412 1,043,645 653,061 Units redeemed and transferred to other funding options (2,670,628) (2,156,476) (1,396,433) (1,441,970) (1,183,185) (749,708) ------------- ---------------------- ------------- ------------- ---------------------- ------------ Units end of year 4,055,742 4,272,691 4,498,247 2,044,692 2,111,250 2,250,790 ============= ====================== ============= ============= ====================== ============
MSF T. ROWE PRICE LARGE CAP GROWTH MSF BARCLAYS CAPITAL AGGREGATE BOND INDEX INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------- ---------------------- ------------- Units beginning of year 3,409,767 3,522,287 3,529,093 5,979,612 5,705,639 6,582,200 Units issued and transferred from other funding options 2,659,923 2,114,300 1,354,500 5,950,976 4,481,852 3,155,394 Units redeemed and transferred to other funding options (2,921,312) (2,226,820) (1,361,306) (5,861,380) (4,207,879) (4,031,955) ------------- ---------------------- ------------- ------------- ---------------------- ------------- Units end of year 3,148,378 3,409,767 3,522,287 6,069,208 5,979,612 5,705,639 ============= ====================== ============= ============= ====================== =============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 174 MSF METLIFE STOCK INDEX MSF ARTIO INTERNATIONAL STOCK INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 -------------- ---------------------- -------------- ------------- ---------------------- ------------- 36,924,505 36,120,853 34,637,993 3,130,833 3,272,041 3,371,026 25,845,802 21,105,595 13,540,436 2,254,216 1,779,165 1,065,634 (26,105,801) (20,301,943) (12,057,576) (2,399,709) (1,920,373) (1,164,619) -------------- ---------------------- -------------- ------------- ---------------------- ------------- 36,664,506 36,924,505 36,120,853 2,985,340 3,130,833 3,272,041 ============== ====================== ============== ============= ====================== =============
MSF MFS VALUE MSF NEUBERGER BERMAN MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------- ---------------------- ------------- 4,056,273 4,061,727 4,115,566 3,292,949 3,355,424 3,292,329 3,454,529 2,678,033 1,700,729 3,046,306 2,427,646 1,542,307 (3,535,458) (2,683,487) (1,754,568) (3,160,150) (2,490,121) (1,479,212) ------------- ---------------------- ------------- ------------- ---------------------- ------------- 3,975,344 4,056,273 4,061,727 3,179,105 3,292,949 3,355,424 ============= ====================== ============= ============= ====================== =============
MSF MORGAN STANLEY EAFE INDEX MSF RUSSELL 2000 INDEX INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------- ---------------------- ------------- 4,618,467 4,548,869 4,186,312 2,972,133 2,979,566 2,975,863 5,171,804 3,949,991 2,508,640 2,633,026 2,105,103 1,318,726 (5,072,931) (3,880,393) (2,146,083) (2,796,559) (2,112,536) (1,315,023) ------------- ---------------------- ------------- ------------- ---------------------- ------------- 4,717,340 4,618,467 4,548,869 2,808,600 2,972,133 2,979,566 ============= ====================== ============= ============= ====================== =============
175 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: MSF JENNISON GROWTH MSF NEUBERGER BERMAN GENESIS INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------ ---------------------- ------------ ------------- ---------------------- ------------- Units beginning of year 1,148,604 1,170,101 1,203,057 4,279,459 4,285,033 4,450,536 Units issued and transferred from other funding options 1,009,921 646,258 394,023 3,571,339 2,810,773 1,678,023 Units redeemed and transferred to other funding options (923,867) (667,755) (426,979) (3,738,934) (2,816,347) (1,843,526) ------------ ---------------------- ------------ ------------- ---------------------- ------------- Units end of year 1,234,658 1,148,604 1,170,101 4,111,864 4,279,459 4,285,033 ============ ====================== ============ ============= ====================== =============
MSF BLACKROCK LARGE CAP VALUE MSF DAVIS VENTURE VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ ------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ----------- ------------- ---------------------- ------------ Units beginning of year 1,018,697 924,995 770,111 1,661,533 1,580,625 1,479,707 Units issued and transferred from other funding options 1,430,731 1,160,670 738,266 1,634,097 1,319,611 814,725 Units redeemed and transferred to other funding options (1,423,068) (1,066,968) (583,382) (1,662,761) (1,238,703) (713,807) ------------- ---------------------- ----------- ------------- ---------------------- ------------ Units end of year 1,026,360 1,018,697 924,995 1,632,869 1,661,533 1,580,625 ============= ====================== =========== ============= ====================== ============
MSF BLACKROCK BOND INCOME MSF FI VALUE LEADERS INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ---------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ----------- ---------------------- ----------- Units beginning of year 3,849,026 4,137,787 4,467,585 478,934 451,406 440,904 Units issued and transferred from other funding options 2,545,294 1,958,068 1,342,396 576,474 447,507 277,204 Units redeemed and transferred to other funding options (2,698,422) (2,246,829) (1,672,194) (561,589) (419,979) (266,702) ------------- ---------------------- ------------- ----------- ---------------------- ----------- Units end of year 3,695,898 3,849,026 4,137,787 493,819 478,934 451,406 ============= ====================== ============= =========== ====================== ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 176 MSF METLIFE MID CAP STOCK INDEX MSF LOOMIS SAYLES SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ---------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ----------- ---------------------- ----------- 3,313,158 3,450,115 3,466,871 592,149 579,322 569,953 3,107,108 2,443,661 1,669,439 595,787 456,755 284,532 (3,196,529) (2,580,618) (1,686,195) (590,320) (443,928) (275,163) ------------- ---------------------- ------------- ----------- ---------------------- ----------- 3,223,737 3,313,158 3,450,115 597,616 592,149 579,322 ============= ====================== ============= =========== ====================== ===========
MSF LOOMIS SAYLES SMALL CAP CORE MSF BLACKROCK LEGACY LARGE CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ---------------------------------------------- 2010 2009 2008 2010 2009 2008 ---------- ---------------------- ---------- ----------- ---------------------- ----------- 116,312 116,157 98,083 480,438 413,693 265,094 70,304 70,176 60,203 793,080 696,623 481,035 (71,077) (70,021) (42,129) (778,520) (629,878) (332,436) ---------- ---------------------- ---------- ----------- ---------------------- ----------- 115,539 116,312 116,157 494,998 480,438 413,693 ========== ====================== ========== =========== ====================== ===========
MSF WESTERN ASSET MANAGEMENT MSF MET/ARTISAN MID CAP VALUE STRATEGIC BOND OPPORTUNITIES INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ------------- ---------------------- ------------ 2010 2009 2008 2010 2009 2008 ----------- ---------------------- ---------- ------------- ---------------------- ------------ 191,339 196,801 191,591 1,115,618 1,106,833 1,117,386 303,121 142,199 89,923 1,232,736 931,022 616,116 (271,624) (147,661) (84,713) (1,202,545) (922,237) (626,669) ----------- ---------------------- ---------- ------------- ---------------------- ------------ 222,836 191,339 196,801 1,145,809 1,115,618 1,106,833 =========== ====================== ========== ============= ====================== ============
177 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: MSF WESTERN ASSET MANAGEMENT U.S. GOVERNMENT MSF BLACKROCK MONEY MARKET INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------ ------------- ---------------------- ------------- Units beginning of year 1,063,071 1,059,598 1,066,735 1,962,757 3,533,477 3,638,086 Units issued and transferred from other funding options 1,297,550 1,058,237 562,109 1,839,931 1,181,172 902,181 Units redeemed and transferred to other funding options (1,338,852) (1,054,764) (569,246) (2,138,792) (2,751,892) (1,006,790) ------------- ---------------------- ------------ ------------- ---------------------- ------------- Units end of year 1,021,769 1,063,071 1,059,598 1,663,896 1,962,757 3,533,477 ============= ====================== ============ ============= ====================== =============
MSF METLIFE CONSERVATIVE TO MODERATE ALLOCATION MSF METLIFE MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ----------- ---------------------- --------------- ------------- ---------------------- ------------- Units beginning of year 443,689 336,506 244,254 2,488,914 2,031,439 1,452,241 Units issued and transferred from other funding options 852,775 631,508 381,130 4,421,202 3,488,092 2,404,563 Units redeemed and transferred to other funding options (773,277) (524,325) (288,878) (4,084,553) (3,030,617) (1,825,365) ----------- ---------------------- --------------- ------------- ---------------------- ------------- Units end of year 523,187 443,689 336,506 2,825,563 2,488,914 2,031,439 =========== ====================== =============== ============= ====================== =============
JANUS ASPEN JANUS JANUS ASPEN BALANCED INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ------------------------------------------- 2010 2009 2008 2010 2009 2008 ---------- ---------------------- ---------- ---------- ---------------------- --------- Units beginning of year 718,894 685,791 643,417 99,381 20,633 5,625 Units issued and transferred from other funding options 65,451 77,949 85,627 79,900 81,253 20,270 Units redeemed and transferred to other funding options (42,822) (44,846) (43,253) (23,447) (2,505) (5,262) ---------- ---------------------- ---------- ---------- ---------------------- --------- Units end of year 741,523 718,894 685,791 155,834 99,381 20,633 ========== ====================== ========== ========== ====================== =========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 178 MSF MFS TOTAL RETURN MSF METLIFE CONSERVATIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ---------------------------------------------- 2010 2009 2008 2010 2009 2008 ----------- ---------------------- ----------- ----------- ---------------------- ----------- 580,613 469,855 418,473 179,332 133,696 66,558 701,621 595,895 357,123 672,097 463,545 353,431 (714,128) (485,137) (305,741) (570,404) (417,909) (286,293) ----------- ---------------------- ----------- ----------- ---------------------- ----------- 568,106 580,613 469,855 281,025 179,332 133,696 =========== ====================== =========== =========== ====================== ===========
MSF METLIFE MODERATE TO AGGRESSIVE ALLOCATION MSF METLIFE AGGRESSIVE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ------------------------------------------------ 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------- ---------------------- ----------- 4,732,679 3,956,910 2,499,351 993,895 851,068 608,756 8,011,177 6,445,005 4,336,625 1,827,076 1,466,442 960,727 (7,625,587) (5,669,236) (2,879,066) (1,739,137) (1,323,615) (718,415) ------------- ---------------------- ------------- ------------- ---------------------- ----------- 5,118,269 4,732,679 3,956,910 1,081,834 993,895 851,068 ============= ====================== ============= ============= ====================== ===========
JANUS ASPEN FORTY JANUS ASPEN OVERSEAS INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ------------------------------------------- 2010 2009 2008 2010 2009 2008 (a) ---------- ---------------------- ---------- --------- ---------------------- ---------- 61,130 45,182 27,126 3,135 1,777 -- 22,591 39,687 46,241 9,125 5,289 1,802 (10,503) (23,739) (28,185) (779) (3,931) (25) ---------- ---------------------- ---------- --------- ---------------------- ---------- 73,218 61,130 45,182 11,481 3,135 1,777 ========== ====================== ========== ========= ====================== ==========
179 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: INVESCO V.I. GLOBAL REAL ESTATE INVESCO V.I. INTERNATIONAL GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ------------------------------------ 2010 2009 2008 2010 2009 (b) ---------- ----------------------- ---------- --------- -------------------------- Units beginning of year 59,960 76,172 74,508 1,080 -- Units issued and transferred from other funding options 6,829 18,609 21,095 20,685 1,114 Units redeemed and transferred to other funding options (12,696) (34,821) (19,431) (7,564) (34) ---------- ----------------------- ---------- --------- -------------------------- Units end of year 54,093 59,960 76,172 14,201 1,080 ========== ======================= ========== ========= ==========================
FTVIPT TEMPLETON FTVIPT MUTUAL GLOBAL DISCOVERY SECURITIES GLOBAL BOND SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- --------------------------------- 2010 2009 2008 2010 2009 (d) ---------- ---------------------- ---------- ---------- ---------------------- Units beginning of year 54,588 140,006 93,103 204 -- Units issued and transferred from other funding options 32,229 28,222 55,579 11,325 213 Units redeemed and transferred to other funding options (33,373) (113,640) (8,676) (11,350) (9) ---------- ---------------------- ---------- ---------- ---------------------- Units end of year 53,444 54,588 140,006 179 204 ========== ====================== ========== ========== ============== =======
FIDELITY VIP CONTRAFUND FIDELITY VIP ASSET MANAGER: GROWTH INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- -------------------------------------------- 2010 2009 2008 2010 2009 2008 ----------- ---------------------- ---------- ---------- ---------------------- ---------- Units beginning of year 332,757 218,160 188,529 181,097 126,890 112,746 Units issued and transferred from other funding options 43,442 153,261 67,806 24,042 70,300 28,458 Units redeemed and transferred to other funding options (185,444) (38,664) (38,175) (32,679) (16,093) (14,314) ----------- ---------------------- ---------- ---------- ---------------------- ---------- Units end of year 190,755 332,757 218,160 172,460 181,097 126,890 =========== ====================== ========== ========== ====================== ==========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 180 INVESCO V.I. INVESCO V.I. GOVERNMENT VAN KAMPEN COMSTOCK FTVIPT TEMPLETON FOREIGN SECURITIES INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ------------------------------- ----------------------------------- 2010 2009 2008 2010 (C) 2010 2009 2008 ------------- ---------------------- --------- ---------------------- -------- ------------------------ ---------- 7,019 2,625 1,920 -- 520,792 527,866 504,436 2,058 5,113 2,736 2,966 75,062 104,859 90,235 (757) (719) (2,031) -- (37,545) (111,933) (66,805) ------------- ---------------------- --------- ---------------------- -------- ------------------------ ---------- 8,320 7,019 2,625 2,966 558,309 520,792 527,866 ==== ======== ====================== ========= ====================== ======== ======================== ==========
ALLIANCEBERNSTEIN ALLIANCEBERNSTEIN ALLIANCEBERNSTEIN GLOBAL THEMATIC GROWTH INTERMEDIATE BOND INTERNATIONAL VALUE INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ---------------------- ---------------------- 2010 2009 2008 2010 2009 (e) 2010 (f) ---------- ---------------------- --------- --------- ------------ ---------------------- 25,043 14,644 8,261 2,242 -- -- 5,471 14,289 6,627 3,226 3,299 73 (11,028) (3,890) (244) (2,322) (1,057) -- ---------- ---------------------- --------- --------- ------------ ---------------------- 19,486 25,043 14,644 3,146 2,242 73 ========== ====================== ========= ========= ============ ======================
FIDELITY VIP INVESTMENT GRADE BOND FIDELITY VIP EQUITY-INCOME INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- -------------------------------------------- 2010 2009 2008 2010 2009 2008 ---------- ---------------------- ---------- ---------- ---------------------- ---------- 18,087 3,908 73,675 23,778 72,691 87,700 87,556 31,638 1,647 4,102 10,561 72,887 (67,207) (17,459) (71,414) (10,840) (59,474) (87,896) ---------- ---------------------- ---------- ---------- ---------------------- ---------- 38,436 18,087 3,908 17,040 23,778 72,691 ========== ====================== ========== ========== ====================== ==========
181 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: FIDELITY VIP HIGH INCOME FIDELITY VIP MID CAP INVESTMENT DIVISION INVESTMENT DIVISION --------------------------- ------------------------------------------- 2010 2009 (b) 2010 2009 2008 (a) --------- ----------------- --------- ---------------------- ---------- Units beginning of year 3,001 -- 10,051 2,071 -- Units issued and transferred from other funding options -- 3,022 7,750 9,260 2,085 Units redeemed and transferred to other funding options (2,707) (21) (1,068) (1,280) (14) --------- ----------------- --------- ---------------------- ---------- Units end of year 294 3,001 16,733 10,051 2,071 ========= ================= ========= ====================== ==========
FIDELITY VIP FREEDOM 2030 AMERICAN FUNDS GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 --------- ---------------------- ---------- ------------- ---------------------- ------------ Units beginning of year 3,665 3,324 -- 1,419,237 1,382,286 1,218,654 Units issued and transferred from other funding options 9,042 372 3,402 1,491,854 1,183,014 771,486 Units redeemed and transferred to other funding options (3,696) (31) (78) (1,499,983) (1,146,063) (607,854) --------- ---------------------- ---------- ------------- ---------------------- ------------ Units end of year 9,011 3,665 3,324 1,411,108 1,419,237 1,382,286 ========= ====================== ========== ============= ====================== ============
AMERICAN FUNDS BOND AMERICAN FUNDS INTERNATIONAL INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ------------------------------------------- 2010 2009 2008 2010 2009 2008 (a) ----------- ---------------------- ----------- --------- ---------------------- ---------- Units beginning of year 335,183 317,147 291,647 17,214 2,335 -- Units issued and transferred from other funding options 767,492 631,349 466,213 13,635 16,414 2,351 Units redeemed and transferred to other funding options (741,602) (613,313) (440,713) (2,919) (1,535) (16) ----------- ---------------------- ----------- --------- ---------------------- ---------- Units end of year 361,073 335,183 317,147 27,930 17,214 2,335 =========== ====================== =========== ========= ====================== ==========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 182 FIDELITY VIP FREEDOM 2010 FIDELITY VIP FREEDOM 2020 INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- ------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ------------- ---------------------- ---------- --------- ---------------------- ---------- 1,541 3,089 -- 56,341 4,617 -- 1,471 21 3,101 829 52,551 4,660 (10) (1,569) (12) (873) (827) (43) ------------- ---------------------- ---------- --------- ---------------------- ---------- 3,002 1,541 3,089 56,297 56,341 4,617 ==== ======== ====================== ========== ========= ====================== ==========
AMERICAN FUNDS GROWTH-INCOME AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------ ------------- ---------------------- ------------- 1,491,242 1,461,879 1,381,044 2,152,577 2,098,117 1,945,062 1,511,750 1,196,222 759,706 2,898,451 2,393,707 1,620,594 (1,519,897) (1,166,859) (678,871) (2,936,108) (2,339,247) (1,467,539) ------------- ---------------------- ------------ ------------- ---------------------- ------------- 1,483,095 1,491,242 1,461,879 2,114,920 2,152,577 2,098,117 ============= ====================== ============ ============= ====================== =============
AMERICAN FUNDS U.S. GOVERNMENT/AAA RATED SECURITIES MIST T. ROWE PRICE MID CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- -------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 --------- ---------------------- ---------- ------------- ---------------------- ------------- 4,564 1,808 -- 1,754,850 1,702,757 1,587,296 398 4,273 1,820 2,400,707 1,928,793 1,301,840 (3,152) (1,517) (12) (2,429,809) (1,876,700) (1,186,379) --------- ---------------------- ---------- ------------- ---------------------- ------------- 1,810 4,564 1,808 1,725,748 1,754,850 1,702,757 ========= ====================== ========== ============= ====================== =============
183 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: MIST MFS RESEARCH INTERNATIONAL MIST PIMCO TOTAL RETURN INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------------------- ------------------------------------ 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ----------- ------------- ---------------------- ------------- Units beginning of year 885,756 870,603 695,827 2,378,221 2,287,745 2,175,489 Units issued and transferred from other funding options 1,201,606 996,145 702,443 2,765,705 2,051,940 1,322,359 Units redeemed and transferred to other funding options (1,249,252) (980,992) (527,667) (2,693,499) (1,961,464) (1,210,103) ------------- ---------------------- ----------- ------------- ---------------------- ------------- Units end of year 838,110 885,756 870,603 2,450,427 2,378,221 2,287,745 ============= ====================== =========== ============= ====================== =============
MIST LAZARD MID CAP MIST INVESCO SMALL CAP GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ---------------------------------------------- 2010 2009 2008 2010 2009 2008 ----------- ---------------------- ----------- ----------- ---------------------- ----------- Units beginning of year 362,314 371,732 340,316 268,049 230,618 208,985 Units issued and transferred from other funding options 450,103 378,306 294,536 345,354 285,386 181,529 Units redeemed and transferred to other funding options (451,970) (387,724) (263,120) (333,149) (247,955) (159,896) ----------- ---------------------- ----------- ----------- ---------------------- ----------- Units end of year 360,447 362,314 371,732 280,254 268,049 230,618 =========== ====================== =========== =========== ====================== ===========
MIST LORD ABBETT GROWTH AND INCOME MIST CLARION GLOBAL REAL ESTATE INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- ------------------------------------------------- 2010 2009 2008 2010 2009 2008 ---------- ---------------------- ---------- ------------- ---------------------- ------------ Units beginning of year 585,353 569,914 539,972 1,332,507 1,247,223 1,071,638 Units issued and transferred from other funding options 46,143 58,321 51,580 1,901,957 1,551,482 1,053,139 Units redeemed and transferred to other funding options (30,055) (42,882) (21,638) (1,891,476) (1,466,198) (877,554) ---------- ---------------------- ---------- ------------- ---------------------- ------------ Units end of year 601,441 585,353 569,914 1,342,988 1,332,507 1,247,223 ========== ====================== ========== ============= ====================== ============
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 184 MIST RCM TECHNOLOGY MIST LORD ABBETT BOND DEBENTURE INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ------------------------------------------------ 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------ ---------------------- ------------ 2,111,049 1,806,845 1,867,295 1,300,112 1,205,110 1,249,287 3,754,204 2,949,637 1,857,487 833,058 736,059 372,521 (3,857,418) (2,645,433) (1,917,937) (910,963) (641,057) (416,698) ------------- ---------------------- ------------- ------------ ---------------------- ------------ 2,007,835 2,111,049 1,806,845 1,222,207 1,300,112 1,205,110 ============= ====================== ============= ============ ====================== ============
MIST HARRIS OAKMARK INTERNATIONAL MIST LEGG MASON CLEARBRIDGE AGGRESSIVE GROWTH INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ------------------------------------------------ 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ----------- ---------------------- ------------- 1,439,875 1,337,674 1,335,770 918,435 929,444 893,124 1,994,881 1,598,848 1,015,983 862,843 681,902 427,707 (1,961,447) (1,496,647) (1,014,079) (893,021) (692,911) (391,387) ------------- ---------------------- ------------- ----------- ---------------------- ------------- 1,473,309 1,439,875 1,337,674 888,257 918,435 929,444 ============= ====================== ============= =========== ====================== =============
MIST MORGAN STANLEY MID CAP GROWTH MIST LORD ABBETT MID CAP VALUE INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------------- ------------------------------------------ 2010 2009 2008 2010 2009 2008 -------------- ---------------------- ------------- --------- ---------------------- --------- 23,317 1,987 2,000 9,319 10,463 4,638 24,103,485 23,232 9 620 12,325 8,670 (11,005,152) (1,902) (22) (1,965) (13,469) (2,845) -------------- ---------------------- ------------- --------- ---------------------- --------- 13,121,650 23,317 1,987 7,974 9,319 10,463 ============== ====================== ============= ========= ====================== =========
185 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: MIST THIRD AVENUE SMALL CAP VALUE MIST OPPENHEIMER CAPITAL APPRECIATION INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- --------------------------------------------- 2010 2009 2008 2010 2009 2008 ---------- ---------------------- --------- ----------- ---------------------- ---------- Units beginning of year 66,457 22,742 24,943 155,544 114,986 70,634 Units issued and transferred from other funding options 54,144 49,002 5,677 284,133 234,271 142,400 Units redeemed and transferred to other funding options (23,671) (5,287) (7,878) (284,323) (193,713) (98,048) ---------- ---------------------- --------- ----------- ---------------------- ---------- Units end of year 96,930 66,457 22,742 155,354 155,544 114,986 ========== ====================== ========= =========== ====================== ==========
MIST SSGA GROWTH AND INCOME ETF MIST PIMCO INFLATION PROTECTED BOND INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------------------- ------------------------------------------------ 2010 2009 2008 2010 2009 2008 ----------- ---------------------- ---------- ------------- ---------------------- ----------- Units beginning of year 149,333 39,742 30,551 618,801 523,888 80,592 Units issued and transferred from other funding options 435,343 206,989 57,632 1,507,168 1,226,809 872,786 Units redeemed and transferred to other funding options (264,392) (97,398) (48,441) (1,472,356) (1,131,896) (429,490) ----------- ---------------------- ---------- ------------- ---------------------- ----------- Units end of year 320,284 149,333 39,742 653,613 618,801 523,888 =========== ====================== ========== ============= ====================== ===========
MIST DREMAN SMALL CAP VALUE MIST AMERICAN FUNDS BALANCED ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION ----------------------------------------------- ---------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ------------- ---------------------- ---------- ------- ---------- ---------------------- ---------- Units beginning of year 1,271 11 -- 23,102 1,427 -- Units issued and transferred from other funding options 1,222 22,145 15 70,685 44,911 1,565 Units redeemed and transferred to other funding options (788) (20,885) (4) (52,491) (23,236) (138) ------------- ---------------------- ---------- ------- ---------- ---------------------- ---------- Units end of year 1,705 1,271 11 41,296 23,102 1,427 ============= ====================== ========== ======= ========== ====================== ==========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 186 MIST LEGG MASON VALUE EQUITY MIST SSGA GROWTH ETF INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- --------------------------------------------- 2010 2009 2008 2010 2009 2008 ----------- ---------------------- ----------- ----------- ---------------------- ---------- 615,613 576,603 511,093 181,473 59,898 56,164 729,851 565,868 304,320 355,523 247,780 75,852 (704,992) (526,858) (238,810) (299,245) (126,205) (72,118) ----------- ---------------------- ----------- ----------- ---------------------- ---------- 640,472 615,613 576,603 237,751 181,473 59,898 =========== ====================== =========== =========== ====================== ==========
MIST BLACKROCK LARGE CAP CORE MIST JANUS FORTY INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------------- ------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------- ------------- ---------------------- ------------ 14,107,746 14,670,780 15,352,126 1,122,196 943,170 281,380 9,046,176 6,882,314 4,069,201 2,258,407 1,816,405 1,255,331 (9,685,539) (7,445,348) (4,750,547) (2,194,977) (1,637,379) (593,541) ------------- ---------------------- ------------- ------------- ---------------------- ------------ 13,468,383 14,107,746 14,670,780 1,185,626 1,122,196 943,170 ============= ====================== ============= ============= ====================== ============
MIST AMERICAN FUNDS GROWTH ALLOCATION MIST AMERICAN FUNDS MODERATE ALLOCATION INVESTMENT DIVISION INVESTMENT DIVISION -------------------------------------------- -------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ---------- ---------------------- ---------- ---------- ---------------------- ---------- 15,564 2,439 -- 9,961 593 -- 90,305 17,809 2,697 29,424 11,392 809 (34,295) (4,684) (258) (15,801) (2,024) (216) ---------- ---------------------- ---------- ---------- ---------------------- ---------- 71,574 15,564 2,439 23,584 9,961 593 ========== ====================== ========== ========== ====================== ==========
187 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: MIST MET/FRANKLIN INCOME MIST MET/FRANKLIN MUTUAL SHARES INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) --------- ---------------------- ---------- --------- ---------------------- ---------- Units beginning of year 5,364 2,408 -- 2,904 1,208 -- Units issued and transferred from other funding options 13,379 4,293 2,572 6,436 2,223 1,620 Units redeemed and transferred to other funding options (5,703) (1,337) (164) (3,206) (527) (412) --------- ---------------------- ---------- --------- ---------------------- ---------- Units end of year 13,040 5,364 2,408 6,134 2,904 1,208 ========= ====================== ========== ========= ====================== ==========
MIST PIONEER FUND AMERICAN CENTURY VP VISTA INVESTMENT DIVISION INVESTMENT DIVISION --------------------------------- ------------------------------------ 2010 2009 (d) 2010 2009 2008 --------- ------------ ---------- ---------------------- ------------- Units beginning of year 20,277 -- 13,115 8,686 1,642 Units issued and transferred from other funding options 399 22,226 2,722 17,746 7,373 Units redeemed and transferred to other funding options (2,738) (1,949) (10,477) (13,317) (329) --------- ------------ ---------- ---------------------- ------------- Units end of year 17,938 20,277 5,360 13,115 8,686 ========= ============ ========== ====================== ==== ========
GOLDMAN SACHS MID CAP VALUE GOLDMAN SACHS STRUCTURED SMALL CAP EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- -------------------------------------------- 2010 2009 2008 2010 2009 2008 --------- ---------------------- ---------- --------- ---------------------- ----------- Units beginning of year 27,552 102,102 84,789 7,623 6,818 12,264 Units issued and transferred from other funding options 1 -- 29,281 436 2,806 2,521 Units redeemed and transferred to other funding options (2,910) (74,550) (11,968) (3,801) (2,001) (7,967) --------- ---------------------- ---------- --------- ---------------------- ----------- Units end of year 24,643 27,552 102,102 4,258 7,623 6,818 ========= ====================== ========== ========= ====================== ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 188 MIST MET/FRANKLIN TEMPLETON FOUNDING STRATEGY MIST MET/TEMPLETON GROWTH INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------ --------------------------------------------------- 2010 2009 2008 (a) 2010 2009 2008 (a) ---------- ---------------------- -------------- --------- ---------------------- ---------- ------- 21,298 1,503 -- 2,173 480 -- 55,695 44,058 1,613 5,903 2,325 543 (51,240) (24,263) (110) (2,988) (632) (63) ---------- ---------------------- -------------- --------- ---------------------- ---------- ------- 25,753 21,298 1,503 5,088 2,173 480 ========== ====================== ============== ========= ====================== ========== =======
DELAWARE VIP SMALL CAP VALUE DREYFUS VIF INTERNATIONAL VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- --------------------------------------------- 2010 2009 2008 2010 2009 2008 --------- ---------------------- ---------- --------- ------------------------ ---------- 16,198 59,279 67,044 21,676 33,156 42,550 7,585 7,473 14,415 505 2,909 1,327 (3,044) (50,554) (22,180) (5,679) (14,389) (10,721) --------- ---------------------- ---------- --------- ------------------------ ---------- 20,739 16,198 59,279 16,502 21,676 33,156 ========= ====================== ========== ========= ======================== ==========
MFS VIT HIGH INCOME MFS VIT GLOBAL EQUITY INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------------------------- ---------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- --------- --------- ---------------------- ------------- 9,209 354 1,776 5,543 5,386 3,948 106 9,330 77 11,271 2,627 1,868 (295) (475) (1,499) (2,592) (2,470) (430) ------------- ---------------------- --------- --------- ---------------------- ------------- 9,020 9,209 354 14,222 5,543 5,386 ============= ====================== ========= ========= ====================== =============
189 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 7. SCHEDULES OF UNITS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008: MFS VIT NEW DISCOVERY MFS VIT VALUE INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------------- -------------------------------------------------- 2010 2009 2008 2010 2009 2008 ------------- ---------------------- ------------ ------------- ---------------------- ------------- Units beginning of year 396 249 253 5,803 6,081 2,966 Units issued and transferred from other funding options 7,766 864 -- -- -- 3,928 Units redeemed and transferred to other funding options (348) (717) (4) (226) (278) (813) ------------- ---------------------- ------------ ------------- ---------------------- ------------- Units end of year 7,814 396 249 5,577 5,803 6,081 ============= ====================== ============ ============= ====================== =============
PIONEER VCT MID CAP VALUE ROYCE MICRO-CAP ROYCE SMALL-CAP INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------- ---------------------- ---------------------- 2010 2009 (b) 2010 (f) 2010 2009 (g) -------- ------------------- ---------------------- ---------- ----------- Units beginning of year 586 -- -- 4,703 -- Units issued and transferred from other funding options 1,815 604 19,549 35,416 4,771 Units redeemed and transferred to other funding options (99) (18) (323) (13,884) (68) -------- ------------------- ---------------------- ---------- ----------- Units end of year 2,302 586 19,226 26,235 4,703 ======== =================== ====================== ========== ===========
(a) For the period April 28, 2008 to December 31, 2008. (b) Commenced on April 28, 2008 and began transactions in 2009. (c) For the period May 3, 2010 to December 31, 2010. (d) For the period May 4, 2009 to December 31, 2009. (e) Commenced on May 1, 2005 and began transactions in 2009. (f) Commenced on November 10, 2008 and began transactions in 2010. (g) Commenced on November 10, 2008 and began transactions in 2009. 190 WELLS FARGO VT TOTAL RETURN BOND PIONEER VCT EMERGING MARKETS INVESTMENT DIVISION INVESTMENT DIVISION ------------------------------------------- ------------------------------------------- 2010 2009 2008 2010 2009 2008 (a) ---------- ---------------------- --------- --------- ---------------------- ---------- 39,845 15,329 9,697 37,577 13,031 -- 56,222 36,270 9,589 11,637 26,780 13,166 (20,786) (11,754) (3,957) (7,783) (2,234) (136) ---------- ---------------------- --------- --------- ---------------------- ---------- 75,281 39,845 15,329 41,431 37,577 13,031 ========== ====================== ========= ========= ====================== ==========
UIF EMERGING MARKETS DEBT UIF EMERGING MARKETS EQUITY PIMCO VIT LOW DURATION INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION ---------------------------- ------------------------------ ------------------------- 2010 2009 (g) 2010 2009 (g) 2010 2009 (d) ------- -------------------- --------- -------------------- --------- --------------- 223 -- 442 -- 66,450 -- 79 302 13,146 714 -- 66,978 (43) (79) (570) (272) (953) (528) ------- -------------------- --------- -------------------- --------- --------------- 259 223 13,018 442 65,497 66,450 ======= ==================== ========= ==================== ========= ===============
191 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS 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 cash value. Differences in the fee structures result in a variety of unit values, expense ratios, and total returns. 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 the respective stated periods in the five years ended December 31, 2010: AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) ---------- ------------- ----------- ------------- ---------------- ------------------- MSF BlackRock Diversified 2010 10,826,228 14.93 - 60.41 263,102,316 1.90 0.00 - 0.90 8.67 - 9.65 Investment Division 2009 11,480,151 13.61 - 55.09 257,391,816 5.15 0.45 - 0.90 16.25 - 17.30 2008 12,136,197 11.61 - 46.97 235,715,981 2.81 0.45 - 0.90 (25.47) - (20.65) 2007 12,715,624 15.43 - 38.69 334,245,436 2.54 0.45 - 0.90 4.96 - 8.02 2006 13,096,726 14.57 - 36.86 331,432,719 2.44 0.40 - 0.90 7.38 - 10.53 MSF BlackRock Aggressive Growth 2010 9,010,506 17.39 - 65.35 200,141,525 0.07 0.00 - 0.90 14.27 - 15.30 Investment Division 2009 9,655,662 15.15 - 56.68 187,532,635 0.20 0.45 - 0.90 48.10 - 49.44 2008 10,226,808 10.19 - 37.93 134,277,037 -- 0.45 - 0.90 (46.22) - (44.59) 2007 10,673,487 18.84 - 26.64 260,061,815 -- 0.45 - 0.90 19.53 - 20.60 2006 11,198,297 15.63 - 22.09 228,717,595 -- 0.40 - 0.90 5.76 - 6.75 MSF MetLife Stock Index 2010 36,664,506 12.28 - 55.00 671,751,965 1.75 0.00 - 0.90 13.79 - 14.82 Investment Division 2009 36,924,505 10.69 - 47.90 597,707,546 2.70 0.45 - 0.90 25.11 - 26.26 2008 36,120,853 8.47 - 37.94 472,610,929 1.94 0.45 - 0.90 (37.67) - (34.22) 2007 34,637,993 13.47 - 39.67 748,068,488 1.03 0.45 - 0.90 4.28 - 10.73 2006 33,607,228 12.80 - 38.04 707,564,793 1.97 0.40 - 0.90 8.73 - 15.48 MSF Artio International Stock 2010 2,985,340 12.56 - 18.74 45,766,876 1.57 0.00 - 0.90 6.25 - 7.21 Investment Division 2009 3,130,833 11.77 - 17.48 45,163,862 0.71 0.45 - 0.90 21.07 - 22.17 2008 3,272,041 9.71 - 14.31 38,994,328 3.13 0.45 - 0.90 (44.63) - (40.37) 2007 3,371,026 17.46 - 23.95 72,704,709 1.05 0.45 - 0.90 9.36 - 11.35 2006 3,412,213 15.68 - 21.90 67,509,144 1.40 0.40 - 0.90 14.38 - 16.49 MSF T. Rowe Price Small Cap Growth 2010 4,055,742 19.98 - 22.99 88,004,866 -- 0.00 - 0.90 33.69 - 34.90 Investment Division 2009 4,272,691 14.95 - 17.11 68,810,021 0.35 0.45 - 0.90 37.72 - 38.97 2008 4,498,247 10.85 - 12.37 52,291,217 -- 0.45 - 0.90 (36.76) - (33.41) 2007 4,692,085 17.16 - 19.47 85,746,187 -- 0.45 - 0.90 8.88 - 9.89 2006 4,913,291 15.76 - 17.80 81,812,746 -- 0.45 - 0.90 2.96 - 3.93 MSF Oppenheimer Global Equity 2010 2,044,692 20.77 - 23.52 43,706,570 1.54 0.00 - 0.90 15.19 - 16.23 Investment Division 2009 2,111,250 18.03 - 20.23 38,882,417 2.57 0.45 - 0.90 39.06 - 40.31 2008 2,250,790 12.94 - 14.42 29,644,684 2.15 0.45 - 0.90 (40.90) - (37.34) 2007 2,347,437 21.71 - 24.18 52,072,709 1.10 0.45 - 0.90 5.53 - 10.86 2006 2,344,938 20.38 - 22.70 48,944,535 2.49 0.45 - 0.90 11.00 - 16.59 MSF MFS Value Investment Division 2010 3,975,344 12.48 - 18.04 54,052,850 1.43 0.00 - 0.90 10.43 - 11.42 2009 4,056,273 11.25 - 16.19 49,365,491 -- 0.45 - 0.90 19.74 - 20.82 2008 4,061,727 9.35 - 13.40 41,012,912 1.91 0.45 - 0.90 (34.05) - (17.37) 2007 4,115,566 14.14 - 17.54 61,926,665 0.78 0.45 - 0.90 (4.67) - (3.48) 2006 4,099,325 14.65 - 18.40 64,292,839 0.77 0.40 - 0.90 16.70 - 18.14 MSF Neuberger Berman Mid Cap 2010 3,179,105 20.40 - 30.55 77,987,809 0.83 0.00 - 0.90 25.18 - 26.31 Value Investment Division 2009 3,292,949 16.29 - 24.19 63,957,799 1.58 0.90 46.77 - 48.10 2008 3,355,424 11.10 - 16.33 44,065,744 0.85 0.90 (47.81) - (46.55) 2007 3,292,329 21.27 - 30.68 82,005,373 0.55 0.90 2.51 - 3.45 2006 3,225,765 20.75 - 29.66 77,735,349 0.48 0.40 - 0.90 10.46 - 11.46
192 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------------- -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) --------- ------------- ----------- ------------- ---------------- ------------------- MSF T. Rowe Price Large Cap Growth 2010 3,148,378 10.95 - 17.18 45,775,087 0.27 0.00 - 0.90 16.00 - 17.05 Investment Division 2009 3,409,767 9.44 - 14.68 42,520,597 0.63 0.90 42.15 - 43.44 2008 3,522,287 6.64 - 10.23 30,702,575 0.59 0.90 (41.89) - (38.27) 2007 3,529,093 11.53 - 17.60 52,811,241 0.45 0.90 8.47 - 9.40 2006 3,620,946 10.63 - 16.09 49,315,573 0.33 0.40 - 0.90 12.21 - 13.23 MSF Barclays Capital Aggregate 2010 6,069,208 16.75 - 19.11 114,484,755 3.72 0.00 - 0.90 5.10 - 6.05 Bond Index Investment Division 2009 5,979,612 15.94 - 18.02 106,351,639 5.95 0.45 - 0.90 4.22 - 5.17 2008 5,705,639 15.30 - 17.13 96,524,738 4.55 0.45 - 0.90 4.32 - 5.99 2007 6,582,200 14.56 - 16.17 104,928,263 4.49 0.45 - 0.90 5.89 - 11.27 2006 6,058,549 13.75 - 15.13 90,417,327 4.29 0.45 - 0.90 (0.88) - 4.15 MSF Morgan Stanley EAFE Index 2010 4,717,340 11.23 - 15.78 65,367,829 2.68 0.00 - 0.90 7.22 - 8.19 Investment Division 2009 4,618,467 10.47 - 14.59 58,913,857 4.28 0.45 - 0.90 27.52 - 28.67 2008 4,548,869 8.21 - 11.34 44,991,420 2.87 0.45 - 0.90 (42.58) - (40.15) 2007 4,186,312 14.30 - 19.58 71,635,930 1.94 0.45 - 0.90 9.83 - 13.98 2006 3,792,545 13.02 - 17.67 58,401,764 1.70 0.40 - 0.90 23.03 - 25.75 MSF Russell 2000 Index 2010 2,808,600 15.35 - 22.19 56,596,227 1.10 0.00 - 0.90 25.78 - 26.92 Investment Division 2009 2,972,133 12.21 - 17.49 47,243,288 2.05 0.45 - 0.90 24.88 - 26.01 2008 2,979,566 9.77 - 13.88 37,446,370 1.26 0.45 - 0.90 (34.09) - (30.11) 2007 2,975,863 14.83 - 20.87 56,244,600 0.91 0.45 - 0.90 (2.43) - 2.72 2006 2,884,744 15.20 - 21.19 55,288,989 0.81 0.45 - 0.90 12.11 - 17.99 MSF Jennison Growth 2010 1,234,658 6.44 - 14.22 15,408,401 0.59 0.00 - 0.90 10.63 - 11.66 Investment Division 2009 1,148,604 5.77 - 12.74 13,473,347 0.19 0.90 38.73 - 39.99 2008 1,170,101 4.12 - 9.10 9,813,769 2.43 0.90 (37.00) - (26.98) 2007 1,203,057 6.48 - 13.98 15,741,716 0.42 0.90 10.62 - 11.66 2006 1,356,790 5.81 - 12.52 14,099,259 -- 0.40 - 0.90 1.88 - 2.82 MSF Neuberger Berman Genesis 2010 4,111,864 17.63 - 19.37 78,718,096 0.51 0.00 - 0.90 20.49 - 21.58 Investment Division 2009 4,279,459 14.59 - 15.93 67,433,059 1.12 0.90 12.14 - 13.15 2008 4,285,033 12.90 - 14.08 59,706,219 0.54 0.90 (38.96) - (35.81) 2007 4,450,536 20.94 - 22.86 100,708,365 0.30 0.90 (4.30) - (3.41) 2006 4,494,782 21.68 - 23.68 105,414,517 0.31 0.40 - 0.90 15.68 - 16.74 MSF MetLife Mid Cap Stock Index 2010 3,223,737 18.84 - 20.70 65,796,062 0.99 0.00 - 0.90 25.15 - 26.28 Investment Division 2009 3,313,158 14.93 - 16.39 53,691,851 1.81 0.90 35.77 - 36.99 2008 3,450,115 10.90 - 11.97 40,733,135 1.41 0.90 (36.75) - (35.42) 2007 3,466,871 17.07 - 18.75 63,959,203 0.75 0.90 6.83 - 7.82 2006 3,270,208 15.84 - 17.39 56,090,136 1.19 0.48 - 0.90 9.11 - 10.09 MSF Loomis Sayles Small Cap 2010 597,616 11.50 - 12.54 7,430,441 -- 0.00 - 0.90 30.53 - 31.71 Growth Investment Division 2009 592,149 8.22 - 9.52 5,593,368 -- 0.90 28.77 - 38.63 2008 579,322 5.93 - 7.33 4,206,928 -- 0.90 (41.67) - (36.32) 2007 569,953 11.73 - 12.46 7,040,049 -- 0.90 3.53 - 4.53 2006 538,941 11.33 - 11.92 6,368,294 -- 0.90 9.07 - 10.05 MSF BlackRock Large Cap Value 2010 1,026,360 11.78 - 12.73 12,899,137 1.05 0.00 - 0.90 8.24 - 9.22 Investment Division 2009 1,018,697 10.88 - 11.66 11,723,889 1.58 0.90 10.22 - 11.21 2008 924,995 9.87 - 10.48 9,571,372 0.82 0.90 (35.46) - (30.94) 2007 770,111 15.30 - 16.10 12,275,048 0.98 0.90 2.41 - 3.40 2006 608,908 8.29 - 15.57 9,397,259 1.17 0.90 18.29 - 19.30
193 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) --------- --------------- ---------- ------------- ---------------- ------------------- MSF Davis Venture Value 2010 1,632,869 13.03 - 43.04 57,910,618 1.00 0.00 - 0.90 11.00 - 12.00 Investment Division 2009 1,661,533 11.63 - 38.43 52,773,242 1.57 0.90 30.80 - 31.99 2008 1,580,625 8.81 - 29.12 38,001,762 1.34 0.90 (39.89) - (37.59) 2007 1,479,707 14.53 - 42.17 58,550,244 0.77 0.90 3.65 - 4.56 2006 1,301,427 13.90 - 40.33 49,859,713 0.85 0.40 - 0.90 13.55 - 14.62 MSF Loomis Sayles Small Cap Core 2010 115,539 16.04 - 355.36 18,282,784 0.09 0.00 - 0.90 26.38 - 27.53 Investment Division 2009 116,312 12.58 - 278.66 14,825,414 0.28 0.90 29.08 - 30.25 2008 116,157 9.66 - 213.94 11,034,259 -- 0.90 (36.47) - (30.05) 2007 98,083 15.07 - 333.74 15,771,472 0.08 0.90 10.90 - 11.90 2006 78,273 13.47 - 298.24 12,333,660 -- 0.40 - 0.90 15.64 - 16.72 MSF BlackRock Legacy Large Cap 2010 494,998 10.25 - 41.25 7,322,523 0.23 0.00 - 0.90 18.75 - 19.82 Growth Investment Division 2009 480,438 8.55 - 34.42 5,950,495 0.62 0.90 35.56 - 36.79 2008 413,693 6.25 - 25.16 3,786,888 0.43 0.90 (37.07) - (34.56) 2007 265,094 9.85 - 14.78 3,824,550 0.19 0.90 17.60 - 18.77 2006 190,308 8.29 - 12.45 2,269,333 0.16 0.48 - 0.90 3.23 - 4.13 MSF BlackRock Bond Income 2010 3,695,898 17.52 - 82.97 84,862,836 3.95 0.00 - 0.90 7.37 - 8.34 Investment Division 2009 3,849,026 16.17 - 76.59 82,419,233 7.04 0.45 - 0.90 8.49 - 9.47 2008 4,137,787 14.77 - 69.96 81,985,350 5.16 0.45 - 0.90 (4.31) - (3.43) 2007 4,467,585 15.30 - 31.06 92,436,358 3.24 0.45 - 0.90 5.36 - 12.31 2006 4,668,001 14.39 - 29.48 92,311,177 5.74 0.40 - 0.90 (2.17) - 4.43 MSF FI Value Leaders 2010 493,819 10.47 - 34.50 6,488,932 1.56 0.00 - 0.90 13.54 - 14.56 Investment Division 2009 478,934 9.14 - 30.11 5,481,161 2.80 0.90 20.75 - 21.85 2008 451,406 7.50 - 24.71 4,225,438 1.93 0.90 (39.49) - (34.25) 2007 440,904 12.29 - 15.50 6,742,764 0.91 0.90 3.22 - 4.24 2006 393,835 11.79 - 14.87 5,778,898 1.00 0.40 - 0.90 10.97 - 11.91 MSF Met/Artisan Mid Cap Value 2010 222,836 17.60 - 250.67 46,601,141 0.74 0.00 - 0.90 7.99 - 15.04 Investment Division 2009 191,339 35.18 - 217.89 41,071,915 1.13 0.90 40.30 - 41.56 2008 196,801 24.85 - 153.92 29,975,616 0.37 0.90 (46.49) - (42.81) 2007 191,591 268.52 - 285.05 54,129,720 0.56 0.90 (7.67) - (6.84) 2006 191,529 290.84 - 305.98 58,176,504 0.30 0.90 11.45 - 12.45 MSF Western Asset Management 2010 1,145,809 19.28 - 33.21 23,786,502 6.04 0.00 - 0.90 11.72 - 12.73 Strategic Bond Opportunities 2009 1,115,618 17.25 - 29.46 20,580,082 6.60 0.90 31.04 - 32.22 Investment Division 2008 1,106,833 13.17 - 22.28 15,464,462 4.07 0.90 (15.76) - (14.42) 2007 1,117,386 15.63 - 16.60 18,372,006 2.67 0.90 3.10 - 4.08 2006 998,939 15.16 - 15.95 15,802,133 4.79 0.90 3.38 - 4.33 MSF Western Asset Management 2010 1,021,769 15.08 - 22.66 16,633,651 2.70 0.00 - 0.90 4.86 - 5.81 U.S. Government 2009 1,063,071 14.38 - 21.41 16,359,270 4.49 0.90 3.40 - 4.33 Investment Division 2008 1,059,598 13.91 - 20.52 15,636,881 4.27 0.90 (1.23) - (0.36) 2007 1,066,735 14.08 - 14.95 15,797,381 2.66 0.90 3.38 - 4.33 2006 988,756 13.62 - 14.33 14,050,390 3.26 0.90 3.25 - 4.19 MSF BlackRock Money Market 2010 1,663,896 17.66 - 17.98 29,818,336 0.01 0.00 - 0.90 (0.89) - 0.01 Investment Division 2009 1,962,757 17.82 - 17.98 35,228,518 0.45 0.90 (0.48) - 0.42 2008 3,533,477 17.90 - 17.91 63,265,014 2.81 0.90 1.92 - 2.84 2007 3,638,086 17.41 - 17.57 63,398,057 4.94 0.90 4.15 - 5.07 2006 3,575,759 16.57 - 16.87 59,328,821 4.81 0.40 - 0.90 3.86 - 4.82
194 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------------- -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) --------- -------------- ---------- ------------- ---------------- ------------------- MSF MFS Total Return 2010 568,106 12.76 - 66.27 7,708,272 3.01 0.00 - 0.90 9.09 - 10.08 Investment Division 2009 580,613 11.70 - 60.20 7,134,157 4.19 0.90 17.54 - 18.60 2008 469,855 9.95 - 50.76 4,861,537 3.50 0.90 (22.84) - (20.13) 2007 418,473 12.90 - 13.33 5,549,510 1.97 0.90 3.45 - 4.39 2006 297,430 12.47 - 12.77 3,781,921 3.21 0.40 - 0.90 11.19 - 12.18 MSF MetLife Conservative 2010 281,025 12.84 - 133.23 4,036,496 3.52 0.00 - 0.90 9.35 - 10.34 Allocation Investment Division 2009 179,332 11.74 - 121.06 2,188,237 3.20 0.90 19.65 - 20.73 2008 133,696 9.82 - 10.14 1,350,130 1.41 0.90 (14.87) - (13.89) 2007 66,558 11.53 - 11.81 784,035 -- 0.90 4.82 - 5.73 2006 44,128 11.00 - 11.17 492,252 2.90 0.90 6.27 - 7.27 MSF MetLife Conservative to 2010 523,187 12.70 - 131.65 6,925,701 3.39 0.00 - 0.90 10.78 - 11.78 Moderate Allocation 2009 443,689 11.47 - 118.05 5,262,543 3.27 0.90 22.89 - 24.00 Investment Division 2008 336,506 9.33 - 9.64 3,218,477 1.34 0.90 (22.11) - (20.23) 2007 244,254 11.98 - 12.27 2,977,400 -- 0.90 4.08 - 5.05 2006 161,903 11.51 - 11.68 1,884,052 2.36 0.90 8.80 - 9.74 MSF MetLife Moderate Allocation 2010 2,825,563 12.48 - 129.39 37,214,331 2.69 0.00 - 0.90 12.45 - 13.47 Investment Division 2009 2,488,914 11.09 - 114.33 28,790,175 3.09 0.90 25.71 - 26.84 2008 2,031,439 8.82 - 90.36 18,535,109 1.08 0.90 (29.06) - (26.51) 2007 1,452,241 12.44 - 12.74 18,395,945 0.19 0.90 3.58 - 4.51 2006 775,138 12.01 - 12.19 9,406,274 1.48 0.90 11.20 - 12.19 MSF MetLife Moderate to Aggressive 2010 5,118,269 12.16 - 126.24 65,064,069 2.27 0.00 - 0.90 13.86 - 14.89 Allocation Investment Division 2009 4,732,679 10.68 - 110.06 52,449,221 2.75 0.90 28.27 - 29.43 2008 3,956,910 8.33 - 8.61 33,871,944 0.84 0.90 (35.55) - (32.36) 2007 2,499,351 12.92 - 13.23 32,935,899 0.19 0.90 3.19 - 4.09 2006 1,098,433 12.52 - 12.71 13,918,465 1.07 0.90 13.54 - 14.57 MSF MetLife Aggressive Allocation 2010 1,081,834 11.74 - 121.79 13,599,649 1.15 0.00 - 0.90 14.82 - 15.85 Investment Division 2009 993,895 10.23 - 105.27 10,645,616 2.32 0.90 30.74 - 31.92 2008 851,068 7.82 - 80.06 6,897,699 0.76 0.90 (40.83) - (37.15) 2007 608,756 13.22 - 13.54 8,191,098 0.22 0.90 2.56 - 3.52 2006 225,274 12.89 - 13.08 2,934,559 0.67 0.90 15.05 - 16.04 Janus Aspen Janus 2010 741,523 10.56 7,832,002 1.09 -- 14.52 Investment Division 2009 718,894 9.22 6,630,451 0.54 -- 36.35 2008 685,791 6.76 4,638,873 0.74 -- (39.71) 2007 643,417 11.22 7,219,885 0.74 -- 15.08 2006 595,051 9.75 5,801,609 0.49 0.48 - 0.60 11.38 Janus Aspen Balanced 2010 155,834 16.22 2,526,859 2.71 -- 8.12 Investment Division 2009 99,381 15.00 1,490,464 2.93 -- 25.58 2008 20,633 11.94 246,409 3.65 -- (16.08) 2007 5,625 14.23 80,035 3.00 -- 10.31 2006 179 12.90 2,311 1.92 0.48 10.41 Janus Aspen Forty Investment Division 2010 73,218 16.56 1,212,768 0.24 -- 6.48 (Commenced 5/3/2004 and began 2009 61,130 15.56 950,941 0.01 -- 46.01 transactions in 2006) 2008 45,182 10.65 475,295 0.01 -- (44.31) 2007 27,126 19.13 518,927 0.25 -- 36.64 2006 7,954 14.00 111,362 0.14 0.48 9.11
195 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 -------------------------------- ------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) ------- ------------- ---------- ------------- ---------------- ------------------ Janus Aspen Overseas 2010 11,481 32.74 375,851 0.73 -- 25.02 Investment Division 2009 3,135 26.19 82,093 0.46 -- 79.07 (Commenced 4/28/2008) 2008 1,777 14.62 25,984 -- -- (52.68) Invesco V.I. Global Real Estate 2010 54,093 29.53 1,597,111 5.17 -- 17.51 Investment Division 2009 59,960 25.13 1,506,522 -- -- 31.53 2008 76,172 19.10 1,455,085 5.47 -- (44.65) 2007 74,508 34.51 2,571,266 5.97 -- (12.34) 2006 70,179 39.37 2,762,613 1.18 0.40 - 0.60 42.62 Invesco V.I. International Growth 2010 14,201 19.18 272,411 2.40 -- 12.86 Investment Division 2009 1,080 17.00 18,360 1.38 -- 35.24 (Commenced 4/28/2008 and began transactions in 2009) Invesco V.I. Government 2010 8,320 12.71 105,713 0.20 -- 4.88 Investment Division 2009 7,019 12.11 85,035 6.08 -- 0.86 2008 2,625 12.01 31,526 5.03 -- 1.53 2007 1,920 11.83 22,716 5.06 -- 6.96 2006 1,342 11.06 14,833 4.52 0.40 3.14 Invesco V.I. Comstock Van Kampen 2010 2,966 10.82 32,084 -- -- 19.94 Investment Division (Commenced 5/3/2010) FTVIPT Templeton Foreign Securities 2010 558,309 16.56 9,244,694 2.02 -- 8.67 Investment Division 2009 520,792 15.24 7,935,141 3.61 -- 37.34 2008 527,866 11.09 5,856,168 2.58 -- (40.23) 2007 504,436 18.56 9,363,624 2.07 -- 15.78 2006 471,719 16.03 7,566,317 1.35 0.48 - 0.60 21.69 FTVIPT Mutual Global 2010 53,444 18.10 967,332 1.39 -- 11.96 Discovery Securities 2009 54,588 16.17 882,515 0.75 -- 23.31 Investment Division 2008 140,006 13.11 1,835,518 2.51 -- (28.44) 2007 93,103 18.32 1,706,062 1.59 -- 11.84 2006 54,880 16.38 899,109 0.99 0.40 - 0.48 23.03 FTVIPT Templeton Global Bond 2010 179 20.79 3,728 0.20 -- 14.71 Securities Investment Division (Commenced 5/4/2009) 2009 204 18.12 3,704 -- -- 95.55 AllianceBernstein Global Thematic 2010 19,486 6.13 119,488 1.84 -- 18.58 Growth Investment Division 2009 25,043 5.17 129,504 -- -- 53.14 2008 14,644 3.38 49,447 -- -- (47.48) 2007 8,261 6.43 53,097 -- -- 19.96 2006 11,769 5.36 63,091 -- 0.40 - 0.60 8.36 AllianceBernstein Intermediate Bond 2010 3,146 13.75 43,265 5.90 -- 8.93 Investment Division 2009 2,242 12.62 28,308 4.18 -- 18.20 (Commenced 5/1/2005 and began transactions in 2009)
196 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) --------- -------------- ----------- ------------- ---------------- ------------------- AllianceBernstein International Value 2010 73 18.68 1,357 2.40 -- 13.41 Investment Division (Commenced 11/10/2008 and began transactions in 2010) Fidelity VIP Contrafund 2010 190,755 14.04 2,677,373 0.96 -- 17.11 Investment Division 2009 332,757 11.99 3,988,185 1.48 -- 35.66 2008 218,160 8.83 1,927,330 0.90 -- (42.60) 2007 188,529 15.39 2,902,318 0.91 -- 11.44 2006 151,404 13.81 2,091,319 1.15 0.40 - 0.60 11.57 Fidelity VIP Asset Manager: Growth 2010 172,460 11.05 1,905,608 1.12 -- 16.18 Investment Division 2009 181,097 9.51 1,722,435 1.60 -- 32.79 2008 126,890 7.16 908,867 1.87 -- (35.88) 2007 112,746 11.17 1,259,390 4.07 -- 18.83 2006 102,160 9.40 958,076 1.87 0.48 6.89 Fidelity VIP Investment Grade Bond 2010 38,436 13.93 535,344 4.23 -- 7.68 Investment Division 2009 18,087 12.93 233,950 10.75 -- 15.67 2008 3,908 11.18 43,701 1.19 -- (3.35) 2007 73,675 11.57 852,372 0.68 -- 4.23 2006 3,341 11.10 36,978 4.18 0.40 - 0.48 4.28 Fidelity VIP Equity-Income 2010 17,040 11.90 202,690 1.60 -- 15.09 Investment Division 2009 23,778 10.34 245,766 1.95 -- 30.03 2008 72,691 7.95 577,801 1.89 -- (42.69) 2007 87,700 13.87 1,216,664 3.23 -- (0.93) 2006 30,951 14.00 433,176 3.96 0.40 - 0.48 20.07 Fidelity VIP High Income 2010 294 15.52 4,565 4.94 -- 13.82 Investment Division 2009 3,001 13.63 40,915 26.74 -- 43.96 (Commenced 4/28/2008 and began transactions in 2009) Fidelity VIP Mid Cap 2010 16,733 27.61 462,031 0.15 -- 28.57 Investment Division 2009 10,051 21.48 215,869 0.29 -- 39.75 (Commenced 4/28/2008) 2008 2,071 15.37 31,825 0.15 -- (46.25) Fidelity VIP Freedom 2010 2010 3,002 10.61 31,860 2.67 -- 12.45 Investment Division 2009 1,541 9.44 - 12.05 14,548 3.32 0.45 23.72 - 24.27 (Commenced 4/28/2008) 2008 3,089 7.63 - 9.69 23,569 6.53 0.45 (23.71) - (23.48) Fidelity VIP Freedom 2020 2010 56,297 10.16 - 13.67 738,702 2.26 -- 13.98 - 14.49 Investment Division 2009 56,341 8.91 - 11.94 648,511 4.16 0.45 28.40 - 28.97 (Commenced 4/28/2008) 2008 4,617 6.94 - 9.26 37,721 4.51 0.45 (30.60) - (30.39) Fidelity VIP Freedom 2030 2010 9,011 9.75 - 13.35 108,191 2.42 -- 15.56 - 16.08 Investment Division 2009 3,665 8.43 - 11.50 31,738 2.47 0.45 31.07 - 31.66 (Commenced 4/28/2008) 2008 3,324 6.43 - 8.74 21,387 6.89 0.45 (35.65) - (35.46) American Funds Growth 2010 1,411,108 20.92 - 228.81 127,437,855 0.73 0.00 - 0.90 17.62 - 18.68 Investment Division 2009 1,419,237 17.62 - 192.80 109,197,492 0.67 0.90 38.16 - 39.41 2008 1,382,286 12.64 - 138.29 76,515,292 0.86 0.90 (44.47) - 27.72 2007 1,218,654 94.52 - 100.35 121,273,017 0.82 0.90 11.33 - 12.35 2006 1,094,384 84.90 - 89.32 97,034,740 0.86 0.90 9.24 - 10.22
197 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------------- -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) --------- -------------- ---------- ------------- ---------------- ------------------- American Funds Growth-Income 2010 1,483,095 45.89 - 152.46 73,861,194 1.51 0.00 - 0.90 10.43 - 11.43 Investment Division 2009 1,491,242 41.56 - 136.83 66,537,414 1.65 0.90 30.07 - 31.24 2008 1,461,879 31.95 - 104.26 49,610,668 1.79 0.90 (38.41) - (35.35) 2007 1,381,044 51.88 - 55.07 75,370,228 1.59 0.90 4.11 - 5.04 2006 1,228,077 49.83 - 52.43 63,898,091 1.68 0.90 14.17 - 15.21 American Funds Global Small 2010 2,114,920 29.62 - 37.13 67,405,353 1.74 0.00 - 0.90 21.32 - 22.41 Capitalization Investment Division 2009 2,152,577 24.42 - 30.34 56,054,284 0.29 0.90 59.85 - 61.30 2008 2,098,117 15.27 - 18.81 33,880,750 -- 0.90 (53.94) - (48.89) 2007 1,945,062 33.16 - 35.20 67,615,279 3.01 0.90 20.32 - 21.42 2006 1,521,701 27.56 - 28.99 43,642,742 0.46 0.90 22.97 - 24.05 American Funds Bond 2010 361,073 11.41 - 20.00 4,365,031 3.15 0.00 - 0.90 5.49 - 6.44 Investment Division 2009 335,183 10.81 - 18.79 3,760,642 3.37 0.90 11.60 - 12.61 (Commenced 5/1/2006) 2008 317,147 9.69 - 16.69 3,143,128 5.80 0.90 (10.12) - (9.37) 2007 291,647 10.78 - 10.95 3,182,415 10.03 0.90 6.52 - 7.56 2006 63,414 10.12 - 10.18 644,176 0.87 0.90 1.20 - 1.80 American Funds International 2010 27,930 28.99 809,625 2.23 -- 7.23 Investment Division 2009 17,214 27.03 465,344 1.51 -- 43.07 (Commenced 4/28/2008) 2008 2,335 18.89 44,134 2.51 -- (39.19) American Funds U.S. 2010 1,810 20.90 37,830 1.49 -- 5.75 Government/AAA Rated Securities 2009 4,564 19.77 90,231 3.32 -- 2.50 Investment Division 2008 1,808 19.29 34,883 2.26 -- 6.61 (Commenced 4/28/2008) MIST T. Rowe Price Mid Cap Growth 2010 1,725,748 11.33 - 18.33 21,234,908 -- 0.00 - 0.90 26.93 - 28.07 Investment Division 2009 1,754,850 8.93 - 14.35 16,772,681 -- 0.90 44.54 - 45.85 2008 1,702,757 6.18 - 9.87 11,162,717 0.07 0.90 (40.16) - (37.28) 2007 1,587,296 10.32 - 16.38 17,384,199 0.21 0.90 16.74 - 17.85 2006 1,338,870 8.84 - 13.92 12,401,292 -- 0.60 - 0.90 5.66 - 6.60 MIST MFS Research International 2010 838,110 14.64 - 17.04 13,920,818 1.89 0.00 - 0.90 10.65 - 11.65 Investment Division 2009 885,756 13.14 - 15.26 13,178,754 3.35 0.90 30.75 - 31.93 2008 870,603 9.99 - 11.57 9,814,566 2.06 0.90 (42.78) - (41.00) 2007 695,827 17.33 - 20.03 13,629,924 1.44 0.90 12.59 - 13.61 2006 566,593 15.30 - 17.63 9,803,525 1.59 0.90 25.80 - 26.90 MIST PIMCO Total Return 2010 2,450,427 17.69 - 19.29 46,602,262 3.66 0.00 - 0.90 7.44 - 8.41 Investment Division 2009 2,378,221 16.46 - 17.80 41,820,317 7.36 0.90 17.33 - 18.39 2008 2,287,745 14.03 - 15.03 34,041,059 3.92 0.90 (1.28) - 0.61 2007 2,175,489 14.07 - 14.94 32,210,481 3.46 0.90 6.91 - 7.87 2006 2,039,385 13.16 - 13.85 28,016,253 2.73 0.90 3.85 - 4.81 MIST RCM Technology 2010 2,007,835 7.46 - 8.14 16,113,886 -- 0.00 - 0.90 27.12 - 28.27 Investment Division 2009 2,111,049 5.87 - 6.34 13,221,048 -- 0.90 57.74 - 59.17 2008 1,806,845 3.72 - 3.99 7,121,496 13.07 0.90 (44.79) - (37.82) 2007 1,867,295 6.74 - 7.15 13,231,277 -- 0.90 30.62 - 31.68 2006 1,395,573 5.16 - 5.43 7,523,569 -- 0.90 4.51 - 5.47
198 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------------- -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) ---------- ------------- ---------- ------------- ---------------- ------------------- MIST Lord Abbett Bond Debenture 2010 1,222,207 19.75 - 29.48 27,673,730 6.47 0.00 - 0.90 12.16 - 13.18 Investment Division 2009 1,300,112 17.61 - 26.05 26,033,742 7.18 0.45 - 0.90 35.89 - 37.12 2008 1,205,110 12.96 - 19.00 17,548,678 4.38 0.45 - 0.90 (19.13) - (18.40) 2007 1,249,287 16.02 - 19.29 22,262,379 5.32 0.45 - 0.90 5.88 - 14.15 2006 1,162,806 14.77 - 18.05 19,368,414 6.71 0.40 - 0.90 1.42 - 9.34 MIST Lazard Mid Cap 2010 360,447 13.62 - 18.13 5,585,124 1.05 0.00 - 0.90 22.15 - 23.25 Investment Division 2009 362,314 11.09 - 14.71 4,569,758 1.34 0.90 35.92 - 37.14 2008 371,732 8.11 - 10.73 3,422,640 1.17 0.90 (38.70) - (36.07) 2007 340,316 13.14 - 15.10 5,084,696 0.63 0.90 (3.37) - (2.45) 2006 261,764 14.85 - 15.48 4,020,887 0.52 0.90 6.62 - 14.86 MIST Invesco Small Cap Growth 2010 280,254 15.06 - 18.44 4,469,898 -- 0.00 - 0.90 25.34 - 26.47 Investment Division 2009 268,049 12.01 - 14.58 3,392,636 -- 0.90 33.01 - 34.21 2008 230,618 9.03 - 10.86 2,187,257 -- 0.90 (38.73) - (34.43) 2007 208,985 14.84 - 15.62 3,233,322 -- 0.90 10.42 - 11.41 2006 170,794 13.44 - 14.02 2,376,804 -- 0.90 3.77 - 13.93 MIST Harris Oakmark International 2010 1,473,309 20.09 - 21.72 31,544,698 2.05 0.00 - 0.90 15.63 - 16.67 Investment Division 2009 1,439,875 17.38 - 18.61 26,459,351 7.87 0.90 54.07 - 55.46 2008 1,337,674 11.28 - 11.97 15,844,670 1.96 0.90 (41.26) - (37.26) 2007 1,335,770 19.20 - 20.20 26,700,786 0.89 0.90 (1.74) - (0.83) 2006 1,060,490 19.54 - 20.37 21,411,537 2.33 0.90 28.05 - 29.18 MIST Legg Mason ClearBridge 2010 888,257 7.56 - 9.05 7,832,576 0.06 0.00 - 0.90 22.94 - 24.05 Aggressive Growth 2009 918,435 6.11 - 7.30 6,533,459 0.12 0.90 32.26 - 33.45 Investment Division 2008 929,444 4.59 - 5.47 4,956,827 0.01 0.90 (39.49) - (36.35) 2007 893,124 7.54 - 8.82 7,804,601 0.22 0.90 1.71 - 2.56 2006 908,926 7.37 - 8.60 7,744,433 -- 0.48 - 0.90 (2.53) - (1.60) MIST Lord Abbett Growth and 2010 601,441 10.35 6,224,061 1.22 -- 17.33 Income Investment Division 2009 585,353 8.82 5,163,011 2.45 -- 18.67 2008 569,914 7.43 - 48.32 4,235,811 1.80 -- (36.20) - (32.76) 2007 539,972 11.65 6,289,386 1.00 -- 4.02 2006 523,423 11.20 5,861,368 0.03 0.40 - 0.60 18.05 MIST Clarion Global Real Estate 2010 1,342,988 14.98 - 15.90 21,160,564 8.28 0.00 - 0.90 15.24 - 16.28 Investment Division 2009 1,332,507 13.00 - 13.68 18,066,465 3.50 0.90 33.91 - 35.12 2008 1,247,223 9.71 - 10.12 12,525,455 2.00 0.90 (44.73) - (41.56) 2007 1,071,638 16.76 - 17.32 18,432,903 1.09 0.90 (15.57) - (14.81) 2006 939,464 19.85 - 20.33 18,987,194 1.01 0.40 - 0.90 36.70 - 37.93 MIST Morgan Stanley Mid Cap 2010 13,121,650 6.67 - 18.71 203,754,931 -- 0.00 - 0.90 17.91 - 32.19 Growth Investment Division 2009 23,317 13.14 - 14.13 306,427 -- -- 57.27 - 57.83 (Commenced 5/3/2004 and began 2008 1,987 8.35 - 8.96 16,600 1.36 -- (46.77) - (43.85) transactions in 2007) 2007 2,000 15.69 31,371 -- -- 23.52 MIST Lord Abbett Mid Cap Value 2010 7,974 13.94 111,190 0.58 -- 25.53 Investment Division 2009 9,319 11.11 103,521 2.10 -- 26.53 2008 10,463 8.78 91,851 0.25 -- (38.78) 2007 4,638 14.34 66,500 0.94 -- 0.63 2006 2,988 14.25 42,580 0.54 0.48 - 0.60 12.16
199 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) ---------- -------------- ---------- ------------- ---------------- ------------------- MIST Third Avenue Small Cap Value 2010 96,930 16.25 1,575,589 1.05 -- 19.90 Investment Division 2009 66,457 13.56 900,994 0.62 -- 26.45 2008 22,742 10.72 243,831 0.70 -- (29.73) 2007 24,943 15.28 381,064 0.85 -- (2.98) 2006 17,494 15.75 275,584 0.11 0.48 - 0.60 13.11 MIST Oppenheimer Capital 2010 155,354 9.89 - 11.63 1,779,611 0.66 0.00 - 0.90 8.70 - 9.68 Appreciation Investment Division 2009 155,544 9.02 - 10.61 1,631,638 -- 0.90 42.73 - 44.02 2008 114,986 6.26 - 7.37 841,297 3.67 0.90 (46.29) - (43.37) 2007 70,634 13.27 - 13.59 955,427 0.11 0.90 13.42 - 14.49 2006 27,796 11.70 - 11.87 329,300 0.26 0.90 6.88 - 7.78 MIST Legg Mason Value Equity 2010 640,472 6.61 - 7.73 4,606,102 2.19 0.00 - 0.90 6.88 - 7.85 Investment Division 2009 615,613 6.18 - 7.17 4,100,190 1.81 0.90 36.55 - 37.79 (Commenced 5/1/2006) 2008 576,603 4.53 - 5.20 2,788,353 0.32 0.90 (54.82) - (47.12) 2007 511,093 10.02 - 11.42 5,435,902 -- 0.90 (6.62) - (5.70) 2006 490,888 10.73 - 12.11 5,537,660 0.16 0.48 - 0.90 7.73 - 27.65 MIST SSgA Growth ETF 2010 237,751 10.89 - 12.28 2,679,381 1.57 0.00 - 0.90 13.35 - 14.37 Investment Division 2009 181,473 9.61 - 10.74 1,789,007 1.53 0.90 28.34 - 29.51 (Commenced 5/1/2006) 2008 59,898 7.48 - 8.29 457,331 1.65 0.90 (33.42) - (30.82) 2007 56,164 11.24 - 11.41 639,459 -- 0.90 4.95 - 5.94 2006 16,395 10.71 - 10.77 176,315 2.52 0.90 7.10 - 7.70 MIST SSgA Growth and Income ETF 2010 320,284 11.51 - 12.74 3,818,907 1.29 0.00 - 0.90 11.60 - 12.61 Investment Division 2009 149,333 10.31 - 11.31 1,581,109 1.61 0.90 23.84 - 24.96 (Commenced 5/1/2006) 2008 39,742 8.33 - 9.05 336,449 1.95 0.90 (25.54) - (23.99) 2007 30,551 11.18 - 11.35 345,473 -- 0.90 4.78 - 5.78 2006 10,875 10.67 - 10.73 116,548 3.14 0.90 6.70 - 7.30 MIST PIMCO Inflation 2010 653,613 12.97 - 15.63 8,812,538 2.54 0.00 - 0.90 7.04 - 8.00 Protected Bond 2009 618,801 12.12 - 14.47 7,734,444 3.75 0.90 17.31 - 18.37 Investment Division 2008 523,888 10.33 - 12.23 5,523,166 3.28 0.90 (9.73) - (6.61) (Commenced 5/1/2006) 2007 80,592 11.16 - 11.33 911,539 1.27 0.90 10.06 - 11.08 2006 12,722 10.14 - 10.20 129,728 -- 0.90 1.40 - 2.00 MIST BlackRock Large Cap Core 2010 13,468,383 8.42 - 36.79 309,489,536 1.34 0.00 - 0.90 11.73 - 12.73 Investment Division 2009 14,107,746 7.50 - 32.93 291,577,776 1.61 0.45 - 0.90 18.37 - 19.43 (Commenced 4/30/2007) 2008 14,670,780 6.31 - 27.82 258,799,279 0.70 0.45 - 0.90 (37.68) - (31.87) 2007 15,352,126 10.08 - 44.64 436,975,682 -- 0.45 - 0.90 0.80 - 6.77 MIST Janus Forty 2010 1,185,626 10.96 - 355.01 14,254,655 1.71 0.00 - 0.90 8.70 - 9.68 Investment Division 2009 1,122,196 10.08 - 323.68 12,100,411 -- 0.90 41.93 - 43.21 (Commenced 4/30/2007) 2008 943,170 7.10 - 226.02 6,915,393 4.58 0.90 (44.68) - (41.84) 2007 281,380 12.33 - 12.40 3,487,948 -- 0.90 23.30 - 24.00 MIST Dreman Small Cap Value 2010 1,705 16.12 27,489 0.82 -- 19.53 Investment Division 2009 1,271 13.49 17,136 -- -- 29.09 (Commenced 4/28/2008) 2008 11 10.45 120 -- -- (25.08) MIST American Funds 2010 41,296 10.35 427,406 1.26 -- 12.40 Balanced Allocation 2009 23,102 9.21 212,728 -- -- 30.06 Investment Division 2008 1,427 7.08 10,107 5.25 -- (29.27) (Commenced 4/28/2008)
200 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 -------------------------------- ------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) ------- ------------- ---------- ------------- ---------------- ------------------ MIST American Funds 2010 71,574 9.87 706,300 0.62 -- 13.78 Growth Allocation 2009 15,564 8.67 134,986 -- -- 34.36 Investment Division 2008 2,439 6.45 15,747 8.38 -- (35.51) (Commenced 4/28/2008) MIST American Funds 2010 23,584 10.60 250,094 1.38 -- 10.15 Moderate Allocation 2009 9,961 9.63 95,893 -- -- 23.90 Investment Division 2008 593 7.77 4,607 6.80 -- (22.46) (Commenced 4/28/2008) MIST Met/Franklin Income 2010 13,040 11.60 151,292 3.26 -- 12.13 Investment Division 2009 5,364 10.35 55,505 -- -- 28.05 (Commenced 4/28/2008) 2008 2,408 8.08 19,461 4.29 -- (19.19) MIST Met/Franklin Mutual Shares 2010 6,134 9.30 57,042 -- -- 11.23 Investment Division 2009 2,904 8.36 24,280 -- -- 25.15 (Commenced 4/28/2008) 2008 1,208 6.68 8,064 3.53 -- (33.20) MIST Met/Franklin 2010 25,753 10.11 260,280 -- -- 10.36 Templeton Founding Strategy 2009 21,298 9.16 195,055 -- -- 28.84 Investment Division 2008 1,503 7.11 10,681 7.79 -- (28.92) (Commenced 4/28/2008) MIST Met/Templeton Growth 2010 5,088 9.53 48,492 0.98 -- 7.88 Investment Division 2009 2,173 8.83 19,197 0.02 -- 33.08 (Commenced 4/28/2008) 2008 480 6.64 3,188 1.08 -- (33.62) MIST Pioneer Fund 2010 17,938 13.71 245,860 0.90 -- 17.93 Investment Division 2009 20,277 11.79 239,136 -- -- 17.93 (Commenced 5/4/2009) American Century VP Vista 2010 5,360 13.83 74,155 -- -- 23.88 Investment Division 2009 13,115 11.17 146,455 -- -- 22.47 2008 8,686 9.12 79,193 -- -- (48.63) 2007 1,642 17.75 29,133 -- -- 39.76 2006 1,963 12.70 24,927 -- 0.40 9.03 Delaware VIP Small Cap Value 2010 20,739 18.57 385,136 0.44 -- 31.91 Investment Division 2009 16,198 14.08 228,031 1.34 -- 31.56 2008 59,279 10.70 634,305 0.47 -- (30.06) 2007 67,044 15.30 1,025,844 0.21 -- (6.82) 2006 31,911 16.42 524,104 0.02 0.48 15.86 Dreyfus VIF International Value 2010 16,502 14.03 231,464 1.53 -- 4.22 Investment Division 2009 21,676 13.46 291,742 3.77 -- 30.67 2008 33,156 10.30 341,560 2.14 -- (37.50) 2007 42,550 16.48 701,093 1.66 -- 3.97 2006 45,198 15.85 716,432 -- 0.40 - 0.48 22.35 Goldman Sachs Mid Cap Value 2010 24,643 14.90 367,089 0.70 -- 25.00 Investment Division 2009 27,552 11.92 328,341 1.09 -- 33.15 2008 102,102 8.95 913,808 1.06 -- (37.33) 2007 84,789 14.28 1,210,921 1.16 -- (0.70) 2006 18,361 14.38 263,966 1.82 0.40 - 0.48 16.17
201 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 8. FINANCIAL HIGHLIGHTS -- (CONTINUED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------- ------------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) ------ ------------- ---------- ------------- ---------------- ------------------ Goldman Sachs Structured 2010 4,258 12.04 51,252 0.57 -- 30.12 Small Cap Equity 2009 7,623 9.25 70,508 1.46 -- 27.67 Investment Division 2008 6,818 7.24 49,396 0.66 -- (33.96) 2007 12,264 10.97 134,527 0.51 -- (17.46) 2006 6,743 13.29 89,590 0.87 0.48 12.30 MFS VIT High Income 2010 9,020 14.65 132,109 7.00 -- 14.40 Investment Division 2009 9,209 12.80 117,897 1.48 -- 45.22 2008 354 8.82 3,111 10.38 -- (28.67) 2007 1,776 12.36 21,944 9.79 -- 1.56 2006 6,738 12.17 82,011 5.42 0.40 - 0.48 9.98 MFS VIT Global Equity 2010 14,222 15.95 226,794 0.78 -- 12.05 Investment Division 2009 5,543 14.23 78,884 2.04 -- 31.80 2008 5,386 10.80 58,159 0.76 -- (33.95) 2007 3,948 16.35 64,569 1.71 -- 8.93 2006 1,789 15.01 26,856 -- 0.40 - 0.48 24.04 MFS VIT New Discovery 2010 7,814 17.27 134,923 -- -- 35.94 Investment Division 2009 396 12.70 5,029 -- -- 62.92 (Commenced 5/3/2004 and began 2008 249 7.80 1,942 -- -- (39.52) transactions in 2007) 2007 253 12.89 3,269 -- -- 2.25 MFS VIT Value Investment Division 2010 5,577 14.18 79,095 1.32 -- 11.22 (Commenced 5/3/2004 and began 2009 5,803 12.75 74,001 1.24 -- 22.45 transactions in 2007) 2008 6,081 10.41 63,334 6.73 -- (32.72) 2007 2,966 15.48 45,933 -- -- 7.56 Wells Fargo VT Total Return Bond 2010 75,281 14.37 1,081,415 3.35 -- 7.04 Investment Division 2009 39,845 13.42 534,737 4.42 -- 12.00 2008 15,329 11.98 183,674 4.82 -- 2.41 2007 9,697 11.70 113,479 4.64 -- 6.17 2006 5,553 11.02 61,191 4.43 0.40 3.79 Pioneer VCT Emerging Markets 2010 41,431 23.75 984,166 0.33 -- 15.61 Investment Division 2009 37,577 20.55 772,123 0.96 -- 74.02 (Commenced 4/28/2008) 2008 13,031 11.81 153,859 -- -- (55.11) Pioneer VCT Mid Cap Value 2010 2,302 43.21 99,478 1.08 -- 18.22 Investment Division 2009 586 36.55 21,403 -- -- 25.58 (Commenced 4/28/2008 and began transactions in 2009) Royce Micro-Cap 2010 19,226 18.14 348,709 3.02 -- 29.96 Investment Division (Commenced 11/10/2008 and began transactions in 2010) Royce Small-Cap 2010 26,235 14.99 393,142 0.14 -- 20.52 Investment Division 2009 4,703 12.43 58,471 -- -- 35.20 (Commenced 11/10/2008 and began transactions in 2009)
202 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONCLUDED) 8. FINANCIAL HIGHLIGHTS -- (CONCLUDED) AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------- ---------------------------------------------- UNIT VALUE INVESTMENT(1) EXPENSE RATIO(2) TOTAL RETURN(3) LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST(%) ------ ------------- ---------- ------------- ---------------- --------------- UIF Emerging Markets Debt 2010 259 28.33 7,343 4.24 -- 9.74 Investment Division 2009 223 25.82 5,747 2.19 -- 30.21 (Commenced 11/10/2008 and began transactions in 2009) UIF Emerging Markets Equity 2010 13,018 15.18 197,669 0.57 -- 19.02 Investment Division 2009 442 12.76 5,643 -- -- 69.84 (Commenced 11/10/2008 and began transactions in 2009) PIMCO VIT Low Duration 2010 65,497 11.64 762,531 1.62 -- 5.29 Investment Division 2009 66,450 11.06 734,746 1.55 -- 10.57 (Commenced 5/4/2009)
(1) 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. The investment income ratio is calculated as a weighted average ratio since the Investment Division may invest in two or more share classes, if any, within the underlying portfolio, series or fund of the Trusts which may have unique investment income ratios. (2) These amounts represent the annualized policy expenses of each of the applicable Investment Divisions, 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. (3) 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. The total return is presented as a range of minimum to maximum returns, based on minimum and maximum returns within each product grouping of the applicable Investment Division. 203 This page is intentionally left blank. METFLEX A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY METROPOLITAN LIFE SEPARATE ACCOUNT UL ISSUED BY METROPOLITAN LIFE INSURANCE COMPANY STATEMENT OF ADDITIONAL INFORMATION MAY 1, 2011 This Statement of Additional Information is not a prospectus. This Statement of Additional Information relates to the prospectus dated May 1, 2011 for MetFlex--A Flexible Premium Variable Life Insurance Policy. A copy of that prospectus may be obtained by writing to MetLife--SBR, 501 Route 22, Bridgewater 08807. B-1 TABLE OF CONTENTS The Company and the Separate Account....................... 3 Additional Information about the Operation of the Policies. 3 Limits to MetLife's Right to Challenge the Policy......... 3 Misstatement of Age or Sex................................ 3 Dividends................................................. 3 Payment and Deferment..................................... 3 Additional Information about Voting........................ 4 Additional Information about Sales of Policies............. 4 Independent Registered Public Accounting Firm.............. 5 Financial Statements....................................... 5
B-2 THE COMPANY AND THE SEPARATE ACCOUNT Metropolitan Life Insurance Company and its subsidiaries (collectively, the "Company") is a leading provider of insurance, employee benefits and financial services with operations throughout the United States. The Company offers life insurance and annuities to individuals, as well as group insurance and retirement and savings products and services to corporations and other institutions. The Company was formed under the laws of New York in 1868. The Company's home office is located at 200 Park Avenue, New York, New York 10166-0188. The Company is a wholly-owned subsidiary of MetLife, Inc. Through its subsidiaries and affiliates, MetLife, Inc. offers life insurance, annuities, automobile and homeowners insurance, retail banking and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions. MetLife, Inc. has operations throughout the United States and the regions of Latin America, Asia Pacific and Europe, Middle East and India. 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 OPERATION OF THE POLICIES LIMITS TO METLIFE'S RIGHT TO CHALLENGE THE POLICY We will not contest: .. Your Policy after two Policy 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 OR SEX We will adjust benefits to reflect the correct age and sex of the insured, if this information isn't correct in the Policy application. DIVIDENDS The Policy is "nonparticipating," which means it is not eligible for dividends from us and does not share in any distributions of our surplus. PAYMENT AND DEFERMENT We can delay transfers, withdrawals, surrender and payment of Policy loans from the Fixed Account for up to six 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 a Policy. .. The Securities and Exchange determines that an emergency exists. .. The Securities and Exchange Commission by order permits us to do so for the protection of Policy 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 are paying amounts attributable to a check. In that case we can wait for a reasonable time (15 days or less) to let the check clear. 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. B-3 ADDITIONAL INFORMATION ABOUT 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 Policy 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: .. Your Policy'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 Policy 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. 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 SALES OF POLICIES Information about the distribution of the Policies is contained in the prospectus. (See "Sales of Policies.") Additional information is provided below. The Policies are offered to the public on a continuous basis. We anticipate continuing to offer the Policies, but reserve the right to discontinue the offering. MetLife Investors Distribution Company ("MLIDC") serves as principal underwriter for the Policies. MLIDC is a Missouri corporation and its principal office is located at 5 Park Plaza, Suite 1900, Irvine, California 92614. MLIDC is an indirect wholly-owned subsidiary of MetLife, Inc. MLIDC is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934 and is a member of FINRA. MLIDC is not a member of the Securities Investor Protection Corporation. MLIDC has entered into selling agreements with other broker-dealers and compensates them for their services. MLIDC received sales compensation with respect to the Policies in the following amounts during the periods indicated:
AGGREGATE AMOUNT OF AGGREGATE AMOUNT OF COMMISSIONS COMMISSION PAID TO RETAINED BY DISTRIBUTOR AFTER FISCAL YEAR DISTRIBUTOR* PAYMENTS TO SELLING FIRMS ----------- ------------------- ------------------------------- 2010..... $2,059,970 $0 2009..... $2,672,851 $0 2008..... $3,683,209 $0
B-4 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The consolidated financial statements of Metropolitan Life Insurance Company and subsidiaries (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 on the consolidated financial statements and includes an explanatory paragraph referring to changes in the Company's method of accounting for the recognition and presentation of other-than-temporary impairment losses for certain investments as required by accounting guidance adopted on April 1, 2009, and its method of accounting for certain assets and liabilities to a fair value measurement approach as required by accounting guidance adopted on January 1, 2008). Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The principal business address of Deloitte & Touche LLP is Two World Financial Center, New York, New York 10281-1414. FINANCIAL STATEMENTS The financial statements of MetLife are attached. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy. B-5 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, 2010 and 2009, and the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2010. 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, 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 the recognition and presentation of other-than-temporary impairment losses for certain investments as required by accounting guidance adopted on April 1, 2009, and changed its method of accounting for certain assets and liabilities to a fair value measurement approach as required by accounting guidance adopted on January 1, 2008. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP New York, New York March 31, 2011 F-1 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2010 AND 2009 (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
2010 2009 -------- -------- ASSETS Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $153,708 and $145,439, respectively).............................................. $159,535 $144,649 Equity securities available-for-sale, at estimated fair value (cost: $1,898 and $2,191, respectively).................... 1,821 2,116 Trading and other securities, at estimated fair value (includes: $463 and $420 of actively traded securities, respectively; and $201 and $0, respectively, relating to variable interest entities)................................ 735 471 Mortgage loans (net of valuation allowances of $522 and $594, respectively).............................................. 41,667 40,620 Policy loans.................................................. 8,270 8,099 Real estate and real estate joint ventures (includes $10 and $18, respectively, relating to variable interest entities).................................................. 5,755 5,711 Other limited partnership interests (includes $187 and $236, respectively, relating to variable interest entities)...... 4,517 4,215 Short-term investments, principally at estimated fair value... 2,369 3,315 Other invested assets, principally at estimated fair value (includes $102 and $137, respectively, relating to variable interest entities)......................................... 7,822 6,811 -------- -------- Total investments.......................................... 232,491 216,007 Cash and cash equivalents, principally at estimated fair value (includes $55 and $9, respectively, relating to variable interest entities)............................................ 3,485 3,347 Accrued investment income (includes $3 and $0, respectively, relating to variable interest entities)....................... 2,183 2,066 Premiums, reinsurance and other receivables (includes $1 and $0, respectively, relating to variable interest entities)......... 26,802 26,375 Deferred policy acquisition costs and value of business acquired...................................................... 8,191 9,364 Current income tax recoverable.................................. -- 121 Deferred income tax assets...................................... -- 1,094 Other assets (includes $6 and $16, respectively, relating to variable interest entities)................................... 4,426 4,206 Separate account assets......................................... 97,829 80,377 -------- -------- Total assets............................................... $375,407 $342,957 ======== ======== LIABILITIES AND EQUITY LIABILITIES Future policy benefits.......................................... $102,950 $ 99,960 Policyholder account balances................................... 88,922 86,590 Other policy-related balances................................... 5,649 5,627 Policyholder dividends payable.................................. 722 761 Policyholder dividend obligation................................ 876 -- Payables for collateral under securities loaned and other transactions.................................................. 17,014 14,662 Short-term debt................................................. 102 319 Long-term debt (includes $236 and $64, respectively, at estimated fair value, relating to variable interest entities)..................................................... 3,610 3,502 Current income tax payable...................................... 155 -- Deferred income tax liability................................... 950 -- Other liabilities (includes $61 and $26, respectively, relating to variable interest entities)................................ 35,113 33,690 Separate account liabilities.................................... 97,829 80,377 -------- -------- Total liabilities.......................................... 353,892 325,488 -------- -------- CONTINGENCIES, COMMITMENTS AND GUARANTEES (NOTE 13) EQUITY Metropolitan Life Insurance Company 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 both December 31, 2010 and 2009............................ 5 5 Additional paid-in capital.................................... 14,445 14,438 Retained earnings............................................. 6,001 4,817 Accumulated other comprehensive income (loss)................. 916 (2,082) -------- -------- Total Metropolitan Life Insurance Company stockholder's equity................................................... 21,367 17,178 Noncontrolling interests........................................ 148 291 -------- -------- Total equity............................................... 21,515 17,469 -------- -------- Total liabilities and equity............................... $375,407 $342,957 ======== ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-2 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008 (IN MILLIONS)
2010 2009 2008 ------- ------- ------- REVENUES Premiums............................................... $18,519 $18,629 $18,444 Universal life and investment-type product policy fees................................................. 2,075 2,067 2,285 Net investment income.................................. 11,605 10,189 11,114 Other revenues......................................... 1,725 1,739 1,882 Net investment gains (losses): Other-than-temporary impairments on fixed maturity securities........................................ (510) (1,521) (787) Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)..................................... 150 623 -- Other net investment gains (losses).................. 190 (769) (742) ------- ------- ------- Total net investment gains (losses)............... (170) (1,667) (1,529) Net derivative gains (losses)........................ (266) (4,428) 5,001 ------- ------- ------- Total revenues.................................. 33,488 26,529 37,197 ------- ------- ------- EXPENSES Policyholder benefits and claims....................... 20,707 20,662 20,699 Interest credited to policyholder account balances..... 2,523 2,669 3,181 Policyholder dividends................................. 1,443 1,612 1,716 Other expenses......................................... 6,259 6,009 6,578 ------- ------- ------- Total expenses.................................. 30,932 30,952 32,174 ------- ------- ------- Income (loss) from continuing operations before provision for income tax............................. 2,556 (4,423) 5,023 Provision for income tax expense (benefit)............. 782 (1,890) 1,650 ------- ------- ------- Income (loss) from continuing operations, net of income tax.................................................. 1,774 (2,533) 3,373 Income (loss) from discontinued operations, net of income tax........................................... 18 11 (189) ------- ------- ------- Net income (loss)...................................... 1,792 (2,522) 3,184 Less: Net income (loss) attributable to noncontrolling interests............................................ (3) (5) 97 ------- ------- ------- Net income (loss) attributable to Metropolitan Life Insurance Company.................................... $ 1,795 $(2,517) $ 3,087 ======= ======= =======
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-3 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF EQUITY FOR THE YEAR ENDED DECEMBER 31, 2010 (IN MILLIONS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ---------------------------------------------------- TOTAL METROPOLITAN NET FOREIGN DEFINED LIFE INSURANCE ADDITIONAL UNREALIZED OTHER-THAN- CURRENCY BENEFIT COMPANY COMMON PAID-IN RETAINED INVESTMENT TEMPORARY TRANSLATION PLANS STOCKHOLDER'S STOCK CAPITAL EARNINGS GAINS (LOSSES) IMPAIRMENTS ADJUSTMENTS ADJUSTMENT EQUITY ------ ---------- -------- -------------- ----------- ----------- ---------- -------------- Balance at December 31, 2009................... $5 $14,438 $4,817 $ (265) $(341) $ 51 $(1,527) $17,178 Cumulative effect of change in accounting principle, net of income tax (Note 1).... 30 30 -- ------- ------ ------ ----- ---- ------- ------- Balance at January 1, 2010................... 5 14,438 4,847 (265) (341) 51 (1,527) 17,208 Cumulative effect of change in accounting principle, net of income tax (Note 1).... (10) 10 -- Capital contributions from MetLife, Inc. (Note 15).............. 3 3 Excess tax benefits related to stock-based compensation........... 4 4 Dividends on common stock.................. (631) (631) Change in equity of noncontrolling interests.............. Comprehensive income (loss): Net income (loss)...... 1,795 1,795 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax..... 118 118 Unrealized investment gains (losses), net of related offsets and income tax.... 2,701 87 2,788 Foreign currency translation adjustments, net of income tax..... (16) (16) Defined benefit plans adjustment, net of income tax............... 98 98 ------- Other comprehensive income (loss).. 2,988 ------- Comprehensive income (loss).............. 4,783 -- ------- ------ ------ ----- ---- ------- ------- Balance at December 31, 2010................... $5 $14,445 $6,001 $2,564 $(254) $ 35 $(1,429) $21,367 == ======= ====== ====== ===== ==== ======= ======= NONCONTROLLING TOTAL INTERESTS EQUITY -------------- ------- Balance at December 31, 2009................... $ 291 $17,469 Cumulative effect of change in accounting principle, net of income tax (Note 1).... 30 ----- ------- Balance at January 1, 2010................... 291 17,499 Cumulative effect of change in accounting principle, net of income tax (Note 1).... -- Capital contributions from MetLife, Inc. (Note 15).............. 3 Excess tax benefits related to stock-based compensation........... 4 Dividends on common stock.................. (631) Change in equity of noncontrolling interests.............. (146) (146) Comprehensive income (loss): Net income (loss)...... (3) 1,792 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax..... 118 Unrealized investment gains (losses), net of related offsets and income tax.... 6 2,794 Foreign currency translation adjustments, net of income tax..... (16) Defined benefit plans adjustment, net of income tax............... 98 ----- ------- Other comprehensive income (loss).. 6 2,994 ----- ------- Comprehensive income (loss).............. 3 4,786 ----- ------- Balance at December 31, 2010................... $ 148 $21,515 ===== =======
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-4 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 (IN MILLIONS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ---------------------------------------------------- NET FOREIGN DEFINED ADDITIONAL UNREALIZED OTHER-THAN- CURRENCY BENEFIT COMMON PAID-IN RETAINED INVESTMENT TEMPORARY TRANSLATION PLANS STOCK CAPITAL EARNINGS GAINS (LOSSES) IMPAIRMENTS ADJUSTMENTS ADJUSTMENT ------ ---------- -------- -------------- ----------- ----------- ---------- Balance at December 31, 2008.............. $5 $14,437 $ 7,298 $(7,701) $ -- $143 $(1,437) Cumulative effect of change in accounting principle, net of income tax (Note 1)... 36 (36) Capital contributions from MetLife, Inc. (Note 15)............................ 3 Excess tax liabilities related to stock- based compensation................... (2) Change in equity of noncontrolling interests............................ Comprehensive income (loss): Net income (loss)....................... (2,517) Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax......................... (162) Unrealized investment gains (losses), net of related offsets and income tax................................ 7,598 (305) Foreign currency translation adjustments, net of income tax..... (92) Defined benefit plans adjustment, net of income tax...................... (90) Other comprehensive income (loss).... Comprehensive income (loss)............. -- ------- ------- ------- ----- ---- ------- Balance at December 31, 2009.............. $5 $14,438 $ 4,817 $ (265) $(341) $ 51 $(1,527) == ======= ======= ======= ===== ==== ======= TOTAL METROPOLITAN LIFE INSURANCE COMPANY STOCKHOLDER'S NONCONTROLLING TOTAL EQUITY INTERESTS EQUITY -------------- -------------- ------- Balance at December 31, 2008.............. $12,745 $ 83 $12,828 Cumulative effect of change in accounting principle, net of income tax (Note 1)... -- -- Capital contributions from MetLife, Inc. (Note 15)............................ 3 3 Excess tax liabilities related to stock- based compensation................... (2) (2) Change in equity of noncontrolling interests............................ 218 218 Comprehensive income (loss): Net income (loss)....................... (2,517) (5) (2,522) Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax......................... (162) (162) Unrealized investment gains (losses), net of related offsets and income tax................................ 7,293 (5) 7,288 Foreign currency translation adjustments, net of income tax..... (92) (92) Defined benefit plans adjustment, net of income tax...................... (90) (90) ------- ---- ------- Other comprehensive income (loss).... 6,949 (5) 6,944 ------- ---- ------- Comprehensive income (loss)............. 4,432 (10) 4,422 ------- ---- ------- Balance at December 31, 2009.............. $17,178 $291 $17,469 ======= ==== =======
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-5 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF EQUITY -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 (IN MILLIONS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) --------------------------------------- TOTAL METROPOLITAN NET FOREIGN DEFINED LIFE INSURANCE ADDITIONAL UNREALIZED CURRENCY BENEFIT COMPANY COMMON PAID-IN RETAINED INVESTMENT TRANSLATION PLANS STOCKHOLDER'S STOCK CAPITAL EARNINGS GAINS (LOSSES) ADJUSTMENTS ADJUSTMENT EQUITY ------ ---------- -------- -------------- ----------- ---------- -------------- Balance at December 31, 2007............... $5 $14,426 $ 5,529 $ 1,342 $ 283 $ (284) $ 21,301 Treasury stock transactions, net -- by subsidiary............................... (11) (11) Capital contributions from MetLife, Inc. (Note 15)................................ 13 13 Excess tax benefits related to stock-based compensation............................. 9 9 Dividends of interest in subsidiary (Note 2)....................................... (1,318) (1,318) Dividends on subsidiary common stock....... Change in equity of noncontrolling interests................................ Comprehensive income (loss): Net income (loss)........................ 3,087 3,087 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax.......................... 272 272 Unrealized investment gains (losses), net of related offsets and income tax................................. (9,315) (9,315) Foreign currency translation adjustments, net of income tax...... (140) (140) Defined benefit plans adjustment, net of income tax....................... (1,153) (1,153) -------- Other comprehensive income (loss)..... (10,336) -------- Comprehensive income (loss).............. (7,249) -- ------- ------- ------- ----- ------- -------- Balance at December 31, 2008............... $5 $14,437 $ 7,298 $(7,701) $ 143 $(1,437) $ 12,745 == ======= ======= ======= ===== ======= ======== NONCONTROLLING INTERESTS ------------------------ DISCONTINUED CONTINUING TOTAL OPERATIONS OPERATIONS EQUITY ------------ ---------- -------- Balance at December 31, 2007............... $ 1,534 $162 $ 22,997 Treasury stock transactions, net -- by subsidiary............................... (11) Capital contributions from MetLife, Inc. (Note 15)................................ 13 Excess tax benefits related to stock-based compensation............................. 9 Dividends of interest in subsidiary (Note 2)....................................... (1,318) Dividends on subsidiary common stock....... 34 34 Change in equity of noncontrolling interests................................ (1,409) (82) (1,491) Comprehensive income (loss): Net income (loss)........................ 94 3 3,184 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax.......................... 272 Unrealized investment gains (losses), net of related offsets and income tax................................. (150) (9,465) Foreign currency translation adjustments, net of income tax...... (107) (247) Defined benefit plans adjustment, net of income tax....................... 4 (1,149) ------- ---- -------- Other comprehensive income (loss)..... (253) -- (10,589) ------- ---- -------- Comprehensive income (loss).............. (159) 3 (7,405) ------- ---- -------- Balance at December 31, 2008............... $ -- $ 83 $ 12,828 ======= ==== ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-6 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008 (IN MILLIONS)
2010 2009 2008 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)......................................... $ 1,792 $ (2,522) $ 3,184 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expenses.................. 394 381 258 Amortization of premiums and accretion of discounts associated with investments, net..................... (709) (715) (660) (Gains) losses on investments and derivatives and from sales of businesses, net............................. 380 6,081 (2,868) Undistributed equity earnings of real estate joint ventures and other limited partnership interests..... (270) 716 524 Interest credited to policyholder account balances...... 2,523 2,669 3,289 Universal life and investment-type product policy fees.. (2,075) (2,067) (2,285) Change in trading and other securities.................. (14) (165) 74 Change in accrued investment income..................... (117) 14 316 Change in premiums, reinsurance and other receivables... (377) (507) (1,734) Change in deferred policy acquisition costs, net........ 147 (441) (100) Change in income tax recoverable (payable).............. 735 (2,340) 630 Change in other assets.................................. 283 (10) 2,828 Change in insurance-related liabilities and policy- related balances..................................... 2,469 2,582 5,117 Change in other liabilities............................. 684 3,330 1,730 Other, net.............................................. 266 85 161 -------- -------- -------- Net cash provided by operating activities................. 6,111 7,091 10,464 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Sales, maturities and repayments of: Fixed maturity securities............................ 49,828 41,437 68,089 Equity securities.................................... 520 1,030 2,140 Mortgage loans....................................... 4,853 4,589 5,238 Real estate and real estate joint ventures........... 241 30 159 Other limited partnership interests.................. 383 751 404 Purchases of: Fixed maturity securities............................ (57,961) (51,066) (56,251) Equity securities.................................... (157) (544) (1,094) Mortgage loans....................................... (5,820) (3,231) (8,819) Real estate and real estate joint ventures........... (539) (318) (1,071) Other limited partnership interests.................. (614) (585) (1,163) Cash received in connection with freestanding derivatives.......................................... 712 1,801 5,448 Cash paid in connection with freestanding derivatives... (920) (1,748) (5,420) Sales of businesses..................................... -- -- (4) Dividend of subsidiary.................................. -- -- (270) Net change in policy loans.............................. (171) (218) (193) Net change in short-term investments.................... 841 4,268 (6,967) Net change in other invested assets..................... 142 (740) (1,859) Net change in property, equipment and leasehold improvements......................................... (138) (109) (171) Other, net.............................................. (7) 1 -- -------- -------- -------- Net cash used in investing activities..................... $ (8,807) $ (4,652) $ (1,804) -------- -------- --------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-7 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008 (IN MILLIONS)
2010 2009 2008 -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Policyholder account balances: Deposits............................................. $ 44,481 $ 51,313 $ 58,338 Withdrawals.......................................... (43,381) (57,182) (48,818) Net change in payables for collateral under securities loaned and other transactions........................ 2,352 (3,987) (10,303) Net change in short-term debt........................... (217) (95) 57 Long-term debt issued................................... 188 1,205 27 Long-term debt repaid................................... (324) (737) (21) Dividends on common stock............................... (232) -- -- Other, net.............................................. (33) 112 8 -------- -------- -------- Net cash provided by (used in) financing activities....... 2,834 (9,371) (712) -------- -------- -------- Change in cash and cash equivalents....................... 138 (6,932) 7,948 Cash and cash equivalents, beginning of year.............. 3,347 10,279 2,331 -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF YEAR.................... $ 3,485 $ 3,347 $ 10,279 ======== ======== ======== Cash and cash equivalents, subsidiaries held-for-sale, beginning of year....................................... $ -- $ -- $ 404 ======== ======== ======== CASH AND CASH EQUIVALENTS, SUBSIDIARIES HELD-FOR-SALE, END OF YEAR................................................. $ -- $ -- $ -- ======== ======== ======== Cash and cash equivalents, from continuing operations, beginning of year....................................... $ 3,347 $ 10,279 $ 1,927 ======== ======== ======== CASH AND CASH EQUIVALENTS, FROM CONTINUING OPERATIONS, END OF YEAR................................................. $ 3,485 $ 3,347 $ 10,279 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Net cash paid during the year for: Interest............................................. $ 217 $ 166 $ 268 ======== ======== ======== Income tax........................................... $ 183 $ 285 $ 494 ======== ======== ======== Non-cash transactions during the year: Dividend of subsidiary: Assets disposed.................................... $ -- $ -- $ 22,135 Liabilities disposed............................... -- -- (20,689) -------- -------- -------- Net assets disposed................................ -- -- 1,446 Cash disposed...................................... -- -- 270 Dividend of interests in subsidiary................ -- -- (1,318) -------- -------- -------- Loss on dividend of interests in subsidiary........ $ -- $ -- $ 398 ======== ======== ======== Purchase money mortgage loans on sales of real estate joint ventures....................................... $ 2 $ 93 $ -- ======== ======== ======== Fixed maturity securities received in connection with insurance contract commutation....................... $ -- $ -- $ 115 ======== ======== ======== Capital contribution from MetLife, Inc. ................ $ 3 $ 3 $ 13 ======== ======== ======== Dividends to MetLife, Inc. ............................. $ 399 $ -- $ -- ======== ======== ======== Real estate and real estate joint ventures acquired in satisfaction of debt................................. $ 58 $ 209 $ -- ======== ======== ======== Issuance of secured demand note collateral agreement.... $ -- $ -- $ 25 ======== ======== ======== Long-term debt issued to MetLife, Inc. in exchange for fixed maturity securities............................ $ -- $ 300 $ -- ======== ======== ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. F-8 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS Metropolitan Life Insurance Company and its subsidiaries (collectively, "MLIC" or the "Company") is a leading provider of insurance, annuities and employee benefit programs throughout the United States. The Company offers life insurance and annuities to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Metropolitan Life Insurance Company and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities ("VIEs") for which the Company is the primary beneficiary. See "-- Adoption of New Accounting Pronouncements." 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 10. Intercompany accounts and transactions have been eliminated. Certain amounts in the prior years consolidated financial statements have been reclassified to conform with the 2010 presentation. Such reclassifications include: - Reclassification from other net investment gains (losses) of ($4,428) million and $5,001 million to net derivative gains (losses) in the consolidated statements of operations for the years ended December 31, 2009 and 2008, respectively; - Reclassification from net change in other invested assets of $1,801 million and $5,448 million to cash received in connection with freestanding derivatives and ($1,748) million and ($5,420) million to cash paid in connection with freestanding derivatives, all within cash flows from investing activities, in the consolidated statements of cash flows for the years ended December 31, 2009 and 2008, respectively; and - Realignment that affected assets, liabilities and results of operations on a segment basis with no impact to the consolidated results. See Note 17. See Note 18 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. A description of critical estimates is incorporated within the discussion of the related accounting policies which follows. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company's businesses and operations. Actual results could differ from these estimates. F-9 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Fair Value As described below, certain assets and liabilities are measured at estimated fair value on the Company's consolidated balance sheets. In addition, the notes to these consolidated financial statements include further disclosures of estimated fair values. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In many cases, the exit price and the transaction (or entry) price will be the same at initial recognition. However, in certain cases, the transaction price may not represent fair value. The fair value of a liability is based on the amount that would be paid to transfer a liability to a third party with the same credit standing. It requires that fair value be a market-based measurement in which the fair value is determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant. When quoted prices are not used to determine fair value of an asset, the Company considers three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs. The Company prioritizes the inputs to fair valuation techniques and allows for the use of unobservable inputs to the extent that observable inputs are not available. The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability's classification within the fair value hierarchy is based on the lowest level of input to its valuation. The input levels are as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. Level 2 Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of estimated fair value requires significant management judgment or estimation. Prior to January 1, 2009, the measurement and disclosures of fair value based on exit price excluded certain items such as nonfinancial assets and nonfinancial liabilities initially measured at estimated fair value in a business combination, reporting units measured at estimated fair value in the first step of a goodwill impairment test and indefinite-lived intangible assets measured at estimated fair value for impairment assessment. In addition, the Company elected the fair value option ("FVO") for certain of its financial instruments to better match measurement of assets and liabilities in the consolidated statements of operations. F-10 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Investments The accounting policies for the Company's principal investments are as follows: Fixed Maturity and Equity Securities. The Company's fixed maturity and equity securities are classified as available-for-sale and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of other comprehensive income (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 in net investment income. Included within fixed maturity securities are loan-backed securities including mortgage-backed and asset-backed securities ("ABS"). 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 ABS are estimated by management using inputs obtained from third-party specialists, including broker-dealers, and based on management's knowledge of the current market. For credit-sensitive mortgage-backed and ABS and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. For all other mortgage-backed and ABS, the effective yield is recalculated on a retrospective basis. The Company periodically evaluates fixed maturity and equity securities for impairment. The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in estimated 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 severity and/or age of the gross unrealized loss, as summarized in Note 3 "-- Aging of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale." An extended and severe unrealized loss position on a fixed maturity security may not have any impact on the ability of the issuer to service all scheduled interest and principal payments and the Company's evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for certain equity securities, greater weight and consideration are given by the Company to a decline in market value and the likelihood such market value decline will recover. 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 estimated fair 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) with respect to fixed maturity securities, whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below cost or F-11 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) amortized cost recovers; (vii) with respect to equity securities, whether the Company's ability and intent to hold the security for a period of time sufficient to allow for the recovery of its estimated fair value to an amount equal to or greater than cost; (viii) unfavorable changes in forecasted cash flows on mortgage-backed and ABS; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies. Effective April 1, 2009, the Company prospectively adopted guidance on the recognition and presentation of other-than-temporary impairment ("OTTI") losses as described in "-- Adoption of New Accounting Pronouncements -- Financial Instruments." The guidance requires that an OTTI be recognized in earnings for a fixed maturity security in an unrealized loss position when it is anticipated that the amortized cost will not be recovered. In such situations, the OTTI recognized in earnings is the entire difference between the fixed maturity security's amortized cost and its estimated fair value only when either: (i) the Company has the intent to sell the fixed maturity security; or (ii) it is more likely than not that the Company will be required to sell the fixed maturity security before recovery of the decline in estimated fair value below amortized cost. If neither of these two conditions exist, the difference between the amortized cost of the fixed maturity security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings ("credit loss"). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than credit factors ("noncredit loss") is recorded in other comprehensive income (loss). There was no change for equity securities which, when an OTTI has occurred, continue to be impaired for the entire difference between the equity security's cost and its estimated fair value with a corresponding charge to earnings. The Company does not make any adjustments for subsequent recoveries in value. Prior to the adoption of the OTTI guidance, the Company recognized in earnings an OTTI for a fixed maturity security in an unrealized loss position unless it could assert that it had both the intent and ability to hold the fixed maturity security for a period of time sufficient to allow for a recovery of estimated fair value to the security's amortized cost. Also, prior to the adoption of this guidance, the entire difference between the fixed maturity security's amortized cost basis and its estimated fair value was recognized in earnings if it was determined to have an OTTI. With respect to equity securities, the Company considers in its OTTI analysis its intent and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its estimated fair value to an amount equal to or greater than cost. If a sale decision is made for an equity security and it is not expected to recover to an amount at least equal to cost prior to the expected time of the sale, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an OTTI loss will be recorded in earnings. When an OTTI loss has occurred, the OTTI loss is the entire difference between the equity security's cost and its estimated fair value with a corresponding charge to earnings. With respect to perpetual hybrid securities that have attributes of both debt and equity, some of which are classified as fixed maturity securities and some of which are classified as non-redeemable preferred stock within equity securities, the Company considers in its OTTI analysis whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of the securities that are in a severe and extended unrealized loss position. The Company also considers whether any perpetual hybrid securities, with an unrealized loss, regardless of credit rating, have deferred any dividend payments. When an OTTI loss has occurred, the OTTI loss is the entire difference between the perpetual hybrid security's cost and its estimated fair value with a corresponding charge to earnings. F-12 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company's methodology and significant inputs used to determine the amount of the credit loss on fixed maturity securities under the OTTI guidance are as follows: (i) The Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the effective interest rate of the fixed maturity security prior to impairment. (ii) When determining the collectability and the period over which value is expected to recover, the Company applies the same considerations utilized in its overall impairment evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management's best estimates of likely scenario-based outcomes after giving consideration to a variety of variables that include, but are not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies. (iii) Additional considerations are made when assessing the unique features that apply to certain structured securities such as residential mortgage-backed securities ("RMBS"), commercial mortgage-backed securities ("CMBS") and ABS. These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security. (iv) When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, management considers the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, management considers in the determination of recovery value the same considerations utilized in its overall impairment evaluation process which incorporates available information and management's best estimate of scenarios-based outcomes regarding the specific security and issuer; possible corporate restructurings or asset sales by the issuer; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; fundamentals of the industry and geographic area in which the security issuer operates, and the overall macroeconomic conditions. The cost or amortized cost of fixed maturity and equity securities is adjusted for OTTI in the period in which the determination is made. These impairments are included within net investment gains (losses). The Company does not change the revised cost basis for subsequent recoveries in value. In periods subsequent to the recognition of OTTI on a fixed maturity security, the Company accounts for the impaired security as if it had been purchased on the measurement date of the impairment. Accordingly, the discount (or reduced premium) based on the new cost basis is accreted into net investment income over the remaining term of the fixed maturity security in a prospective manner based on the amount and timing of estimated future cash flows. 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 fixed maturity 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 F-13 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) not the primary beneficiary. These Structured Investment Transactions are included in fixed maturity securities and their investment income is generally recognized using the retrospective interest method. Impairments of these investments are included in net investment gains (losses). In addition, the Company has invested in certain structured transactions that are VIEs. These structured transactions include asset-backed securitizations, hybrid securities, real estate joint ventures, other limited partnership interests, and limited liability companies. The Company consolidates those VIEs for which it is deemed to be the primary beneficiary. The Company reconsiders whether it is the primary beneficiary for investments designated as VIEs on a quarterly basis. Trading and Other Securities. Trading and other securities are stated at estimated fair value. Trading and other securities include investments that are actively purchased and sold ("Actively Traded Securities"). These Actively Traded Securities are principally fixed maturity securities. Short sale agreement liabilities related to Actively Traded Securities, included in other liabilities, are also stated at estimated fair value. Trading and other securities also includes securities for which the FVO has been elected ("FVO Securities"). FVO Securities include certain fixed maturity and equity securities held-for-investment by the general account to support asset and liability matching strategies for certain insurance products. FVO Securities also include securities held by consolidated securitization entities ("CSEs") (former qualifying special purpose entities ("QSPEs")) with changes in estimated fair value subsequent to consolidation included in net investment gains (losses). Interest and dividends related to all trading and other securities are included in net investment income. Securities Lending. Securities loaned transactions, whereby blocks of securities, which are included in fixed maturity securities and short-term investments, are loaned to third parties, are treated as financing arrangements and the associated liability is recorded at the amount of cash received. At the inception of a loan, the Company obtains collateral, generally cash, in an amount at least equal to 102% of the estimated fair value of the securities loaned and maintains it at a level greater than or equal to 100% for the duration of the loan. The Company monitors the estimated fair 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 brokerage firms and commercial banks. Income and expenses associated with securities loaned transactions are reported as investment income and investment expense, respectively, within net investment income. Mortgage Loans. For the purposes of determining valuation allowances the Company disaggregates its mortgage loan investments into three portfolio segments: (1) commercial, (2) agricultural, and (3) residential. The accounting and valuation allowance policies that are applicable to all portfolio segments are presented below, followed by the policies applicable to both commercial and agricultural loans, which are very similar, as well as policies applicable to residential loans. Commercial, Agricultural and Residential Mortgage Loans -- Mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts and prepayment fees are reported in net investment income. Interest ceases to accrue when collection of interest is not considered probable and/or when interest or principal payments are past due as follows: commercial -- 60 days; and agricultural and residential -- 90 days, unless, in the case of a residential loan, it is both well-secured and in the process of collection. When a loan is placed on non-accrual status, uncollected past due interest is charged-off against net investment income. Generally, the accrual of interest income resumes after all delinquent amounts are paid and management believes all future principal and interest payments will be collected. Cash receipts on non-accruing loans are recorded in accordance with the loan agreement as a reduction of principal and/or interest income. Charge-offs occur upon the realization of a credit loss, typically through foreclosure or after a decision is made to sell a loan, or for residential loans F-14 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) when, after considering the individual consumer's financial status, management believes that uncollectability is other-than-temporary. Gain or loss upon charge-off is recorded, net of previously established valuation allowances, in net investment gains (losses). Cash recoveries on principal amounts previously charged-off are generally recorded as an increase to the valuation allowance, unless the valuation allowance adequately provides for expected credit losses; then the recovery is recorded in net investment gains (losses). Gains and losses from sales of loans and increases or decreases to valuation allowances are recorded in net investment gains (losses). Mortgage 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. Specific valuation allowances are established using the same methodology for all three portfolio segments as the excess carrying value of a loan over either (i) the present value of expected future cash flows discounted at the loan's original effective interest rate, (ii) the estimated fair value of the loan's underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or (iii) the loan's observable market price. A common evaluation framework is used for establishing non-specific valuation allowances for all loan portfolio segments; however, a separate non-specific valuation allowance is calculated and maintained for each loan portfolio segment that is based on inputs unique to each loan portfolio segment. Non-specific valuation allowances are established for pools of loans with similar risk characteristics where a property-specific or market-specific risk has not been identified, but for which the Company expects to incur a credit loss. These evaluations are based upon several loan portfolio segment-specific factors, including the Company's experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. The Company typically uses ten years, or more, of historical experience, in these evaluations. These evaluations are revised as conditions change and new information becomes available. Commercial and Agricultural Mortgage Loans -- All commercial and agricultural loans are monitored on an ongoing basis for potential credit losses. For commercial loans, these ongoing reviews may include an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, loan-to-value ratios, debt service coverage ratios, and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, potentially delinquent, delinquent or in foreclosure, as well as loans with higher loan-to-value ratios and lower debt service coverage ratios. The monitoring process for agricultural loans is generally similar, with a focus on higher risk loans, including reviews on a geographic and property-type basis. Higher risk commercial and agricultural loans are reviewed individually on an ongoing basis for potential credit loss and specific valuation allowances are established using the methodology described above for all loan portfolio segments. Quarterly, the remaining loans are reviewed on a pool basis by aggregating groups of loans that have similar risk characteristics for potential credit loss, and non-specific valuation allowances are established as described above using inputs that are unique to each segment of the loan portfolio. For commercial loans, the Company's primary credit quality indicator is the debt service coverage ratio, which compares a property's net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss. The values utilized in calculating these ratios are developed in connection with the ongoing review of the commercial loan portfolio and are routinely updated. For agricultural loans, the Company's primary credit quality indicator is the loan-to-value ratio. Loan-to-value ratios compare the amount of the loan to the estimated fair value of the underlying collateral. A loan-to-value ratio greater than 100% indicates that the loan amount is greater than the collateral value. A loan-to-value ratio of less than 100% indicates an excess of collateral value over the F-15 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) loan amount. Generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss. The values utilized in calculating these ratios are developed in connection with the ongoing review of the agricultural loan portfolio and are routinely updated. Residential Mortgage Loans -- The Company's residential loan portfolio is comprised primarily of closed end, amortizing residential loans and home equity lines of credit and it does not hold any optional adjustable rate mortgages, sub-prime, or low teaser rate loans. In contrast to the commercial and agricultural loan portfolios, residential loans are smaller-balance homogeneous loans that are collectively evaluated for impairment. Non-specific valuation allowances are established using the evaluation framework described above for pools of loans with similar risk characteristics from inputs that are unique to the residential segment of the loan portfolio. Loan specific valuation allowances are only established on residential loans when they have been restructured and are established using the methodology described above for all loan portfolio segments. For residential loans, the Company's primary credit quality indicator is whether the loan is performing or non-performing. The Company generally defines non-performing residential loans as those that are 90 or more days past due and/or in non-accrual status. The determination of performing or non-performing status is assessed monthly. Generally, non-performing residential loans have a higher risk of experiencing a credit loss. Mortgage loans held-for-sale are recorded at the lower of amortized cost or estimated fair value less expected disposition costs determined on an individual loan basis. The amount by which amortized cost exceeds estimated fair value, less expected disposition costs, is recognized in net investment gains (losses). Policy Loans. Policy loans are stated at unpaid principal balances. Interest income on such loans is recorded as earned in net investment income using the contractually agreed upon interest rate. Generally, interest is capitalized on the policy's anniversary date. Valuation allowances are not established for policy loans, as these loans are fully collateralized by the cash surrender value of the underlying insurance policies. Any unpaid principal or interest on the loan is deducted from the cash surrender value or the death benefit prior to settlement of the policy. 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 estimated 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 estimated 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 estimated fair value. Properties whose carrying values are greater than their undiscounted cash flows are written down to their estimated 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 is recorded at the lower of estimated fair value or the carrying value of the mortgage loan at the date of foreclosure. F-16 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 consisting of leveraged buy-out funds, hedge funds and other private equity funds 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 equity method is also used for such investments in which the Company has more than a minor influence or more than a 20% interest. Generally, the Company records its share of earnings using a three-month lag methodology for instances where the timely financial information is available and the contractual right exists to receive such financial information on a timely basis. 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. The Company reports the distributions from real estate joint ventures and other limited partnership interests accounted for under the cost method and equity in earnings from real estate joint ventures and other limited partnership interests accounted for under the equity method in net investment income. In addition to the investees performing regular evaluations for the impairment of underlying investments, the Company routinely evaluates its investments in real estate joint ventures and other limited partnerships for impairments. The Company considers its cost method investments for OTTI when the carrying value of real estate joint ventures and other limited partnership interests exceeds the net asset value ("NAV"). The Company takes into consideration the severity and duration of this excess when deciding if the cost method investment is other-than- temporarily impaired. 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 OTTI is deemed to have occurred, the Company records a realized capital loss within net investment gains (losses) to record the investment at its estimated 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 purchase and are stated at amortized cost, which approximates estimated fair value, or stated at estimated fair value, if available. Short-term investments also include investments in affiliated money market pools. Other Invested Assets. Other invested assets consist principally of freestanding derivatives with positive estimated fair values, leveraged leases, loans to affiliates, investments in insurance enterprise joint ventures, tax credit partnerships, and funds withheld. Freestanding derivatives with positive estimated fair values are described in the derivatives accounting policy which follows. 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. Loans to affiliates, some of which are regulated, are carried at amortized cost and are used by the affiliates to assist in meeting their capital requirements. Joint venture investments represent the Company's investments in entities that engage in insurance underwriting activities and are accounted for under the equity method. Tax credit partnerships are established for the purpose of investing in low-income housing and other social causes, where the primary return on investment is in the form of income tax credits and are accounted for under the equity method or under the effective yield method. The Company reports the equity in earnings of joint venture investments and tax credit partnerships in net investment income. F-17 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Funds withheld represent amounts contractually withheld by ceding companies in accordance with reinsurance agreements. The Company records a funds withheld receivable rather than the underlying investments. The Company recognizes interest on funds withheld at rates defined by the terms of the agreement which may be contractually specified or directly related to the underlying investments and records it in net investment income. Investments Risks and Uncertainties. The Company's investments are exposed to four primary sources of risk: credit, interest rate, liquidity risk, and market valuation. The financial statement risks, stemming from such investment risks, are those associated with the determination of estimated fair values, the diminished ability to sell certain investments in times of strained market conditions, the recognition of impairments, the recognition of income on certain investments and the potential consolidation of VIEs. The use of different methodologies, assumptions and inputs relating to these financial statement risks may have a material effect on the amounts presented within the consolidated financial statements. When available, the estimated fair value of the Company's fixed maturity and equity securities are based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company's securities holdings and valuation of these securities does not involve management judgment. When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies. The market standard valuation methodologies utilized include: discounted cash flow methodologies, matrix pricing or other similar techniques. The inputs to these market standard valuation methodologies include, but are not limited to: interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund requirements, maturity, estimated duration and management's assumptions regarding liquidity and estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management's judgments about financial instruments. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Such observable inputs include benchmarking prices for similar assets in active, liquid markets, quoted prices in markets that are not active and observable yields and spreads in the market. When observable inputs are not available, the market standard valuation methodologies for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. These unobservable inputs can be based in large part on management judgment or estimation, and cannot be supported by reference to market activity. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such securities. Mortgage loans held-for-sale which are recorded at the lower of amortized cost or estimated fair value less expected disposition costs determined on an individual loan basis. For these loans, estimated fair value is determined using independent broker quotations or, when the loan is in foreclosure or otherwise determined to be collateral dependent, the estimated fair value of the underlying collateral estimated using internal models. Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. The Company's ability to sell securities, or the price ultimately realized for these securities, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain securities. The determination of the amount of allowances and impairments, as applicable, is described previously by investment type. The determination of such allowances and impairments is highly subjective and is based upon the F-18 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. The recognition of income on certain investments (e.g. loan-backed securities, including mortgage-backed and ABS, certain structured investment transactions, trading and other securities) is dependent upon market conditions, which could result in prepayments and changes in amounts to be earned. The accounting guidance for the determination of when an entity is a VIE and when to consolidate a VIE is complex and requires significant management judgment. The determination of the VIE's primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party's relationship with or involvement in the entity, an estimate of the entity's expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity. The Company generally uses a qualitative approach to determine whether it is the primary beneficiary. For most VIEs, the entity that has both the ability to direct the most significant activities of the VIE and the obligation to absorb losses or receive benefits that could be significant to the VIE is considered the primary beneficiary. However, for VIEs that are investment companies or apply measurement principles consistent with those utilized by investment companies, the primary beneficiary is based on a risks and rewards model and is defined as the entity that will absorb a majority of a VIE's expected losses, receive a majority of a VIE's expected residual returns if no single entity absorbs a majority of expected losses, or both. The Company reassesses its involvement with VIEs on a quarterly basis. The use of different methodologies, assumptions and inputs in the determination of the primary beneficiary could 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, credit spreads, and/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 various risks relating to its ongoing business. 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 sheets either as assets within other invested assets or as liabilities within other liabilities at estimated fair value as determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for over-the-counter derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that are assumed to be consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), volatility, liquidity and changes in estimates and assumptions used in the pricing models. The Company does not offset the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. 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 estimated fair value of the derivative are generally reported in net derivative gains (losses) except for those in net investment income for economic hedges of equity method investments in joint ventures, or for all derivatives held in relation to the trading portfolios. The fluctuations in estimated fair value of derivatives which have not been designated for hedge accounting can result in significant volatility in net income. F-19 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either (i) a hedge of the estimated fair value of a recognized asset or liability ("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 guidance continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under such accounting guidance. If it was determined that hedge accounting designations were not appropriately applied, reported net income could be materially affected. Under a fair value hedge, changes in the estimated fair value of the hedging derivative, including amounts measured as ineffectiveness, and changes in the estimated fair value of the hedged item related to the designated risk being hedged, are reported within net derivative gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of operations within interest income or interest expense to match the location of the hedged item. However, accruals that are not scheduled to settle until maturity are included in the estimated fair value of derivatives in the consolidated balance sheets. Under a cash flow hedge, changes in the estimated 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 operations when the Company's earnings are affected by the variability in cash flows of the hedged item. Changes in the estimated fair value of the hedging instrument measured as ineffectiveness are reported within net derivative gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of operations within interest income or interest expense to match the location of the hedged item. However, accruals that are not scheduled to settle until maturity are included in the estimated fair value of derivatives in the consolidated balance sheets. In a hedge of a net investment in a foreign operation, changes in the estimated 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 estimated fair value of the hedging instrument measured as ineffectiveness are reported within net derivative 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 estimated 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; or (iv) 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 estimated fair value or cash flows of a hedged item, the derivative continues to be carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value F-20 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in other comprehensive income (loss) related to discontinued cash flow hedges are released into the consolidated statements of operations 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 on the anticipated date or within two months of that date, the derivative continues to be carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). Deferred gains and losses of a derivative recorded in other comprehensive income (loss) pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable are recognized immediately in net derivative gains (losses). In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value in the consolidated balance sheets, with changes in its estimated fair value recognized in the current period as net derivative 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 estimated 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 in the consolidated balance sheets at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative 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 estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income. Additionally, the Company may elect to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income if that contract contains an embedded derivative that requires bifurcation. 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. Cash equivalents are stated at amortized cost, which approximates estimated fair value. 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 the straight-line 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 $1.6 billion and $1.5 billion at December 31, 2010 and 2009, respectively. Accumulated depreciation and amortization of property, equipment and leasehold improvements was $898 million and $804 million at December 31, 2010 and 2009, respectively. Related depreciation and amortization expense was $111 million for each of the years ended December 31, 2010, 2009 and 2008. F-21 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE 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 $1.5 billion and $1.3 billion at December 31, 2010 and 2009, respectively. Accumulated amortization of capitalized software was $1,106 million and $983 million at December 31, 2010 and 2009, respectively. Related amortization expense was $132 million, $125 million and $117 million for the years ended December 31, 2010, 2009 and 2008, respectively. Deferred Policy Acquisition Costs ("DAC") and Value of Business Acquired ("VOBA") 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 issuance expenses. VOBA is an intangible asset that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force at the acquisition date. The estimated fair value of the acquired liabilities 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, nonperformance risk adjustment 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 consolidated 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 within the closed block (dividend paying traditional contracts) future gross margins are also dependent upon changes in the policyholder dividend obligation. Of these factors, the Company anticipates that investment returns, expenses, persistency and other factor changes as well as policyholder dividend scales are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross margins with the actual gross margins for that period. When the actual gross margins change from previously estimated gross margins, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross margins exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross margins are below the previously estimated gross margins. Each reporting period, the Company also updates the actual amount of business in-force, which impacts F-22 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) expected future gross margins. When expected future gross margins are below those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the expected future gross margins are above the previously estimated expected future gross margins. Each period, the Company also reviews the estimated gross margins for each block of business to determine the recoverability of DAC and VOBA balances. 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. When expected future gross profits are below those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the expected future gross profits are above the previously estimated expected future gross profits. Each period, the Company also reviews the estimated gross profits for each block of business to determine the recoverability of DAC and VOBA balances. 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 which can result in significant fluctuations in amortization of DAC and VOBA. 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 and living 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 events and only changes the assumption when its long-term expectation changes. The Company also periodically reviews 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. Periodically, the Company modifies 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 such modification, referred to as an internal replacement, substantially changes the contract, the associated DAC or VOBA 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 or F-23 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. Sales Inducements The Company generally 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. The amortization of sales inducements is included in policyholder benefits and claims. Each year, or more frequently if circumstances indicate a potentially significant recoverability issue exists, the Company reviews the deferred sales inducements to determine the recoverability of these balances. Value of Distribution Agreements and Customer Relationships Acquired Value of distribution agreements ("VODA") is reported in other assets and represents the present value of expected future profits associated with the expected future business derived from the distribution agreements. Value of customer relationships acquired ("VOCRA") is also reported in other assets and represents the present value of the expected future profits associated with the expected future business acquired through existing customers of the acquired company or business. The VODA and VOCRA associated with past acquisitions are amortized over useful lives ranging from 10 to 30 years and such amortization is included in other expenses. Each year, or more frequently if circumstances indicate a potentially significant recoverability issue exists, the Company reviews VODA and VOCRA to determine the recoverability of these balances. Goodwill Goodwill, which is included in other assets, is the excess of cost over the estimated fair value of net assets acquired which represents the future economic benefits arising from such net assets acquired that could not be individually identified. 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. The Company performs its annual goodwill impairment testing during the third quarter of each year based upon data as of the close of the second quarter. Goodwill associated with a business acquisition is not tested for impairment during the year the business is acquired unless there is a significant identified impairment event. 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, if the carrying value of a reporting unit exceeds its estimated fair value, there might be an indication of impairment. In such instances, the implied fair value of the goodwill is determined in the same manner as the amount of goodwill that would be determined in a business acquisition. The excess of the carrying value of goodwill over the implied fair value of goodwill would be recognized as an impairment and recorded as a charge against net income. In performing the Company's goodwill impairment tests, the estimated fair values of the reporting units are first determined using a market multiple approach. When further corroboration is required, the Company uses a discounted cash flow approach. For reporting units which are particularly sensitive to market assumptions, such as F-24 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) the retirement products and individual life reporting units, the Company may use additional valuation methodologies to estimate the reporting units' fair values. The key inputs, judgments and assumptions necessary in determining estimated fair value of the reporting units include projected earnings, current book value, the level of economic capital required to support the mix of business, long-term growth rates, comparative market multiples, the level of interest rates, credit spreads, equity market levels and the discount rate that the Company believes is appropriate for the respective reporting unit. The Company applies significant judgment when determining the estimated fair value of the Company's reporting units. The valuation methodologies utilized are subject to key judgments and assumptions that are sensitive to change. Estimates of fair value are inherently uncertain and represent only management's reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood, differ in some respects from actual future results. Declines in the estimated fair value of the Company's reporting units could result in goodwill impairments in future periods which could adversely affect the Company's results of operations or financial position. During the 2010 impairment tests of goodwill, the Company concluded that the fair values of all reporting units were in excess of their carrying values and, therefore, goodwill was not impaired. On an ongoing basis, the Company evaluates potential triggering events that may affect the estimated fair value of the Company's reporting units to assess whether any goodwill impairment exists. Deteriorating or adverse market conditions for certain reporting units may have an impact on the estimated fair value of these reporting units and could result in future impairments of goodwill. See Note 7 for further consideration of goodwill impairment testing during 2010. 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. These assumptions are established at the time the policy is issued and are intended to estimate the experience for the period the policy benefits are payable. Utilizing these assumptions, liabilities are established on a block of business basis. Future policy benefit liabilities for participating 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. Participating business represented approximately 6% of the Company's life insurance in-force at both December 31, 2010 and 2009. Participating policies represented approximately 32%, 33% and 32% of gross life insurance premiums for the years ended December 31, 2010, 2009 and 2008, respectively. Future policy benefit liabilities for non-participating 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 rate assumptions for the aggregate future policy benefit liabilities range from 2% to 10%. F-25 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE 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 rate assumptions used in establishing such liabilities range from 2% 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 rate assumptions 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 rate assumptions used in establishing such liabilities range from 3% to 8%. Liabilities for unpaid claims and claim expenses are included in future policyholder benefits and represent the amount estimated for claims that have been reported but not settled and claims incurred but not reported. 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: - 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 appropriate underlying equity index, such as the Standard & Poor's ("S&P") 500 Index. The benefit assumptions 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. Certain GMIBs have settlement features that result in a portion of that guarantee being accounted for as an embedded derivative and are recorded in policyholder account balances as described below. 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 F-26 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. The Company establishes policyholder account balances for guaranteed minimum benefits relating to certain variable annuity products as follows: - Guaranteed minimum withdrawal benefits ("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 estimated fair value separately from the host variable annuity product. - Guaranteed minimum accumulation benefits ("GMAB") and settlement features in certain GMIB described above 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 an embedded derivative, which is measured at estimated fair value separately from the host variable annuity product. For GMWB, GMAB and certain GMIB, 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. GMWB, GMAB and certain GMIB are accounted for as embedded derivatives with changes in estimated fair value reported in net derivative gains (losses). At inception of the GMWB, GMAB and certain GMIB contracts, the Company attributes to the embedded derivative a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any additional fees represent "excess" fees and are reported in universal life and investment-type product policy fees. The estimated fair values of these embedded derivatives are then determined based on the present value of projected future benefits minus the present value of projected future fees. The projections of future benefits and future fees require capital market and actuarial assumptions including expectations concerning policyholder behavior. A risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk free rates. The valuation of these embedded derivatives also includes an adjustment for the Company's nonperformance risk and risk margins for non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.'s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife, Inc. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment. These guaranteed minimum benefits may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates, changes in nonperformance risk, variations in actuarial assumptions regarding F-27 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) policyholder behavior, mortality and risk margins related to non-capital market inputs may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect 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 and guarantees, and in the establishment of the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur. Policyholder account balances relate to investment-type contracts, universal life-type policies and certain guaranteed minimum benefits. Investment-type contracts principally include traditional individual fixed annuities in the accumulation phase and non-variable group annuity contracts. Policyholder account balances for these contracts are equal to: (i) policy account values, which consist of an accumulation of gross premium payments; (ii) credited interest, ranging from 1% to 17%, less expenses, mortality charges and withdrawals; and (iii) fair value adjustments relating to business combinations. Other Policy-Related Balances Other policy-related balances 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 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 policy-related balances 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. F-28 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. The portion of fees allocated to embedded derivatives described previously is recognized within net derivative gains (losses) as part of the estimated fair value of embedded derivatives. Other Revenues Other revenues include, in addition to items described elsewhere herein, 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 Metropolitan Life Insurance Company and its insurance subsidiaries. Income Taxes The Company joins with MetLife, Inc. 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 MetLife, Inc. 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) MetLife, Inc. 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; F-29 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (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 Note 12 ) 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. The Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made. The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax. Reinsurance The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products and also as a provider of reinsurance for some insurance products issued by third parties. For each of its reinsurance agreements, the Company determines whether the agreement 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 reinsurance agreement. 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, reinsurance 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 agreements are deferred and recorded in other liabilities. The gains are amortized primarily using the recovery method. F-30 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The assumptions used to account for both long and short-duration reinsurance agreements 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 agreements are included in premiums, reinsurance and other receivables and amounts currently payable are included in other liabilities. Such assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance balances recoverable could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance. Premiums, fees and policyholder benefits and claims include amounts assumed under reinsurance agreements and are net of reinsurance ceded. Amounts received from reinsurers for policy administration are reported in other revenues. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within premiums, reinsurance and other receivables. 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. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed previously. Cessions under reinsurance arrangements do not discharge the Company's obligations as the primary insurer. 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. 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. F-31 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. The expected postretirement plan benefit obligations represent the actuarial present value of all other postretirement benefits expected to be paid after retirement to employees and their dependents and is used in measuring the periodic postretirement benefit expense. The accumulated postretirement plan benefit obligations ("APBO") represent 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. The Company recognizes the funded status of the PBO for pension plans and the APBO for other postretirement plans for each of its plans in the consolidated balance sheets. 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 are charged, net of income tax, to accumulated other comprehensive income (loss). 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 firms, 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 is matched. Applicable matching contributions are 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 MetLife, Inc. The accounting policies described below represent those that MetLife, Inc. applies in determining such allocated expenses. F-32 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) As more fully described in Note 15, MetLife, Inc. grants certain employees and directors stock-based compensation awards under various plans that are subject to specific vesting conditions. The cost of all stock-based transactions is measured at fair value at grant date 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 MetLife, Inc.'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, MetLife, Inc. recognizes compensation expense related to stock-based awards over the shorter of the requisite service period or the period to attainment of retirement eligibility. An estimation of future forfeitures of stock-based awards is incorporated into the determination of compensation expense when recognizing expense over the requisite service period. Foreign Currency Assets, liabilities and operations of foreign affiliates and subsidiaries, if any, are recorded based on the functional currency of each entity. The determination of the functional currency is made based on the appropriate economic and management indicators. The local currencies of foreign operations are the functional currencies. Assets and liabilities of foreign affiliates and subsidiaries, if any, are translated from the functional currency to U.S. dollars 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 resulting translation adjustments are charged or credited directly to other comprehensive income or loss, net of applicable taxes. Gains and losses from foreign currency transactions, including the effect of re-measurement of monetary assets and liabilities to the appropriate functional currency, are reported as part of 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 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. 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. Assets within the Company's separate accounts primarily include: mutual funds, fixed maturity and equity securities, mortgage loans, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash F-33 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) equivalents. 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 which is based on the estimated fair values of the underlying assets comprising the portfolios of an individual separate account. 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 operations. Separate accounts credited with a contractual investment return are combined on a line-by-line basis with the Company's general account assets, liabilities, revenues and expenses and the accounting for these investments is consistent with the methodologies described herein for similar financial instruments held within the general account. 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. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Financial Instruments Effective December 31, 2010, the Company adopted new guidance regarding disclosures about the credit quality of financing receivables and valuation allowances for credit losses, including credit quality indicators. Such disclosures must be disaggregated by portfolio segment or class based on how a company develops its valuation allowances for credit losses and how it manages its credit exposure. The Company has provided all material required disclosures in its consolidated financial statements. Certain additional disclosures will be required for reporting periods ending March 31, 2011 and certain disclosures relating to troubled debt restructurings have been deferred indefinitely. Effective July 1, 2010, the Company adopted new guidance regarding accounting for embedded credit derivatives within structured securities. This guidance clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, embedded credit derivatives resulting only from subordination of one financial instrument to another continue to qualify for the scope exception. Embedded credit derivative features other than subordination must be analyzed to determine whether they require bifurcation and separate accounting. As a result of the adoption of this guidance, the Company elected FVO for certain structured securities that were previously accounted for as fixed maturity securities. Upon adoption, the Company reclassified $50 million of securities from fixed maturity securities to trading and other securities. These securities had cumulative unrealized losses of $10 million, net of income tax, which was recognized as a cumulative effect adjustment to decrease retained earnings with a corresponding increase to accumulated other comprehensive income (loss) as of July 1, 2010. Effective January 1, 2010, the Company adopted new guidance related to financial instrument transfers and consolidation of VIEs. The financial instrument transfer guidance eliminates the concept of a QSPE, eliminates the guaranteed mortgage securitization exception, changes the criteria for achieving sale accounting when transferring a financial asset and changes the initial recognition of retained beneficial interests. The new consolidation guidance changes the definition of the primary beneficiary, as well as the method of determining whether an entity is a primary beneficiary of a VIE from a quantitative model to a qualitative model. Under the new qualitative model, the entity that has both the ability to direct the most significant activities of the VIE and the obligation to absorb losses or receive benefits that could be significant to the VIE is considered to be the primary beneficiary of the VIE. The F-34 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) guidance requires a quarterly reassessment, as well as enhanced disclosures, including the effects of a company's involvement with VIEs on its financial statements. As a result of the adoption of this guidance, the Company consolidated certain former QSPEs that were previously accounted for as equity security collateralized debt obligations. The Company also elected the FVO for all of the consolidated assets and liabilities of these entities. Upon consolidation, the Company recorded $278 million of securities classified as trading and other securities and $232 million of long-term debt based on estimated fair values at January 1, 2010 and de-recognized less than $1 million in equity securities. The consolidation also resulted in an increase in retained earnings of $30 million, net of income tax, at January 1, 2010. For the year ended December 31, 2010, the Company recorded $15 million of net investment income on the consolidated assets, $15 million of interest expense in other expenses on the related long- term debt and ($30) million in net investment gains (losses) to remeasure the assets and liabilities at their estimated fair values. In addition, the Company also deconsolidated certain partnerships for which the Company does not have the power to direct activities and for which the Company has concluded it is no longer the primary beneficiary. These deconsolidations did not result in a cumulative effect adjustment to retained earnings and did not have a material impact on the Company's consolidated financial statements. Also effective January 1, 2010, the Company adopted new guidance that indefinitely defers the above changes relating to the Company's interests in entities that have all the attributes of an investment company or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those applied by an investment company. As a result of the deferral, the above guidance did not apply to certain real estate joint ventures and other limited partnership interests held by the Company. As more fully described in "Summary of Significant Accounting Policies and Critical Accounting Estimates," effective April 1, 2009, the Company adopted OTTI guidance. This guidance amends the previously used methodology for determining whether an OTTI exists for fixed maturity securities, changes the presentation of OTTI for fixed maturity securities and requires additional disclosures for OTTI on fixed maturity and equity securities in interim and annual financial statements. The Company's net cumulative effect adjustment of adopting the OTTI guidance was an increase of $36 million to retained earnings with a corresponding increase to accumulated other comprehensive loss to reclassify the noncredit loss portion of previously recognized OTTI losses on fixed maturity securities held at April 1, 2009. This cumulative effect adjustment was comprised of an increase in the amortized cost basis of fixed maturity securities of $59 million, net of policyholder related amounts of $4 million and net of deferred income taxes of $19 million, resulting in the net cumulative effect adjustment of $36 million. The increase in the amortized cost basis of fixed maturity securities of $59 million by sector was as follows: $25 million -- ABS, $25 million -- RMBS and $9 million -- U.S. corporate securities. As a result of the adoption of the OTTI guidance, the Company's pre-tax earnings for the year ended December 31, 2009 increased by $566 million, offset by an increase in other comprehensive loss representing OTTI relating to noncredit losses recognized during the year ended December 31, 2009. Effective January 1, 2009, the Company adopted guidance on disclosures about derivative instruments and hedging. This guidance 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. The Company has provided all of the material disclosures in its consolidated financial statements. F-35 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following pronouncements relating to financial instruments had no material impact on the Company's consolidated financial statements: - Effective January 1, 2009, the Company adopted prospectively an update on accounting for transfers of financial assets and repurchase financing transactions. This update 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. - Effective December 31, 2008, the Company adopted guidance on the recognition of interest income and impairment on purchased beneficial interests and beneficial interests that continue to be held by a transferor in securitized financial assets. This new guidance more closely aligns the determination of whether an OTTI has occurred for a beneficial interest in a securitized financial asset with the original guidance for fixed maturity securities classified as available-for-sale or held-to-maturity. - Effective January 1, 2008, the Company adopted guidance relating to application of the shortcut method of accounting for derivative instruments and hedging activities. This guidance permits interest rate swaps to have a non-zero fair value at inception when applying the shortcut method of assessing hedge effectiveness as long as the difference between the transaction price (zero) and the fair value (exit price), as defined by current accounting guidance on fair value measurements, is solely attributable to a bid-ask spread. In addition, entities are not precluded from applying the shortcut method of assessing hedge effectiveness 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. - Effective January 1, 2008, the Company adopted guidance that permits 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. This guidance also includes certain terminology modifications. Upon adoption of this guidance, the Company did not change its accounting policy of not offsetting fair value amounts recognized for derivative instruments under master netting arrangements. Business Combinations and Noncontrolling Interests Effective January 1, 2009, the Company adopted revised guidance on business combinations and accounting for noncontrolling interests in the consolidated financial statements. Under this guidance: - 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. - Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if the acquisition- date fair value can be reasonably determined. If the fair value is not estimable, an asset or liability is recorded if existence or incurrence at the acquisition date is probable and its amount is reasonably estimable. F-36 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) - Changes in deferred income 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. - Net income (loss) includes amounts attributable to noncontrolling interests. - 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 adoption of this guidance on a prospective basis did not have an impact on the Company's consolidated financial statements. Financial statements and disclosures for periods prior to 2009 reflect the retrospective application of the accounting for noncontrolling interests as required under this guidance. Effective January 1, 2009, the Company adopted prospectively guidance on determination of the useful life of intangible assets. This guidance amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. This change is intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected future cash flows used to measure the fair value of the asset. The Company determines useful lives and provides all of the material disclosures prospectively on intangible assets acquired on or after January 1, 2009 in accordance with this guidance. Fair Value Effective January 1, 2010, the Company adopted new guidance that requires new disclosures about significant transfers into and/or out of Levels 1 and 2 of the fair value hierarchy and activity in Level 3. In addition, this guidance provides clarification of existing disclosure requirements about level of disaggregation and inputs and valuation techniques. The adoption of this guidance did not have an impact on the Company's consolidated financial statements. Effective January 1, 2008, the Company adopted fair value measurements guidance which defines fair value, establishes a consistent framework for measuring fair value, establishes a fair value hierarchy based on the observability of inputs used to measure fair value, and requires enhanced disclosures about fair value measurements and applied this guidance prospectively to assets and liabilities measured at fair value. The adoption of this guidance changed the valuation of certain freestanding derivatives by moving from a mid to bid pricing convention as it relates to certain volatility inputs, as well as the addition of liquidity adjustments and adjustments for risks inherent in a particular input or valuation technique. The adoption of this guidance also changed the valuation of the Company's embedded derivatives, most significantly the valuation of embedded derivatives associated with certain guarantees on variable annuity contracts. The change in valuation of embedded derivatives associated with guarantees on annuity contracts resulted from the incorporation of risk margins associated with non-capital market inputs and the inclusion of the Company's nonperformance risk in their valuation. At January 1, 2008, the impact of adopting the guidance on assets and liabilities measured at estimated fair value was $13 million ($8 million, net of income tax) and was recognized as a change in estimate in the accompanying consolidated statement of operations where it was presented in the respective statement of operations caption to which the item measured at estimated fair value is presented. There were no significant changes in estimated fair value of items measured at fair value and reflected in accumulated other comprehensive income (loss). The addition of risk margins and the Company's nonperformance risk adjustment in the valuation of embedded derivatives associated with annuity contracts may F-37 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) result in significant volatility in the Company's consolidated net income in future periods. The Company provided all of the material disclosures in Note 5. In February 2007, the Financial Accounting Standards Board ("FASB") issued guidance related to the FVO for financial assets and financial liabilities. This guidance permits entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to recognize related unrealized gains and losses in earnings. The FVO is applied on an instrument-by-instrument basis upon adoption of the standard, upon the acquisition of an eligible financial asset, financial liability or firm commitment or when certain specified reconsideration events occur. The fair value election is an irrevocable election. Effective January 1, 2008, the Company did not elect the FVO for any instruments. The following pronouncements relating to fair value had no material impact on the Company's consolidated financial statements: - Effective September 30, 2008, the Company adopted guidance relating to the fair value measurements of financial assets when the market for those assets is not active. It provides guidance on how a company's internal cash flow and discount rate assumptions should be considered in the measurement of fair value when relevant market data does not exist, how observable market information in an inactive market affects fair value measurement and how the use of market quotes should be considered when assessing the relevance of observable and unobservable data available to measure fair value. - Effective January 1, 2009, the Company implemented fair value measurements guidance for certain nonfinancial assets and liabilities that are recorded at fair value on a non-recurring basis. This guidance applies to such items as: (i) nonfinancial assets and nonfinancial liabilities initially measured at estimated fair value in a business combination; (ii) reporting units measured at estimated fair value in the first step of a goodwill impairment test; and (iii) indefinite-lived intangible assets measured at estimated fair value for impairment assessment. - Effective January 1, 2009, the Company adopted prospectively guidance on issuer's accounting for liabilities measured at fair value with a third- party credit enhancement. This guidance states that an issuer of a liability with a third-party credit enhancement should not include the effect of the credit enhancement in the fair value measurement of the liability. In addition, it requires disclosures about the existence of any third-party credit enhancement related to liabilities that are measured at fair value. - Effective April 1, 2009, the Company adopted guidance on: (i) estimating the fair value of an asset or liability if there was a significant decrease in the volume and level of trading activity for these assets or liabilities; and (ii) identifying transactions that are not orderly. The Company has provided all of the material disclosures in its consolidated financial statements. - Effective December 31, 2009, the Company adopted guidance on: (i) measuring the fair value of investments in certain entities that calculate NAV per share; (ii) how investments within its scope would be classified in the fair value hierarchy; and (iii) enhanced disclosure requirements, for both interim and annual periods, about the nature and risks of investments measured at fair value on a recurring or non- recurring basis. - Effective December 31, 2009, the Company adopted guidance on measuring liabilities at fair value. This guidance provides clarification for measuring fair value in circumstances in which a quoted price in an active market for the identical liability is not available. In such circumstances a company is required to measure fair value using either a valuation technique that uses: (i) the quoted price of the identical liability when traded as an asset; or (ii) quoted prices for similar liabilities or similar liabilities when traded as assets; or (iii) another valuation technique that is consistent with the principles of fair value measurement such as an income approach (e.g., present value technique) or a market approach (e.g., "entry" value technique). F-38 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Defined Benefit and Other Postretirement Plans Effective December 31, 2009, the Company adopted guidance to enhance the transparency surrounding the types of assets and associated risks in an employer's defined benefit pension or other postretirement benefit plans. This guidance requires an employer to disclose information about the valuation of plan assets similar to that required under other fair value disclosure guidance. The Company provided all of the material disclosures in its consolidated financial statements. Other Pronouncements Effective April 1, 2009, the Company adopted prospectively guidance which establishes general standards for accounting and disclosures of events that occur subsequent to the balance sheet date but before financial statements are issued or available to be issued. The Company has provided all of the material disclosures in its consolidated financial statements. Effective January 1, 2008, the Company prospectively adopted guidance on the sale of real estate when the agreement includes a buy-sell clause. This guidance addresses whether the existence of a buy-sell arrangement would preclude partial sales treatment when real estate is sold to a jointly owned entity and concludes that the existence of a buy-sell clause does not necessarily preclude partial sale treatment under current guidance. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS In December 2010, the FASB issued new guidance addressing when a business combination should be assumed to have occurred for the purpose of providing pro forma disclosure (Accounting Standards Update ("ASU") 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations). Under the new guidance, if an entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. The guidance also expands the supplemental pro forma disclosures to include additional narratives. The guidance is effective for fiscal years beginning on or after December 15, 2010. The Company will apply the guidance prospectively on its accounting for future acquisitions and does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements. In December 2010, the FASB issued new guidance regarding goodwill impairment testing (ASU 2010-28, Intangibles -- Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts). This guidance modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity would be required to perform Step 2 of the test if qualitative factors indicate that it is more likely than not that goodwill impairment exists. The guidance is effective for the first quarter of 2011. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements. In October 2010, the FASB issued new guidance regarding accounting for deferred acquisition costs (ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts) effective for the first quarter of 2012. This guidance clarifies the costs that should be deferred by insurance entities when issuing and renewing insurance contracts. The guidance also specifies that only costs related directly to successful acquisition of new or renewal contracts can be capitalized. All other acquisition-related costs should be expensed as incurred. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In April 2010, the FASB issued new guidance regarding accounting for investment funds determined to be VIEs (ASU 2010-15, How Investments Held through Separate Accounts Affect an Insurer's Consolidation Analysis of Those Investments). Under this guidance, an insurance entity would not be required to consolidate a voting- F-39 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts. In addition, an insurance entity would not consider the interests held through separate accounts for the benefit of policyholders in the insurer's evaluation of its economics in a VIE, unless the separate account contractholder is a related party. The guidance is effective for the first quarter of 2011. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements. 2. ACQUISITIONS AND DISPOSITIONS 2009 DISPOSITION THROUGH ASSUMPTION REINSURANCE On October 30, 2009, the Company completed the disposal, through assumption reinsurance, of substantially all of the insurance business of MetLife Canada, a wholly-owned indirect subsidiary, to a third-party. Pursuant to the assumption reinsurance agreement, the consideration paid by the Company was $259 million, comprised of cash of $14 million and fixed maturity securities, mortgage loans and other assets totaling $245 million. At the date of the assumption reinsurance agreement, the carrying value of insurance liabilities transferred was $267 million, resulting in a gain of $5 million, net of income tax. The gain was recognized in net investment gains (losses). 2008 DISPOSITION In September 2008, MetLife, Inc. completed a tax-free split-off of its majority-owned subsidiary, Reinsurance Group of America, Incorporated ("RGA"). In connection with this transaction, General American Life Insurance Company ("GALIC") dividended to Metropolitan Life Insurance Company and Metropolitan Life Insurance Company dividended to MetLife, Inc. substantially all of its interests in RGA at a value of $1,318 million. The net book value of RGA at the time of the dividend was $1,716 million. The loss recognized in connection with the dividend was $398 million. Metropolitan Life Insurance Company, through its investment in GALIC, retained 3,000,000 shares of RGA Class A common stock. These shares are marketable equity securities which do not constitute significant continuing involvement in the operations of RGA; accordingly, they were classified within equity securities in the consolidated financial statements of the Company at a cost basis of $157 million which is equivalent to the net book value of the shares. The equity securities have been recorded at fair value at each subsequent reporting date. The Company agreed to dispose of the remaining shares of RGA within the next five years. In connection with the Company's agreement to dispose of the remaining shares, the Company also recognized, in its provision for income tax on continuing operations, a deferred tax liability of $16 million which represents the difference between the book and taxable basis of the remaining investment in RGA. On February 15, 2011, the Company sold to RGA such remaining shares. The impact of the disposition of the Company's investment in RGA was reflected in the Company's consolidated financial statements as discontinued operations. See Note 18. OTHER ACQUISITIONS AND DISPOSITIONS See Note 15 for information on the contribution from MetLife, Inc. in the form of intangible assets related to VOCRA from a 2008 acquisition by MetLife, Inc. F-40 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE 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, estimated fair value of the Company's fixed maturity and equity securities and the percentage that each sector represents by the respective total holdings for the periods shown. The unrealized loss amounts presented below include the noncredit loss component of OTTI loss:
DECEMBER 31, 2010 ---------------------------------------------------- GROSS UNREALIZED COST OR ----------------------- ESTIMATED AMORTIZED TEMPORARY OTTI FAIR % OF COST GAIN LOSS LOSS VALUE TOTAL --------- ------ --------- ---- --------- ----- (IN MILLIONS) FIXED MATURITY SECURITIES: U.S. corporate securities..................... $ 50,764 $3,322 $ 959 $ -- $ 53,127 33.3% Foreign corporate securities.................. 28,841 2,218 492 -- 30,567 19.2 RMBS.......................................... 29,548 1,244 569 319 29,904 18.7 U.S. Treasury, agency and government guaranteed securities (1)................... 20,154 1,190 367 -- 20,977 13.1 CMBS.......................................... 9,401 484 174 10 9,701 6.1 ABS........................................... 7,514 159 365 90 7,218 4.5 State and political subdivision securities.... 4,693 86 195 -- 4,584 2.9 Foreign government securities................. 2,793 682 18 -- 3,457 2.2 -------- ------ ------ ---- -------- ----- Total fixed maturity securities (2), (3).... $153,708 $9,385 $3,139 $419 $159,535 100.0% ======== ====== ====== ==== ======== ===== EQUITY SECURITIES: Common stock.................................. $ 937 $ 42 $ 7 $ -- $ 972 53.4% Non-redeemable preferred stock (2)............ 961 52 164 -- 849 46.6 -------- ------ ------ ---- -------- ----- Total equity securities (4)................. $ 1,898 $ 94 $ 171 $ -- $ 1,821 100.0% ======== ====== ====== ==== ======== =====
DECEMBER 31, 2009 ---------------------------------------------------- GROSS UNREALIZED COST OR ----------------------- ESTIMATED AMORTIZED TEMPORARY OTTI FAIR % OF COST GAIN LOSS LOSS VALUE TOTAL --------- ------ --------- ---- --------- ----- (IN MILLIONS) FIXED MATURITY SECURITIES: U.S. corporate securities..................... $ 48,650 $2,179 $1,752 $ 9 $ 49,068 33.9% Foreign corporate securities.................. 24,367 1,469 836 3 24,997 17.3 RMBS.......................................... 31,810 899 1,303 421 30,985 21.4 U.S. Treasury, agency and government guaranteed securities (1)................... 16,399 681 678 -- 16,402 11.3 CMBS.......................................... 11,393 124 746 -- 10,771 7.5 ABS........................................... 7,892 102 682 141 7,171 5.0 State and political subdivision securities.... 2,827 53 146 -- 2,734 1.9 Foreign government securities................. 2,101 467 47 -- 2,521 1.7 -------- ------ ------ ---- -------- ----- Total fixed maturity securities (2), (3).... $145,439 $5,974 $6,190 $574 $144,649 100.0% ======== ====== ====== ==== ======== ===== EQUITY SECURITIES: Common stock.................................. $ 1,076 $ 58 $ 4 $ -- $ 1,130 53.4% Non-redeemable preferred stock (2)............ 1,115 54 183 -- 986 46.6 -------- ------ ------ ---- -------- ----- Total equity securities (4)................. $ 2,191 $ 112 $ 187 $ -- $ 2,116 100.0% ======== ====== ====== ==== ======== =====
F-41 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) -------- (1) The Company has classified within the U.S. Treasury, agency and government guaranteed securities caption certain corporate fixed maturity securities issued by U.S. financial institutions that were guaranteed by the Federal Deposit Insurance Corporation ("FDIC") pursuant to the FDIC's Temporary Liquidity Guarantee Program of $23 million and $51 million at estimated fair value at December 31, 2010 and 2009, respectively, with an unrealized gain of less than $1 million at both December 31, 2010 and 2009. (2) Upon acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more debt-like characteristics. The Company classifies perpetual securities with an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more equity-like characteristics, as equity securities within non-redeemable preferred stock. Many of such securities have been issued by non-U.S. financial institutions that are accorded Tier 1 and Upper Tier 2 capital treatment by their respective regulatory bodies and are commonly referred to as "perpetual hybrid securities." The following table presents the perpetual hybrid securities held by the Company at:
DECEMBER 31, --------------------- 2010 2009 CLASSIFICATION --------- --------- ------------------------------------------------------------------------- ESTIMATED ESTIMATED CONSOLIDATED BALANCE FAIR FAIR SHEETS SECTOR TABLE PRIMARY ISSUERS VALUE VALUE -------------------- -------------------- ------------------------ --------- --------- (IN MILLIONS) Non-redeemable Non-U.S. financial Equity securities preferred stock institutions $ 667 $ 699 Non-redeemable U.S. financial Equity securities preferred stock institutions $ 84 $ 191 Fixed maturity Foreign corporate Non-U.S. financial securities securities institutions $1,304 $1,785 Fixed maturity U.S. corporate U.S. financial securities securities institutions $ 11 $ 38
-------- (3) The Company's holdings in redeemable preferred stock with stated maturity dates, commonly referred to as "capital securities", were primarily issued by U.S. financial institutions and have cumulative interest deferral features. The Company held $1,796 million and $1,769 million at estimated fair value of such securities at December 31, 2010 and 2009, respectively, which are included in the U.S. and foreign corporate securities sectors within fixed maturity securities. (4) Equity securities primarily consist of investments in common and preferred stocks, including certain perpetual hybrid securities and mutual fund interests. Privately-held equity securities were $789 million and $810 million at estimated fair value at December 31, 2010 and 2009, respectively. The Company held foreign currency derivatives with notional amounts of $8.3 billion and $7.5 billion to hedge the exchange rate risk associated with foreign denominated fixed maturity securities at December 31, 2010 and 2009, respectively. The below investment grade and non-income producing amounts presented below are based on rating agency designations and equivalent designations of the National Association of Insurance Commissioners ("NAIC"), with the exception of certain structured securities described below held by Metropolitan Life Insurance Company and its domestic insurance subsidiaries. Non-agency RMBS, including RMBS backed by sub-prime mortgage loans reported within ABS, CMBS and all other ABS held by Metropolitan Life Insurance Company and its domestic insurance subsidiaries, are presented based on final ratings from the revised NAIC rating methodologies which became effective December 31, 2009 for non- agency RMBS, including RMBS backed by sub-prime mortgage loans reported within ABS, and December 31, 2010 for CMBS and the remaining ABS (which may not correspond to rating agency designations). All NAIC designation (e.g., NAIC 1 -- 6) amounts and percentages presented herein are based on the revised NAIC methodologies. All rating agency designation (e.g., Aaa/AAA) amounts and F-42 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) percentages presented herein are based on rating agency designations without adjustment for the revised NAIC methodologies described above. Rating agency designations are based on availability of applicable ratings from rating agencies on the NAIC acceptable rating organization list, including Moody's Investors Service ("Moody's"), S&P and Fitch Ratings ("Fitch"). The following table presents selected information about certain fixed maturity securities held by the Company at:
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS) Below investment grade or non-rated fixed maturity securities: Estimated fair value........................................ $15,214 $13,438 Net unrealized gain (loss).................................. $ (553) $(1,804) Non-income producing fixed maturity securities: Estimated fair value........................................ $ 55 $ 120 Net unrealized gain (loss).................................. $ (13) $ (12)
Concentrations of Credit Risk (Fixed Maturity Securities) -- Summary. The following section contains a summary of the concentrations of credit risk related to fixed maturity securities holdings. The Company was not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company's equity, other than certain U.S. government securities. The Company's holdings in U.S. Treasury, agency and government guaranteed fixed maturity securities at estimated fair value were $21.0 billion and $16.4 billion at December 31, 2010 and 2009, respectively. Concentrations of Credit Risk (Fixed Maturity Securities) -- U.S. and Foreign Corporate Securities. The Company maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. This portfolio does not have an exposure to any single issuer in excess of 1% of total investments. The tables below present for all corporate fixed maturity securities holdings, corporate securities by sector, U.S. corporate securities by major industry types, the largest exposure to a single issuer and the combined holdings in the ten issuers to which it had the largest exposure at:
DECEMBER 31, ------------------------------------- 2010 2009 ----------------- ----------------- ESTIMATED ESTIMATED FAIR % OF FAIR % OF VALUE TOTAL VALUE TOTAL --------- ----- --------- ----- (IN MILLIONS) Corporate fixed maturity securities -- by sector: Foreign corporate fixed maturity securities (1).......................................... $30,567 36.5% $24,997 33.7% U.S. corporate fixed maturity securities -- by industry: Industrial...................................... 14,059 16.8 12,339 16.6 Consumer........................................ 12,776 15.3 11,456 15.5 Utility......................................... 11,902 14.2 10,372 14.0 Finance......................................... 7,838 9.4 8,658 11.7 Communications.................................. 4,375 5.2 4,273 5.8 Other........................................... 2,177 2.6 1,970 2.7 ------- ----- ------- ----- Total........................................ $83,694 100.0% $74,065 100.0% ======= ===== ======= =====
-------- (1) Includes U.S. dollar-denominated debt obligations of foreign obligors and other foreign fixed maturity securities. F-43 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, ------------------------------------------------- 2010 2009 ----------------------- ----------------------- ESTIMATED ESTIMATED FAIR % OF TOTAL FAIR % OF TOTAL VALUE INVESTMENTS VALUE INVESTMENTS --------- ----------- --------- ----------- (IN MILLIONS) Concentrations within corporate fixed maturity securities: Largest exposure to a single issuer........ $ 672 0.3% $ 753 0.3% Holdings in ten issuers with the largest exposures............................... $4,812 2.1% $5,363 2.5%
Concentrations of Credit Risk (Fixed Maturity Securities) -- RMBS. The table below presents the Company's RMBS holdings and portion rated Aaa/AAA and portion rated NAIC 1 at:
DECEMBER 31, ------------------------------------- 2010 2009 ----------------- ----------------- ESTIMATED ESTIMATED FAIR % OF FAIR % OF VALUE TOTAL VALUE TOTAL --------- ----- --------- ----- (IN MILLIONS) By security type: Collateralized mortgage obligations............. $15,304 51.2% $17,051 55.0% Pass-through securities......................... 14,600 48.8 13,934 45.0 ------- ----- ------- ----- Total RMBS................................... $29,904 100.0% $30,985 100.0% ======= ===== ======= ===== By risk profile: Agency.......................................... $22,525 75.3% $23,415 75.6% Prime........................................... 4,074 13.6 4,613 14.9 Alternative residential mortgage loans.......... 3,305 11.1 2,957 9.5 ------- ----- ------- ----- Total RMBS................................... $29,904 100.0% $30,985 100.0% ======= ===== ======= ===== Portion rated Aaa/AAA............................. $23,934 80.0% $25,316 81.7% ======= ===== ======= ===== Portion rated NAIC 1.............................. $26,162 87.5% $27,305 88.1% ======= ===== ======= =====
Collateralized mortgage obligations are a type of mortgage-backed security structured by dividing the cash flows of mortgages into separate pools or tranches of risk that create multiple classes of bonds with varying maturities and priority of payments. Pass-through mortgage-backed securities are a type of asset-backed security that is secured by a mortgage or collection of mortgages. The monthly mortgage payments from homeowners pass from the originating bank through an intermediary, such as a government agency or investment bank, which collects the payments, and for a fee, remits or passes these payments through to the holders of the pass-through securities. Prime residential mortgage lending includes the origination of residential mortgage loans to the most creditworthy borrowers with high quality credit profiles. Alternative residential mortgage loans ("Alt-A") are a classification of mortgage loans where the risk profile of the borrower falls between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles. Included within Alt-A RMBS are resecuritization of real estate mortgage investment conduit ("Re-REMIC") securities. Re-REMIC Alt-A RMBS involve the pooling of previous issues of Alt-A RMBS and restructuring the combined pools to create new senior and subordinated securities. The credit enhancement on the senior tranches is improved through the resecuritization. The Company's holdings are in senior tranches with significant credit enhancement. F-44 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables present the Company's investment in Alt-A RMBS by vintage year (vintage year refers to the year of origination and not to the year of purchase) and certain other selected data:
DECEMBER 31, ------------------------------------- 2010 2009 ----------------- ----------------- ESTIMATED ESTIMATED FAIR % OF FAIR % OF VALUE TOTAL VALUE TOTAL --------- ----- --------- ----- (IN MILLIONS) VINTAGE YEAR: 2004 & Prior...................................... $ 71 2.1% $ 79 2.7% 2005.............................................. 1,074 32.5 948 32.0 2006.............................................. 796 24.1 619 20.9 2007.............................................. 654 19.8 543 18.4 2008.............................................. 7 0.2 -- -- 2009 (1).......................................... 671 20.3 768 26.0 2010 (1).......................................... 32 1.0 -- -- ------ ----- ------ ----- Total............................................. $3,305 100.0% $2,957 100.0% ====== ===== ====== =====
-------- (1) All of the Company's Alt-A RMBS holdings in the 2009 and 2010 vintage years are Re-REMIC Alt-A RMBS that were purchased in 2009 and 2010 and are comprised of original issue vintage year 2005 through 2007 Alt-A RMBS. All of the Company's Re-REMIC Alt-A RMBS holdings are NAIC 1 rated.
DECEMBER 31, ------------------------------- 2010 2009 -------------- -------------- % OF % OF AMOUNT TOTAL AMOUNT TOTAL ------ ----- ------ ----- (IN MILLIONS) Net unrealized gain (loss).......................... $(408) $(821) Rated Aa/AA or better............................... 19.7% 35.0% Rated NAIC 1........................................ 47.2% 36.7% Distribution of holdings -- at estimated fair value -- by collateral type: Fixed rate mortgage loans collateral.............. 91.6% 90.4% Hybrid adjustable rate mortgage loans collateral.. 8.4 9.6 ----- ----- Total Alt-A RMBS............................... 100.0% 100.0% ===== =====
Concentrations of Credit Risk (Fixed Maturity Securities) -- CMBS. The Company's holdings in CMBS were $9.7 billion and $10.8 billion at estimated fair value at December 31, 2010 and 2009, respectively. The Company had no exposure to CMBS index securities at December 31, 2010 or 2009. The Company held commercial real estate collateralized debt obligations securities of $36 million and $39 million at estimated fair value at December 31, 2010 and 2009, respectively. F-45 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables present the Company's holdings of CMBS by rating agency designation and by vintage year at:
DECEMBER 31, 2010 --------------------------------------------------------------------------------------------------------------- BELOW INVESTMENT AAA AA A BAA GRADE -------------------- -------------------- -------------------- -------------------- ----------------------- ESTIMATED ESTIMATED ESTIMATED ESTIMATED ESTIMATED AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR COST VALUE COST VALUE COST VALUE COST VALUE COST VALUE --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- (IN MILLIONS) 2003 & Prior..... $3,585 $3,736 $183 $185 $122 $119 $ 29 $ 27 $ 7 $ 6 2004............. 1,345 1,451 68 67 34 30 8 8 70 49 2005............. 1,867 2,003 38 32 48 41 36 25 -- -- 2006............. 968 1,031 75 74 19 19 36 35 71 61 2007............. 479 448 224 176 16 15 63 53 10 10 2008 to 2010..... -- -- -- -- -- -- -- -- -- -- ------ ------ ---- ---- ---- ---- ---- ---- ---- ---- Total.......... $8,244 $8,669 $588 $534 $239 $224 $172 $148 $158 $126 ====== ====== ==== ==== ==== ==== ==== ==== ==== ==== Ratings Distribution... 89.4% 5.5% 2.3% 1.5% 1.3% ====== ==== ==== ==== ==== DECEMBER 31, 2010 -------------------- TOTAL -------------------- ESTIMATED AMORTIZED FAIR COST VALUE --------- --------- 2003 & Prior..... $3,926 $4,073 2004............. 1,525 1,605 2005............. 1,989 2,101 2006............. 1,169 1,220 2007............. 792 702 2008 to 2010..... -- -- ------ ------ Total.......... $9,401 $9,701 ====== ====== Ratings Distribution... 100.0% ======
The December 31, 2010 table reflects rating agency designations assigned by nationally recognized rating agencies including Moody's, S&P, Fitch and Realpoint, LLC.
DECEMBER 31, 2009 --------------------------------------------------------------------------------------------------------------- BELOW INVESTMENT AAA AA A BAA GRADE -------------------- -------------------- -------------------- -------------------- ----------------------- ESTIMATED ESTIMATED ESTIMATED ESTIMATED ESTIMATED AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR COST VALUE COST VALUE COST VALUE COST VALUE COST VALUE --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- (IN MILLIONS) 2003 & Prior..... $4,421 $4,480 $331 $308 $132 $113 $ 22 $ 18 $ -- $ -- 2004............. 1,633 1,645 108 91 70 43 20 15 58 45 2005............. 2,138 2,064 125 94 33 28 35 21 21 19 2006............. 705 656 97 84 332 284 149 106 96 37 2007............. 410 294 7 6 247 189 193 124 10 7 2008 to 2009..... -- -- -- -- -- -- -- -- -- -- ------ ------ ---- ---- ---- ---- ---- ---- ---- ---- Total.......... $9,307 $9,139 $668 $583 $814 $657 $419 $284 $185 $108 ====== ====== ==== ==== ==== ==== ==== ==== ==== ==== Ratings Distribution... 84.9% 5.4% 6.1% 2.6% 1.0% ====== ==== ==== ==== ==== DECEMBER 31, 2009 -------------------- TOTAL -------------------- ESTIMATED AMORTIZED FAIR COST VALUE --------- --------- 2003 & Prior..... $ 4,906 $ 4,919 2004............. 1,889 1,839 2005............. 2,352 2,226 2006............. 1,379 1,167 2007............. 867 620 2008 to 2009..... -- -- ------- ------- Total.......... $11,393 $10,771 ======= ======= Ratings Distribution... 100.0% =======
The December 31, 2009 table reflects rating agency designations assigned by nationally recognized rating agencies including Moody's, S&P and Fitch. The NAIC rating distribution of the Company's holdings of CMBS was as follows at:
DECEMBER 31, ----------- 2010 2009 ---- ---- NAIC 1............................................................. 96.8% 96.3% NAIC 2............................................................. 2.8% 0.1% NAIC 3............................................................. 0.3% 2.7% NAIC 4............................................................. 0.1% 0.9%
Concentrations of Credit Risk (Fixed Maturity Securities) -- ABS. The Company's holdings in ABS were $7.2 billion at estimated fair value at both December 31, 2010 and 2009. The Company's ABS are diversified both by collateral type and by issuer. F-46 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the collateral type and certain other information about ABS held by the Company at:
DECEMBER 31, ------------------------------------- 2010 2009 ----------------- ----------------- ESTIMATED ESTIMATED FAIR % OF FAIR % OF VALUE TOTAL VALUE TOTAL --------- ----- --------- ----- (IN MILLIONS) By collateral type: Credit card loans............................... $3,259 45.2% $3,706 51.7% Student loans................................... 1,028 14.2 882 12.3 RMBS backed by sub-prime mortgage loans......... 775 10.7 710 9.9 Automobile loans................................ 353 4.9 619 8.6 Other loans..................................... 1,803 25.0 1,254 17.5 ------ ----- ------ ----- Total...................................... $7,218 100.0% $7,171 100.0% ====== ===== ====== ===== Portion rated Aaa/AAA............................. $5,000 69.3% $4,947 69.0% ====== ===== ====== ===== Portion rated NAIC 1.............................. $6,436 89.2% $6,155 85.8% ====== ===== ====== =====
The Company had ABS supported by sub-prime mortgage loans with estimated fair values of $775 million and $710 million and unrealized losses of $217 million and $381 million at December 31, 2010 and 2009, respectively. Approximately 49% of this portfolio was rated Aa or better, of which 82% was in vintage year 2005 and prior at December 31, 2010. Approximately 59% of this portfolio was rated Aa or better, of which 88% was in vintage year 2005 and prior at December 31, 2009. These older vintages from 2005 and prior benefit from better underwriting, improved enhancement levels and higher residential property price appreciation. Approximately 62% and 67% of this portfolio was rated NAIC 2 or better at December 31, 2010 and 2009, respectively. Concentrations of Credit Risk (Equity Securities). The Company was not exposed to any concentrations of credit risk in its equity securities holdings of any single issuer greater than 10% of the Company's equity or 1% of total investments at December 31, 2010 and 2009. Maturities of Fixed Maturity Securities. The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), were as follows at:
DECEMBER 31, --------------------------------------------- 2010 2009 --------------------- --------------------- ESTIMATED ESTIMATED AMORTIZED FAIR AMORTIZED FAIR COST VALUE COST VALUE --------- --------- --------- --------- (IN MILLIONS) Due in one year or less...................... $ 3,974 $ 4,052 $ 3,927 $ 3,987 Due after one year through five years........ 25,910 27,017 22,001 22,733 Due after five years through ten years....... 31,060 33,543 25,114 25,974 Due after ten years.......................... 46,301 48,100 43,302 43,028 -------- -------- -------- -------- Subtotal................................... 107,245 112,712 94,344 95,722 RMBS, CMBS and ABS........................... 46,463 46,823 51,095 48,927 -------- -------- -------- -------- Total fixed maturity securities......... $153,708 $159,535 $145,439 $144,649 ======== ======== ======== ========
F-47 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. RMBS, CMBS and ABS are shown separately in the table, as they are not due at a single maturity. EVALUATING AVAILABLE-FOR-SALE SECURITIES FOR OTHER-THAN-TEMPORARY IMPAIRMENT As described more fully in Note 1, the Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired. As described more fully in Note 1, effective April 1, 2009, the Company adopted OTTI guidance that amends the methodology for determining for fixed maturity securities whether an OTTI exists, and for certain fixed maturity securities, changes how the amount of the OTTI loss that is charged to earnings is determined. There was no change in the OTTI methodology for equity securities. NET UNREALIZED INVESTMENT GAINS (LOSSES) The components of net unrealized investment gains (losses), included in accumulated other comprehensive income (loss), were as follows:
YEARS ENDED DECEMBER 31, -------------------------- 2010 2009 2008 ------- ----- -------- (IN MILLIONS) Fixed maturity securities.................................. $ 6,189 $(216) $(13,199) Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss)............ (419) (574) -- ------- ----- -------- Total fixed maturity securities.......................... 5,770 (790) (13,199) Equity securities.......................................... (66) (75) (633) Derivatives................................................ 90 (156) 14 Short-term investments..................................... (13) (23) -- Other...................................................... 48 52 56 ------- ----- -------- Subtotal.............................................. 5,829 (992) (13,762) ------- ----- -------- Amounts allocated from: Insurance liability loss recognition..................... (426) -- (1) DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)...... 27 49 -- DAC and VOBA............................................. (999) 6 2,000 Policyholder dividend obligation......................... (876) -- -- ------- ----- -------- Subtotal.............................................. (2,274) 55 1,999 Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss)............................................ 138 184 -- Deferred income tax benefit (expense)...................... (1,382) 142 4,062 ------- ----- -------- Net unrealized investment gains (losses)................... 2,311 (611) (7,701) Net unrealized investment gains (losses) attributable to noncontrolling interests................................. (1) 5 -- ------- ----- -------- Net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company...................... $ 2,310 $(606) $ (7,701) ======= ===== ========
Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss), as presented above of ($419) million at December 31, 2010, includes ($574) million recognized prior to January 1, F-48 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 2010, ($150) million (($148) million, net of DAC) of noncredit OTTI losses recognized in the year ended December 31, 2010, $87 million related to securities sold during the year ended December 31, 2010 for which a noncredit OTTI loss was previously recognized in accumulated other comprehensive income (loss) and $218 million of subsequent increases in estimated fair value during the year ended December 31, 2010 on such securities for which a noncredit OTTI loss was previously recognized in accumulated other comprehensive income (loss). Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss), as presented above of ($574) million at December 31, 2009, includes ($59) million related to the transition adjustment recorded in 2009 upon the adoption of guidance on the recognition and presentation of OTTI, ($623) million (($566) million, net of DAC) of noncredit OTTI losses recognized in the year ended December 31, 2009 (as more fully described in Note 1), $8 million related to securities sold during the year ended December 31, 2009 for which a noncredit OTTI loss was previously recognized in accumulated comprehensive income (loss) and $100 million of subsequent increases in estimated fair value during the year ended December 31, 2009 on such securities for which a noncredit OTTI loss was previously recognized in accumulated other comprehensive income (loss). F-49 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The changes in net unrealized investment gains (losses) were as follows:
YEARS ENDED DECEMBER 31, -------------------------- 2010 2009 2008 ------- ------- -------- (IN MILLIONS) Balance, beginning of period............................... $ (606) $(7,701) $ 1,342 Cumulative effect of change in accounting principles, net of income tax............................................ 10 (36) -- Fixed maturity securities on which noncredit OTTI losses have been recognized..................................... 155 (515) -- Unrealized investment gains (losses) during the year....... 6,650 13,344 (17,624) Unrealized investment losses of subsidiary at the date of dividend of interests.................................... -- -- 106 Unrealized investment gains (losses) relating to: Insurance liability gain (loss) recognition.............. (426) 1 365 DAC and VOBA on which noncredit OTTI losses recognized in other comprehensive income (loss)..................... (22) 45 -- DAC and VOBA............................................. (1,005) (1,994) 2,438 DAC and VOBA of subsidiary at date of dividend of interests............................................. -- -- (18) Policyholder dividend obligation......................... (876) -- 789 Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in other accumulated comprehensive income (loss)........................... (46) 165 -- Deferred income tax benefit (expense).................... (1,518) (3,920) 4,797 Deferred income tax benefit (expense) of subsidiary at the date of dividend of interests..................... -- -- (46) ------- ------- -------- Net unrealized investment gains (losses)................... 2,316 (611) (7,851) Net unrealized investment gains (losses) attributable to noncontrolling interests................................. (6) 5 -- Net unrealized investment gains (losses) attributable to noncontrolling interests of subsidiary at date of dividend of interests.................................... -- -- 150 ------- ------- -------- Balance, end of period..................................... $ 2,310 $ (606) $ (7,701) ======= ======= ======== Change in net unrealized investment gains (losses)......... $ 2,922 $ 7,090 $ (9,193) Change in net unrealized investment gains (losses) attributable to noncontrolling interests................. (6) 5 -- Change in net unrealized investment gains (losses) attributable to noncontrolling interests of subsidiary at date of dividend of interests........... -- -- 150 ------- ------- -------- Change in net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company...... $ 2,916 $ 7,095 $ (9,043) ======= ======= ========
CONTINUOUS GROSS UNREALIZED LOSS AND OTTI LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE BY SECTOR The following tables present the estimated fair value and gross unrealized loss of the Company's fixed maturity and equity securities in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position. The unrealized loss amounts presented below include the noncredit component of OTTI loss. Fixed maturity securities on which a noncredit OTTI loss has been recognized in accumulated other comprehensive income (loss) are categorized by length of time as being "less than 12 months" or "equal to or greater than 12 months" in a continuous unrealized loss position based on the point in F-50 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) time that the estimated fair value initially declined to below the amortized cost basis and not the period of time since the unrealized loss was deemed a noncredit OTTI loss.
DECEMBER 31, 2010 ------------------------------------------------------------------- EQUAL TO OR GREATER LESS THAN 12 MONTHS THAN 12 MONTHS TOTAL --------------------- --------------------- --------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSS VALUE LOSS VALUE LOSS --------- ---------- --------- ---------- --------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) FIXED MATURITY SECURITIES: U.S. corporate securities............... $ 5,997 $197 $ 5,234 $ 762 $11,231 $ 959 Foreign corporate securities............ 3,692 125 2,662 367 6,354 492 RMBS.................................... 3,949 120 4,537 768 8,486 888 U.S. Treasury, agency and government guaranteed securities................. 8,553 367 -- -- 8,553 367 CMBS.................................... 236 2 965 182 1,201 184 ABS..................................... 1,015 18 1,810 437 2,825 455 State and political subdivision securities............................ 2,412 117 234 78 2,646 195 Foreign government securities........... 231 7 94 11 325 18 ------- ---- ------- ------ ------- ------ Total fixed maturity securities....... $26,085 $953 $15,536 $2,605 $41,621 $3,558 ======= ==== ======= ====== ======= ====== EQUITY SECURITIES: Common stock............................ $ 29 $ 7 $ -- $ -- $ 29 $ 7 Non-redeemable preferred stock.......... 52 3 558 161 610 164 ------- ---- ------- ------ ------- ------ Total equity securities............... $ 81 $ 10 $ 558 $ 161 $ 639 $ 171 ======= ==== ======= ====== ======= ====== Total number of securities in an unrealized loss position.............. 1,405 1,151 ======= =======
F-51 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2009 ------------------------------------------------------------------- EQUAL TO OR GREATER LESS THAN 12 MONTHS THAN 12 MONTHS TOTAL --------------------- --------------------- --------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSS VALUE LOSS VALUE LOSS --------- ---------- --------- ---------- --------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) FIXED MATURITY SECURITIES: U.S. corporate securities............... $ 5,592 $ 270 $11,119 $1,491 $16,711 $1,761 Foreign corporate securities............ 2,442 77 5,047 762 7,489 839 RMBS.................................... 4,703 80 6,534 1,644 11,237 1,724 U.S. Treasury, agency and government guaranteed securities................. 9,089 678 -- -- 9,089 678 CMBS.................................... 1,291 15 3,865 731 5,156 746 ABS..................................... 826 73 3,454 750 4,280 823 State and political subdivision securities............................ 1,236 64 272 82 1,508 146 Foreign government securities........... 171 9 171 38 342 47 ------- ------ ------- ------ ------- ------ Total fixed maturity securities....... $25,350 $1,266 $30,462 $5,498 $55,812 $6,764 ======= ====== ======= ====== ======= ====== EQUITY SECURITIES: Common stock............................ $ 49 $ 4 $ 2 $ -- $ 51 $ 4 Non-redeemable preferred stock.......... 46 29 628 154 674 183 ------- ------ ------- ------ ------- ------ Total equity securities............... $ 95 $ 33 $ 630 $ 154 $ 725 $ 187 ======= ====== ======= ====== ======= ====== Total number of securities in an unrealized loss position.............. 1,365 2,073 ======= =======
F-52 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AGING OF GROSS UNREALIZED LOSS AND OTTI LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized loss, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss), gross unrealized loss as a percentage of cost or amortized cost 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, 2010 -------------------------------------------------------------- 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) FIXED MATURITY SECURITIES: Less than six months.................... $25,867 $ 811 $ 843 $ 216 1,287 65 Six months or greater but less than nine months................................ 696 275 19 75 51 24 Nine months or greater but less than twelve months......................... 271 35 22 8 29 6 Twelve months or greater................ 13,525 3,699 1,158 1,217 823 226 ------- ------ ------ ------ Total................................. $40,359 $4,820 $2,042 $1,516 ======= ====== ====== ====== Percentage of amortized cost............ 5% 31% ====== ====== EQUITY SECURITIES: Less than six months.................... $ 52 $ 59 $ 2 $ 13 23 11 Six months or greater but less than nine months................................ 29 28 5 6 3 2 Nine months or greater but less than twelve months......................... -- 40 -- 14 2 2 Twelve months or greater................ 309 293 32 99 22 13 ------- ------ ------ ------ Total................................. $ 390 $ 420 $ 39 $ 132 ======= ====== ====== ====== Percentage of cost...................... 10% 31% ====== ======
F-53 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2009 --------------------------------------------------------------- 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) FIXED MATURITY SECURITIES: Less than six months................... $22,545 $ 1,574 $ 657 $ 414 1,057 115 Six months or greater but less than nine months.......................... 2,813 317 352 85 75 30 Nine months or greater but less than twelve months........................ 713 1,161 67 356 37 55 Twelve months or greater............... 25,337 8,116 1,972 2,861 1,417 486 ------- ------- ------ ------ Total................................ $51,408 $11,168 $3,048 $3,716 ======= ======= ====== ====== Percentage of amortized cost........... 6% 33% ====== ====== EQUITY SECURITIES: Less than six months................... $ 60 $ 54 $ 4 $ 12 166 7 Six months or greater but less than nine months.......................... -- -- -- -- 3 -- Nine months or greater but less than twelve months........................ 3 69 -- 29 4 5 Twelve months or greater............... 389 337 47 95 30 20 ------- ------- ------ ------ Total................................ $ 452 $ 460 $ 51 $ 136 ======= ======= ====== ====== Percentage of cost..................... 11% 30% ====== ======
Equity securities with a gross unrealized loss of 20% or more for twelve months or greater increased from $95 million at December 31, 2009 to $99 million at December 31, 2010. As shown in the section "-- Evaluating Temporarily Impaired Available-for-Sale Securities" below, all of the $99 million of equity securities with a gross unrealized loss of 20% or more for twelve months or greater at December 31, 2010 were financial services industry investment grade non-redeemable preferred stock, of which 82% were rated A or better. F-54 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONCENTRATION OF GROSS UNREALIZED LOSS AND OTTI LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The Company's gross unrealized losses related to its fixed maturity and equity securities, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss) of $3.7 billion and $7.0 billion at December 31, 2010 and 2009, respectively, were concentrated, calculated as a percentage of gross unrealized loss and OTTI loss, by sector and industry as follows:
DECEMBER 31, ----------- 2010 2009 ---- ---- SECTOR: U.S. corporate securities........................................ 26% 25% RMBS............................................................. 24 25 Foreign corporate securities..................................... 13 12 ABS.............................................................. 12 12 U.S. Treasury, agency and government guaranteed securities....... 10 10 CMBS............................................................. 5 11 State and political subdivision securities....................... 5 2 Other............................................................ 5 3 --- --- Total......................................................... 100% 100% === === INDUSTRY: Mortgage-backed.................................................. 29% 36% Finance.......................................................... 21 23 Asset-backed..................................................... 12 12 U.S. Treasury, agency and government guaranteed securities....... 10 10 Utility.......................................................... 6 4 State and political subdivision securities....................... 5 2 Consumer......................................................... 4 4 Communications................................................... 2 2 Industrial....................................................... 2 1 Other............................................................ 9 6 --- --- Total......................................................... 100% 100% === ===
F-55 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) EVALUATING TEMPORARILY IMPAIRED AVAILABLE-FOR-SALE SECURITIES The following table presents the Company's fixed maturity and equity securities, each with a gross unrealized loss of greater than $10 million, the number of securities, total gross unrealized loss and percentage of total gross unrealized loss at:
DECEMBER 31, --------------------------------------------------------- 2010 2009 --------------------------- --------------------------- FIXED MATURITY EQUITY FIXED MATURITY EQUITY SECURITIES SECURITIES SECURITIES SECURITIES -------------- ---------- -------------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Number of securities...................... 67 5 145 5 Total gross unrealized loss............... $1,179 $75 $2,796 $70 Percentage of total gross unrealized loss.................................... 33% 44% 41% 37%
Fixed maturity and equity securities, each with a gross unrealized loss greater than $10 million, decreased $1.6 billion during the year ended December 31, 2010. The cause of the decline in, or improvement in, gross unrealized losses for the year ended December 31, 2010, was primarily attributable to a decrease in interest rates and narrowing of credit spreads. These securities were included in the Company's OTTI review process. Based upon the Company's current evaluation of these securities and other available-for-sale securities in an unrealized loss position in accordance with its impairment policy, and the Company's current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired. In the Company's impairment review process, the duration and severity of an unrealized loss position for equity securities is given greater weight and consideration than for fixed maturity securities. An extended and severe unrealized loss position on a fixed maturity security may not have any impact on the ability of the issuer to service all scheduled interest and principal payments and the Company's evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for an equity security, greater weight and consideration is given by the Company to a decline in market value and the likelihood such market value decline will recover. The following table presents certain information about the Company's equity securities available-for-sale with a gross unrealized loss of 20% or more at December 31, 2010:
NON-REDEEMABLE PREFERRED STOCK ------------------------------------------------------------------------------- ALL TYPES OF NON-REDEEMABLE PREFERRED STOCK INVESTMENT GRADE ALL EQUITY ---------------- ------------------------------------------------------------- SECURITIES % OF ALL INDUSTRIES FINANCIAL SERVICES INDUSTRY ---------- GROSS ALL --------------------------- -------------------------------- GROSS UNREAL- EQUITY GROSS % OF ALL GROSS % A UNREALIZED IZED SECURI- UNREALIZED NON-REDEEMABLE UNREALIZED % OF ALL RATED OR LOSS LOSS TIES LOSS PREFERRED STOCK LOSS INDUSTRIES BETTER ---------- ------- ------- ---------- --------------- ---------- ---------- -------- (IN MILLIONS) Less than six months........ $ 13 $ 11 85% $ 7 64% $ 7 100% 100% Six months or greater but less than twelve months... 20 20 100% 20 100% 20 100% 65% Twelve months or greater.... 99 99 100% 99 100% 99 100% 82% ---- ---- ---- ---- All equity securities with a gross unrealized loss of 20% or more............... $132 $130 98% $126 97% $126 100% 80% ==== ==== ==== ====
In connection with the equity securities impairment review process, the Company evaluated its holdings in non-redeemable preferred stock, particularly those companies in the financial services industry. The Company considered several factors including whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of non-redeemable preferred stock with a severe or an extended unrealized loss. The F-56 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Company also considered whether any issuers of non-redeemable preferred stock with an unrealized loss held by the Company, regardless of credit rating, have deferred any dividend payments. No such dividend payments had been deferred. With respect to common stock holdings, the Company considered the duration and severity of the unrealized losses for securities in an unrealized loss position of 20% or more; and the duration of unrealized losses for securities in an unrealized loss position of less than 20% in an extended unrealized loss position (i.e., 12 months or greater). Future OTTIs will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit rating, changes in collateral valuation, changes in interest rates and changes in credit spreads. If economic fundamentals and any of the above factors deteriorate, additional OTTIs may be incurred in upcoming quarters. NET INVESTMENT GAINS (LOSSES) See "-- Evaluating Available-for-Sale Securities for Other-Than-Temporary Impairment" for a discussion of changes in guidance adopted April 1, 2009 that impacted how fixed maturity security OTTI losses that are charged to earnings are measured. The components of net investment gains (losses) were as follows:
YEARS ENDED DECEMBER 31, ------------------------- 2010 2009 2008 ----- ------- ------- (IN MILLIONS) Total gains (losses) on fixed maturity securities: Total OTTI losses recognized........................... $(510) $(1,521) $ (787) Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss).............................................. 150 623 -- ----- ------- ------- Net OTTI losses on fixed maturity securities recognized in earnings......................................... (360) (898) (787) Fixed maturity securities -- net gains (losses) on sales and disposals................................. 129 (7) (275) ----- ------- ------- Total losses on fixed maturity securities........... (231) (905) (1,062) Other net investment gains (losses): Equity securities...................................... 70 (255) (90) Mortgage loans......................................... 59 (373) (88) Real estate and real estate joint ventures............. (33) (100) (18) Other limited partnership interests.................... (5) (284) (131) Other investment portfolio gains (losses).............. 36 (38) 146 ----- ------- ------- Subtotal -- investment portfolio gains (losses)..... (104) (1,955) (1,243) FVO consolidated securitization entities: Securities............................................. (78) -- -- Long term debt -- related to securities................ 48 -- -- Other gains (losses)................................... (36) 288 (286) ----- ------- ------- Subtotal FVO consolidated securitization entities and other gains (losses).......................... (66) 288 (286) ----- ------- ------- Total net investment gains (losses)............... $(170) $(1,667) $(1,529) ===== ======= =======
See "-- Variable Interest Entities" for discussion of CSEs included in the table above. F-57 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) See "-- Related Party Investment Transactions" for discussion of affiliated net investment gains (losses) related to internal asset transfers included in the table above. Gains (losses) from foreign currency transactions included within net investment gains (losses) were $18 million, $317 million and ($184) million for the years ended December 31, 2010, 2009 and 2008, respectively. Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown below. Investment gains and losses on sales of securities are determined on a specific identification basis.
YEARS ENDED DECEMBER YEARS ENDED DECEMBER 31, 31, YEARS ENDED DECEMBER 31, --------------------------- ----------------------- ----------------------------- 2010 2009 2008 2010 2009 2008 2010 2009 2008 ------- ------- ------- ---- ----- ------ ------- ------- ------- FIXED MATURITY SECURITIES EQUITY SECURITIES TOTAL --------------------------- ----------------------- ----------------------------- (IN MILLIONS) Proceeds..................... $30,817 $24,900 $42,785 $429 $ 658 $1,888 $31,246 $25,558 $44,673 ======= ======= ======= ==== ===== ====== ======= ======= ======= Gross investment gains....... $ 544 $ 685 $ 631 $ 88 $ 118 $ 412 $ 632 $ 803 $ 1,043 ------- ------- ------- ---- ----- ------ ------- ------- ------- Gross investment losses...... (415) (692) (906) (11) (90) (223) (426) (782) (1,129) ------- ------- ------- ---- ----- ------ ------- ------- ------- Total OTTI losses recognized in earnings: Credit- related.................... (334) (632) (668) -- -- -- (334) (632) (668) Other (1).................. (26) (266) (119) (7) (283) (279) (33) (549) (398) ------- ------- ------- ---- ----- ------ ------- ------- ------- Total OTTI losses recognized in earnings.............. (360) (898) (787) (7) (283) (279) (367) (1,181) (1,066) ------- ------- ------- ---- ----- ------ ------- ------- ------- Net investment gains (losses)................... $ (231) $ (905) $(1,062) $ 70 $(255) $ (90) $ (161) $(1,160) $(1,152) ======= ======= ======= ==== ===== ====== ======= ======= =======
-------- (1) Other OTTI losses recognized in earnings include impairments on equity securities, impairments on perpetual hybrid securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in estimated fair value. Fixed maturity security OTTI losses recognized in earnings related to the following sectors and industries within the U.S. and foreign corporate securities sector:
YEARS ENDED DECEMBER 31, ---------------------- 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Sector: U.S. and foreign corporate securities -- by industry: Finance.................................................. $117 $284 $361 Consumer................................................. 20 127 71 Communications........................................... 10 130 109 Utility.................................................. 1 81 5 Industrial............................................... -- 9 26 Other industries......................................... -- 27 144 ---- ---- ---- Total U.S. and foreign corporate securities........... 148 658 716 ABS...................................................... 85 95 61 RMBS..................................................... 68 127 -- CMBS..................................................... 59 18 -- Foreign government securities............................ -- -- 10 ---- ---- ---- Total................................................. $360 $898 $787 ==== ==== ====
F-58 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Equity security OTTI losses recognized in earnings related to the following sectors and industries:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Sector: Common stock............................................ $ 4 $ 55 $ 82 Non-redeemable preferred stock.......................... 3 228 197 --- ---- ---- Total........................................... $ 7 $283 $279 === ==== ==== Industry: Financial services industry: Perpetual hybrid securities.......................... $ 3 $228 $ 38 Common and remaining non-redeemable preferred stock.. -- 25 180 --- ---- ---- Total financial services industry.................. 3 253 218 Other industries........................................ 4 30 61 --- ---- ---- Total........................................... $ 7 $283 $279 === ==== ====
CREDIT LOSS ROLLFORWARD -- ROLLFORWARD OF THE CUMULATIVE CREDIT LOSS COMPONENT OF OTTI LOSS RECOGNIZED IN EARNINGS ON FIXED MATURITY SECURITIES STILL HELD FOR WHICH A PORTION OF THE OTTI LOSS WAS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held by the Company at the respective time period, for which a portion of the OTTI loss was recognized in other comprehensive income (loss):
YEARS ENDED DECEMBER 31, -------------------- 2010 2009 ----- ---- (IN MILLIONS) Balance, at January 1,...................................... $ 303 $ -- Credit loss component of OTTI loss not reclassified to other comprehensive income (loss) in the cumulative effect transition adjustment..................................... -- 110 Additions: Initial impairments -- credit loss OTTI recognized on securities not previously impaired..................... 91 188 Additional impairments -- credit loss OTTI recognized on securities previously impaired......................... 91 36 Reductions: Due to sales (maturities, pay downs or prepayments) during the period of securities previously credit loss OTTI impaired............................................... (149) (30) Due to securities impaired to net present value of expected future cash flows............................. (1) -- Due to increases in cash flows -- accretion of previous credit loss OTTI....................................... (5) (1) ----- ---- Balance, at December 31,.................................... $ 330 $303 ===== ====
F-59 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NET INVESTMENT INCOME The components of net investment income were as follows:
YEARS ENDED DECEMBER 31, --------------------------- 2010 2009 2008 ------- ------- ------- (IN MILLIONS) Investment income: Fixed maturity securities.............................. $ 8,147 $ 7,799 $ 8,830 Equity securities...................................... 89 126 174 Trading and other securities -- Actively Traded Securities and FVO general account securities........ 72 116 (21) Mortgage loans......................................... 2,258 2,236 2,387 Policy loans........................................... 515 504 475 Real estate and real estate joint ventures............. 396 (137) 499 Other limited partnership interests.................... 684 147 (92) Cash, cash equivalents and short-term investments...... 15 27 134 International joint ventures........................... 14 7 (1) Other.................................................. 111 104 202 ------- ------- ------- Subtotal............................................. 12,301 10,929 12,587 Less: Investment expenses.............................. 711 740 1,473 ------- ------- ------- Subtotal, net........................................ 11,590 10,189 11,114 ------- ------- ------- FVO consolidated securitization entities: Securities........................................... 15 -- -- ------- ------- ------- Net investment income............................. $11,605 $10,189 $11,114 ======= ======= =======
Affiliated investment income included in the table above was $78 million, $44 million and $29 million related to fixed maturity securities for the years ended December 31, 2010, 2009 and 2008, respectively. Affiliated investment income related to short-term investments included in the table above was less than $1 million for each of the years ended December 31, 2010 and 2009, and was $2 million for the year ended December 31, 2008. The Company provides investment administrative services to certain affiliates. Investment administrative service costs charged to these affiliates, which reduced investment expenses in the table above, were $107 million, $87 million and $67 million for the years ended December 31, 2010, 2009 and 2008, respectively. See "-- Variable Interest Entities" for discussion of CSEs included in the table above. See "-- Related Party Investment Transactions" for discussion of additional affiliated net investment income related to short-term investments included in the table above. SECURITIES LENDING The Company participates in securities lending programs whereby blocks of securities, which are included in fixed maturity securities and short-term investments, are loaned to third parties, primarily brokerage firms and commercial banks. The Company generally obtains collateral, generally cash, in an amount equal to 102% of the estimated fair value of the securities loaned, which is obtained at the inception of a loan and maintained at a level greater than or equal to 100% for the duration of the loan. Securities loaned under such transactions may be sold or repledged by the transferee. The Company is liable to return to its counterparties the cash collateral under its F-60 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) control. These transactions are treated as financing arrangements and the associated liability is recorded at the amount of the cash received. Elements of the securities lending programs are presented below at:
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS) Securities on loan: Amortized cost.............................................. $15,274 $13,468 Estimated fair value........................................ $15,682 $13,523 Aging of cash collateral liability: Open (1).................................................... $ 1,262 $ 1,611 Less than thirty days....................................... 8,213 9,810 Thirty days or greater but less than sixty days............. 3,005 1,684 Sixty days or greater but less than ninety days............. 1,683 41 Ninety days or greater...................................... 1,818 734 ------- ------- Total cash collateral liability.......................... $15,981 $13,880 ======= ======= Security collateral on deposit from counterparties............ $ -- $ 6 ======= ======= Reinvestment portfolio -- estimated fair value................ $15,789 $13,373 ======= =======
-------- (1) Open -- meaning that the related loaned security could be returned to the Company on the next business day requiring the Company to immediately return the cash collateral. The estimated fair value of the securities on loan related to the cash collateral on open at December 31, 2010 was $1,238 million, of which $985 million were U.S. Treasury, agency and government guaranteed securities which, if put to the Company, can be immediately sold to satisfy the cash requirements. The remainder of the securities on loan were primarily U.S. Treasury, agency and government guaranteed securities, and very liquid RMBS. The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including RMBS, U.S. corporate, U.S. Treasury, agency and government guaranteed, ABS, foreign corporate and CMBS). Security collateral on deposit from counterparties in connection with the securities lending transactions may not be sold or repledged, unless the counterparty is in default, and is not reflected in the consolidated financial statements. Separately, the Company had $49 million and $46 million, at estimated fair value, of cash and security collateral on deposit from a counterparty to secure its interest in a pooled investment that is held by a third-party trustee, as custodian, at December 31, 2010 and 2009, respectively. This pooled investment is included within fixed maturity securities and had an estimated fair value of $49 million and $51 million at December 31, 2010 and 2009, respectively. F-61 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) INVESTED ASSETS ON DEPOSIT AND PLEDGED AS COLLATERAL The invested assets on deposit and invested assets pledged as collateral are presented in the table below. The amounts presented in the table below are at estimated fair value for cash and cash equivalents, short-term investments, fixed maturity, equity, trading and other securities and at carrying value for mortgage loans.
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS) Invested assets on deposit: Regulatory agencies (1)..................................... $ 1,491 $ 1,296 Invested assets pledged as collateral: Funding agreements -- FHLB of NY (2)........................ 14,204 15,084 Funding agreements -- Farmer Mac (3)........................ 2,928 2,871 Derivative transactions (4)................................. 141 290 Short sale agreements (5)................................... 465 496 ------- ------- Total invested assets on deposit and pledged as collateral............................................. $19,229 $20,037 ======= =======
-------- (1) The Company has investment assets on deposit with regulatory agencies consisting primarily of cash and cash equivalents, short-term investments, fixed maturity securities and equity securities. (2) The Company has pledged fixed maturity securities in support of its funding agreements with the Federal Home Loan Bank of New York ("FHLB of NY"). The nature of these FHLB of NY arrangements is described in Note 8. (3) The Company has pledged certain agricultural mortgage loans in connection with funding agreements issued to certain SPEs that have issued securities guaranteed by the Federal Agricultural Mortgage Corporation ("Farmer Mac"). The nature of these Farmer Mac arrangements is described in Note 8. (4) Certain of the Company's invested assets are pledged as collateral for various derivative transactions as described in Note 3. (5) Certain of the Company's Actively Traded Securities and cash and cash equivalents are pledged to secure liabilities associated with short sale agreements in the Actively Traded Securities portfolio. See also "-- Securities Lending" for the amount of the Company's cash received from and due back to counterparties pursuant to the Company's securities lending program. See "-- Variable Interest Entities" for assets of certain CSEs that can only be used to settle liabilities of such entities. F-62 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) TRADING AND OTHER SECURITIES The tables below present certain information about the Company's trading securities and other securities for which the FVO has been elected:
DECEMBER 31, ------------ 2010 2009 ---- ----- (IN MILLIONS) Actively Traded Securities....................................... $463 $ 420 FVO general account securities................................... 71 51 FVO securities held by consolidated securitization entities...... 201 -- ---- ----- Total trading and other securities -- at estimated fair value.. $735 $ 471 ==== ===== Actively Traded Securities -- at estimated fair value............ $463 $ 420 Short sale agreement liabilities -- at estimated fair value...... (46) (106) ---- ----- Net long/short position -- at estimated fair value............... $417 $ 314 ==== ===== Investments pledged to secure short sale agreement liabilities... $465 $ 496 ==== =====
YEARS ENDED DECEMBER 31, ---------------------- 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Actively Traded Securities: Net investment income..................................... $ 54 $98 $(13) Changes in estimated fair value included in net investment income................................................. $ 12 $18 $ (2) FVO general account securities: Net investment income..................................... $ 18 $18 $ (8) Changes in estimated fair value included in net investment income................................................. $ 18 $13 $(15) FVO securities held by consolidated securitization entities: Net investment income..................................... $ 15 $-- $ -- Changes in estimated fair value included in net investment gains (losses)......................................... $(78) $-- $ --
See "-- Variable Interest Entities" for discussion of CSEs included in the tables above. F-63 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) MORTGAGE LOANS Mortgage loans are summarized as follows at:
DECEMBER 31, ----------------------------------- 2010 2009 ---------------- ---------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL -------- ----- -------- ----- (IN MILLIONS) Mortgage loans: Commercial mortgage loans........................ $31,080 74.6% $30,426 74.9% Agricultural mortgage loans...................... 11,108 26.7 10,787 26.6 Residential mortgage loans....................... 1 -- 1 -- ------- ----- ------- ----- Subtotal mortgage loans....................... 42,189 101.3 41,214 101.5 Valuation allowances............................. (522) (1.3) (594) (1.5) ------- ----- ------- ----- Total mortgage loans, net.......................... $41,667 100.0% $40,620 100.0% ======= ===== ======= =====
See "-- Variable Interest Entities" for discussion of CSEs included in the table above. Concentration of Credit Risk -- The Company diversifies its mortgage loan portfolio by both geographic region and property type to reduce the risk of concentration. The Company's commercial and agricultural mortgage loans are collateralized by properties primarily located in the United States, at 91%, with the remaining 9% collateralized by properties located outside the United States. The carrying value of the Company's commercial and agricultural mortgage loans located in California, New York and Texas were 20%, 8% and 7%, respectively, of total mortgage loans at December 31, 2010. Additionally, the Company manages risk when originating commercial and agricultural mortgage loans by generally lending only up to 75% of the estimated fair value 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 mortgage loans were $283 million and $368 million at December 31, 2010 and 2009, respectively. The following tables present the recorded investment in mortgage loans, by portfolio segment, by method of evaluation of credit loss, and the related valuation allowances, by type of credit loss, at:
DECEMBER 31, ----------------------------------------------------------------------- 2010 2009 2010 2009 2010 2009 2010 2009 ------- ------- ------- ------- ---- ---- ------- ------- COMMERCIAL AGRICULTURAL RESIDENTIAL TOTAL ----------------- ----------------- ----------- ----------------- (IN MILLIONS) Mortgage loans: Evaluated individually for credit losses........................ $ 96 $ 58 $ 147 $ 191 $-- $-- $ 243 $ 249 Evaluated collectively for credit losses........................ 30,984 30,368 10,961 10,596 1 1 41,946 40,965 ------- ------- ------- ------- --- --- ------- ------- Total mortgage loans.......... 31,080 30,426 11,108 10,787 1 1 42,189 41,214 ------- ------- ------- ------- --- --- ------- ------- Valuation allowances: Specific credit losses........... 13 12 52 74 -- -- 65 86 Non-specifically identified credit losses................. 428 480 29 28 -- -- 457 508 ------- ------- ------- ------- --- --- ------- ------- Total valuation allowances.... 441 492 81 102 -- -- 522 594 ------- ------- ------- ------- --- --- ------- ------- Mortgage loans, net of valuation allowance........................ $30,639 $29,934 $11,027 $10,685 $ 1 $ 1 $41,667 $40,620 ======= ======= ======= ======= === === ======= =======
F-64 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables present the changes in the valuation allowance, by portfolio segment:
MORTGAGE LOAN VALUATION ALLOWANCES ----------------------------------------------- COMMERCIAL AGRICULTURAL RESIDENTIAL TOTAL ---------- ------------ ----------- ----- (IN MILLIONS) Balance at January 1, 2008.................... $156 $ 23 $ 2 $ 181 Provision (release)......................... 127 47 -- 174 Charge-offs, net of recoveries.............. (99) (12) -- (111) ---- ---- --- ----- Balance at December 31, 2008.................. 184 58 2 244 Provision (release)......................... 325 69 -- 394 Charge-offs, net of recoveries.............. (17) (25) (2) (44) ---- ---- --- ----- Balance at December 31, 2009.................. 492 102 -- 594 Provision (release)......................... (39) 12 -- (27) Charge-offs, net of recoveries.............. (12) (33) -- (45) ---- ---- --- ----- Balance at December 31, 2010.................. $441 $ 81 $-- $ 522 ==== ==== === =====
Commercial Mortgage Loans -- by Credit Quality Indicators with Estimated Fair Value: Presented below for commercial mortgage loans is the recorded investment, prior to valuation allowances, by the indicated loan-to-value ratio categories and debt service coverage ratio categories and estimated fair value of such mortgage loans by the indicated loan-to-value ratio categories at:
DECEMBER 31, 2010 ------------------------------------------------------------------------------------- RECORDED INVESTMENT -------------------------------------------------------- DEBT SERVICE COVERAGE RATIOS --------------------------------- ESTIMATED > 1.20X 1.00X - 1.20X < 1.00X TOTAL % OF TOTAL FAIR VALUE % OF TOTAL ------- ------------- ------- ------- ---------- ------------- ---------- (IN MILLIONS) (IN MILLIONS) Loan-to-value ratios: Less than 65%............. $13,864 $ 100 $ 425 $14,389 46.3% $15,203 47.5% 65% to 75%................ 7,658 611 343 8,612 27.7 8,955 28.0 76% to 80%................ 2,534 166 128 2,828 9.1 2,883 9.0 Greater than 80%.......... 3,002 1,625 624 5,251 16.9 4,978 15.5 ------- ------ ------ ------- ----- ------- ----- Total................... $27,058 $2,502 $1,520 $31,080 100.0% $32,019 100.0% ======= ====== ====== ======= ===== ======= =====
Agricultural and Residential Mortgage Loans -- by Credit Quality Indicator: The recorded investment in agricultural and residential mortgage loans, prior to valuation allowances, by credit quality indicator, was at:
DECEMBER 31, 2010 ---------------------------------------------------------------------------------------------- AGRICULTURAL MORTGAGE LOANS RESIDENTIAL MORTGAGE LOANS -------------------------------- -------------------------------- RECORDED INVESTMENT % OF TOTAL RECORDED INVESTMENT % OF TOTAL ------------------- ---------- ------------------- ---------- (IN MILLIONS) (IN MILLIONS) Loan-to-value ratios: Performance indicators: Less than 65%........... $ 9,896 89.1% Performing.............. $ 1 100.0% 65% to 75%.............. 829 7.5 Nonperforming........... -- -- --- ----- 76% to 80%.............. 48 0.4 Total................. $ 1 100.0% === ===== Greater than 80%........ 335 3.0 ------- ----- Total................. $11,108 100.0% ======= =====
F-65 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Past Due and Interest Accrual Status of Mortgage Loans. The Company has a high quality, well performing, mortgage loan portfolio with approximately 99% of all mortgage loans classified as performing. Past Due. The Company defines delinquent mortgage loans consistent with industry practice, when interest and principal payments are past due as follows: commercial mortgage loans -- 60 days past due; agricultural mortgage loans -- 90 days past due; and residential mortgage loans -- 60 days past due. The recorded investment in mortgage loans, prior to valuation allowances, past due according to these aging categories, was $51 million, $145 million and $0 for commercial, agricultural and residential mortgage loans, respectively, at December 31, 2010; and for all mortgage loans was $196 million and $120 million at December 31, 2010 and 2009, respectively. Accrual Status. Past Due 90 Days or More and Still Accruing Interest. The recorded investment in mortgage loans, prior to valuation allowances, that were past due 90 days or more and still accruing interest was $0, $9 million and $0 for commercial, agricultural and residential mortgage loans, respectively, at December 31, 2010; and for all mortgage loans, was $9 million and $1 million at December 31, 2010 and 2009, respectively. Accrual Status. Mortgage Loans in Nonaccrual Status. The recorded investment in mortgage loans, prior to valuation allowances, that were in nonaccrual status was $6 million, $166 million and $0 for commercial, agricultural and residential mortgage loans, respectively, at December 31, 2010; and for all mortgage loans, was $172 million and $119 million at December 31, 2010 and 2009, respectively. Impaired Mortgage Loans. The unpaid principal balance, recorded investment, valuation allowances and carrying value, net of valuation allowances, for impaired mortgage loans, by portfolio segment, at December 31, 2010, and for all impaired mortgage loans at December 31, 2009, were as follows at:
IMPAIRED MORTGAGE LOANS ---------------------------------------------------------------------------------------------- LOANS WITHOUT LOANS WITH A VALUATION ALLOWANCE A VALUATION ALLOWANCE ALL IMPAIRED LOANS ---------------------------------------------- ---------------------- -------------------- UNPAID UNPAID UNPAID PRINCIPAL RECORDED VALUATION CARRYING PRINCIPAL RECORDED PRINCIPAL CARRYING BALANCE INVESTMENT ALLOWANCES VALUE BALANCE INVESTMENT BALANCE VALUE --------- ---------- ---------- -------- --------- ---------- --------- -------- (IN MILLIONS) AT DECEMBER 31, 2010: Commercial mortgage loans................. $ 96 $ 96 $13 $ 83 $ 94 $ 82 $190 $165 Agricultural mortgage loans................. 146 146 52 94 107 104 253 198 ---- ---- --- ---- ---- ---- ---- ---- Total................. $242 $242 $65 $177 $201 $186 $443 $363 ==== ==== === ==== ==== ==== ==== ==== TOTAL MORTGAGE LOANS AT DECEMBER 31, 2009........ $249 $249 $86 $163 $ 89 $ 89 $338 $252 ==== ==== === ==== ==== ==== ==== ====
Unpaid principal balance is generally prior to any charge-off. F-66 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The average investment in impaired mortgage loans, and the related interest income, by portfolio segment, for the year ended December 31, 2010 and for all mortgage loans for the years ended December 31, 2009 and 2008, respectively, was:
IMPAIRED MORTGAGE LOANS ----------------------------------------------- AVERAGE INVESTMENT INTEREST INCOME RECOGNIZED ------------------ -------------------------- CASH BASIS ACCRUAL BASIS ---------- ------------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2010: Commercial mortgage loans.................... $126 $ 3 $ 1 Agricultural mortgage loans.................. 259 6 2 Residential mortgage loans................... -- -- -- ---- --- --- Total..................................... $385 $ 9 $ 3 ==== === === FOR THE YEAR ENDED DECEMBER 31, 2009........... $288 $ 5 $ 1 ==== === === FOR THE YEAR ENDED DECEMBER 31, 2008........... $315 $11 $10 ==== === ===
REAL ESTATE AND REAL ESTATE JOINT VENTURES Real estate investments by type consisted of the following:
DECEMBER 31, ----------------------------------- 2010 2009 ---------------- ---------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL -------- ----- -------- ----- (IN MILLIONS) Traditional........................................ $3,387 58.9% $3,345 58.6% Real estate joint ventures and funds............... 2,279 39.6 2,190 38.3 ------ ----- ------ ----- Real estate and real estate joint ventures....... 5,666 98.5 5,535 96.9 Foreclosed......................................... 85 1.4 121 2.1 ------ ----- ------ ----- Real estate held-for-investment.................. 5,751 99.9 5,656 99.0 Real estate held-for-sale.......................... 4 0.1 55 1.0 ------ ----- ------ ----- Total real estate and real estate joint ventures...................................... $5,755 100.0% $5,711 100.0% ====== ===== ====== =====
The Company classifies within traditional real estate its investment in income-producing real estate, which is comprised primarily of wholly-owned real estate and to a much lesser extent joint ventures with interests in single property income-producing real estate. The Company classifies within real estate joint ventures and funds, its investments in joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the operation of income-producing properties; as well as its investments in real estate private equity funds. From time to time, the Company transfers investments from these joint ventures to traditional real estate, if the Company retains an interest in the joint venture after a completed property commences operations and the Company intends to retain an interest in the property. Properties acquired through foreclosure were $48 million and $121 million for the years ended December 31, 2010 and 2009, respectively, and includes commercial and agricultural properties. There were no properties acquired through foreclosure for the year ended December 31, 2008. After the Company acquires properties through foreclosure, it evaluates whether the property is appropriate for retention in its traditional real estate portfolio. Foreclosed real estate held at December 31, 2010 and 2009 includes those properties the Company has not F-67 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) selected for retention in its traditional real estate portfolio and which do not meet the criteria to be classified as held-for-sale. The wholly-owned real estate within traditional real estate is net of accumulated depreciation of $1.5 billion and $1.4 billion at December 31, 2010 and 2009, respectively. Related depreciation expense on traditional wholly-owned real estate was $134 million, $120 million and $120 million for the years ended December 31, 2010, 2009 and 2008, respectively. These amounts include depreciation expense related to discontinued operations of less than $1 million for the year ended December 31, 2010, and $1 million for both the years ended December 31, 2009 and 2008. Impairments recognized on real estate held-for-investment were $27 million, $96 million and $20 million for the years ended December 31, 2010, 2009 and 2008, respectively. Impairments recognized on real estate held-for-sale were $1 million for the year ended December 31, 2010. There were no impairments recognized on real estate held-for-sale for each of the years ended December 31, 2009 and 2008. The Company's carrying value of real estate held-for-sale has been reduced by impairments recorded prior to 2009 of $1 million at both December 31, 2010 and 2009. The carrying value of non-income producing real estate was $94 million, $72 million and $27 million at December 31, 2010, 2009 and 2008, respectively. The Company diversifies its real estate investments by both geographic region and property type to reduce risk of concentration. The Company's real estate investments are primarily located in the United States, and at December 31, 2010, 22%, 15%, 11% and 11% were located in California, Florida, New York and Texas, respectively. The Company's real estate investments by property type are categorized as follows:
DECEMBER 31, ----------------------------------- 2010 2009 ---------------- ---------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL -------- ----- -------- ----- (IN MILLIONS) Office............................................. $2,772 48.2% $2,770 48.5% Apartments......................................... 1,439 25.0 1,366 23.9 Industrial......................................... 418 7.3 411 7.2 Real estate investment funds....................... 404 7.0 405 7.1 Retail............................................. 380 6.6 443 7.8 Hotel.............................................. 216 3.7 190 3.3 Land............................................... 74 1.3 22 0.4 Agriculture........................................ 17 0.3 46 0.8 Other.............................................. 35 0.6 58 1.0 ------ ----- ------ ----- Total real estate and real estate joint ventures...................................... $5,755 100.0% $5,711 100.0% ====== ===== ====== =====
OTHER LIMITED PARTNERSHIP INTERESTS The carrying value of other limited partnership interests (which primarily represent ownership interests in pooled investment funds that principally make private equity investments in companies in the United States and overseas) was $4.5 billion and $4.2 billion at December 31, 2010 and 2009, respectively. Included within other limited partnership interests were $604 million and $617 million at December 31, 2010 and 2009, respectively, of investments in hedge funds. Impairments of other limited partnership interests, principally cost method other limited partnership interests, were $2 million, $288 million and $99 million for the years ended December 31, 2010, 2009 and 2008, respectively. F-68 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) COLLECTIVELY SIGNIFICANT EQUITY METHOD INVESTMENTS The Company holds investments in real estate joint ventures, real estate funds and other limited partnership interests consisting of leveraged buy-out funds, hedge funds, private equity funds, joint ventures and other funds. The portion of these investments accounted for under the equity method had a carrying value of $5.8 billion as of December 31, 2010. The Company's maximum exposure to loss related to these equity method investments is limited to the carrying value of these investments plus unfunded commitments of $1.7 billion as of December 31, 2010. Except for certain real estate joint ventures, the Company's investments in real estate funds and other limited partnership interests are generally of a passive nature in that the Company does not participate in the management of the entities. As further described in Note 1, the Company generally records its share of earnings in its equity method investments using a three-month lag methodology and within net investment income. As of December 31, 2010, aggregate net investment income from these equity method real estate joint ventures, real estate funds and other limited partnership interests exceeded 10% of the Company's consolidated pre-tax income (loss) from continuing operations. Accordingly, the Company is providing the following aggregated summarized financial data for such equity method investments. This aggregated summarized financial data does not represent the Company's proportionate share of the assets, liabilities, or earnings of such entities. As of, and for the year ended December 31, 2010, the aggregated summarized financial data presented below reflects the latest available financial information. Aggregate total assets of these entities totaled $185.6 billion and $154.1 billion as of December 31, 2010 and 2009, respectively. Aggregate total liabilities of these entities totaled $30.6 billion and $28.7 billion as of December 31, 2010 and 2009, respectively. Aggregate net income (loss) of these entities totaled $16.5 billion, $22 billion and ($21.2) billion for the years ended December 31, 2010, 2009 and 2008, respectively. Aggregate net income (loss) from real estate joint ventures, real estate funds and other limited partnership interests is primarily comprised of investment income, including recurring investment income and realized and unrealized investment gains (losses). OTHER INVESTED ASSETS The following table presents the carrying value of the Company's other invested assets by type at:
DECEMBER 31, ----------------------------------- 2010 2009 ---------------- ---------------- CARRYING % OF CARRYING % OF VALUE TOTAL VALUE TOTAL -------- ----- -------- ----- (IN MILLIONS) Freestanding derivatives with positive fair values........................................... $3,311 42.3% $2,415 35.5% Leveraged leases, net of non-recourse debt......... 1,799 23.0 1,763 25.9 Loans to affiliates................................ 1,415 18.1 1,628 23.9 Tax credit partnerships............................ 835 10.7 683 10.0 Joint venture investments.......................... 51 0.7 36 0.5 Funds withheld..................................... 31 0.4 38 0.6 Other.............................................. 380 4.8 248 3.6 ------ ----- ------ ----- Total............................................ $7,822 100.0% $6,811 100.0% ====== ===== ====== =====
See Note 4 for information regarding the freestanding derivatives with positive estimated fair values. See the following section "Leveraged Leases" for the composition of leveraged leases. Loans to affiliates, some of which are regulated, are used by the affiliates to assist in meeting their capital requirements. Tax credit partnerships are established for the purpose of investing in low-income housing and other social causes, where the primary return on F-69 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) investment is in the form of income tax credits, and are accounted for under the equity method or under the effective yield method. Joint venture investments are accounted for under the equity method and represent the Company's investment in insurance underwriting joint ventures in China. Funds withheld represent amounts contractually withheld by ceding companies in accordance with reinsurance agreements. Leveraged Leases Investment in leveraged leases, included in other invested assets, consisted of the following:
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS) Rental receivables, net........................................ $ 1,783 $ 1,690 Estimated residual values...................................... 1,136 1,225 ------- ------- Subtotal..................................................... 2,919 2,915 Unearned income................................................ (1,120) (1,152) ------- ------- Investment in leveraged leases............................... $ 1,799 $ 1,763 ======= =======
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. For rental receivables, the Company's primary credit quality indicator is whether the rental receivable is performing or non-performing. The Company generally defines non-performing rental receivables as those that are 90 days or more past due. The determination of performing or non-performing status is assessed monthly. As of December 31, 2010, all of the rental receivables were performing. The Company's deferred income tax liability related to leveraged leases was $1.2 billion and $1.1 billion at December 31, 2010 and 2009, respectively. The components of income from investment in leveraged leases, excluding realized gains (losses), were as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Income from investment in leveraged leases (included in net investment income).................................. $102 $ 92 $ 95 Less: Income tax expense on leveraged leases.............. (36) (32) (33) ---- ---- ---- Net income from investment in leveraged leases............ $ 66 $ 60 $ 62 ==== ==== ====
SHORT-TERM INVESTMENTS The carrying value of short-term investments, which includes investments with remaining maturities of one year or less, but greater than three months, at the time of purchase was $2.4 billion and $3.3 billion at December 31, 2010 and 2009, respectively. The Company is exposed to concentrations of credit risk related to securities of the U.S. government and certain U.S. government agencies included within short-term investments, which were $1.4 billion and $2.5 billion at December 31, 2010 and 2009, respectively. F-70 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CASH EQUIVALENTS The carrying value of cash equivalents, which includes investments with an original or remaining maturity of three months or less, at the time of purchase was $3.1 billion and $3.0 billion at December 31, 2010 and 2009, respectively. The Company is exposed to concentrations of credit risk related to securities of the U.S. government and certain U.S. government agencies included within cash equivalents, which were $2.5 billion and $2.3 billion at December 31, 2010 and 2009, respectively. PURCHASED CREDIT IMPAIRED INVESTMENTS Investments acquired with evidence of credit quality deterioration since origination and for which it is probable at the acquisition date that the Company will be unable to collect all contractually required payments are classified as purchased credit impaired investments. For each investment, the excess of the cash flows expected to be collected as of the acquisition date over its acquisition-date fair value is referred to as the accretable yield and is recognized as net investment income on an effective yield basis. If subsequently, based on current information and events, it is probable that there is a significant increase in cash flows previously expected to be collected or if actual cash flows are significantly greater than cash flows previously expected to be collected, the accretable yield is adjusted prospectively. The excess of the contractually required payments (including interest) as of the acquisition date over the cash flows expected to be collected as of the acquisition date is referred to as the nonaccretable difference, and this amount is not expected to be realized as net investment income. Decreases in cash flows expected to be collected can result in OTTI or the recognition of mortgage loan valuation allowances (see Note 1). The table below presents the purchased credit impaired fixed maturity securities held at:
DECEMBER 31, 2010 ----------------- (IN MILLIONS) Outstanding principal and interest balance (1).................. $1,163 Carrying value (2).............................................. $ 913
-------- (1) Represents the contractually required payments which is the sum of contractual principal, whether or not currently due, and accrued interest. (2) Estimated fair value plus accrued interest. The following table presents information about purchased credit impaired fixed maturity securities, as of their respective acquisition dates at:
DECEMBER 31, 2010 ----------------- (IN MILLIONS) Contractually required payments (including interest)............ $1,605 Cash flows expected to be collected (1)......................... $1,540 Fair value of investments acquired.............................. $ 939
-------- (1) Represents undiscounted principal and interest cash flow expectations, at the date of acquisition. F-71 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents activity for the accretable yield on purchased credit impaired fixed maturity securities at:
DECEMBER 31, 2010 ----------------- (IN MILLIONS) Accretable yield, January 1,.................................... $ -- Investments purchased......................................... 601 Accretion recognized in net investment income................. (62) Reclassification (to) from nonaccretable difference........... (103) ----- Accretable yield, December 31,.................................. $ 436 =====
VARIABLE INTEREST ENTITIES The Company holds investments in certain entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, consistent with the new guidance described in Note 1, is deemed to be the primary beneficiary or consolidator of the entity. The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated in the Company's financial statements at December 31, 2010 and 2009. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company's obligation to the VIEs is limited to the amount of its committed investment.
DECEMBER 31, ------------------------------------------- 2010 2009 -------------------- -------------------- TOTAL TOTAL TOTAL TOTAL ASSETS LIABILITIES ASSETS LIABILITIES ------ ----------- ------ ----------- (IN MILLIONS) Consolidated securitization entities (1)........... $243 $226 $ -- $-- Other limited partnership interests................ 194 53 367 72 Other invested assets.............................. 108 1 27 1 Real estate joint ventures......................... 20 17 22 17 ---- ---- ---- --- Total............................................ $565 $297 $416 $90 ==== ==== ==== ===
-------- (1) As discussed in Note 1, upon the adoption of new guidance effective January 1, 2010, the Company consolidated former QSPEs that are structured as collateralized debt obligations. At December 31, 2010, these entities held total assets of $243 million, consisting of $201 million of FVO securities held by CSEs classified within trading and other securities, $39 million in cash and $3 million of accrued investment income. These entities had total liabilities of $226 million, consisting of $184 million of long-term debt and $42 million of other liabilities. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company or any of its subsidiaries or affiliates liable for any principal or interest shortfalls should any arise. The Company's exposure is limited to that of its remaining investment in the former QSPEs of less than $1 million at estimated fair value at December 31, 2010. The long-term debt referred to above bears interest at primarily variable rates, payable on a bi-annual basis, and is expected to be repaid over the next 4 years. Interest expense related to these obligations, included in other expenses, was $15 million for the year ended December 31, 2010. F-72 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the carrying amount and maximum exposure to loss relating to VIEs for which the Company holds significant variable interests but is not the primary beneficiary and which have not been consolidated at:
DECEMBER 31, ----------------------------------------------- 2010 2009 ---------------------- ---------------------- MAXIMUM MAXIMUM CARRYING EXPOSURE CARRYING EXPOSURE AMOUNT TO LOSS (1) AMOUNT TO LOSS (1) -------- ----------- -------- ----------- (IN MILLIONS) Fixed maturity securities available-for-sale: RMBS (2)..................................... $29,904 $29,904 $ -- $ -- CMBS (2)..................................... 9,701 9,701 -- -- ABS (2)...................................... 7,218 7,218 -- -- U.S. corporate securities.................... 1,283 1,283 809 809 Foreign corporate securities................. 1,058 1,058 733 733 Other limited partnership interests............ 2,583 3,281 1,908 2,170 Other invested assets.......................... 514 694 394 387 Real estate joint ventures..................... 24 69 -- -- ------- ------- ------ ------ Total..................................... $52,285 $53,208 $3,844 $4,099 ======= ======= ====== ======
-------- (1) The maximum exposure to loss relating to the fixed maturity securities available-for-sale is equal to the carrying amounts or carrying amounts of retained interests. The maximum exposure to loss relating to the other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments of the Company. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. For certain of its investments in other invested assets, the Company's return is in the form of income tax credits which are guaranteed by a creditworthy third-party. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by third parties of $225 million and $226 million at December 31, 2010 and 2009, respectively. (2) As discussed in Note 1, the Company adopted new guidance effective January 1, 2010 which eliminated the concept of a QSPE. As a result, the Company concluded it held variable interests in RMBS, CMBS and ABS. For these interests, the Company's involvement is limited to that of a passive investor. As described in Note 13, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during the years ended December 31, 2010, 2009 and 2008. RELATED PARTY INVESTMENT TRANSACTIONS At December 31, 2010 and 2009, the Company held $445 million and $717 million, respectively, in the Metropolitan Money Market Pool, an affiliated partnership, which are included in short-term investments. Net investment income (loss) from this investment was ($1) million, $1 million and $4 million for the years ended December 31, 2010, 2009 and 2008, respectively. The MetLife Intermediate Income Pool ("MIIP") is a New York general partnership consisting solely of U.S. domestic insurance companies owned directly or indirectly by MetLife, Inc. and is managed by and consolidated into the accounts of the Company. Each partner's investment in the MIIP represents such partner's pro rata ownership interest in the pool and is included in the Company's noncontrolling interests in the consolidated balance sheets. The affiliated companies' ownership interests in the pooled investments held by F-73 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) the MIIP were less than $1 million and $118 million at December 31, 2010 and 2009, respectively. Net investment income (loss) allocated to affiliates from the MIIP was ($3) million, $1 million and $3 million for the years ended December 31, 2010, 2009 and 2008, respectively. In the normal course of business, the Company transfers invested assets, primarily consisting of fixed maturity securities, to and from affiliates. Invested assets transferred to and from affiliates, inclusive of amounts related to reinsurance agreements, were as follows:
YEARS ENDED DECEMBER 31, -------------------- 2010 2009 2008 ---- ------ ---- (IN MILLIONS) Estimated fair value of invested assets transferred to affiliates................................................ $444 $ -- $230 Amortized cost of invested assets transferred to affiliates................................................ $431 $ -- $220 Net investment gains (losses) recognized on invested assets transferred to affiliates................................. $ 13 $ -- $ 10 Estimated fair value of assets transferred from affiliates.. $582 $1,019 $ 57
During the year ended December 31, 2009, the Company issued loans to Exeter Reassurance Company Ltd. ("Exeter"), an affiliate, which were included in other invested assets. The loans outstanding were $1.0 billion at both December 31, 2010 and 2009. The loans are due as follows: $500 million on June 30, 2014, $250 million on September 30, 2012 and $250 million on September 30, 2016, and these amounts bear interest, payable semi-annually, at 6.44%, 5.33% and 7.44%, respectively. Both principal and interest payments have been guaranteed by MetLife, Inc. Net investment income from this investment was $64 million and $28 million for the years ended December 31, 2010 and 2009, respectively. 4. DERIVATIVE FINANCIAL INSTRUMENTS ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS See Note 1 for a description of the Company's accounting policies for derivative financial instruments. See Note 5 for information about the fair value hierarchy for derivatives. F-74 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) PRIMARY RISKS MANAGED BY DERIVATIVE FINANCIAL INSTRUMENTS AND NON-DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to various risks relating to its ongoing business operations, including interest rate risk, foreign currency risk, credit risk and equity market risk. The Company uses a variety of strategies to manage these risks, including the use of derivative instruments. The following table presents the gross notional amount, estimated fair value and primary underlying risk exposure of the Company's derivative financial instruments, excluding embedded derivatives, held at:
DECEMBER 31, ------------------------------------------------------------ 2010 2009 ----------------------------- ----------------------------- ESTIMATED FAIR ESTIMATED FAIR VALUE (1) VALUE (1) PRIMARY UNDERLYING NOTIONAL ------------------- NOTIONAL ------------------- RISK EXPOSURE INSTRUMENT TYPE AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES ------------------ ------------------------------- -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Interest rate Interest rate swaps............ $ 25,614 $1,477 $ 870 $18,630 $ 804 $ 696 Interest rate floors........... 13,290 460 4 12,115 339 2 Interest rate caps............. 27,253 145 -- 23,406 255 -- Interest rate futures.......... 1,246 7 -- 1,186 -- 5 Interest rate options.......... 5,680 107 23 3,750 114 57 Interest rate forwards......... 445 -- 36 -- -- -- Synthetic GICs................. 4,397 -- -- 4,352 -- -- Foreign currency Foreign currency swaps......... 13,558 1,024 901 12,706 821 1,058 Foreign currency forwards...... 2,050 17 16 1,466 16 5 Credit Credit default swaps........... 6,792 72 79 5,656 61 99 Credit forwards................ 90 2 3 130 2 2 Equity market Equity futures................. 7 -- -- -- -- -- Equity options................. 176 -- -- 85 3 -- Total rate of return swaps..... -- -- -- 250 -- 47 -------- ------ ------ ------- ------ ------ Total........................ $100,598 $3,311 $1,932 $83,732 $2,415 $1,971 ======== ====== ====== ======= ====== ======
-------- (1) The estimated fair value of all derivatives in an asset position is reported within other invested assets in the consolidated balance sheets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the consolidated balance sheets. F-75 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the gross notional amount of derivative financial instruments by maturity at December 31, 2010:
REMAINING LIFE ----------------------------------------------------------------- AFTER FIVE AFTER ONE YEAR YEARS ONE YEAR OR THROUGH FIVE THROUGH TEN AFTER TEN LESS YEARS YEARS YEARS TOTAL ----------- -------------- ----------- --------- -------- (IN MILLIONS) Interest rate swaps............... $ 3,584 $10,252 $ 4,153 $ 7,625 $ 25,614 Interest rate floors.............. -- 7,540 2,250 3,500 13,290 Interest rate caps................ 3,250 22,606 1,397 -- 27,253 Interest rate futures............. 1,246 -- -- -- 1,246 Interest rate options............. 28 4,227 1,425 -- 5,680 Interest rate forwards............ 100 275 70 -- 445 Synthetic GICs.................... 4,397 -- -- -- 4,397 Foreign currency swaps............ 2,310 4,775 4,923 1,550 13,558 Foreign currency forwards......... 1,944 24 20 62 2,050 Credit default swaps.............. 98 6,057 637 -- 6,792 Credit forwards................... 90 -- -- -- 90 Equity futures.................... 7 -- -- -- 7 Equity options.................... 176 -- -- -- 176 Total rate of return swaps........ -- -- -- -- -- ------- ------- ------- ------- -------- Total........................... $17,230 $55,756 $14,875 $12,737 $100,598 ======= ======= ======= ======= ========
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 utilizes interest rate swaps in fair value, cash flow and non- qualifying hedging relationships. 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. The Company utilizes basis swaps in non-qualifying hedging relationships. Inflation swaps are used as an economic hedge to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are included in interest rate swaps in the preceding table. The Company utilizes inflation swaps in non-qualifying hedging relationships. Implied volatility swaps are used by the Company primarily as economic hedges of interest rate risk associated with the Company's investments in mortgage-backed securities. In an implied volatility swap, the Company exchanges fixed payments for floating payments that are linked to certain market volatility measures. If implied volatility rises, the floating payments that the Company receives will increase, and if implied volatility falls, the floating payments that the Company receives will decrease. Implied volatility swaps are included in interest rate swaps in the preceding table. The Company utilizes implied volatility swaps in non-qualifying hedging relationships. F-76 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company purchases interest rate caps and floors 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 certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in non- qualifying hedging relationships. In exchange-traded interest rate (Treasury and swap) 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 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 Company utilizes exchange-traded interest rate futures in non-qualifying hedging relationships. Swaptions are used by the Company to hedge interest rate risk associated with the Company's long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. Swaptions are included in interest rate options in the preceding table. The Company utilizes swaptions in non-qualifying hedging relationships. The Company writes covered call options on its portfolio of U.S. Treasuries as an income generation strategy. In a covered call transaction, the Company receives a premium at the inception of the contract in exchange for giving the derivative counterparty the right to purchase the referenced security from the Company at a predetermined price. The call option is "covered" because the Company owns the referenced security over the term of the option. Covered call options are included in interest rate options in the preceding table. The Company utilizes covered call options in non-qualifying hedging relationships. The Company enters into interest rate 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. The Company utilizes interest rate forwards in cash flow and non-qualifying hedging relationships. A synthetic GIC is a contract that simulates the performance of a traditional guaranteed interest contract 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. Synthetic GICs are not designated as hedging instruments. Foreign currency derivatives, including foreign currency swaps and foreign currency forwards, are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency forwards and swaps to hedge the foreign currency risk associated with certain of its net investments in foreign operations. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, 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. The Company utilizes foreign currency swaps in fair value, cash flow, net investment in foreign operations and non-qualifying hedging relationships. F-77 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 utilizes foreign currency forwards in net investment in foreign operations and non-qualifying hedging relationships. The Company uses certain of its foreign currency denominated funding agreements to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. Such contracts are included in non- derivative hedging instruments in the hedges of net investments in foreign operations table. Swap spreadlocks are used by the Company to hedge invested assets on an economic basis against the risk of changes in credit spreads. Swap spreadlocks are forward transactions between two parties whose underlying reference index is a forward starting interest rate swap 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. The Company utilizes swap spreadlocks in non-qualifying hedging relationships. 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 hedge 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. The Company utilizes credit default swaps in non-qualifying hedging relationships. Credit default swaps are also used to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. Treasury or Agency security. The Company also enters into certain credit default swaps held in relation to trading portfolios for the purpose of generating profits on short-term differences in price. These credit default swaps are not designated as hedging instruments. The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships. In exchange-traded 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 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. The Company utilizes exchange-traded equity futures in non-qualifying hedging relationships. Equity index options are used by the Company to hedge certain invested assets against adverse changes in equity indices. In an equity index option transaction, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. Equity index options are included in equity options in the preceding table. The Company utilizes equity index options in non-qualifying hedging relationships. Equity variance swaps are used by the Company primarily as a macro hedge on certain invested assets. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes F-78 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) in equity volatility over a defined period. The Company utilizes equity variance swaps in non-qualifying hedging relationships. 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 the London Inter- Bank Offer Rate ("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. The Company uses TRRs to hedge its equity market guarantees in certain of its insurance products. TRRs can be used as hedges or to synthetically create investments. The Company utilizes TRRs in non-qualifying hedging relationships. HEDGING The following table presents the gross notional amount and estimated fair value of derivatives designated as hedging instruments by type of hedge designation at:
DECEMBER 31, ----------------------------------------------------------------- 2010 2009 ------------------------------- ------------------------------- ESTIMATED ESTIMATED FAIR VALUE FAIR VALUE DERIVATIVES DESIGNATED AS HEDGING NOTIONAL -------------------- NOTIONAL -------------------- INSTRUMENTS AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES ----------------------------------- -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Fair Value Hedges: Foreign currency swaps........... $ 3,737 $ 572 $126 $ 3,958 $ 484 $117 Interest rate swaps.............. 4,795 811 154 4,472 488 70 ------- ------ ---- ------- ------ ---- Subtotal...................... 8,532 1,383 280 8,430 972 187 ------- ------ ---- ------- ------ ---- Cash Flow Hedges: Foreign currency swaps........... 4,487 193 212 3,181 109 251 Interest rate swaps.............. 2,602 95 71 1,740 -- 48 Interest rate forwards........... 445 -- 36 -- -- -- Credit forwards.................. 90 2 3 130 2 2 ------- ------ ---- ------- ------ ---- Subtotal...................... 7,624 290 322 5,051 111 301 ------- ------ ---- ------- ------ ---- Total Qualifying Hedges..... $16,156 $1,673 $602 $13,481 $1,083 $488 ======= ====== ==== ======= ====== ====
F-79 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the gross notional amount and estimated fair value of derivatives that were not designated or do not qualify as hedging instruments by derivative type at:
DECEMBER 31, ------------------------------------------------------------ 2010 2009 ----------------------------- ----------------------------- ESTIMATED ESTIMATED FAIR VALUE FAIR VALUE DERIVATIVES NOT DESIGNATED OR NOT NOTIONAL ------------------- NOTIONAL ------------------- QUALIFYING AS HEDGING INSTRUMENTS AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES ------------------------------------------ -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Interest rate swaps....................... $18,217 $ 571 $ 645 $12,418 $ 316 $ 578 Interest rate floors...................... 13,290 460 4 12,115 339 2 Interest rate caps........................ 27,253 145 -- 23,406 255 -- Interest rate futures..................... 1,246 7 -- 1,186 -- 5 Interest rate options..................... 5,680 107 23 3,750 114 57 Synthetic GICs............................ 4,397 -- -- 4,352 -- -- Foreign currency swaps.................... 5,334 259 563 5,567 228 690 Foreign currency forwards................. 2,050 17 16 1,466 16 5 Credit default swaps...................... 6,792 72 79 5,656 61 99 Equity futures............................ 7 -- -- -- -- -- Equity options............................ 176 -- -- 85 3 -- Total rate of return swaps................ -- -- -- 250 -- 47 ------- ------ ------ ------- ------ ------ Total non-designated or non-qualifying derivatives.......................... $84,442 $1,638 $1,330 $70,251 $1,332 $1,483 ======= ====== ====== ======= ====== ======
NET DERIVATIVE GAINS (LOSSES) The components of net derivative gains (losses) were as follows:
YEARS ENDED DECEMBER, 31, ------------------------ 2010 2009 2008 ----- ------- ------ (IN MILLIONS) Derivatives and hedging gains (losses) (1)............... $ 353 $(2,842) $3,257 Embedded derivatives..................................... (619) (1,586) 1,744 ----- ------- ------ Total net derivative gains (losses).................... $(266) $(4,428) $5,001 ===== ======= ======
-------- (1) Includes foreign currency transaction gains (losses) on hedged items in cash flow and non-qualifying hedge relationships, which are not presented elsewhere in this note. F-80 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the settlement payments recorded in income for the:
YEARS ENDED DECEMBER 31, ---------------------- 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Qualifying hedges: Net investment income.................................... $ 82 $ 51 $ 21 Interest credited to policyholder account balances....... 196 180 99 Non-qualifying hedges: Net investment income.................................... (4) (3) (1) Net derivative gains (losses)............................ 53 (51) (38) ---- ---- ---- Total................................................. $327 $177 $ 81 ==== ==== ====
FAIR VALUE HEDGES The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate investments to floating rate investments; (ii) interest rate swaps to convert fixed rate liabilities to floating rate liabilities; and (iii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated investments and liabilities. The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges within net derivative gains (losses). The following table represents the amount of such net derivative gains (losses) recognized for the years ended December 31, 2010, 2009 and 2008:
NET NET DERIVATIVE DERIVATIVE GAINS (LOSSES) INEFFECTIVENESS DERIVATIVES IN FAIR GAINS (LOSSES) RECOGNIZED RECOGNIZED IN VALUE HEDGED ITEMS IN FAIR VALUE RECOGNIZED FOR HEDGED NET DERIVATIVE HEDGING RELATIONSHIPS HEDGING RELATIONSHIPS FOR DERIVATIVES ITEMS GAINS (LOSSES) ------------------------ ------------------------------------------------------- --------------- -------------- --------------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2010: Interest rate swaps: Fixed maturity securities.............................. $ (13) $ 15 $ 2 Policyholder account balances (1)...................... 153 (150) 3 Foreign currency swaps: Foreign-denominated fixed maturity securities.......... 13 (13) -- Foreign-denominated policyholder account balances (2).. 47 (34) 13 ----- ----- --- Total....................................................................... $ 200 $(182) $18 ===== ===== === FOR THE YEAR ENDED DECEMBER 31, 2009: Interest rate swaps: Fixed maturity securities.............................. $ 42 $ (35) $ 7 Policyholder account balances (1)...................... (956) 947 (9) Foreign currency swaps: Foreign-denominated fixed maturity securities.......... (13) 10 (3) Foreign-denominated policyholder account balances (2).. 351 (332) 19 ----- ----- --- Total....................................................................... $(576) $ 590 $14 ===== ===== === FOR THE YEAR ENDED DECEMBER 31, 2008............................................. $ 336 $(337) $(1) ===== ===== ===
-------- (1) Fixed rate liabilities (2) Fixed rate or floating rate liabilities F-81 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. CASH FLOW HEDGES The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (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; (iv) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments; and (v) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed-rate investments. For the years ended December 31, 2010 and 2009, the Company recognized $2 million and ($3) million, respectively, of net derivative gains (losses) which represented the ineffective portion of all cash flow hedges. For the year ended December 31, 2008, the Company did not recognize any net derivative gains (losses) 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 within two months of that date. The net amounts reclassified into net derivative gains (losses) for the years ended December 31, 2010, 2009 and 2008 related to such discontinued cash flow hedges were gains (losses) of $9 million, ($7) million and ($12) million, respectively. At December 31, 2010 and 2009, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed seven years and five years, respectively. There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for the year ended December 31, 2008. The following table presents the components of accumulated other comprehensive income (loss), before income tax, related to cash flow hedges:
YEARS ENDED DECEMBER 31, -------------------- 2010 2009 2008 ---- ----- ----- (IN MILLIONS) Accumulated other comprehensive income (loss), balance at January 1,................................................ $(92) $ 137 $(262) Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges.............. 134 (327) 483 Amounts reclassified to net derivative gains (losses)....... 46 93 (93) Amounts reclassified to net investment income............... 3 7 9 Amounts reclassified to other expenses...................... (1) -- -- Amortization of transition adjustment....................... -- (2) -- ---- ----- ----- Accumulated other comprehensive income (loss), balance at December 31,.............................................. $ 90 $ (92) $ 137 ==== ===== =====
At December 31, 2010, $6 million of deferred net gains on derivatives in accumulated other comprehensive income (loss) was expected to be reclassified to earnings within the next 12 months. F-82 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the effects of derivatives in cash flow hedging relationships on the consolidated statements of operations and the consolidated statements of equity for the years ended December 31, 2010, 2009 and 2008:
AMOUNT AND LOCATION OF GAINS (LOSSES) RECLASSIFIED FROM ACCUMULATED OTHER AMOUNT OF GAINS COMPREHENSIVE (LOSSES) DEFERRED INCOME (LOSS) INTO INCOME IN ACCUMULATED OTHER (LOSS) AMOUNT AND LOCATION COMPREHENSIVE INCOME ------------------------------ OF GAINS (LOSSES) (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME (LOSS) --------------------- ON DERIVATIVES (EFFECTIVE PORTION) (EFFECTIVE PORTION) --------------------------- --------------------- ------------------------------ (INEFFECTIVE PORTION AND NET AMOUNT EXCLUDED FROM DERIVA- NET EFFECTIVENESS TESTING) TIVE INVEST- --------------------------- DERIVATIVES IN CASH FLOW GAINS MENT OTHER NET DERIVATIVE HEDGING RELATIONSHIPS (LOSSES) INCOME EXPENSES GAINS (LOSSES) --------------------------- --------- --------- -------- --------------------------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2010: Interest rate swaps...... $ 90 $ -- $-- $ 1 $ 3 Foreign currency swaps... 74 (56) (6) -- -- Interest rate forwards... (35) 10 3 -- (1) Credit forwards.......... 5 -- -- -- -- ----- ----- --- --- --- Total................. $ 134 $ (46) $(3) $ 1 $ 2 ===== ===== === === === FOR THE YEAR ENDED DECEMBER 31, 2009: Interest rate swaps...... $ (47) $ -- $-- $-- $(2) Foreign currency swaps... (409) (159) (5) -- (1) Interest rate forwards... 130 66 -- -- -- Credit forwards.......... (1) -- -- -- -- ----- ----- --- --- --- Total................. $(327) $ (93) $(5) $-- $(3) ===== ===== === === === FOR THE YEAR ENDED DECEMBER 31, 2008: Foreign currency swaps... $ 483 $ 93 $(9) $-- $-- ===== ===== === === ===
HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS The Company uses foreign exchange contracts, which may include foreign currency swaps, forwards and options, to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company measures ineffectiveness on these contracts based upon the change in forward rates. In addition, the Company may also use 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 non-derivative financial instruments based upon the change in spot rates. When net investments in foreign operations are sold or substantially liquidated, the amounts in accumulated other comprehensive income (loss) are reclassified to the consolidated statements of operations, while a pro rata portion will be reclassified upon partial sale of the net investments in foreign operations. F-83 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the effects of derivatives and non-derivative financial instruments in net investment hedging relationships in the consolidated statements of operations and the consolidated statements of equity for the years ended December 31, 2010, 2009 and 2008:
AMOUNT AND LOCATION OF GAINS (LOSSES) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO AMOUNT OF GAINS (LOSSES) INCOME (LOSS) (EFFECTIVE DEFERRED IN ACCUMULATED PORTION) OTHER COMPREHENSIVE INCOME ------------------------- (LOSS) NET INVESTMENT GAINS (EFFECTIVE PORTION) (LOSSES) DERIVATIVES AND NON-DERIVATIVE -------------------------- ------------------------- HEDGING INSTRUMENTS IN NET YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31, INVESTMENT -------------------------- ------------------------- HEDGING RELATIONSHIPS (1), (2) 2010 2009 2008 2010 2009 2008 ------------------------------ ---- ---- ---- ---- ----- ---- (IN MILLIONS) Foreign currency forwards........... $-- $ -- $ -- $-- $ (59) $-- Foreign currency swaps.............. -- (18) 76 -- (63) -- Non-derivative hedging instruments.. -- (37) 81 -- (11) -- --- ---- ---- --- ----- --- Total............................. $-- $(55) $157 $-- $(133) $-- === ==== ==== === ===== ===
-------- (1) During the years ended December 31, 2010 and 2008, there were no sales or substantial liquidations of net investments in foreign operations that would have required the reclassification of gains or losses from accumulated other comprehensive income (loss) into earnings. During the year ended December 31, 2009, the Company substantially liquidated, through assumption reinsurance (see Note 2), the portion of its Canadian operations that was being hedged in a net investment hedging relationship. As a result, the Company reclassified losses of $133 million from accumulated other comprehensive income (loss) into earnings. (2) There was no ineffectiveness recognized for the Company's hedges of net investments in foreign operations. At December 31, 2010 and 2009, there was no cumulative foreign currency translation gain (loss) recorded in accumulated other comprehensive income (loss) related to hedges of 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 or for purposes other than hedging: (i) interest rate swaps, implied volatility swaps, caps and floors and interest rate futures to economically hedge its exposure to interest rates; (ii) foreign currency forwards and swaps to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to economically hedge exposure to adverse movements in credit; (iv) equity futures to economically hedge liabilities; (v) swap spreadlocks to economically hedge invested assets against the risk of changes in credit spreads; (vi) interest rate forwards to buy and sell securities to economically hedge its exposure to interest rates; (vii) credit default swaps and TRRs to synthetically create investments; (viii) basis swaps to better match the cash flows of assets and related liabilities; (ix) credit default swaps held in relation to trading portfolios; (x) swaptions to hedge interest rate risk; (xi) inflation swaps to reduce risk generated from inflation-indexed liabilities; (xii) covered call options for income generation; (xiii) synthetic GICs; (xiv) equity options to economically hedge certain invested assets against adverse changes in equity indices; and (xv) equity variance swaps as a macro hedge on certain invested assets. F-84 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following tables present the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as hedging instruments:
NET NET DERIVATIVE INVESTMENT GAINS (LOSSES) INCOME (1) -------------- ---------- (IN MILLIONS) FOR THE YEAR ENDED DECEMBER 31, 2010: Interest rate swaps........................................ $ 74 $ -- Interest rate floors....................................... 95 -- Interest rate caps......................................... (165) -- Interest rate futures...................................... 108 -- Foreign currency swaps..................................... 118 -- Foreign currency forwards.................................. (12) -- Equity options............................................. (2) (17) Interest rate options...................................... 30 -- Interest rate forwards..................................... 7 -- Credit default swaps....................................... 28 (2) Total rate of return swaps................................. 15 -- ------- ---- Total.................................................... $ 296 $(19) ======= ==== FOR THE YEAR ENDED DECEMBER 31, 2009: Interest rate swaps........................................ $ (880) $ -- Interest rate floors....................................... (514) -- Interest rate caps......................................... 27 -- Interest rate futures...................................... (155) -- Foreign currency swaps..................................... (584) -- Foreign currency forwards.................................. (151) -- Equity options............................................. 2 (2) Interest rate options...................................... (379) -- Interest rate forwards..................................... (7) -- Swap spreadlocks........................................... (38) -- Credit default swaps....................................... (195) (11) Total rate of return swaps................................. 63 -- ------- ---- Total.................................................... $(2,811) $(13) ======= ==== FOR THE YEAR ENDED DECEMBER 31, 2008....................... $ 3,470 $ 54 ======= ====
-------- (1) Changes in estimated fair value related to economic hedges of equity method investments in joint ventures, and changes in estimated fair value related to derivatives held in relation to trading portfolios. CREDIT DERIVATIVES In connection with synthetically created investment transactions and credit default swaps held in relation to the trading portfolio, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the non-qualifying derivatives and derivatives for purposes other than F-85 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) hedging table. If a credit event occurs, as defined by the contract, generally the contract will require the Company to pay the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company's maximum amount at risk, assuming the value of all referenced credit obligations is zero, was $4,153 million and $2,584 million at December 31, 2010 and 2009, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current fair value of the credit default swaps. At December 31, 2010 and 2009, the Company would have received $49 million and $44 million, respectively, to terminate all of these contracts. The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at December 31, 2010 and 2009:
DECEMBER 31, ------------------------------------------------------------------------------------- 2010 2009 ------------------------------------------- ---------------------------------------- MAXIMUM MAXIMUM ESTIMATED AMOUNT ESTIMATED AMOUNT OF FAIR VALUE OF FUTURE WEIGHTED FAIR VALUE FUTURE WEIGHTED RATING AGENCY DESIGNATION OF OF CREDIT PAYMENTS UNDER AVERAGE OF CREDIT PAYMENTS UNDER AVERAGE REFERENCED DEFAULT CREDIT DEFAULT YEARS DEFAULT CREDIT DEFAULT YEARS TO CREDIT OBLIGATIONS (1) SWAPS SWAPS (2) TO MATURITY (3) SWAPS SWAPS (2) MATURITY (3) ----------------------------------- ---------- -------------- --------------- ---------- -------------- ------------ (IN MILLIONS) AAA/AA/A Single name credit default swaps (corporate)...................... $ 4 $ 423 3.9 $ 4 $ 148 4.3 Credit default swaps referencing indices.......................... 34 2,247 3.7 38 2,201 3.5 --- ------ --- ------ Subtotal......................... 38 2,670 3.7 42 2,349 3.5 --- ------ --- ------ BAA Single name credit default swaps (corporate)...................... 5 730 4.4 2 190 4.9 Credit default swaps referencing indices.......................... 6 728 5.0 -- -- -- --- ------ --- ------ Subtotal......................... 11 1,458 4.7 2 190 4.9 --- ------ --- ------ BA Single name credit default swaps (corporate)...................... -- 25 4.4 -- 25 5.0 Credit default swaps referencing indices.......................... -- -- -- -- -- -- --- ------ --- ------ Subtotal......................... -- 25 4.4 -- 25 5.0 --- ------ --- ------ B Single name credit default swaps (corporate)...................... -- -- -- -- -- -- Credit default swaps referencing indices.......................... -- -- -- -- 20 5.0 --- ------ --- ------ Subtotal......................... -- -- -- -- 20 5.0 --- ------ --- ------ Total......................... $49 $4,153 4.1 $44 $2,584 3.6 === ====== === ======
-------- (1) The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody's, S&P and Fitch. If no rating is available from a rating agency, then an internally developed rating is used. (2) Assumes the value of the referenced credit obligations is zero. (3) The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts. The Company has also entered into credit default swaps to purchase credit protection on certain of the referenced credit obligations in the table above. As a result, the maximum amounts of potential future recoveries available to offset the $4,153 million and $2,584 million from the table above were $120 million and $21 million at December 31, 2010 and 2009, respectively. F-86 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CREDIT RISK ON FREESTANDING DERIVATIVES 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 net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received pursuant to credit support annexes. 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. See Note 5 for a description of the impact of credit risk on the valuation of derivative instruments. The Company enters into various collateral arrangements, which require both the pledging and accepting of collateral in connection with its derivative instruments. At December 31, 2010 and 2009, the Company was obligated to return cash collateral under its control of $1,033 million and $782 million, respectively. This unrestricted cash collateral is included in cash and cash equivalents or in short-term investments and the obligation to return it is included in payables for collateral under securities loaned and other transactions in the consolidated balance sheets. At December 31, 2010 and 2009, the Company had also accepted collateral consisting of various securities with a fair market value of $501 million and $123 million, respectively, which were held in separate custodial accounts. The Company is permitted by contract to sell or repledge this collateral, but at December 31, 2010, none of the collateral had been sold or repledged. The Company's collateral arrangements for its over-the-counter derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the fair value of that counterparty's derivatives reaches a pre-determined threshold. Certain of these arrangements also include credit-contingent provisions that provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of the Company and/or the counterparty. In addition, certain of the Company's netting agreements for derivative instruments contain provisions that require the Company to maintain a specific investment grade credit rating from at least one of the major credit rating agencies. If the Company's credit ratings were to fall below that specific investment grade credit rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments that are in a net liability position after considering the effect of netting agreements. The following table presents the estimated fair value of the Company's over-the-counter derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. The table also presents the incremental collateral that the Company would be required to provide if there was a one notch downgrade in the Company's credit rating at the reporting date or if the Company's credit rating sustained a downgrade to a level that triggered full overnight collateralization or F-87 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) termination of the derivative position at the reporting date. Derivatives that are not subject to collateral agreements are not included in the scope of this table.
----------------------------------------------------------------------------------------------------------------------- ESTIMATED FAIR VALUE OF FAIR VALUE OF INCREMENTAL COLLATERAL COLLATERAL PROVIDED: PROVIDED UPON: ------------------------- -------------------------------------- DOWNGRADE IN THE ONE NOTCH COMPANY'S CREDIT RATING DOWNGRADE TO A LEVEL THAT TRIGGERS ESTIMATED IN THE FULL OVERNIGHT FAIR VALUE (1) OF COMPANY'S COLLATERALIZATION OR DERIVATIVES IN NET FIXED MATURITY CREDIT TERMINATION LIABILITY POSITION SECURITIES (2) CASH (3) RATING OF THE DERIVATIVE POSITION ------------------ -------------- -------- --------- -------------------------- (IN MILLIONS) DECEMBER 31, 2010: Derivatives subject to credit- contingent provisions....... $243 $120 $-- $35 $110 Derivatives not subject to credit-contingent provisions.................. 1 -- 1 -- -- ---- ---- --- --- ---- Total....................... $244 $120 $ 1 $35 $110 ==== ==== === === ==== DECEMBER 31, 2009: Derivatives subject to credit- contingent provisions....... $342 $230 $-- $45 $132 Derivatives not subject to credit-contingent provisions.................. 47 42 -- -- -- ---- ---- --- --- ---- Total....................... $389 $272 $-- $45 $132 ==== ==== === === ====
-------- (1) After taking into consideration the existence of netting agreements. (2) Included in fixed maturity securities in the consolidated balance sheets. The counterparties are permitted by contract to sell or repledge this collateral. (3) Included in premiums, reinsurance and other receivables in the consolidated balance sheets. Without considering the effect of netting agreements, the estimated fair value of the Company's over-the-counter derivatives with credit-contingent provisions that were in a gross liability position at December 31, 2010 was $334 million. At December 31, 2010, the Company provided securities collateral of $120 million in connection with these derivatives. In the unlikely event that both: (i) the Company's credit rating was downgraded to a level that triggers full overnight collateralization or termination of all derivative positions; and (ii) the Company's netting agreements were deemed to be legally unenforceable, then the additional collateral that the Company would be required to provide to its counterparties in connection with its derivatives in a gross liability position at December 31, 2010 would be $214 million. This amount does not consider gross derivative assets of $91 million for which the Company has the contractual right of offset. The Company also has exchange-traded futures, which require the pledging of collateral. At both December 31, 2010 and 2009, the Company did not pledge any securities collateral for exchange-traded futures. At December 31, 2010 and 2009, the Company provided cash collateral for exchange-traded futures of $21 million and $18 million, respectively, which is included in premiums, reinsurance and other receivables. 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 principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; affiliated ceded reinsurance contracts of guaranteed F-88 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) minimum benefits related to GMWBs, GMABs and certain GMIBs; funds withheld on ceded reinsurance and affiliated funds withheld on ceded reinsurance; and funding agreements with equity or bond indexed crediting rates. The following table presents the estimated fair value of the Company's embedded derivatives at:
DECEMBER 31, ----------- 2010 2009 ---- ---- (IN MILLIONS) Net embedded derivatives within asset host contracts: Ceded guaranteed minimum benefits............................... $295 $263 Options embedded in debt or equity securities................... (24) (15) ---- ---- Net embedded derivatives within asset host contracts......... $271 $248 ==== ==== Net embedded derivatives within liability host contracts: Direct guaranteed minimum benefits.............................. $(77) $(35) Funds withheld on ceded reinsurance............................. 754 132 Other........................................................... 11 (26) ---- ---- Net embedded derivatives within liability host contracts..... $688 $ 71 ==== ====
The following table presents changes in estimated fair value related to embedded derivatives:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ----- ------- ------ (IN MILLIONS) Net derivative gains (losses) (1),(2).................... $(619) $(1,586) $1,744
-------- (1) The valuation of direct guaranteed minimum benefits includes an adjustment for nonperformance risk. Included in net derivative gains (losses), in connection with this adjustment, were gains (losses) of ($43) million, ($380) million and $442 million, for the years ended December 31, 2010, 2009 and 2008, respectively. In addition, the valuation of ceded guaranteed minimum benefits includes an adjustment for nonperformance risk. Included in net derivative gains (losses), in connection with this adjustment, were gains (losses) of $82 million, $624 million and ($747) million, for the years ended December 31, 2010, 2009 and 2008, respectively. Net derivative gains (losses) for the year ended December 31, 2010 included a gain of $121 million relating to a refinement for estimating nonperformance risk in fair value measurements implemented at June 30, 2010. See Note 5. (2) See Note 9 for discussion of affiliated net derivative gains (losses) included in the table above. 5. FAIR VALUE Considerable judgment is often required in interpreting market data to develop estimates of fair value and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. F-89 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ASSETS AND LIABILITIES MEASURED AT FAIR VALUE RECURRING FAIR VALUE MEASUREMENTS The assets and liabilities measured at estimated fair value on a recurring basis, including those items for which the Company has elected the FVO, were determined as described below. These estimated fair values and their corresponding placement in the fair value hierarchy are summarized as follows:
DECEMBER 31, 2010 ----------------------------------------------------------------- FAIR VALUE MEASUREMENTS AT REPORTING DATE USING ----------------------------------------------------------------- QUOTED PRICES IN ACTIVE MARKETS FOR SIGNIFICANT TOTAL IDENTICAL ASSETS SIGNIFICANT OTHER UNOBSERVABLE ESTIMATED AND LIABILITIES OBSERVABLE INPUTS INPUTS FAIR (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE ------------------ ----------------- ------------ --------- (IN MILLIONS) ASSETS Fixed maturity securities: U.S. corporate securities............... $ -- $ 48,064 $ 5,063 $ 53,127 Foreign corporate securities............ -- 27,771 2,796 30,567 RMBS.................................... 274 28,420 1,210 29,904 U.S. Treasury, agency and government guaranteed securities................ 7,728 13,205 44 20,977 CMBS.................................... -- 9,540 161 9,701 ABS..................................... -- 4,929 2,289 7,218 State and political subdivision securities........................... -- 4,583 1 4,584 Foreign government securities........... -- 3,286 171 3,457 ------- -------- ------- -------- Total fixed maturity securities...... 8,002 139,798 11,735 159,535 ------- -------- ------- -------- Equity securities: Common stock............................ 176 717 79 972 Non-redeemable preferred stock.......... -- 216 633 849 ------- -------- ------- -------- Total equity securities.............. 176 933 712 1,821 ------- -------- ------- -------- Trading and other securities: Actively Traded Securities.............. -- 453 10 463 FVO general account securities.......... -- 21 50 71 FVO securities held by consolidated securitization entities.............. -- 201 -- 201 ------- -------- ------- -------- Total trading and other securities... -- 675 60 735 Short-term investments (1)................ 1,001 845 379 2,225 Derivative assets: (2) Interest rate contracts................. 7 2,175 14 2,196 Foreign currency contracts.............. -- 995 46 1,041 Credit contracts........................ -- 35 39 74 ------- -------- ------- -------- Total derivative assets.............. 7 3,205 99 3,311 Net embedded derivatives within asset host contracts (3)........................... -- -- 295 295 Separate account assets (4)............... 19,550 76,770 1,509 97,829 ------- -------- ------- -------- Total assets......................... $28,736 $222,226 $14,789 $265,751 ======= ======== ======= ======== LIABILITIES Derivative liabilities: (2) Interest rate contracts................. $ -- $ 896 $ 37 $ 933 Foreign currency contracts.............. -- 917 -- 917 Credit contracts........................ -- 76 6 82 ------- -------- ------- -------- Total derivative liabilities......... -- 1,889 43 1,932 Net embedded derivatives within liability host contracts (3)...................... -- 11 677 688 Long-term debt of consolidated securitization entities................. -- -- 184 184 Trading liabilities (5)................... 46 -- -- 46 ------- -------- ------- -------- Total liabilities....................... $ 46 $ 1,900 $ 904 $ 2,850 ======= ======== ======= ========
See "-- Variable Interest Entities" in Note 3 for discussion of CSEs included in the table above. F-90 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2009 ----------------------------------------------------------------- FAIR VALUE MEASUREMENTS AT REPORTING DATE USING ----------------------------------------------------- QUOTED PRICES IN ACTIVE MARKETS FOR SIGNIFICANT TOTAL IDENTICAL ASSETS SIGNIFICANT OTHER UNOBSERVABLE ESTIMATED AND LIABILITIES OBSERVABLE INPUTS INPUTS FAIR (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE ------------------ ----------------- ------------ --------- (IN MILLIONS) ASSETS Fixed maturity securities: U.S. corporate securities............... $ -- $ 44,394 $ 4,674 $ 49,068 Foreign corporate securities............ -- 21,541 3,456 24,997 RMBS.................................... -- 29,405 1,580 30,985 U.S. Treasury, agency and government guaranteed securities................ 6,090 10,312 -- 16,402 CMBS.................................... -- 10,684 87 10,771 ABS..................................... -- 5,503 1,668 7,171 State and political subdivision securities........................... -- 2,714 20 2,734 Foreign government securities........... -- 2,272 249 2,521 ------- -------- ------- -------- Total fixed maturity securities...... 6,090 126,825 11,734 144,649 ------- -------- ------- -------- Equity securities: Common stock............................ 289 777 64 1,130 Non-redeemable preferred stock.......... -- 193 793 986 ------- -------- ------- -------- Total equity securities.............. 289 970 857 2,116 ------- -------- ------- -------- Trading and other securities.............. -- 388 83 471 Short-term investments (1)................ 2,099 1,193 8 3,300 Derivative assets (2)..................... -- 2,318 97 2,415 Net embedded derivatives within asset host contracts (3)........................... -- -- 263 263 Separate account assets (4)............... 13,006 65,788 1,583 80,377 ------- -------- ------- -------- Total assets......................... $21,484 $197,482 $14,625 $233,591 ======= ======== ======= ======== LIABILITIES Derivative liabilities (2)................ $ 5 $ 1,961 $ 5 $ 1,971 Net embedded derivatives within liability host contracts (3)...................... -- (26) 97 71 Trading liabilities (5)................... 106 -- -- 106 ------- -------- ------- -------- Total liabilities....................... $ 111 $ 1,935 $ 102 $ 2,148 ======= ======== ======= ========
-------- (1) Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because certain short-term investments are not measured at estimated fair value (e.g., time deposits, etc.), and therefore are excluded from the tables presented above. (2) Derivative assets are presented within other invested assets in the consolidated balance sheets and derivative liabilities are presented within other liabilities in the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables which follow. (3) Net embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables in the consolidated balance sheets. Net embedded derivatives within liability host contracts are presented in the consolidated balance sheets within policyholder account balances and other liabilities. At December 31, 2010, fixed maturity securities and equity securities also included embedded derivatives of F-91 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) $1 million and ($25) million, respectively. At December 31, 2009, fixed maturity securities and equity securities included embedded derivatives of $0 and ($15) million, respectively. (4) Separate account assets are measured at estimated fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets. (5) Trading liabilities are presented within other liabilities in the consolidated balance sheets. The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments When available, the estimated fair value of the Company's fixed maturity, equity and trading and other securities are based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company's securities holdings and valuation of these securities does not involve management judgment. When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies. The market standard valuation methodologies utilized include: discounted cash flow methodologies, matrix pricing or other similar techniques. The inputs in applying these market standard valuation methodologies include, but are not limited to: interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund requirements, maturity and management's assumptions regarding estimated duration, liquidity and estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management's judgments about financial instruments. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Such observable inputs include benchmarking prices for similar assets in active markets, quoted prices in markets that are not active and observable yields and spreads in the market. When observable inputs are not available, the market standard valuation methodologies for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. These unobservable inputs can be based in large part on management judgment or estimation and cannot be supported by reference to market activity. Even though unobservable, these inputs are assumed to be consistent with what other market participants would use when pricing such securities and are considered appropriate given the circumstances. The estimated fair value of FVO securities held by CSEs is determined on a basis consistent with the methodologies described herein for fixed maturity securities and equity securities. As discussed in Note 1, the Company adopted new guidance effective January 1, 2010 and consolidated certain securitization entities that hold securities that have been accounted for under the FVO and classified within trading and other securities. The use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company's securities holdings. Derivatives The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for over-the-counter derivatives. The determination of F-92 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that are assumed to be consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), volatility, liquidity and changes in estimates and assumptions used in the pricing models. The significant inputs to the pricing models for most over-the-counter derivatives are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Significant inputs that are observable generally include: interest rates, foreign currency exchange rates, interest rate curves, credit curves and volatility. However, certain over-the-counter derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. Significant inputs that are unobservable generally include: independent broker quotes, credit correlation assumptions, references to emerging market currencies and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility or other relevant market measure. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and are assumed to be consistent with what other market participants would use when pricing such instruments. The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all over-the-counter derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its derivative positions using the standard swap curve which includes a spread to the risk free rate. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with the standard swap curve. As the Company and its significant derivative counterparties consistently execute trades at such pricing levels, additional credit risk adjustments are not currently required in the valuation process. The Company's ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. The evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period. Most inputs for over-the-counter derivatives are mid market inputs but, in certain cases, bid level inputs are used when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company's derivatives and could materially affect net income. Embedded Derivatives Within Asset and Liability Host Contracts Embedded derivatives principally include certain direct variable annuity guarantees, certain affiliated ceded reinsurance contracts related to such variable annuity guarantees and certain funding agreements with equity or bond indexed crediting rates and those related to ceded funds withheld on reinsurance. Embedded derivatives are recorded in the consolidated financial statements at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefit guarantees. GMWBs, GMABs and certain GMIBs are embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances in the consolidated balance sheets. The fair value of these guarantees is estimated using the present value of future benefits minus the present value of future fees using actuarial and capital market assumptions related to the projected cash flows over the expected lives of the contracts. A risk neutral valuation methodology is used under which the cash flows from the F-93 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) guarantees are projected under multiple capital market scenarios using observable risk free rates, currency exchange rates and observable and estimated implied volatilities. The valuation of these guarantee liabilities includes adjustments for nonperformance risk and for a risk margin related to non-capital market inputs. Both of these adjustments are captured as components of the spread which, when combined with the risk free rate, is used to discount the cash flows of the liability for purposes of determining its fair value. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.'s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife, Inc. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. The Company ceded the risk associated with certain of the GMIB, GMAB and GMWB guarantees described in the preceding paragraph. In addition to ceding risks associated with guarantees that are accounted for as embedded derivatives, the Company also ceded directly written GMIB guarantees that are accounted for as insurance (i.e., not as embedded derivatives) but where the reinsurance contract contains an embedded derivative. These embedded derivatives are included in premiums, reinsurance and other receivables in the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on these ceded risks is determined using a methodology consistent with that described previously for the guarantees directly written by the Company. Because the direct guarantee is not accounted for at fair value, significant fluctuations in net income may occur as the change in fair value of the embedded derivative on the ceded risk is being recorded in net income without a corresponding and offsetting change in fair value of the direct guarantee. As part of its regular review of critical accounting estimates, the Company periodically assesses inputs for estimating nonperformance risk (commonly referred to as "own credit") in fair value measurements. During the second quarter of 2010, the Company completed a study that aggregated and evaluated data, including historical recovery rates of insurance companies as well as policyholder behavior observed over the past two years as the recent financial crisis evolved. As a result, at the end of the second quarter of 2010, the Company refined the way in which it incorporates expected recovery rates into the nonperformance risk adjustment for purposes of estimating the fair value of investment-type contracts and embedded derivatives within insurance contracts. The Company recognized a gain of $38 million, net of DAC and income tax, relating to implementing the refinement at June 30, 2010. The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as described above in "-- Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments." The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities in the consolidated balance sheets with changes in estimated fair F-94 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income. The estimated fair value of the embedded equity and bond indexed derivatives contained in certain funding agreements is determined using market standard swap valuation models and observable market inputs, including an adjustment for nonperformance risk. The estimated fair value of these embedded derivatives are included, along with their funding agreements host, within policyholder account balances with changes in estimated fair value recorded in net derivative gains (losses). Changes in equity and bond indices, interest rates and the Company's credit standing may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income. Separate Account Assets Separate account assets are carried at estimated fair value and reported as a summarized total on the consolidated balance sheets. The estimated fair value of separate account assets is based on the estimated fair value of the underlying assets owned by the separate account. Assets within the Company's separate accounts include: mutual funds, fixed maturity securities, equity securities, mortgage loans, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. See "-- Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities" below for a discussion of the methods and assumptions used to estimate the fair value of these financial instruments. Long-term Debt of CSEs The Company has elected the FVO for the long-term debt of CSEs, which are carried at estimated fair value. See "-- Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities" below for a discussion of the methods and assumptions used to estimate the fair value of these financial instruments. Trading Liabilities Trading liabilities are recorded at estimated fair value with subsequent changes in estimated fair value recognized in net investment income. The estimated fair value of trading liabilities is determined on a basis consistent with the methodologies described in "-- Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments." VALUATION TECHNIQUES AND INPUTS BY LEVEL WITHIN THE THREE-LEVEL FAIR VALUE HIERARCHY BY MAJOR CLASSES OF ASSETS AND LIABILITIES A description of the significant valuation techniques and inputs to the determination of estimated fair value for the more significant asset and liability classes measured at fair value on a recurring basis is as follows: The Company determines the estimated fair value of its investments using primarily the market approach and the income approach. The use of quoted prices for identical assets and matrix pricing or other similar techniques are examples of market approaches, while the use of discounted cash flow methodologies is an example of the income approach. The Company attempts to maximize the use of observable inputs and minimize the use of unobservable inputs in selecting whether the market or income approach is used. While certain investments have been classified as Level 1 from the use of unadjusted quoted prices for identical investments supported by high volumes of trading activity and narrow bid/ask spreads, most investments have been classified as Level 2 because the significant inputs used to measure the fair value on a recurring basis of the same or similar investment are market observable or can be corroborated using market observable information F-95 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) for the full term of the investment. Level 3 investments include those where estimated fair values are based on significant unobservable inputs that are supported by little or no market activity and may reflect our own assumptions about what factors market participants would use in pricing these investments. LEVEL 1 MEASUREMENTS: Fixed Maturity Securities, Equity Securities and Short-term Investments These securities are comprised of U.S. Treasury, agency and government guaranteed fixed maturity securities, RMBS -- principally to-be-announced securities, exchange traded common stock and short-term money market securities, including U.S. Treasury bills. Valuation of these securities is based on unadjusted quoted prices in active markets that are readily and regularly available. Derivative Assets and Derivative Liabilities These assets and liabilities are comprised of exchange-traded derivatives. Valuation of these assets and liabilities is based on unadjusted quoted prices in active markets that are readily and regularly available. Separate Account Assets These assets are comprised of securities that are similar in nature to the fixed maturity securities, equity securities and short-term investments referred to above; and certain exchange-traded derivatives, including financial futures and owned options. Valuation is based on unadjusted quoted prices in active markets that are readily and regularly available. LEVEL 2 MEASUREMENTS: Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments This level includes fixed maturity securities and equity securities priced principally by independent pricing services using observable inputs. Trading and other securities and short-term investments within this level are of a similar nature and class to the Level 2 securities described below; accordingly, the valuation techniques and significant market standard observable inputs used in their valuation are also similar to those described below. U.S. corporate and foreign corporate securities. These securities are principally valued using the market and income approaches. Valuation is based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques that use standard market observable inputs such as a benchmark yields, spreads off benchmark yields, new issuances, issuer rating, duration, and trades of identical or comparable securities. Investment grade privately placed securities are valued using a discounted cash flow methodologies using standard market observable inputs, and inputs derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer. This level also includes certain below investment grade privately placed fixed maturity securities priced by independent pricing services that use observable inputs. Structured securities comprised of RMBS, CMBS and ABS. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques using standard market inputs including spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans. F-96 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) U.S. Treasury, agency and government guaranteed securities. These securities are principally valued using the market approach. Valuation is based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques using standard market observable inputs such as benchmark U.S. Treasury yield curve, the spread off the U.S. Treasury curve for the identical security and comparable securities that are actively traded. Foreign government and state and political subdivision securities. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques using standard market observable inputs including benchmark U.S. Treasury or other yields, issuer ratings, broker-dealer quotes, issuer spreads and reported trades of similar securities, including those within the same sub-sector or with a similar maturity or credit rating. Common and non-redeemable preferred stock. These securities are principally valued using the market approach where market quotes are available but are not considered actively traded. Valuation is based principally on observable inputs including quoted prices in markets that are not considered active. Derivative Assets and Derivative Liabilities This level includes all types of derivative instruments utilized by the Company with the exception of exchange-traded derivatives included within Level 1 and those derivative instruments with unobservable inputs as described in Level 3. These derivatives are principally valued using an income approach. Interest rate contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, and repurchase rates. Option-based -- Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, and interest rate volatility. Foreign currency contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, currency spot rates, and cross currency basis curves. Credit contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, credit curves, and recovery rates. Equity market contracts. Non-option-based -- Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, spot equity index levels, and dividend yield curves. Option-based -- Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, spot equity index levels, dividend yield curves, and equity volatility. Embedded Derivatives Contained in Certain Funding Agreements These derivatives are principally valued using an income approach. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and the spot equity and bond index level. F-97 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Separate Account Assets These assets are comprised of investments that are similar in nature to the fixed maturity securities, equity securities, short-term investments and derivatives referred to above. Also included are certain mutual funds and hedge funds without readily determinable fair values given prices are not published publicly. Valuation of the mutual funds and hedge funds is based upon quoted prices or reported NAV provided by the fund managers. LEVEL 3 MEASUREMENTS: In general, investments classified within Level 3 use many of the same valuation techniques and inputs as described above. However, if key inputs are unobservable, or if the investments are less liquid and there is very limited trading activity, the investments are generally classified as Level 3. The use of independent non-binding broker quotations to value investments generally indicates there is a lack of liquidity or the general lack of transparency in the process to develop the valuation estimates generally causing these investments to be classified in Level 3. Fixed Maturity Securities, Equity Securities, Trading and Other Securities and Short-term Investments This level includes fixed maturity securities and equity securities priced principally by independent broker quotations or market standard valuation methodologies using inputs that are not market observable or cannot be derived principally from or corroborated by observable market data. Trading and other securities and short-term investments within this level are of a similar nature and class to the Level 3 securities described below; accordingly, the valuation techniques and significant market standard observable inputs used in their valuation are also similar to those described below. U.S. corporate and foreign corporate securities. These securities, including financial services industry hybrid securities classified within fixed maturity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing or other similar techniques that utilize unobservable inputs or cannot be derived principally from, or corroborated by, observable market data, including illiquidity premiums and spread adjustments to reflect industry trends or specific credit-related issues. Valuations may be based on independent non-binding broker quotations. Generally, below investment grade privately placed or distressed securities included in this level are valued using discounted cash flow methodologies which rely upon significant, unobservable inputs and inputs that cannot be derived principally from, or corroborated by, observable market data. Structured securities comprised of RMBS, CMBS and ABS. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques that utilize inputs that are unobservable or cannot be derived principally from, or corroborated by, observable market data, or are based on independent non- binding broker quotations. Below investment grade securities and ABS supported by sub-prime mortgage loans included in this level are valued based on inputs including quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2, and certain of these securities are valued based on independent non-binding broker quotations. Foreign government and state and political subdivision securities. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques, however these securities are less liquid and certain of the inputs are based on very limited trading activity. Common and non-redeemable preferred stock. These securities, including privately held securities and financial services industry hybrid securities classified within equity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing or other similar techniques using inputs such as comparable credit rating and issuance structure. Equity securities valuations determined F-98 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) with discounted cash flow methodologies use inputs such as earnings multiples based on comparable public companies, and industry-specific non- earnings based multiples. Certain of these securities are valued based on independent non-binding broker quotations. Derivative Assets and Derivative Liabilities These derivatives are principally valued using an income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models. These valuation methodologies generally use the same inputs as described in the corresponding sections above for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Interest rate contracts. Non-option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve and LIBOR basis curves. Option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves, and interest rate volatility. Foreign currency contracts. Non-option based -- Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves and cross currency basis curves. Certain of these derivatives are valued based on independent non-binding broker quotations. Credit contracts. Non-option-based -- Significant unobservable inputs may include credit correlation, repurchase rates, and the extrapolation beyond observable limits of the swap yield curve and credit curves. Certain of these derivatives are valued based on independent non-binding broker quotations. Equity market contracts. Non-option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves. Option-based -- Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves and equity volatility. Guaranteed Minimum Benefit Guarantees These embedded derivatives are principally valued using an income approach. Valuations are based on option pricing techniques, which utilize significant inputs that may include swap yield curve, currency exchange rates and implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable limits of the swap yield curve and implied volatilities, actuarial assumptions for policyholder behavior and mortality and the potential variability in policyholder behavior and mortality, nonperformance risk and cost of capital for purposes of calculating the risk margin. F-99 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Reinsurance Ceded on Certain Guaranteed Minimum Benefit Guarantees These embedded derivatives are principally valued using an income approach. Valuations are based on option pricing techniques, which utilize significant inputs that may include swap yield curve, currency exchange rates and implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable limits of the swap yield curve and implied volatilities, actuarial assumptions for policyholder behavior and mortality and the potential variability in policyholder behavior and mortality, counterparty credit spreads and cost of capital for purposes of calculating the risk margin. Embedded Derivatives Within Funds Withheld Related to Certain Ceded Reinsurance These derivatives are principally valued using an income approach. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and the fair value of assets within the reference portfolio. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the fair value of certain assets within the reference portfolio which are not observable in the market and cannot be derived principally from, or corroborated by, observable market data. Separate Account Assets These assets are comprised of investments that are similar in nature to the fixed maturity securities, equity securities and derivatives referred to above. Separate account assets within this level also include mortgage loans and other limited partnership interests. The estimated fair value of mortgage loans is determined by discounting expected future cash flows, using current interest rates for similar loans with similar credit risk. Other limited partnership interests are valued giving consideration to the value of the underlying holdings of the partnerships and by applying a premium or discount, if appropriate, for factors such as liquidity, bid/ask spreads, the performance record of the fund manager or other relevant variables which may impact the exit value of the particular partnership interest. Long-term Debt of CSEs The estimated fair value of the long-term debt of the Company's CSEs are priced principally through independent broker quotations or market standard valuation methodologies using inputs that are not market observable or cannot be derived from or corroborated by observable market data. TRANSFERS BETWEEN LEVELS 1 AND 2: During the year ended December 31, 2010, transfers between Levels 1 and 2 were not significant. TRANSFERS INTO OR OUT OF LEVEL 3: Overall, transfers into and/or out of Level 3 are attributable to a change in the observability of inputs. Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. Transfers into and/or out of any level are assumed F-100 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) to occur at the beginning of the period. Significant transfers into and/or out of Level 3 assets and liabilities for the year ended December 31, 2010 are summarized below. During the year ended December 31, 2010, fixed maturity securities transfers into Level 3 of $1,255 million, and separate account assets transfers into Level 3 of $46 million, resulted primarily from current market conditions characterized by a lack of trading activity, decreased liquidity and credit ratings downgrades (e.g., from investment grade to below investment grade). These current market conditions have resulted in decreased transparency of valuations and an increased use of broker quotations and unobservable inputs to determine estimated fair value principally for certain private placements included in U.S. and foreign corporate securities. During the year ended December 31, 2010, fixed maturity securities transfers out of Level 3 of $1,066 million and separate account assets transfers out of Level 3 of $231 million, resulted primarily from increased transparency of both new issuances that subsequent to issuance and establishment of trading activity, became priced by independent pricing services and existing issuances that, over time, the Company was able to corroborate pricing received from independent pricing services with observable inputs or increases in market activity and upgraded credit ratings primarily for certain U.S. and foreign corporate securities, RMBS, ABS and foreign government securities. F-101 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A rollforward of all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs is as follows:
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------------------------------------------------------------------------------------------- TOTAL REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN: --------------------------------- PURCHASES, OTHER SALES, BALANCE, COMPREHENSIVE ISSUANCES AND TRANSFER INTO TRANSFER OUT JANUARY 1, EARNINGS (1), (2) INCOME (LOSS) SETTLEMENTS (3) LEVEL 3 (4) OF LEVEL 3 (4) ---------- ----------------- ------------- --------------- ------------- -------------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: ASSETS: Fixed maturity securities: U.S. corporate securities..... $ 4,674 $ 7 $184 $(400) $ 751 $ (153) Foreign corporate securities.. 3,456 (33) 179 (709) 351 (448) RMBS.......................... 1,580 27 71 (333) 57 (192) U.S. Treasury, agency and government guaranteed securities................. -- -- -- 22 22 -- CMBS.......................... 87 -- 50 (21) 45 -- ABS........................... 1,668 (39) 276 494 29 (139) State and political subdivision securities..... 20 -- -- 2 -- (21) Foreign government securities................. 249 4 16 15 -- (113) ------- ---- ---- ----- ------ ------- Total fixed maturity securities............... $11,734 $(34) $776 $(930) $1,255 $(1,066) ======= ==== ==== ===== ====== ======= Equity securities: Common stock.................. $ 64 $ (1) $ -- $ 16 $ 1 $ (1) Non-redeemable preferred stock...................... 793 30 2 (192) -- -- ------- ---- ---- ----- ------ ------- Total equity securities.... $ 857 $ 29 $ 2 $(176) $ 1 $ (1) ======= ==== ==== ===== ====== ======= Trading and other securities: Actively Traded Securities.... $ 32 $ -- $ -- $ (22) $ -- $ -- FVO general account securities................. 51 10 -- (30) 37 (18) ------- ---- ---- ----- ------ ------- Total trading and other securities............... $ 83 $ 10 $ -- $ (52) $ 37 $ (18) ======= ==== ==== ===== ====== ======= Short-term investments.......... $ 8 $ 1 $ -- $ 370 $ -- $ -- Net derivatives: (5) Interest rate contracts....... $ -- $ 23 $(36) $ (10) $ -- $ -- Foreign currency contracts.... 53 28 -- (35) -- -- Credit contracts.............. 37 2 1 (7) -- -- Equity market contracts....... 2 (2) -- -- -- -- ------- ---- ---- ----- ------ ------- Total net derivatives...... $ 92 $ 51 $(35) $ (52) $ -- $ -- ======= ==== ==== ===== ====== ======= Separate account assets (6)..... $ 1,583 $142 $ -- $ (31) $ 46 $ (231) FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------ BALANCE, DECEMBER 31, ------------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: ASSETS: Fixed maturity securities: U.S. corporate securities..... $ 5,063 Foreign corporate securities.. 2,796 RMBS.......................... 1,210 U.S. Treasury, agency and government guaranteed securities................. 44 CMBS.......................... 161 ABS........................... 2,289 State and political subdivision securities..... 1 Foreign government securities................. 171 ------- Total fixed maturity securities............... $11,735 ======= Equity securities: Common stock.................. $ 79 Non-redeemable preferred stock...................... 633 ------- Total equity securities.... $ 712 ======= Trading and other securities: Actively Traded Securities.... $ 10 FVO general account securities................. 50 ------- Total trading and other securities............... $ 60 ======= Short-term investments.......... $ 379 Net derivatives: (5) Interest rate contracts....... $ (23) Foreign currency contracts.... 46 Credit contracts.............. 33 Equity market contracts....... -- ------- Total net derivatives...... $ 56 ======= Separate account assets (6)..... $ 1,509
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ---------------------------------------------------------------------------------------- TOTAL REALIZED/UNREALIZED (GAINS) LOSSES INCLUDED IN: ------------------------ PURCHASES, OTHER SALES, BALANCE, EARNINGS COMPREHENSIVE ISSUANCES AND TRANSFER INTO TRANSFER OUT JANUARY 1, (1), (2) INCOME (LOSS) SETTLEMENTS (3) LEVEL 3 (4) OF LEVEL 3 (4) ---------- -------- ------------- --------------- ------------- -------------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: LIABILITIES: Net embedded derivatives (7)....... $(166) $588 $-- $(40) $-- $-- Long-term debt of consolidated securitization entities (8)...... $ -- $(48) $-- $232 $-- $-- FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------ BALANCE, DECEMBER 31, ------------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: LIABILITIES: Net embedded derivatives (7)....... $382 Long-term debt of consolidated securitization entities (8)...... $184
F-102 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) --------------------------------------------------------------------------------- TOTAL REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN: --------------------------------- PURCHASES, OTHER SALES, TRANSFER INTO BALANCE, COMPREHENSIVE ISSUANCES AND AND/OR OUT JANUARY 1, EARNINGS (1), (2) INCOME (LOSS) SETTLEMENTS (3) OF LEVEL 3 (4) ---------- ----------------- ------------- --------------- -------------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: ASSETS: Fixed maturity securities: U.S. corporate securities........... $ 5,089 $ (276) $ 572 $(1,002) $ 291 Foreign corporate securities........ 3,367 (210) 1,156 (614) (243) RMBS................................ 373 35 80 1,134 (42) U.S. Treasury, agency and government guaranteed securities............ 48 -- -- (27) (21) CMBS................................ 138 6 4 (38) (23) ABS................................. 1,487 (63) 281 (61) 24 State and political subdivision securities....................... 76 -- 1 (15) (42) Foreign government securities....... 202 2 18 66 (39) ------- ------- ------ ------- ----- Total fixed maturity securities.. $10,780 $ (506) $2,112 $ (557) $ (95) ======= ======= ====== ======= ===== Equity securities: Common stock........................ $ 59 $ (2) $ (2) $ 9 $ -- Non-redeemable preferred stock...... 918 (251) 355 (190) (39) ------- ------- ------ ------- ----- Total equity securities.......... $ 977 $ (253) $ 353 $ (181) $ (39) ======= ======= ====== ======= ===== Trading and other securities.......... $ 116 $ 16 $ -- $ (49) $ -- Short-term investments................ $ 75 $ (9) $ -- $ (53) $ (5) Net derivatives (5)................... $ (19) $ 35 $ (1) $ 79 $ (2) Net embedded derivatives (7).......... $ 1,702 $(1,570) $ -- $ 34 $ -- Separate account assets (6)........... $ 1,486 $ (221) $ -- $ 452 $(134) FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ------------ BALANCE, DECEMBER 31, ------------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: ASSETS: Fixed maturity securities: U.S. corporate securities........... $ 4,674 Foreign corporate securities........ 3,456 RMBS................................ 1,580 U.S. Treasury, agency and government guaranteed securities............ -- CMBS................................ 87 ABS................................. 1,668 State and political subdivision securities....................... 20 Foreign government securities....... 249 ------- Total fixed maturity securities.. $11,734 ======= Equity securities: Common stock........................ $ 64 Non-redeemable preferred stock...... 793 ------- Total equity securities.......... $ 857 ======= Trading and other securities.......... $ 83 Short-term investments................ $ 8 Net derivatives (5)................... $ 92 Net embedded derivatives (7).......... $ 166 Separate account assets (6)........... $ 1,583
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) -------------------------------------------------------------------------------------------- TOTAL REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN: --------------------------------- PURCHASES, BALANCE, OTHER SALES, DECEMBER 31, IMPACT OF BALANCE, COMPREHENSIVE ISSUANCES AND 2007 ADOPTION (9) JANUARY 1, EARNINGS (1), (2) INCOME (LOSS) SETTLEMENTS (3) ------------ ------------ ---------- ----------------- ------------- --------------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2008: ASSETS: Fixed maturity securities: U.S. corporate securities............ $ 5,527 $ -- $ 5,527 $ (455) $(1,085) $ 606 Foreign corporate securities............ 4,752 -- 4,752 (127) (1,794) (104) RMBS..................... 899 -- 899 (2) (111) (53) U.S. Treasury, agency and government guaranteed securities............ 55 -- 55 -- (1) (29) CMBS..................... 271 -- 271 (6) (57) 2 ABS...................... 2,814 -- 2,814 (80) (672) (549) State and political subdivision securities............ 56 -- 56 1 11 33 Foreign government securities............ 475 -- 475 (5) (17) (256) Other fixed maturity securities............ 217 -- 217 -- (37) (180) ------- ------- ------- ------ ------- ----- Total fixed maturity securities.......... $15,066 $-- $15,066 $ (674) $(3,763) $(530) ======= ======= ======= ====== ======= ===== Equity securities: Common stock............. $ 60 $-- $ 60 $ 2 $ (4) $ 1 Non-redeemable preferred stock................. 1,467 -- 1,467 (130) (342) (55) ------- ------- ------- ------ ------- ----- Total equity securities.......... $ 1,527 $-- $ 1,527 $ (128) $ (346) $ (54) ======= ======= ======= ====== ======= ===== Trading and other securities............... $ 174 $-- $ 174 $ (26) $ -- $ (32) Short-term investments..... $ 149 $-- $ 149 $ (2) $ -- $ (72) Net embedded derivatives (7)...................... $ 25 $30 $ 55 $1,631 $ -- $ 16 Separate account assets (6)...................... $ 1,170 $-- $ 1,170 $ (86) $ -- $ (22) FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) --------------------------- TRANSFER INTO AND/OR OUT OF BALANCE, LEVEL 3 (4) DECEMBER 31, ------------- ------------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2008: ASSETS: Fixed maturity securities: U.S. corporate securities............ $ 496 $ 5,089 Foreign corporate securities............ 640 3,367 RMBS..................... (360) 373 U.S. Treasury, agency and government guaranteed securities............ 23 48 CMBS..................... (72) 138 ABS...................... (26) 1,487 State and political subdivision securities............ (25) 76 Foreign government securities............ 5 202 Other fixed maturity securities............ -- -- ----- ------- Total fixed maturity securities.......... $ 681 $10,780 ===== ======= Equity securities: Common stock............. $ -- $ 59 Non-redeemable preferred stock................. (22) 918 ----- ------- Total equity securities.......... $ (22) $ 977 ===== ======= Trading and other securities............... $ -- $ 116 Short-term investments..... $ -- $ 75 Net embedded derivatives (7)...................... $ -- $ 1,702 Separate account assets (6)...................... $ 424 $ 1,486
F-103 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ---------------------------------------------------------------------------------------------- TOTAL REALIZED/UNREALIZED (GAINS) LOSSES INCLUDED IN: --------------------------------- PURCHASES, BALANCE, OTHER SALES, DECEMBER 31, IMPACT OF BALANCE, COMPREHENSIVE ISSUANCES AND 2007 ADOPTION (9) JANUARY 1, EARNINGS (1), (2) INCOME (LOSS) SETTLEMENTS (3) ------------ ------------ ---------- ----------------- ------------- --------------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2008: LIABILITIES: Net derivatives (5)....... $(134) $1 $(133) $60 $-- $92 FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3) ---------------------------- TRANSFER INTO AND/OR OUT OF BALANCE, LEVEL 3 (4) DECEMBER 31, ------------- ------------ YEAR ENDED DECEMBER 31, 2008: LIABILITIES: Net derivatives (5)....... $-- $19
-------- (1) Amortization of premium/discount is included within net investment income which is reported within the earnings caption of total gains (losses). Impairments charged to earnings on securities are included within net investment gains (losses) which are reported within the earnings caption of total gains (losses). Lapses associated with embedded derivatives are included within the earnings caption of total gains (losses). (2) Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward. (3) The amount reported within purchases, sales, issuances and settlements is the purchase/issuance price (for purchases and issuances) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased/issued or sold/settled. Items purchased/issued and sold/settled in the same period are excluded from the rollforward. For embedded derivatives, attributed fees are included within this caption along with settlements, if any. (4) Total gains and losses (in earnings and other comprehensive income (loss)) are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and out in the same period are excluded from the rollforward. (5) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. (6) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. (7) Embedded derivative assets and liabilities are presented net for purposes of the rollforward. (8) The long-term debt at January 1, 2010 of the CSEs is reported within the purchases, sales, issuances and settlements activity column of the rollforward. (9) The impact of adoption of fair value measurement guidance represents the amount recognized in earnings resulting from a change in estimate for certain Level 3 financial instruments held at January 1, 2008. The net impact of adoption on Level 3 assets and liabilities presented in the table above was a $29 million increase to net assets. Such amount was also impacted by a decrease to DAC of $9 million. The impact of this adoption on RGA-- not reflected in the table above as a result of the inclusion of RGA in discontinued operations -- was a net increase of $2 million (i.e., a decrease in Level 3 net embedded derivative liabilities of $17 million, offset by a DAC decrease of $15 million) for a total increase of $22 million in Level 3 net assets. This increase of $22 million, offset by a $9 million reduction in the estimated fair value of Level 2 freestanding derivatives, resulted in a total net impact of adoption of $13 million. F-104 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The tables below summarize both realized and unrealized gains and losses due to changes in estimated fair value recorded in earnings for Level 3 assets and liabilities:
TOTAL GAINS AND LOSSES ------------------------------------------------------------- CLASSIFICATION OF REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN EARNINGS ------------------------------------------------------------- NET NET NET INVESTMENT INVESTMENT DERIVATIVE INCOME GAINS (LOSSES) GAINS (LOSSES) TOTAL ---------- -------------- -------------- ----- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: ASSETS: Fixed maturity securities: U.S. corporate securities............ $17 $ (10) $ -- $ 7 Foreign corporate securities......... (1) (32) -- (33) RMBS................................. 36 (9) -- 27 CMBS................................. 2 (2) -- -- ABS.................................. 32 (71) -- (39) Foreign government securities........ 5 (1) -- 4 ----- ----- ----- ----- Total fixed maturity securities... $91 $(125) $ -- $ (34) ===== ===== ===== ===== Equity securities: Common stock......................... $ -- $ (1) $ -- $ (1) Non-redeemable preferred stock....... -- 30 -- 30 ----- ----- ----- ----- Total equity securities........... $-- $ 29 $ -- $ 29 ===== ===== ===== ===== Short-term investments................. $ 1 $ -- $ -- $ 1 Trading and other securities: FVO general account securities....... $10 $ -- $ -- $ 10 Net derivatives: Interest rate contracts.............. $-- $ -- $ 23 $ 23 Foreign currency contracts........... -- -- 28 28 Credit contracts..................... -- -- 2 2 Equity market contracts.............. -- -- (2) (2) ----- ----- ----- ----- Total net derivatives............. $-- $ -- $ 51 $ 51 ===== ===== ===== ===== LIABILITIES: Net embedded derivatives............... $-- $ -- $(588) $(588) Long-term debt of consolidated securitization entities.............. $-- $ 48 $ -- $ 48
F-105 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TOTAL GAINS AND LOSSES --------------------------------------------------------------- CLASSIFICATION OF REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN EARNINGS --------------------------------------------------------------- NET NET NET INVESTMENT INVESTMENT DERIVATIVE INCOME GAINS (LOSSES) GAINS (LOSSES) TOTAL ---------- -------------- -------------- ------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: ASSETS: Fixed maturity securities: U.S. corporate securities........... $ 12 $(288) $ -- $ (276) Foreign corporate securities........ (8) (202) -- (210) RMBS................................ 30 5 -- 35 CMBS................................ -- 6 -- 6 ABS................................. 8 (71) -- (63) Foreign government securities....... 3 (1) -- 2 ----- ----- ------- ------- Total fixed maturity securities.. $45 $(551) $ -- $ (506) ===== ===== ======= ======= Equity securities: Common stock........................ $-- $ (2) $ -- $ (2) Non-redeemable preferred stock...... -- (251) -- (251) ----- ----- ------- ------- Total equity securities.......... $-- $(253) $ -- $ (253) ===== ===== ======= ======= Trading and other securities.......... $16 $ -- $ -- $ 16 Short-term investments................ $-- $ (9) $ -- $ (9) Net derivatives....................... $-- $ -- $ 35 $ 35 LIABILITIES: Net embedded derivatives.............. $-- $ -- $(1,570) $(1,570)
F-106 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TOTAL GAINS AND LOSSES -------------------------------------------------------------- CLASSIFICATION OF REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN EARNINGS -------------------------------------------------------------- NET NET NET INVESTMENT INVESTMENT DERIVATIVE INCOME GAINS (LOSSES) GAINS (LOSSES) TOTAL ---------- -------------- -------------- ------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2008: ASSETS: Fixed maturity securities: U.S. corporate securities............ $ 8 $(463) $ -- $ (455) Foreign corporate securities......... (6) (121) -- (127) RMBS................................. -- (2) -- (2) CMBS................................. -- (6) -- (6) ABS.................................. 3 (83) -- (80) State and political subdivision securities........................ -- 1 -- 1 Foreign government securities........ 4 (9) -- (5) ---- ----- ------ ------ Total fixed maturity securities... $ 9 $(683) $ -- $ (674) ==== ===== ====== ====== Equity securities: Common stock......................... $ -- $ 2 $ -- $ 2 Non-redeemable preferred stock....... -- (130) -- (130) ---- ----- ------ ------ Total equity securities........... $ -- $(128) $ -- $ (128) ==== ===== ====== ====== Trading and other securities........... $(26) $ -- $ -- $ (26) Short-term investments................. $ 1 $ (3) $ -- $ (2) LIABILITIES: Net derivatives........................ $ -- $ -- $ (60) $ (60) Net embedded derivatives............... $ -- $ -- $1,631 $1,631
F-107 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The tables below summarize the portion of unrealized gains and losses, due to changes in estimated fair value, recorded in earnings for Level 3 assets and liabilities that were still held at the respective time periods:
CHANGES IN UNREALIZED GAINS (LOSSES) RELATING TO ASSETS AND LIABILITIES HELD AT DECEMBER 31, 2010 ------------------------------------------------------------- NET NET NET INVESTMENT INVESTMENT DERIVATIVE INCOME GAINS (LOSSES) GAINS (LOSSES) TOTAL ---------- -------------- -------------- ----- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: ASSETS: Fixed maturity securities: U.S. corporate securities............ $ 8 $ (32) $ -- $ (24) Foreign corporate securities......... (2) (43) -- (45) RMBS................................. 36 -- -- 36 CMBS................................. 1 (2) -- (1) ABS.................................. 31 (49) -- (18) Foreign government securities........ 5 -- -- 5 --- ----- ----- ----- Total fixed maturity securities... $79 $(126) $ -- $ (47) === ===== ===== ===== Equity securities: Common stock......................... $-- $ (2) $ -- $ (2) Non-redeemable preferred stock....... -- (3) -- (3) --- ----- ----- ----- Total equity securities........... $-- $ (5) $ -- $ (5) === ===== ===== ===== Trading and other securities: FVO general account securities....... $13 $ -- $ -- $ 13 Short-term investments............ $ 1 $ -- $ -- $ 1 Net derivatives: Interest rate contracts.............. $-- $ -- $ 23 $ 23 Foreign currency contracts........... -- -- 21 21 Credit contracts..................... -- -- 3 3 Equity market contracts.............. -- -- (2) (2) --- ----- ----- ----- Total net derivatives............. $-- $ -- $ 45 $ 45 === ===== ===== ===== LIABILITIES: Net embedded derivatives............... $ $ $(584) $(584) Long-term debt of consolidated securitization entities.............. $-- $ 48 $ -- $ 48
F-108 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CHANGES IN UNREALIZED GAINS (LOSSES) RELATING TO ASSETS AND LIABILITIES HELD AT DECEMBER 31, 2009 --------------------------------------------------------------- NET NET NET INVESTMENT INVESTMENT DERIVATIVE INCOME GAINS (LOSSES) GAINS (LOSSES) TOTAL ---------- -------------- -------------- ------- (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: ASSETS: Fixed maturity securities: U.S. corporate securities........... $ 11 $(281) $ -- $ (270) Foreign corporate securities........ (7) (106) -- (113) RMBS................................ 30 6 -- 36 CMBS................................ -- (5) -- (5) ABS................................. 8 (97) -- (89) Foreign government securities....... 3 -- -- 3 ----- ----- ------- ------- Total fixed maturity securities.. $45 $(483) $ -- $ (438) ===== ===== ======= ======= Equity securities: Common stock........................ $-- $ (1) $ -- $ (1) Non-redeemable preferred stock...... -- (128) -- (128) ----- ----- ------- ------- Total equity securities.......... $-- $(129) $ -- $ (129) ===== ===== ======= ======= Trading and other securities.......... $15 $ -- $ -- $ 15 Net derivatives....................... $-- $ -- $ 96 $ 96 LIABILITIES: Net embedded derivatives.............. $-- $ -- $(1,568) $(1,568)
F-109 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CHANGES IN UNREALIZED GAINS (LOSSES) RELATING TO ASSETS AND LIABILITIES HELD AT DECEMBER 31, 2008 -------------------------------------------------------------- NET NET NET INVESTMENT INVESTMENT DERIVATIVE INCOME GAINS (LOSSES) GAINS (LOSSES) TOTAL ---------- -------------- -------------- ------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2008: ASSETS: Fixed maturity securities: U.S. corporate securities............ $ 6 $(283) $ -- $ (277) Foreign corporate securities......... (8) (120) -- (128) RMBS................................. -- -- -- -- CMBS................................. -- -- -- -- ABS.................................. 3 (63) -- (60) Foreign government securities........ 4 -- -- 4 ---- ----- ------ ------ Total fixed maturity securities... $ 5 $(466) $ -- $ (461) ==== ===== ====== ====== Equity securities: Common stock......................... $ -- $ (1) $ -- $ (1) Non-redeemable preferred stock....... -- (113) -- (113) ---- ----- ------ ------ Total equity securities........... $ -- $(114) $ -- $ (114) ==== ===== ====== ====== Trading and other securities........... $(18) $ -- $ -- $ (18) LIABILITIES: Net derivatives........................ $ -- $ -- $ (93) $ (93) Net embedded derivatives............... $ -- $ -- $1,632 $1,632
FVO -- CONSOLIDATED SECURITIZATION ENTITIES As discussed in Note 1, upon the adoption of new guidance effective January 1, 2010, the Company elected fair value accounting for the following assets and liabilities held by CSEs: securities and long-term debt. Information on the estimated fair value of the securities classified as trading and other securities is presented in Note 3. The following table presents the long-term debt carried under the FVO related to securities classified as trading and other securities at:
DECEMBER 31, 2010 ----------------- (IN MILLIONS) Contractual principal balance................................... $214 Excess of contractual principal balance over estimated fair value......................................................... (30) ---- Carrying value at estimated fair value........................ $184 ====
Interest expense on long-term debt of CSEs is recorded in other expenses. Gains and losses from initial measurement, subsequent changes in estimated fair value and gains or losses on sales of long-term debt are recognized in net investment gains (losses), which is summarized in Note 3. F-110 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NON-RECURRING FAIR VALUE MEASUREMENTS Certain assets are measured at estimated fair value on a non-recurring basis and are not included in the tables presented above. The amounts below relate to certain investments measured at estimated fair value during the period and still held at the reporting dates.
YEARS ENDED DECEMBER 31, ---------------------------------------------------------------------------------------------------- 2010 2009 2008 ------------------------------------ ------------------------------------ ------------------------ CARRYING ESTIMATED NET CARRYING ESTIMATED NET CARRYING ESTIMATED VALUE FAIR INVESTMENT VALUE FAIR INVESTMENT VALUE FAIR PRIOR TO VALUE AFTER GAINS PRIOR TO VALUE AFTER GAINS PRIOR TO VALUE AFTER MEASUREMENT MEASUREMENT (LOSSES) MEASUREMENT MEASUREMENT (LOSSES) MEASUREMENT MEASUREMENT ----------- ----------- ---------- ----------- ----------- ---------- ----------- ----------- (IN MILLIONS) Mortgage loans: (1) Held-for-investment.. $176 $160 $(16) $248 $168 $ (80) $234 $188 Held-for-sale........ -- -- -- -- -- -- 26 16 ---- ---- ---- ---- ---- ----- ---- ---- Mortgage loans, net............. $176 $160 $(16) $248 $168 $ (80) $260 $204 ==== ==== ==== ==== ==== ===== ==== ==== Other limited partnership interests (2).................. $ 3 $ 1 $ (2) $805 $517 $(288) $230 $131 Real estate joint ventures (3)......... $ 8 $ 3 $ (5) $ 80 $ 43 $ (37) $ -- $ -- YEARS ENDED DECEMBER 31, ---------- 2008 ---------- NET INVESTMENT GAINS (LOSSES) ---------- (IN MILLIONS) Mortgage loans: (1) Held-for-investment.. $(46) Held-for-sale........ (10) ---- Mortgage loans, net............. $(56) ==== Other limited partnership interests (2).................. $(99) Real estate joint ventures (3)......... $ --
-------- (1) Mortgage loans -- The impaired mortgage loans presented above were written down to their estimated fair values at the date the impairments were recognized and are reported as losses above. Subsequent improvements in estimated fair value on previously impaired loans recorded through a reduction in the previously established valuation allowance are reported as gains above. Estimated fair values for impaired mortgage loans are based on observable market prices or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, on the estimated fair value of the underlying collateral, or the present value of the expected future cash flows. Impairments to estimated fair value and decreases in previous impairments from subsequent improvements in estimated fair value represent non-recurring fair value measurements that have been categorized as Level 3 due to the lack of price transparency inherent in the limited markets for such mortgage loans. (2) Other limited partnership interests -- The impaired investments presented above were accounted for using the cost method. Impairments on these cost method investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair value measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several private equity and debt funds that typically invest primarily in a diversified pool of investments across certain investment strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; below investment grade debt and mezzanine debt funds. The estimated fair values of these investments have been determined using the NAV of the Company's ownership interest in the partners' capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next 2 to 10 years. Unfunded commitments for these investments were $11 million and $321 million at December 31, 2010 and 2009, respectively. (3) Real estate joint ventures -- The impaired investments presented above were accounted for using the cost method. Impairments on these cost method investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair value F-111 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several real estate funds that typically invest primarily in commercial real estate. The estimated fair values of these investments have been determined using the NAV of the Company's ownership interest in the partners' capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next 2 to 10 years. Unfunded commitments for these investments were $3 million and $45 million at December 31, 2010 and 2009, respectively. FAIR VALUE OF FINANCIAL INSTRUMENTS Amounts related to the Company's financial instruments that were not measured at fair value on a recurring basis, were as follows:
ESTIMATED NOTIONAL CARRYING FAIR DECEMBER 31, 2010 AMOUNT VALUE VALUE ------------------------------------------------------- -------- -------- --------- (IN MILLIONS) ASSETS Mortgage loans, net.................................. $41,667 $43,278 Policy loans......................................... $ 8,270 $ 9,509 Real estate joint ventures (1)....................... $ 50 $ 58 Other limited partnership interests (1).............. $ 1,423 $ 1,491 Short-term investments (2)........................... $ 144 $ 144 Other invested assets (1)............................ $ 1,494 $ 1,506 Cash and cash equivalents............................ $ 3,485 $ 3,485 Accrued investment income............................ $ 2,183 $ 2,183 Premiums, reinsurance and other receivables (1)...... $18,268 $18,999 LIABILITIES Policyholder account balances (1).................... $66,249 $68,861 Payables for collateral under securities loaned and other transactions................................ $17,014 $17,014 Short-term debt...................................... $ 102 $ 102 Long-term debt (1), (3).............................. $ 3,399 $ 3,473 Other liabilities (1)................................ $24,553 $25,034 Separate account liabilities (1)..................... $37,791 $37,791 COMMITMENTS (4) Mortgage loan commitments............................ $2,516 $ -- $ (13) Commitments to fund bank credit facilities, bridge loans and private corporate bond investments...... $1,997 $ -- $ 16
F-112 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ESTIMATED NOTIONAL CARRYING FAIR DECEMBER 31, 2009 AMOUNT VALUE VALUE ------------------------------------------------------- -------- -------- --------- (IN MILLIONS) ASSETS Mortgage loans, net.................................. $40,620 $39,155 Policy loans......................................... $ 8,099 $ 9,108 Real estate joint ventures (1)....................... $ 49 $ 61 Other limited partnership interests (1).............. $ 1,443 $ 1,431 Short-term investments (2)........................... $ 15 $ 15 Other invested assets (1)............................ $ 1,707 $ 1,659 Cash and cash equivalents............................ $ 3,347 $ 3,347 Accrued investment income............................ $ 2,066 $ 2,066 Premiums, reinsurance and other receivables (1)...... $18,271 $18,648 LIABILITIES Policyholder account balances (1).................... $64,097 $64,081 Payables for collateral under securities loaned and other transactions................................ $14,662 $14,662 Short-term debt...................................... $ 319 $ 319 Long-term debt (1)................................... $ 3,474 $ 3,494 Other liabilities (1)................................ $17,192 $17,192 Separate account liabilities (1)..................... $28,874 $28,874 COMMITMENTS (4) Mortgage loan commitments............................ $1,262 $ -- $ (43) Commitments to fund bank credit facilities, bridge loans and private corporate bond investments...... $ 763 $ -- $ (19)
-------- (1) Carrying values presented herein differ from those presented in the consolidated balance sheets because certain items within the respective financial statement caption are not considered financial instruments. Financial statement captions excluded from the table above are not considered financial instruments. (2) Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because these tables do not include short-term investments that meet the definition of a security, which are measured at estimated fair value on a recurring basis. (3) Long-term debt as presented in the table above does not include long-term debt of CSEs. (4) Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities. The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: The assets and liabilities measured at estimated fair value on a recurring basis include: fixed maturity securities, equity securities, trading and other securities, derivative assets and liabilities, net embedded derivatives within asset and liability host contracts, separate account assets, long-term debt of CSEs and trading liabilities. These assets and liabilities are described in the section "-- Recurring Fair Value Measurements" and, therefore, are F-113 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) excluded from the tables above. The estimated fair value for these financial instruments approximates carrying value. Mortgage Loans The Company originates mortgage loans principally for investment purposes. These loans are principally carried at amortized cost. The estimated fair value of mortgage loans is primarily determined by estimating expected future cash flows and discounting them using current interest rates for similar mortgage loans with similar credit risk. Certain mortgage loans have been impaired to their estimated fair value which is determined using independent broker quotations or, when the mortgage loan is in foreclosure or otherwise determined to be collateral dependent, the fair value of the underlying collateral is estimated using internal models. Policy Loans For policy loans with fixed interest rates, estimated fair values are determined using a discounted cash flow model applied to groups of similar policy loans determined by the nature of the underlying insurance liabilities. Cash flow estimates are developed applying a weighted-average interest rate to the outstanding principal balance of the respective group of policy loans and an estimated average maturity determined through experience studies of the past performance of policyholder repayment behavior for similar loans. These cash flows are discounted using current risk-free interest rates with no adjustment for borrower credit risk as these loans are fully collateralized by the cash surrender value of the underlying insurance policy. The estimated fair value for policy loans with variable interest rates approximates carrying value due to the absence of borrower credit risk and the short time period between interest rate resets, which presents minimal risk of a material change in estimated fair value due to changes in market interest rates. Real Estate Joint Ventures and Other Limited Partnership Interests Real estate joint ventures and other limited partnership interests included in the preceding tables consist of those investments accounted for using the cost method. The remaining carrying value recognized in the consolidated balance sheets represents investments in real estate carried at cost less accumulated depreciation, or real estate joint ventures and other limited partnership interests accounted for using the equity method, which do not meet the definition of financial instruments for which fair value is required to be disclosed. The estimated fair values for other limited partnership interests and real estate joint ventures accounted for under the cost method are generally based on the Company's share of the NAV as provided in the financial statements of the investees. In certain circumstances, management may adjust the NAV by a premium or discount when it has sufficient evidence to support applying such adjustments. Short-term Investments Certain short-term investments do not qualify as securities and are recognized at amortized cost in the consolidated balance sheets. For these instruments, the Company believes that there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value approximates carrying value. In light of recent market conditions, short-term investments have been monitored to ensure there is sufficient demand and maintenance of issuer credit quality and the Company has determined additional adjustment is not required. Other Invested Assets Other invested assets within the preceding tables are principally comprised of loans to affiliates and funds withheld. F-114 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The estimated fair value of loans to affiliates is determined by discounting the expected future cash flows using market interest rates currently available for instruments with similar terms and remaining maturities. For funds withheld, the Company evaluates the specific facts and circumstances of each instrument to determine the appropriate estimated fair values. These estimated fair values were not materially different from the recognized carrying values. Cash and Cash Equivalents Due to the short-term maturities of cash and cash equivalents, the Company believes there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value generally approximates carrying value. In light of recent market conditions, cash and cash equivalent instruments have been monitored to ensure there is sufficient demand and maintenance of issuer credit quality, or sufficient solvency in the case of depository institutions, and the Company has determined additional adjustment is not required. Accrued Investment Income Due to the short term until settlement of accrued investment income, the Company believes there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value approximates carrying value. In light of recent market conditions, the Company has monitored the credit quality of the issuers and has determined additional adjustment is not required. Premiums, Reinsurance and Other Receivables Premiums, reinsurance and other receivables in the preceding tables are principally comprised of certain amounts recoverable under reinsurance contracts, amounts on deposit with financial institutions to facilitate daily settlements related to certain derivative positions and amounts receivable for securities sold but not yet settled. Premiums receivable and those amounts recoverable under reinsurance treaties determined to transfer sufficient risk are not financial instruments subject to disclosure and thus have been excluded from the amounts presented in the preceding tables. Amounts recoverable under ceded reinsurance contracts, which the Company has determined do not transfer sufficient risk such that they are accounted for using the deposit method of accounting, have been included in the preceding tables. The estimated fair value is determined as the present value of expected future cash flows under the related contracts, which were discounted using an interest rate determined to reflect the appropriate credit standing of the assuming counterparty. The amounts on deposit for derivative settlements essentially represent the equivalent of demand deposit balances and amounts due for securities sold are generally received over short periods such that the estimated fair value approximates carrying value. In light of recent market conditions, the Company has monitored the solvency position of the financial institutions and has determined additional adjustments are not required. Policyholder Account Balances Policyholder account balances in the tables above include investment contracts. Embedded derivatives on investment contracts and certain variable annuity guarantees accounted for as embedded derivatives are included in this caption in the consolidated financial statements but excluded from this caption in the tables above as they are separately presented in "-- Recurring Fair Value Measurements." The remaining difference between the amounts reflected as policyholder account balances in the preceding table and those recognized in the consolidated balance sheets represents those amounts due under contracts that satisfy the definition of insurance contracts and are not considered financial instruments. The investment contracts primarily include certain funding agreements, fixed deferred annuities, modified guaranteed annuities, fixed term payout annuities and total control accounts. The fair values for these investment F-115 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) contracts are estimated by discounting best estimate future cash flows using current market risk-free interest rates and adding a spread to reflect the nonperformance risk in the liability. Payables for Collateral Under Securities Loaned and Other Transactions The estimated fair value for payables for collateral under securities loaned and other transactions approximates carrying value. The related agreements to loan securities are short-term in nature such that the Company believes there is limited risk of a material change in market interest rates. Additionally, because borrowers are cross-collateralized by the borrowed securities, the Company believes no additional consideration for changes in nonperformance risk are necessary. Short-term and Long-term Debt The estimated fair value for short-term debt approximates carrying value due to the short-term nature of these obligations. The estimated fair values of long-term debt are generally determined by discounting expected future cash flows using market rates currently available for debt with similar terms, remaining maturities and reflecting the credit risk of the Company, including inputs when available, from actively traded debt of the Company or other companies with similar types of borrowing arrangements. Risk-adjusted discount rates applied to the expected future cash flows can vary significantly based upon the specific terms of each individual arrangement, including, but not limited to: subordinated rights; contractual interest rates in relation to current market rates; the structuring of the arrangement; and the nature and observability of the applicable valuation inputs. Use of different risk-adjusted discount rates could result in different estimated fair values. The carrying value of long-term debt presented in the table above differs from the amounts presented in the consolidated balance sheets as it does not include capital leases which are not required to be disclosed at estimated fair value. Other Liabilities Other liabilities included in the tables above reflect those other liabilities that satisfy the definition of financial instruments subject to disclosure. These items consist primarily of interest and dividends payable; amounts due for securities purchased but not yet settled; and amounts payable under certain ceded and assumed reinsurance treaties accounted for as deposit type treaties. The Company evaluates the specific terms, facts and circumstances of each instrument to determine the appropriate estimated fair values, which were not materially different from the carrying values, with the exception of certain deposit type reinsurance payables. For these reinsurance payables, the estimated fair value is determined as the present value of expected future cash flows under the related contracts, which were discounted using an interest rate determined to reflect the appropriate credit standing of the assuming counterparty. Separate Account Liabilities Separate account liabilities included in the preceding tables represent those balances due to policyholders under contracts that are classified as investment contracts. The remaining amounts presented in the consolidated balance sheets represent those contracts classified as insurance contracts, which do not satisfy the definition of financial instruments. Separate account liabilities classified as investment contracts primarily represent variable annuities with no significant mortality risk to the Company such that the death benefit is equal to the account balance; funding agreements related to group life contracts; and certain contracts that provide for benefit funding. Separate account liabilities are recognized in the consolidated balance sheets at an equivalent value of the related separate account assets. Separate account assets, which equal net deposits, net investment income and F-116 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) realized and unrealized investment gains and losses, are fully offset by corresponding amounts credited to the contractholders' liability which is reflected in separate account liabilities. Since separate account liabilities are fully funded by cash flows from the separate account assets which are recognized at estimated fair value as described in the section "-- Recurring Fair Value Measurements," the Company believes the value of those assets approximates the estimated fair value of the related separate account liabilities. Mortgage Loan Commitments and Commitments to Fund Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments The estimated fair values for mortgage loan commitments that will be held for investment and commitments to fund bank credit facilities, bridge loans and private corporate bonds that will be held for investment reflected in the above tables represent the difference between the discounted expected future cash flows using interest rates that incorporate current credit risk for similar instruments on the reporting date and the principal amounts of the commitments. F-117 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 6. 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, 2008............................... $ 8,551 $ 77 $ 8,628 Capitalizations........................................ 901 -- 901 ------- ---- ------- Subtotal............................................ 9,452 77 9,529 ------- ---- ------- Amortization related to: Net investment gains (losses)....................... (157) 4 (153) Other expenses...................................... (909) (19) (928) ------- ---- ------- Total amortization................................ (1,066) (15) (1,081) ------- ---- ------- Unrealized investment gains (losses)................... 2,274 146 2,420 Effect of foreign currency translation and other....... 2 1 3 ------- ---- ------- Balance at December 31, 2008............................. 10,662 209 10,871 Capitalizations........................................ 857 -- 857 ------- ---- ------- Subtotal............................................ 11,519 209 11,728 ------- ---- ------- Amortization related to: Net investment gains (losses)....................... 254 1 255 Other expenses...................................... (648) (22) (670) ------- ---- ------- Total amortization................................ (394) (21) (415) ------- ---- ------- Unrealized investment gains (losses)................... (1,897) (52) (1,949) ------- ---- ------- Balance at December 31, 2009............................. 9,228 136 9,364 Capitalizations........................................ 804 -- 804 ------- ---- ------- Subtotal............................................ 10,032 136 10,168 ------- ---- ------- Amortization related to: Net investment gains (losses)....................... (127) -- (127) Other expenses...................................... (809) (14) (823) ------- ---- ------- Total amortization................................ (936) (14) (950) ------- ---- ------- Unrealized investment gains (losses)................... (1,020) (7) (1,027) ------- ---- ------- Balance at December 31, 2010............................. $ 8,076 $115 $ 8,191 ======= ==== =======
The estimated future amortization expense allocated to other expenses for the next five years for VOBA is $10 million in 2011, $10 million in 2012, $10 million in 2013, $9 million in 2014 and $8 million in 2015. Amortization of DAC and VOBA is attributed to both investment gains and losses and to other expenses for the amount of gross margins or profits originating from transactions other than investment gains and losses. Unrealized investment gains and losses represent the amount of DAC and VOBA that would have been amortized if such gains and losses had been recognized. F-118 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding DAC and VOBA by segment is as follows:
DAC VOBA TOTAL ---------------- --------------- ---------------- DECEMBER 31, ----------------------------------------------------- 2010 2009 2010 2009 2010 2009 ------ ------- ------ ------ ------ ------- (IN MILLIONS) Insurance Products................... $6,143 $7,034 $ 97 $114 $6,240 $7,148 Retirement Products.................. 1,866 2,126 17 20 1,883 2,146 Corporate Benefit Funding............ 66 66 -- -- 66 66 Corporate & Other.................... 1 2 1 2 2 4 -- --- ------ ---- ---- -- --- ------ Total.............................. $8,076 $9,228 $115 $136 $8,191 $9,364 == === ====== ==== ==== == === ======
7. GOODWILL Goodwill, which is included in other assets, is the excess of cost over the estimated fair value of net assets acquired. Information regarding goodwill is as follows:
DECEMBER 31, ------------------ 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Balance at January 1,........................................ $111 $111 $108 Acquisitions................................................. -- -- 3 ---- ---- ---- Balance at December 31,...................................... $111 $111 $111 ==== ==== ====
Information regarding goodwill by segment and reporting unit is as follows:
DECEMBER 31, ----------- 2010 2009 ---- ---- (IN MILLIONS) Insurance Products: Group life...................................................... $ 3 $ 3 Individual life................................................. 27 27 Non-medical health.............................................. 65 65 ---- ---- Total Insurance Products..................................... 95 95 Retirement Products............................................... 10 10 Corporate Benefit Funding......................................... 2 2 Corporate & Other................................................. 4 4 ---- ---- Total...................................................... $111 $111 ==== ====
As described in more detail in Note 1, the Company performed its annual goodwill impairment tests during the third quarter of 2010 based upon data at June 30, 2010. The tests indicated that goodwill was not impaired. Management continues to evaluate current market conditions that may affect the estimated fair value of the Company's reporting units to assess whether any goodwill impairment exists. Continued deteriorating or adverse market conditions for certain reporting units may have an impact on the estimated fair value of these reporting units and could result in future impairments of goodwill. F-119 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 8. INSURANCE INSURANCE LIABILITIES Insurance liabilities, including affiliated insurance liabilities on reinsurance assumed and ceded, were as follows:
POLICYHOLDER OTHER POLICY- FUTURE POLICY ACCOUNT RELATED BENEFITS BALANCES BALANCES ------------------ ----------------- ----------------- DECEMBER 31, ---------------------------------------------------------- 2010 2009 2010 2009 2010 2009 -------- ------- ------- ------- ------ ------ (IN MILLIONS) Insurance Products................ $ 69,529 $68,341 $19,317 $18,947 $5,322 $5,296 Retirement Products............... 6,681 6,400 21,280 21,505 44 41 Corporate Benefit Funding......... 26,391 24,881 48,296 46,103 179 191 Corporate & Other................. 349 338 29 35 104 99 -------- ------- ------- ------- ------ ------ Total........................... $102,950 $99,960 $88,922 $86,590 $5,649 $5,627 ======== ======= ======= ======= ====== ======
See Note 9 for discussion of affiliated reinsurance liabilities included in the table above. VALUE OF DISTRIBUTION AGREEMENTS AND CUSTOMER RELATIONSHIPS ACQUIRED Information regarding VODA and VOCRA, which are reported in other assets, was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Balance at January 1,..................................... $412 $427 $431 Acquisitions.............................................. 7 -- 9 Amortization.............................................. (19) (15) (13) ---- ---- ---- Balance at December 31,................................... $400 $412 $427 ==== ==== ====
The estimated future amortization expense allocated to other expenses for the next five years for VODA and VOCRA is $22 million in 2011, $25 million in 2012, $27 million in 2013, $29 million in 2014 and $30 million in 2015. See Note 2 for a description of acquisitions and dispositions. SALES INDUCEMENTS Information regarding deferred sales inducements, which are reported in other assets, was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Balance at January 1,..................................... $173 $144 $132 Capitalization............................................ 42 51 40 Amortization.............................................. (25) (22) (28) ---- ---- ---- Balance at December 31,................................... $190 $173 $144 ==== ==== ====
F-120 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPARATE ACCOUNTS Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $63.8 billion and $53.0 billion at December 31, 2010 and 2009, respectively, for which the policyholder assumes all investment risk, and separate accounts for which the Company contractually guarantees either a minimum return or account value to the policyholder which totaled $34.0 billion and $27.4 billion at December 31, 2010 and 2009, respectively. The latter category consisted primarily of funding agreements and participating close-out contracts. The average interest rate credited on these contracts was 3.30% and 3.35% at December 31, 2010 and 2009, respectively. 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, $1.1 billion and $1.3 billion for the years ended December 31, 2010, 2009 and 2008, respectively. The Company's proportional interest in separate accounts was included in the consolidated balance sheets as follows:
DECEMBER 31, -------------- 2010 2009 ---- ---- (IN MILLIONS) Fixed maturity securities........................................ $245 $-- Equity securities................................................ $ 6 $35 Cash and cash equivalents........................................ $ 72 $--
For the years ended December 31, 2010, 2009 and 2008, there were no investment gains (losses) on transfers of assets from the general account to the separate accounts. OBLIGATIONS UNDER FUNDING AGREEMENTS The Company issues fixed and floating rate funding agreements, which are denominated in either U.S. dollars or foreign currencies, to certain SPEs that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. During the years ended December 31, 2010, 2009 and 2008, the Company issued $15.0 billion, $14.1 billion and $18.0 billion, respectively, and repaid $12.3 billion, $16.8 billion and $18.7 billion, respectively, of such funding agreements. At December 31, 2010 and 2009, funding agreements outstanding, which are included in policyholder account balances, were $20.6 billion and $17.3 billion, respectively. During the years ended December 31, 2010, 2009 and 2008, interest credited on the funding agreements, which is included in interest credited to policyholder account balances, was $555 million, $536 million and $911 million, respectively. Metropolitan Life Insurance Company is a member of the FHLB of NY and held $890 million and $742 million of common stock of the FHLB of NY at December 31, 2010 and 2009, respectively, which is included in equity securities. MLIC has also entered into funding agreements with the FHLB of NY in exchange for cash and for which the FHLB of NY has been granted a lien on certain MLIC assets, including RMBS to collateralize MLIC's obligations under the funding agreements. MLIC 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 MLIC, the FHLB of NY's recovery on the collateral is limited to the amount of MLIC's liability to the FHLB of NY. The amount of the Company's liability for funding agreements with the FHLB of NY was $12.6 billion and $13.7 billion at December 31, 2010 and 2009, respectively, which is included in policyholder account balances. The advances on these agreements were collateralized by mortgage-backed securities with estimated fair values of $14.2 billion and $15.1 billion at December 31, 2010 and 2009, respectively. During the F-121 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) years ended December 31, 2010, 2009 and 2008, interest credited on the funding agreements, which is included in interest credited to policyholder account balances, was $276 million, $333 million and $229 million, respectively. During 2010, GALIC became a member of the Federal Home Loan Bank of Des Moines ("FHLB of Des Moines") and held $10 million of common stock of the FHLB of Des Moines at December 31, 2010, which is included in equity securities. GALIC had no funding agreements with the FHLB of Des Moines at December 31, 2010. Metropolitan Life Insurance Company has issued funding agreements to certain SPEs that have issued debt securities for which payment of interest and principal is secured by such funding agreements, and such debt securities are also guaranteed as to payment of interest and principal by Farmer Mac, a federally chartered instrumentality of the United States. The obligations under these funding agreements are secured by a pledge of certain eligible agricultural mortgage loans and may, under certain circumstances, be secured by other qualified collateral. The amount of the Company's liability for funding agreements issued to such SPEs was $2.6 billion and $2.5 billion at December 31, 2010 and 2009, respectively, which is included in policyholder account balances. The obligations under these funding agreements are collateralized by designated agricultural mortgage loans with a carrying value of $2.9 billion at both December 31, 2010 and 2009. During the years ended December 31, 2010, 2009 and 2008, interest credited on the funding agreements, which is included in interest credited to policyholder account balances, was $133 million, $132 million and $132 million, 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 policy-related balances, is as follows:
YEARS ENDED DECEMBER 31, --------------------------- 2010 2009 2008 ------- ------- ------- (IN MILLIONS) Balance at January 1,................................ $ 6,302 $ 5,669 $ 5,174 Less: Reinsurance recoverables..................... 354 266 265 ------- ------- ------- Net balance at January 1,............................ 5,948 5,403 4,909 ------- ------- ------- Incurred related to: Current year....................................... 3,733 4,480 4,063 Prior years........................................ 13 (14) (86) ------- ------- ------- Total incurred.................................. 3,746 4,466 3,977 ------- ------- ------- Paid related to: Current year....................................... (2,244) (2,664) (2,481) Prior years........................................ (1,359) (1,257) (1,002) ------- ------- ------- Total paid...................................... (3,603) (3,921) (3,483) ------- ------- ------- Net balance at December 31,.......................... 6,091 5,948 5,403 Add: Reinsurance recoverables...................... 448 354 266 ------- ------- ------- Balance at December 31,.............................. $ 6,539 $ 6,302 $ 5,669 ======= ======= =======
During 2010, as a result of changes in estimates of insured events in the respective prior year, claims and claim adjustment expenses associated with prior years increased by $13 million. During 2009 and 2008, claims and claim F-122 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) adjustment expenses associated with prior years decreased by $14 million and $86 million, respectively, due to improved loss ratios for non-medical health claim 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 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, --------------------------------------------------------------- 2010 2009 ------------------------------ ------------------------------ 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.................. $ 4,610 $ N/A $ 4,225 $ N/A Net amount at risk (2).................. $ 78 (3) $ N/A $ 218 (3) $ N/A Average attained age of contractholders....................... 61 years N/A 60 years N/A ANNIVERSARY CONTRACT VALUE OR MINIMUM RETURN Separate account value.................. $ 40,114 $ 13,797 $ 34,891 $ 9,739 Net amount at risk (2).................. $ 1,241 (3) $ 1,271 (4) $ 2,516 (3) $ 1,552 (4) Average attained age of contractholders....................... 63 years 59 years 62 years 58 years TWO TIER ANNUITIES General account value................... N/A $ 280 N/A $ 282 Net amount at risk (2).................. N/A $ 49 (5) N/A $ 50 (5) Average attained age of contractholders....................... N/A 62 years N/A 61 years
DECEMBER 31, ------------------------------------------------------- 2010 2009 ------------------------- ------------------------- SECONDARY PAID-UP SECONDARY PAID-UP GUARANTEES GUARANTEES GUARANTEES GUARANTEES ---------- ---------- ---------- ---------- (IN MILLIONS) UNIVERSAL AND VARIABLE LIFE CONTRACTS (1) Account value (general and separate account)................................ $ 6,194 $ 1,250 $ 5,679 $ 1,297 Net amount at risk (2).................... $ 88,425 (3) $ 10,713 (3) $ 92,771 (3) $ 11,521 (3) Average attained age of policyholders..... 50 years 57 years 48 years 56 years
F-123 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) -------- (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 ceded reinsurance). (3) The net amount at risk for guarantees of amounts in the event of death is defined as the current GMDB in excess of the current account balance at the balance sheet date. (4) The net amount at risk for guarantees of amounts at annuitization is defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. (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. F-124 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the liabilities for guarantees (excluding base policy liabilities) relating to annuity and universal and variable life contracts is as follows:
UNIVERSAL AND VARIABLE LIFE CONTRACTS ----------------------- ANNUITY CONTRACTS -------------------------- GUARANTEED GUARANTEED DEATH ANNUITIZATION SECONDARY PAID-UP BENEFITS BENEFITS GUARANTEES GUARANTEES TOTAL ---------- ------------- ---------- ---------- ----- (IN MILLIONS) DIRECT Balance at January 1, 2008.......... $ 28 $ 19 $ 13 $12 $ 72 Incurred guaranteed benefits..... 59 70 14 1 144 Paid guaranteed benefits......... (18) -- -- -- (18) ---- ---- ---- --- ---- Balance at December 31, 2008........ 69 89 27 13 198 Incurred guaranteed benefits..... 21 -- 40 8 69 Paid guaranteed benefits......... (33) -- -- -- (33) ---- ---- ---- --- ---- Balance at December 31, 2009........ 57 89 67 21 234 Incurred guaranteed benefits..... 10 24 179 28 241 Paid guaranteed benefits......... (6) -- -- -- (6) ---- ---- ---- --- ---- Balance at December 31, 2010........ $ 61 $113 $246 $49 $469 ==== ==== ==== === ==== CEDED Balance at January 1, 2008.......... $ 20 $ 4 $ -- $-- $ 24 Incurred guaranteed benefits..... 32 22 -- -- 54 Paid guaranteed benefits......... (12) -- -- -- (12) ---- ---- ---- --- ---- Balance at December 31, 2008........ 40 26 -- -- 66 Incurred guaranteed benefits..... 30 2 44 8 84 Paid guaranteed benefits......... (33) -- -- -- (33) ---- ---- ---- --- ---- Balance at December 31, 2009........ 37 28 44 8 117 Incurred guaranteed benefits..... 13 8 165 26 212 Paid guaranteed benefits......... (6) -- -- -- (6) ---- ---- ---- --- ---- Balance at December 31, 2010........ $ 44 $ 36 $209 $34 $323 ==== ==== ==== === ==== NET Balance at January 1, 2008.......... $ 8 $ 15 $ 13 $12 $ 48 Incurred guaranteed benefits..... 27 48 14 1 90 Paid guaranteed benefits......... (6) -- -- -- (6) ---- ---- ---- --- ---- Balance at December 31, 2008........ 29 63 27 13 132 Incurred guaranteed benefits..... (9) (2) (4) -- (15) Paid guaranteed benefits......... -- -- -- -- -- ---- ---- ---- --- ---- Balance at December 31, 2009........ 20 61 23 13 117 Incurred guaranteed benefits..... (3) 16 14 2 29 Paid guaranteed benefits......... -- -- -- -- -- ---- ---- ---- --- ---- Balance at December 31, 2010........ $ 17 $ 77 $ 37 $15 $146 ==== ==== ==== === ====
F-125 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Account balances of contracts with insurance guarantees are invested in separate account asset classes as follows:
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS) Fund Groupings: Equity...................................................... $19,167 $16,701 Balanced.................................................... 11,640 8,762 Bond........................................................ 3,875 3,342 Money Market................................................ 218 369 Specialty................................................... 886 794 ------- ------- Total.................................................... $35,786 $29,968 ======= =======
9. REINSURANCE The Company's Insurance Products segment participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth. For its individual life insurance products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis or a quota share basis. The Company currently reinsures 90% of the mortality risk in excess of $1 million for most products and reinsures up to 90% of the mortality risk for certain other products. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as well as specific coverages. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specified characteristics. 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 amount the Company retains. The Company evaluates its reinsurance programs routinely and may increase or decrease its retention at any time. For other policies within the Insurance Products segment, the Company generally retains most of the risk and only cedes particular risks on certain client arrangements. The Company's Retirement Products segment reinsures 90% of the new production of fixed annuities from several affiliates. The Company's Retirement Products segment also reinsures 100% of the living and death benefit guarantees associated with its variable annuities issued since 2004 to an affiliated reinsurer and certain portions of the living and death benefit guarantees associated with its variable annuities issued prior to 2004 to affiliated and non-affiliated reinsurers. Under these reinsurance agreements, the Company pays a reinsurance premium generally based on fees associated with the guarantees collected from policyholders, and receives reimbursement for benefits paid or accrued in excess of account values, subject to certain limitations. The Company's Corporate Benefit Funding segment periodically engages in reinsurance activities, as considered appropriate. The impact of these activities on the financial results of this segment has not been significant. 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 agreements to provide greater diversification of risk and minimize exposure to larger risks. The Company reinsures its business through a diversified group of well- capitalized, highly rated reinsurers. The Company analyzes recent trends in arbitration and litigation outcomes in disputes, if any, with its reinsurers. The Company monitors ratings and evaluates the financial strength of its reinsurers by analyzing their financial statements. In addition, the reinsurance recoverable balance due from each reinsurer is evaluated as part of the F-126 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) overall monitoring process. Recoverability of reinsurance recoverable balances is evaluated based on these analyses. The Company generally secures large reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance, which at December 31, 2010 and 2009, were immaterial. The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. The Company had $2.3 billion and $2.2 billion of unsecured unaffiliated reinsurance recoverable balances at December 31, 2010 and 2009, respectively. At December 31, 2010, the Company had $5.6 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $4.6 billion, or 82%, were with the Company's five largest unaffiliated ceded reinsurers, including $1.6 billion of which were unsecured. At December 31, 2009, the Company had $5.5 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $4.4 billion, or 80%, were with the Company's five largest unaffiliated ceded reinsurers, including $1.4 billion of which were unsecured. The Company has reinsured with an unaffiliated third-party reinsurer, 49.25% of the closed block through a modified coinsurance agreement. The Company accounts for this agreement under the deposit method of accounting. The Company, having the right of offset, has offset the modified coinsurance deposit with the deposit recoverable. F-127 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The amounts in the consolidated statements of operations include the impact of reinsurance. Information regarding the effect of reinsurance was as follows:
YEARS ENDED DECEMBER 31, --------------------------- 2010 2009 2008 ------- ------- ------- (IN MILLIONS) PREMIUMS: Direct premiums...................................... $18,793 $19,285 $19,246 Reinsurance assumed.................................. 1,155 1,197 1,334 Reinsurance ceded.................................... (1,429) (1,853) (2,136) ------- ------- ------- Net premiums...................................... $18,519 $18,629 $18,444 ======= ======= ======= UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY FEES: Direct universal life and investment-type product policy fees....................................... $ 2,627 $ 2,565 $ 2,741 Reinsurance assumed.................................. 13 9 7 Reinsurance ceded.................................... (565) (507) (463) ------- ------- ------- Net universal life and investment-type product policy fees..................................... $ 2,075 $ 2,067 $ 2,285 ======= ======= ======= OTHER REVENUES: Direct other revenues................................ $ 750 $ 779 $ 859 Reinsurance assumed.................................. (5) (5) (5) Reinsurance ceded.................................... 980 965 1,028 ------- ------- ------- Net other revenues................................ $ 1,725 $ 1,739 $ 1,882 ======= ======= ======= POLICYHOLDER BENEFITS AND CLAIMS: Direct policyholder benefits and claims.............. $21,246 $21,570 $21,863 Reinsurance assumed.................................. 1,235 1,045 1,018 Reinsurance ceded.................................... (1,774) (1,953) (2,182) ------- ------- ------- Net policyholder benefits and claims.............. $20,707 $20,662 $20,699 ======= ======= ======= INTEREST CREDITED TO POLICYHOLDER ACCOUNT BALANCES: Direct interest credited to policyholder account balances.......................................... $ 2,581 $ 2,734 $ 3,228 Reinsurance assumed.................................. 28 13 23 Reinsurance ceded.................................... (86) (78) (70) ------- ------- ------- Net interest credited to policyholder account balances........................................ $ 2,523 $ 2,669 $ 3,181 ======= ======= ======= POLICYHOLDER DIVIDENDS: Direct policyholder dividends........................ $ 1,475 $ 1,643 $ 1,740 Reinsurance ceded.................................... (32) (31) (24) ------- ------- ------- Net policyholder dividends........................ $ 1,443 $ 1,612 $ 1,716 ======= ======= ======= OTHER EXPENSES: Direct other expenses................................ $ 5,140 $ 4,945 $ 5,681 Reinsurance assumed.................................. 462 427 182 Reinsurance ceded.................................... 657 637 715 ------- ------- ------- Net other expenses................................ $ 6,259 $ 6,009 $ 6,578 ======= ======= =======
F-128 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The amounts in the consolidated balance sheets include the impact of reinsurance. Information regarding the effect of reinsurance was as follows at:
DECEMBER 31, 2010 -------------------------------------------- TOTAL BALANCE TOTAL, NET OF SHEET ASSUMED CEDED REINSURANCE -------- ------- ------- ------------- (IN MILLIONS) ASSETS: Premiums, reinsurance and other receivables..... $ 26,802 $ 476 $25,316 $ 1,010 Deferred policy acquisition costs and value of business acquired............................. 8,191 342 (473) 8,322 -------- ------ ------- -------- Total assets.................................. $ 34,993 $ 818 $24,843 $ 9,332 ======== ====== ======= ======== LIABILITIES: Future policy benefits.......................... $102,950 $1,723 $ -- $101,227 Policyholder account balances................... 88,922 320 -- 88,602 Other policy-related balances................... 5,649 279 (78) 5,448 Other liabilities............................... 35,113 7,543 20,055 7,515 -------- ------ ------- -------- Total liabilities............................. $232,634 $9,865 $19,977 $202,792 ======== ====== ======= ========
DECEMBER 31, 2009 -------------------------------------------- TOTAL BALANCE TOTAL, NET OF SHEET ASSUMED CEDED REINSURANCE -------- ------- ------- ------------- (IN MILLIONS) ASSETS: Premiums, reinsurance and other receivables..... $ 26,375 $ 525 $24,885 $ 965 Deferred policy acquisition costs and value of business acquired............................. 9,364 343 (575) 9,596 -------- ------ ------- -------- Total assets.................................. $ 35,739 $ 868 $24,310 $ 10,561 ======== ====== ======= ======== LIABILITIES: Future policy benefits.......................... $ 99,960 $1,771 $ -- $ 98,189 Policyholder account balances................... 86,590 810 -- 85,780 Other policy-related balances................... 5,627 270 (169) 5,526 Other liabilities............................... 33,690 6,788 19,150 7,752 -------- ------ ------- -------- Total liabilities............................. $225,867 $9,639 $18,981 $197,247 ======== ====== ======= ========
Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on ceded reinsurance were $18.2 billion and $18.3 billion at December 31, 2010 and 2009, respectively. The deposit liabilities for assumed reinsurance were $7.1 billion and $6.9 billion at December 31, 2010 and 2009, respectively. RELATED PARTY REINSURANCE TRANSACTIONS The Company has reinsurance agreements with certain of MetLife, Inc.'s subsidiaries, including Exeter, First MetLife Investors Insurance Company, MetLife Insurance Company of Connecticut, MetLife Investors USA F-129 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Insurance Company, MetLife Investors Insurance Company, MetLife Reinsurance Company of Charleston ("MRC"), MetLife Reinsurance Company of Vermont and Metropolitan Tower Life Insurance Company, all of which are related parties. Information regarding the effect of affiliated reinsurance included in the consolidated statements of operations was as follows:
YEARS ENDED DECEMBER 31, ----------------------- 2010 2009 2008 ------ ------ ----- (IN MILLIONS) PREMIUMS: Reinsurance assumed (1)................................. $ 88 $ 66 $ 43 Reinsurance ceded....................................... (63) (43) (46) ------ ------ ----- Net premiums......................................... $ 25 $ 23 $ (3) ====== ====== ===== UNIVERSAL LIFE AND INVESTMENT-TYPE PRODUCT POLICY FEES: Reinsurance assumed..................................... $ 13 $ 9 $ 7 Reinsurance ceded....................................... (230) (177) (178) ------ ------ ----- Net universal life and investment-type product policy fees............................................... $ (217) $ (168) $(171) ====== ====== ===== OTHER REVENUES: Reinsurance assumed..................................... $ (5) $ (4) $ (5) Reinsurance ceded (2)................................... 908 901 923 ------ ------ ----- Net other revenues................................... $ 903 $ 897 $ 918 ====== ====== ===== POLICYHOLDER BENEFITS AND CLAIMS: Reinsurance assumed (1)................................. $ 112 $ 75 $ 57 Reinsurance ceded....................................... (129) (91) (133) ------ ------ ----- Net policyholder benefits and claims................. $ (17) $ (16) $ (76) ====== ====== ===== INTEREST CREDITED TO POLICYHOLDER ACCOUNT BALANCES: Reinsurance assumed..................................... $ 26 $ 10 $ 22 Reinsurance ceded....................................... (86) (78) (70) ------ ------ ----- Net interest credited to policyholder account balances........................................... $ (60) $ (68) $ (48) ====== ====== ===== POLICYHOLDER DIVIDENDS: Reinsurance assumed..................................... $ -- $ -- $ -- Reinsurance ceded....................................... (16) (18) (20) ------ ------ ----- Net policyholder dividends........................... $ (16) $ (18) $ (20) ====== ====== ===== OTHER EXPENSES: Reinsurance assumed..................................... $ 362 $ 331 $ 128 Reinsurance ceded (1), (2).............................. 826 791 825 ------ ------ ----- Net other expenses................................... $1,188 $1,122 $ 953 ====== ====== =====
-------- (1) As a result of the RGA transaction discussed in Note 2, reinsurance transactions between RGA and affiliates were no longer considered affiliated transactions. For purposes of comparison, the 2008 affiliated transactions F-130 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) between RGA and affiliates have been removed from the presentation in the table above. Affiliated transactions between RGA and affiliates for the year ended December 31, 2008 included assumed premiums, assumed benefits and other expenses on ceded reinsurance of ($14) million, $42 million and $6 million, respectively. (2) In connection with the cession of a portion of its closed block liabilities on a coinsurance with funds withheld basis to MRC, the Company recognized $908 million and $819 million of interest earned on the deposit included within premiums, reinsurance and other receivables, as well as certain administrative fees for the years ended December 31, 2010 and 2009, respectively. The Company also recognized in other expenses $898 million, $888 million and $911 million of interest expense associated with the funds withheld for the years ended December 31, 2010, 2009 and 2008, respectively. Information regarding the effect of affiliated reinsurance included in the consolidated balance sheets was as follows at:
DECEMBER 31, ------------------------------------- 2010 2009 ----------------- ----------------- ASSUMED CEDED ASSUMED CEDED ------- ------- ------- ------- (IN MILLIONS) ASSETS: Premiums, reinsurance and other receivables...... $ 14 $19,423 $ 14 $19,035 Deferred policy acquisition costs and value of business acquired.............................. 310 (323) 307 (399) ------ ------- ------ ------- Total assets................................... $ 324 $19,100 $ 321 $18,636 ====== ======= ====== ======= LIABILITIES: Future policy benefits........................... $ 401 $ -- $ 400 $ -- Policyholder account balances.................... 281 -- 721 -- Other policy-related balances.................... 49 (78) 30 (169) Other liabilities................................ 7,059 17,844 6,440 17,034 ------ ------- ------ ------- Total liabilities.............................. $7,790 $17,766 $7,591 $16,865 ====== ======= ====== =======
MLIC cedes two blocks of business to an affiliate on a 75% coinsurance with funds withheld basis. Certain contractual features of this agreement qualify as an embedded derivative, which was separately accounted for at estimated fair value on the Company's consolidated balance sheet. The embedded derivative related to the funds withheld associated with this reinsurance agreement was included within other liabilities and decreased the funds withheld balance by $9 million at December 31, 2010. The change in fair value of the embedded derivative included in net derivative gains (losses), was $9 million for the year ended December 31, 2010. The reinsurance agreement also includes an experience refund provision, whereby some or all of the profits on the underlying reinsurance agreement are returned to MLIC from the affiliated reinsurer during the first several years of the reinsurance agreement. The experience refund reduced the funds withheld by MLIC from the affiliated reinsurer by $27 million at December 31, 2010, and was considered unearned revenue, amortized over the life of the contract using the same assumptions as used for the DAC associated with the underlying policies. Amortization and interest of the unearned revenue associated with the experience refund was $5 million for the year ended December 31, 2010, respectively, and is included in universal life and investment-type product policy fees in the consolidated statement of operations. At December 31, 2010, unearned revenue related to the experience refund was $22 million, and is included in other policy-related balances in the consolidated balance sheets. The Company cedes risks to an affiliate related to guaranteed minimum benefit guarantees written by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their fair value were included within net derivative gains (losses). The embedded derivatives associated with the cessions were included within premiums, reinsurance and other receivables and were assets of $295 million and $263 million at F-131 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) December 31, 2010 and 2009, respectively. For the years ended December 31, 2010, 2009 and 2008, net derivative gains (losses) included ($66) million, ($596) million and $729 million, respectively, in changes in fair value of such embedded derivatives. Certain contractual features of the closed block agreement with MRC create an embedded derivative, which was separately accounted for at estimated fair value on the Company's consolidated balance sheet. The embedded derivative related to the funds withheld associated with this reinsurance agreement was included within other liabilities and increased the funds withheld balance by $697 million and $101 million at December 31, 2010 and 2009, respectively. The change in estimated fair value of the embedded derivative, included in net derivative gains (losses), was ($596) million, ($1,304) million and $1,203 million, for the years ended December 31, 2010, 2009 and 2008, respectively. The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. The Company had $1.4 billion and $1.3 billion of unsecured affiliated reinsurance recoverable balances at December 31, 2010 and 2009, respectively. Affiliated reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on ceded affiliated reinsurance were $15.8 billion and $15.9 billion at December 31, 2010 and 2009, respectively. The deposit liabilities for assumed affiliated reinsurance were $7.0 billion and $6.8 billion at December 31, 2010 and 2009, respectively. 10. 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. F-132 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 Demutualization Date (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 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 are 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 are 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. Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. The policyholder dividend obligation increased to $876 million at December 31, 2010, from zero at December 31, 2009, as a result of recent unrealized gains in the closed block. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company's net income continues to be sensitive to the actual performance of the closed block. F-133 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the closed block liabilities and assets designated to the closed block was as follows:
DECEMBER 31, ----------------- 2010 2009 ------- ------- (IN MILLIONS) CLOSED BLOCK LIABILITIES Future policy benefits........................................ $43,456 $43,576 Other policy-related balances................................. 316 307 Policyholder dividends payable................................ 579 615 Policyholder dividend obligation.............................. 876 -- Current income tax payable.................................... 178 -- Other liabilities............................................. 627 576 ------- ------- Total closed block liabilities.............................. 46,032 45,074 ------- ------- ASSETS DESIGNATED TO THE CLOSED BLOCK Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $27,067 and $27,129, respectively)............................................ 28,768 27,375 Equity securities available-for-sale, at estimated fair value (cost: $110 and $204, respectively)................ 102 218 Mortgage loans.............................................. 6,253 6,200 Policy loans................................................ 4,629 4,538 Real estate and real estate joint ventures held-for- investment............................................... 328 321 Short-term investments...................................... 1 1 Other invested assets....................................... 729 463 ------- ------- Total investments........................................ 40,810 39,116 Cash and cash equivalents..................................... 236 241 Accrued investment income..................................... 518 489 Premiums, reinsurance and other receivables................... 95 78 Current income tax recoverable................................ -- 112 Deferred income tax assets.................................... 474 612 ------- ------- Total assets designated to the closed block................. 42,133 40,648 ------- ------- Excess of closed block liabilities over assets designated to the closed block............................................ 3,899 4,426 ------- ------- Amounts included in accumulated other comprehensive income (loss): Unrealized investment gains (losses), net of income tax of $594 and $89, respectively............................... 1,101 166 Unrealized gains (losses) on derivative instruments, net of income tax of $5 and ($3), respectively.................. 10 (5) Allocated to policyholder dividend obligation, net of income tax of ($307) and $0, respectively....................... (569) -- ------- ------- Total amounts included in accumulated other comprehensive income (loss).......................................... 542 161 ------- ------- Maximum future earnings to be recognized from closed block assets and liabilities...................................... $ 4,441 $ 4,587 ======= =======
F-134 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the closed block policyholder dividend obligation was as follows:
YEARS ENDED DECEMBER 31, ------------------- 2010 2009 2008 ---- ---- ----- (IN MILLIONS) Balance at January 1,........................................ $ -- $-- $ 789 Change in unrealized investment and derivative gains (losses)................................................... 876 -- (789) ---- --- ----- Balance at December 31,...................................... $876 $-- $ -- ==== === =====
Information regarding the closed block revenues and expenses was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ------ ------ ------ (IN MILLIONS) REVENUES Premiums................................................. $2,461 $2,708 $2,787 Net investment income.................................... 2,294 2,197 2,248 Net investment gains (losses): Other-than-temporary impairments on fixed maturity securities.......................................... (32) (107) (94) Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss).............................................. -- 40 -- Other net investment gains (losses).................... 71 327 (19) ------ ------ ------ Total net investment gains (losses)................. 39 260 (113) Net derivative gains (losses).......................... (27) (128) 29 ------ ------ ------ Total revenues...................................... 4,767 5,037 4,951 ------ ------ ------ EXPENSES Policyholder benefits and claims......................... 3,115 3,329 3,393 Policyholder dividends................................... 1,235 1,394 1,498 Other expenses........................................... 199 203 217 ------ ------ ------ Total expenses...................................... 4,549 4,926 5,108 ------ ------ ------ Revenues, net of expenses before provision for income tax expense (benefit)...................................... 218 111 (157) Provision for income tax expense (benefit)............... 72 36 (68) ------ ------ ------ Revenues, net of expenses and provision for income tax expense (benefit)...................................... $ 146 $ 75 $ (89) ====== ====== ======
The change in the maximum future earnings of the closed block was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ------ ------ ------ (IN MILLIONS) Balance at December 31,.................................. $4,441 $4,587 $4,518 Less: Closed block adjustment (1)............................ -- 144 -- Balance at January 1,.................................... 4,587 4,518 4,429 ------ ------ ------ Change during year....................................... $ (146) $ (75) $ 89 ====== ====== ======
F-135 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) -------- (1) The closed block adjustment represents an intra-company reallocation of assets which affected the closed block. The adjustment had no impact on the Company's consolidated financial statements. 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 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. 11. LONG-TERM AND SHORT-TERM DEBT Long-term and short-term debt outstanding is as follows:
INTEREST RATES ------------------------ DECEMBER 31, WEIGHTED --------------- RANGE AVERAGE MATURITY 2010 2009 ----------- -------- --------- ------ ------ (IN MILLIONS) Surplus notes -- affiliated.......... 2.23%-7.38% 4.61% 2011-2037 $1,874 $1,986 Surplus notes........................ 7.63%-7.88% 7.85% 2015-2025 699 698 Capital notes -- affiliated.......... 7.13% 7.13% 2032-2033 500 500 Mortgage loans -- affiliated......... 7.01%-7.26% 7.18% 2020 199 200 Other notes with varying interest rates.............................. 3.76%-8.56% 8.45% 2011-2017 102 65 Secured demand note -- affiliated.... 0.50% 0.50% 2011 25 25 Capital lease obligations............ 27 28 ------ ------ Total long-term debt (1)............. 3,426 3,502 Total short-term debt................ 102 319 ------ ------ Total.............................. $3,528 $3,821 ====== ======
-------- (1) Excludes $184 million at December 31, 2010 of long-term debt relating to CSEs. See Note 3. The aggregate maturities of long-term debt at December 31, 2010 for the next five years and thereafter are $853 million in 2011, less than $1 million in 2012, less than $1 million in 2013, $217 million in 2014, $388 million in 2015 and $1,968 million thereafter. Capital lease obligations, mortgage loans and the secured demand note are collateralized and rank highest in priority, followed by unsecured senior debt which consists of other notes with varying interest rates. Payments of interest and principal on the Company's surplus notes and capital notes are subordinate to all other obligations. Payments of interest and principal on surplus notes may be made only with the prior approval of the insurance department of the state of domicile, whereas such payments on capital notes may or may not require this prior approval. Certain of the Company's debt instruments, credit facilities and committed facilities contain various administrative, reporting, legal and financial covenants. The Company believes it was in compliance with all covenants at both December 31, 2010 and 2009. SURPLUS NOTES -- AFFILIATED On December 29, 2010, Metropolitan Life Insurance Company repaid a $300 million surplus note to MetLife, Inc. in cash. The note was issued in December 2009, with an original maturity of 2011 and an interest rate of 6-month LIBOR plus 1.80%. The issuance was settled by the transfer of securities from MetLife, Inc. to the Company. F-136 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) On November 8, 2010, Metropolitan Life Insurance Company issued a $188 million surplus note to MetLife Mexico, S.A. ("MetLife Mexico"), an affiliate, maturing in 2015 with an interest rate of 3.0%. In December 2009, Metropolitan Life Insurance Company's $700 million surplus note issued to MetLife, Inc. was renewed and increased to $775 million, extending the maturity to 2011 with an interest rate of 6-month LIBOR plus 1.80%. In September 2009, Metropolitan Life Insurance Company issued a $217 million surplus note to MetLife Mexico, maturing in 2014 with an interest rate of 6.46%. MORTGAGE LOANS -- AFFILIATED In December 2009, two wholly-owned real estate subsidiaries of the Company issued notes aggregating $200 million to MetLife Insurance Company of Connecticut and its wholly-owned subsidiary, MetLife Investors USA Insurance Company, both affiliates of the Company. These affiliated mortgage loans are secured by real estate held by the Company for investment. Of these loans, $60 million bears interest at a rate of 7.01% payable in quarterly interest payments through maturity in 2020, and $140 million bears interest at a rate of 7.26% and is payable in quarterly principal and interest payments through maturity in 2020. SECURED DEMAND NOTE -- AFFILIATED Effective September 2008, the Company entered into a secured demand note collateral agreement with an affiliate pursuant to which the affiliate pledged securities to the Company to collateralize its obligation to lend $25 million to the Company. The Company has not exercised its right to sell or repledge the collateral. SHORT-TERM DEBT Short-term debt with maturities of one year or less was $102 million and $319 million at December 31, 2010 and 2009, respectively, which consisted entirely of commercial paper. During the years ended December 31, 2010, 2009 and 2008, the weighted average interest rate on short-term debt was 0.21%, 0.35% and 2.40%, respectively. During the years ended December 31, 2010, 2009 and 2008, the average daily balance of short-term debt was $311 million, $365 million and $421 million, respectively, and was outstanding for an average of 29 days, 23 days and 25 days, respectively. INTEREST EXPENSE Interest expense related to the Company's indebtedness included in other expenses was $202 million, $166 million and $192 million for the years ended December 31, 2010, 2009 and 2008, respectively. These amounts include $143 million, $105 million and $120 million of interest expense related to affiliated debt for the years ended December 31, 2010, 2009 and 2008, respectively. CREDIT AND COMMITTED FACILITIES The Company maintains unsecured credit facilities and a committed facility, which aggregated $4.0 billion and $500 million, respectively, at December 31, 2010. When drawn upon, these facilities bear interest at varying rates in accordance with the respective agreements. Credit Facilities. The unsecured credit facilities are used for general corporate purposes, to support the borrowers' commercial paper program and for the issuance of letters of credit. Total fees expensed by the Company F-137 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) associated with these credit facilities were $8 million, $6 million and $4 million for the years ended December 31, 2010, 2009 and 2008, respectively. Information on these credit facilities at December 31, 2010 is as follows:
LETTER OF CREDIT UNUSED BORROWER(S) EXPIRATION CAPACITY ISSUANCES DRAWDOWNS COMMITMENTS ----------------------------------- ------------ -------- --------- --------- ----------- (IN MILLIONS) MetLife, Inc. and MetLife Funding, Inc. ............................ October 2011 $1,000 $ -- $-- $1,000 MetLife, Inc. and MetLife Funding, Inc. ............................ October 2013 (1) 3,000 1,507 -- 1,493 ------ ------ --- ------ Total............................ $4,000 $1,507 $-- $2,493 ====== ====== === ======
-------- (1) All borrowings under the credit agreement must be repaid by October 2013, except that letters of credit outstanding upon termination may remain outstanding until October 2014. Committed Facilities. The committed facility is used for collateral for certain of the Company's affiliated reinsurance liabilities. Total fees expensed by the Company associated with this committed facility were $4 million, $3 million and $4 million for the years ended December 31, 2010, 2009 and 2008, respectively. Information on the committed facility at December 31, 2010 is as follows:
LETTER OF CREDIT UNUSED MATURITY ACCOUNT PARTY/BORROWER(S) EXPIRATION CAPACITY ISSUANCES DRAWDOWNS COMMITMENTS (YEARS) ------------------------------- ---------- -------- --------- --------- ----------- -------- (IN MILLIONS) Exeter Reassurance Company Ltd., MetLife, Inc. & Missouri Reinsurance (Barbados), Inc. ............ June 2016 $500 $490 $-- $10 5
12. INCOME TAX The provision for income tax from continuing operations was as follows:
YEARS ENDED DECEMBER 31, ----------------------- 2010 2009 2008 ---- ------- ------ (IN MILLIONS) Current: Federal................................................. $309 $ 212 $ (295) State and local......................................... 4 3 2 Foreign................................................. 46 174 253 ---- ------- ------ Subtotal............................................. 359 389 (40) ---- ------- ------ Deferred: Federal................................................. 354 (2,226) 1,668 Foreign................................................. 69 (53) 22 ---- ------- ------ Subtotal............................................. 423 (2,279) 1,690 ---- ------- ------ Provision for income tax expense (benefit)......... $782 $(1,890) $1,650 ==== ======= ======
F-138 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for continuing operations was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ----- ------- ------ (IN MILLIONS) Tax provision at U.S. statutory rate..................... $ 895 $(1,548) $1,758 Tax effect of: Tax-exempt investment income........................... (100) (149) (116) State and local income tax............................. 1 -- 1 Prior year tax......................................... 48 (11) 52 Tax credits............................................ (72) (85) (56) Foreign tax rate differential and change in valuation allowance........................................... 5 (77) (14) Other, net............................................. 5 (20) 25 ----- ------- ------ Provision for income tax expense (benefit).......... $ 782 $(1,890) $1,650 ===== ======= ======
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, --------------- 2010 2009 ------ ------ (IN MILLIONS) Deferred income tax assets: Policyholder liabilities and receivables...................... $2,787 $3,245 Net operating loss carryforwards.............................. 24 49 Employee benefits............................................. 632 751 Capital loss carryforwards.................................... 12 5 Tax credit carryforwards...................................... 287 296 Net unrealized investment losses.............................. -- 326 Litigation-related and government mandated.................... 220 239 Other......................................................... 17 24 ------ ------ 3,979 4,935 Less: Valuation allowance..................................... 38 26 ------ ------ 3,941 4,909 ------ ------ Deferred income tax liabilities: Investments, including derivatives............................ 1,219 1,338 DAC........................................................... 2,235 2,283 Net unrealized investment gains............................... 1,239 -- Intangibles................................................... 189 184 Other......................................................... 9 10 ------ ------ 4,891 3,815 ------ ------ Net deferred income tax asset (liability)..................... $ (950) $1,094 ====== ======
F-139 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Domestic net operating loss carryforwards of $29 million at December 31, 2010 will expire beginning in 2020. State net operating loss carryforwards of $26 million at December 31, 2010 will expire beginning in 2011. Foreign net operating loss carryforwards of $38 million at December 31, 2010 were generated in various foreign countries with expiration periods of five years to indefinite expiration. Foreign capital loss carryforwards of $35 million at December 31, 2010 will expire beginning in 2014. Tax credit carryforwards were $287 million at December 31, 2010. The Company has recorded a valuation allowance related to tax benefits of certain state and foreign net operating and capital 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 and capital 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 2010, the Company recorded an overall increase to the deferred tax valuation allowance of $12 million, comprised of an increase of $4 million related to certain state and foreign net operating loss carryforwards and an increase of $8 million related to certain foreign capital 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 early 2009, the Company and the IRS completed and substantially settled the audit years of 2000 to 2002. A few issues not settled have been escalated to the next level, IRS Appeals. In April 2010, the IRS exam of the current audit cycle, years 2003 to 2006, began. The Company's liability for unrecognized tax benefits may decrease in the next 12 months pending the outcome of remaining issues, tax-exempt income and tax credits, associated with the 2000 to 2002 IRS audit. A reasonable estimate of the decrease 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 change to its consolidated financial statements, although the resolution of income tax matters could impact the Company's effective tax rate for a particular future period. The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses, while penalties are included in income tax expense. At December 31, 2010, the Company's total amount of unrecognized tax benefits was $499 million and the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, was $432 million. The total amount of unrecognized tax benefits decreased by $93 million from December 31, 2009 primarily due to decreases for tax positions of prior years and settlements reached with the IRS. Settlements with tax authorities amounted to $31 million, all of which was reclassified to current and deferred income tax payable, as applicable, with $1 million paid in 2010. At December 31, 2009, the Company's total amount of unrecognized tax benefits was $592 million and the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, was $490 million. The total amount of unrecognized tax benefits decreased by $1 million from December 31, 2008 primarily due to additions for tax positions of the current and prior years offset by settlements reached with the IRS. Settlements with tax authorities amounted to $45 million, of which $43 million was reclassified to current income tax payable and paid in 2009 and $2 million reduced current income tax expense. At December 31, 2008, the Company's total amount of unrecognized tax benefits was $593 million and the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, was $485 million. The total amount of unrecognized tax benefits decreased by $62 million from December 31, 2007 primarily due to F-140 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) settlements reached with the IRS with respect to certain significant issues involving demutualization, leasing and tax credits 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 $135 million, were reclassified to current and deferred income tax payable, as applicable, of which $2 million was paid in 2008 and $133 million was paid in 2009. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
YEARS ENDED DECEMBER 31, ------------------- 2010 2009 2008 ---- ---- ----- (IN MILLIONS) Balance at January 1,....................................... $592 $593 $ 655 Additions for tax positions of prior years.................. 2 42 4 Reductions for tax positions of prior years................. (54) (30) (33) Additions for tax positions of current year................. 2 34 120 Reductions for tax positions of current year................ (1) (2) (12) Settlements with tax authorities............................ (31) (45) (135) Lapses of statutes of limitations........................... (11) -- (6) ---- ---- ----- Balance at December 31,..................................... $499 $592 $ 593 ==== ==== =====
During the year ended December 31, 2010, the Company recognized $27 million in interest expense associated with the liability for unrecognized tax benefits. At December 31, 2010, the Company had $176 million of accrued interest associated with the liability for unrecognized tax benefits. The $4 million increase from December 31, 2009 in accrued interest associated with the liability for unrecognized tax benefits resulted from an increase of $27 million of interest expense and a $23 million decrease primarily resulting from the aforementioned IRS settlements. Of the $23 million decrease, $9 million has been reclassified to current income tax payable of which $2 million was paid in 2010. The remaining $14 million reduced interest expense. During the year ended December 31, 2009, the Company recognized $38 million in interest expense associated with the liability for unrecognized tax benefits. At December 31, 2009, the Company had $172 million of accrued interest associated with the liability for unrecognized tax benefits. The $16 million increase from December 31, 2008 in accrued interest associated with the liability for unrecognized tax benefits resulted from an increase of $38 million of interest expense and a $22 million decrease primarily resulting from the aforementioned IRS settlements. Of the $22 million decrease, $20 million was reclassified to current income tax payable and was paid in 2009. The remaining $2 million reduced interest expense. During the year ended December 31, 2008, the Company recognized $33 million in interest expense associated with the liability for unrecognized tax benefits. At December 31, 2008, the Company had $156 million of accrued interest associated with the liability for unrecognized tax benefits. The $41 million decrease from December 31, 2007 in accrued interest associated with the liability for unrecognized tax benefits resulted from an increase of $33 million of interest expense and a $74 million decrease primarily resulting from the aforementioned IRS settlements. Of the $74 million decrease, $73 million was reclassified to current income tax payable in 2008, with $4 million and $69 million paid in 2008 and 2009, respectively. The remaining $1 million reduced interest expense. The U.S. Treasury Department and the IRS have indicated that they intend to address through regulations the methodology to be followed in determining the dividends received deduction ("DRD"), related to variable life insurance and annuity contracts. The DRD reduces the amount of dividend income subject to tax and is a significant component of the difference between the actual tax expense and expected amount determined using the federal statutory tax rate of 35%. 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 F-141 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 years ended December 31, 2010 and 2009, the Company recognized an income tax benefit of $38 million and $101 million, respectively, related to the separate account DRD. The 2010 benefit included an expense of $23 million related to a true-up of the 2009 tax return. The 2009 benefit included a benefit of $10 million related to a true-up of the 2008 tax return. 13. 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, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value. 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 difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness 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. 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 established for a number of the matters noted below. 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 at December 31, 2010. 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 F-142 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 individual or groups of claims or lawsuits under appropriate circumstances. 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, --------------------------- 2010 2009 2008 ------- ------- ------- (IN MILLIONS, EXCEPT NUMBER OF CLAIMS) Asbestos personal injury claims at year end............ 68,513 68,804 74,027 Number of new claims during the year................... 5,670 3,910 5,063 Settlement payments during the year (1)................ $ 34.9 $ 37.6 $ 99.0
-------- (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 2007, Metropolitan Life Insurance Company received approximately 7,161 new claims, ending the year with a total of approximately 79,717 claims, and paid approximately $28.2 million for settlements reached in 2007 and prior years. In 2006, Metropolitan Life Insurance Company received approximately 7,870 new claims, ending the year with a total of approximately 87,070 claims, and paid approximately $35.5 million for settlements reached in 2006 and prior years. In 2005, Metropolitan Life Insurance Company received approximately 18,500 new claims, ending the year with a total of approximately 100,250 claims, and paid approximately $74.3 million for settlements reached in 2005 and prior years. 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 F-143 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) may be brought, the aggregate amount of any liability that Metropolitan Life Insurance Company may incur, and the total amount paid in settlements in any given year are uncertain and may vary significantly from year to year. 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 provided for recovery of losses up to $1.5 billion in excess of a $400 million self-insured retention. The Company's initial option to commute the excess insurance policies for asbestos- related claims would have arisen at the end of 2008. On September 29, 2008, Metropolitan Life Insurance Company entered into agreements commuting the excess insurance policies at September 30, 2008. As a result of the commutation of the policies, Metropolitan Life Insurance Company received cash and securities totaling $632 million. Of this total, Metropolitan Life Insurance Company received $115 million in fixed maturity securities on September 26, 2008, $200 million in cash on October 29, 2008, and $317 million in cash on January 29, 2009. Metropolitan Life Insurance Company recognized a loss on commutation of the policies in the amount of $35.3 million during 2008. In the years prior to commutation, the excess insurance policies for asbestos-related claims were 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. Amounts were recoverable under the policies annually with respect to claims paid during the prior calendar year. Each asbestos-related policy contained an experience fund and a reference fund that provided for payments to Metropolitan Life Insurance Company at the commutation date if the reference fund was 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 was less than the return specified in the experience fund. The return in the reference fund was tied to performance of the 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 2008 for the amounts paid with respect to asbestos litigation in excess of the retention. The foregone loss reimbursements were approximately $62.2 million with respect to claims for the period of 2002 through 2007. Because the policies were commuted at September 30, 2008, there will be no claims under the policies or forgone loss reimbursements with respect to payments made in 2008 and thereafter. 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 probable and reasonably estimable F-144 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) liability for asbestos claims already asserted against Metropolitan Life Insurance Company, including claims settled but not yet paid; (ii) the probable and reasonably 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 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. Based upon its regular reevaluation of its exposure from asbestos litigation, Metropolitan Life Insurance Company has updated its liability analysis for asbestos-related claims through December 31, 2010. 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 U.S. Securities and Exchange Commission ("SEC"); federal governmental authorities, including congressional committees; and the Financial Industry Regulatory Authority ("FINRA") seeking a broad range of information. The issues involved in information requests and regulatory matters vary widely. The Company cooperates in these inquiries. United States of America v. EME Homer City Generation, L.P., et al. (W.D. Pa., filed January 4, 2011). On January 4, 2011, the United States commenced a civil action in United States District Court for the Western District of Pennsylvania against EME Homer City Generation L.P. ("EME Homer City"), Homer City OL6 LLC, and other defendants regarding the operations of the Homer City Generating Station, an electricity generating facility. Homer City OL6 LLC, an entity owned by Metropolitan Life Insurance Company, is a passive investor with a noncontrolling interest in the electricity generating facility, which is solely operated by the lessee, EME Homer City. The complaint seeks injunctive relief and assessment of civil penalties for alleged violations of the federal Clean Air Act and Pennsylvania's State Implementation Plan. The alleged violations were the subject of Notices of Violations ("NOVs") that the Environmental Protection Agency ("EPA") issued to EME Homer City, Homer City OL6 LLC, and others in June 2008 and May 2010. On January 7, 2011, the United States District Court for the Western District of Pennsylvania granted the motion by the Pennsylvania Department of Environmental Protection and the State of New York to intervene in the lawsuit as additional plaintiffs. On February 16, 2011, the State of New Jersey filed an Intervenor's Complaint in the lawsuit. On January 7, 2011, two plaintiffs filed a putative class action titled Scott Jackson and Maria Jackson v. EME Homer City Generation L.P., et. al. in the United States District Court for the Western District of Pennsylvania on behalf of a putative class of persons who have allegedly incurred damage to their persons and/or property because of the violations alleged in the action brought by the United States. Homer City OL6 LLC is a defendant in this action. EME Homer City has acknowledged its obligation to indemnify Homer City OL6 LLC for any claims relating to the NOVs. In the Matter of Chemform, Inc. Site, Pompano Beach, Broward County, Florida. In July 2010, the EPA advised Metropolitan Life Insurance Company that it believed payments were due under two settlement F-145 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) agreements, known as "Administrative Orders on Consent," that New England Mutual Life Insurance Company ("New England Mutual") signed in 1989 and 1992 with respect to the cleanup of a Superfund site in Florida (the "Chemform Site"). The EPA originally contacted Metropolitan Life Insurance Company (as successor to New England Mutual) and a third party in 2001, and advised that they owed additional clean-up costs for the Chemform Site. The matter was not resolved at that time. The EPA is requesting payment of an amount under $1 million from Metropolitan Life Insurance Company and a third party for past costs and for future environmental testing costs at the Chemform Site. Regulatory authorities in a small number of states and FINRA, and occasionally the SEC, have had investigations or inquiries relating to sales of individual life insurance policies or annuities or other products by Metropolitan Life Insurance Company, New England Life Insurance Company ("NELICO"), GALIC, and New England Securities Corporation. These investigations often focus on the conduct of particular financial services representatives and the sale of unregistered or unsuitable products or the misuse of client assets. Over the past several years, these and a number of investigations by other regulatory authorities were resolved for monetary payments and certain other relief, including restitution payments. 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 these sales practices related investigations or inquiries. Retained Asset Account Matters The New York Attorney General announced on July 29, 2010 that his office had launched a major fraud investigation into the life insurance industry for practices related to the use of retained asset accounts as a settlement option for death benefits and that subpoenas requesting comprehensive data related to retained asset accounts had been served on the Company and other insurance carriers. The Company received the subpoena on July 30, 2010. The Company also has received requests for documents and information from U.S. congressional committees and members as well as various state regulatory bodies, including the New York State Insurance Department (the "Department"). It is possible that other state and federal regulators or legislative bodies may pursue similar investigations or make related inquiries. Management cannot predict what effect any such investigations might have on the Company's earnings or the availability of the Company's retained asset account known as the Total Control Account ("TCA"), but management believes that the Company's consolidated financial statements taken as a whole would not be materially affected. Management believes that any allegations that information about the TCA is not adequately disclosed or that the accounts are fraudulent or otherwise violate state or federal laws are without merit. Metropolitan Life Insurance Company is a defendant in lawsuits related to the TCA. The lawsuits include claims of breach of contract, breach of a common law fiduciary duty or a quasi fiduciary duty such as a confidential or special relationship, or breach of a fiduciary duty under the Employee Retirement Income Security Act of 1974 ("ERISA"). Clark, et al. v. Metropolitan Life Insurance Company (D. Nev., filed March 28, 2008). This putative class action lawsuit alleges breach of contract and breach of a common law fiduciary and/or quasi-fiduciary duty arising from use of the TCA to pay life insurance policy death benefits. As damages, plaintiffs seek disgorgement of the difference between the interest paid to the account holders and the investment earnings on the assets backing the accounts. In March 2009, the court granted in part and denied in part Metropolitan Life Insurance Company's motion to dismiss, dismissing the fiduciary duty and unjust enrichment claims but allowing a breach of contract claim and a special or confidential relationship claim to go forward. On September 9, 2010, the court granted Metropolitan Life Insurance Company's motion for summary judgment. On September 20, 2010, plaintiff filed a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit. Faber, et al. v. Metropolitan Life Insurance Company (S.D.N. Y., filed December 4, 2008). This putative class action lawsuit alleges that Metropolitan Life Insurance Company's use of the TCA as the settlement option under F-146 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) group life insurance policies violates Metropolitan Life Insurance Company's fiduciary duties under ERISA. As damages, plaintiffs seek disgorgement of the difference between the interest paid to the account holders and the investment earnings on the assets backing the accounts. On October 23, 2009, the court granted Metropolitan Life Insurance Company's motion to dismiss with prejudice. On November 24, 2009, plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the Second Circuit. Keife, et al. v. Metropolitan Life Insurance Company (D. Nev., filed in state court on July 30, 2010 and removed to federal court on September 7, 2010). This putative class action lawsuit raises a breach of contract claim arising from Metropolitan Life Insurance Company's use of the TCA to pay life insurance benefits under the Federal Employees Group Life Insurance program. As damages, plaintiffs seek disgorgement of the difference between the interest paid to the account holders and the investment earnings on the assets backing the accounts. In September 2010, plaintiffs filed a motion for class certification of the breach of contract claim, which the court has stayed. On November 22, 2010, Metropolitan Life Insurance Company filed a motion to dismiss. Other Litigation 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 ("MSI"). Plaintiffs asserted 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 sought rescission, compensatory damages, interest, punitive damages and attorneys' fees and expenses. In August 2009, the district court granted defendants' motion for summary judgment. On February 2, 2011, the United States Court of Appeals for the Tenth Circuit affirmed the judgment of the district court granting Metropolitan Life Insurance Company's and MSI's summary judgment motion. Sales Practices Claims. Over the past several years, the Company has faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. Some of the current cases seek substantial damages, including punitive and treble damages and attorneys' fees. The Company continues to vigorously defend against the claims in these matters. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters. Sun Life Assurance Company of Canada v. Metropolitan Life Ins. Co. (Super. Ct., Ontario, October 2006). In 2006, Sun Life Assurance Company of Canada ("Sun Life"), as successor to the purchaser of Metropolitan Life Insurance Company's Canadian operations, filed this lawsuit in Toronto, seeking a declaration that Metropolitan Life Insurance Company remains liable for "market conduct claims" related to certain individual life insurance policies sold by Metropolitan Life Insurance Company and that have been transferred to Sun Life. Sun Life had asked that the court require Metropolitan Life Insurance Company to indemnify Sun Life for these claims pursuant to indemnity provisions in the sale agreement for the sale of Metropolitan Life Insurance Company's Canadian operations entered into in June of 1998. In January 2010, the court found that Sun Life had given timely notice of its claim for indemnification but, because it found that Sun Life had not yet incurred an indemnifiable loss, granted Metropolitan Life Insurance Company's motion for summary judgment. Both parties appealed. In September 2010, Sun Life notified Metropolitan Life Insurance Company that a purported class action lawsuit was filed against Sun Life in Toronto, Kang v. Sun Life Assurance Co. (Super. Ct., Ontario, September 2010), alleging sales practices claims regarding the same individual policies sold by Metropolitan Life Insurance Company and transferred to Sun Life. Sun Life contends that Metropolitan Life Insurance Company is obligated to indemnify Sun Life for some or all of the claims in this lawsuit. Metropolitan Life Insurance Company is currently not a party to the Kang v. Sun Life lawsuit. F-147 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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. It is not possible to predict the ultimate outcome or provide reasonable ranges of potential losses of all pending investigations and legal proceedings. 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 were as follows:
DECEMBER 31, ----------- 2010 2009 ---- ---- (IN MILLIONS) Other Assets: Premium tax offset for future undiscounted assessments........... $42 $40 Premium tax offsets currently available for paid assessments..... 7 8 --- --- $49 $48 === === Other Liabilities: Insolvency assessments........................................... $63 $60 === ===
Net assessments levied against the Company were $3 million and $2 million for the years ended December 31, 2010 and 2008, respectively. Net assessments levied against the Company were insignificant for the year ended December 31, 2009. F-148 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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' revenues. Additionally, the Company, as lessee, has entered into various lease and sublease agreements for office space, information technology 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) 2011..................................................... $359 $15 $192 2012..................................................... $310 $14 $167 2013..................................................... $273 $13 $155 2014..................................................... $232 $10 $116 2015..................................................... $184 $ 6 $106 Thereafter............................................... $461 $44 $909
During 2008, MetLife, Inc. moved certain of its operations in New York from Long Island City, Queens to Manhattan. As a result of this movement of operations and current market conditions, which precluded the immediate and complete sublet of all unused space in both Long Island City and Manhattan, the Company incurred a lease impairment charge of $38 million which is included within other expenses in Corporate & Other. The impairment charge was determined based upon the present value of the gross rental payments less sublease income discounted at a risk-adjusted rate over the remaining lease terms which range from 15-20 years. The Company has made assumptions with respect to the timing and amount of future sublease income in the determination of this impairment charge. During 2009, pending sublease deals were impacted by the further decline of market conditions, which resulted in an additional lease impairment charge of $52 million. See Note 16 for discussion of $28 million of such charges related to restructuring. Additional impairment charges could be incurred should market conditions deteriorate further or last for a period significantly longer than anticipated. 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 $2.4 billion and $2.6 billion at December 31, 2010 and 2009, 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 $2.5 billion and $1.3 billion at December 31, 2010 and 2009, respectively. 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 $1,997 million and $763 million at December 31, 2010 and 2009, respectively. 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 F-149 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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 $1.1 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. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments. 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, 2010, the Company did not record any additional liabilities for indemnities, guarantees and commitments. The Company's recorded liabilities were $3 million at both December 31, 2010 and 2009, for indemnities, guarantees and commitments. 14. 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. 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 final 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. At December 31, 2010, the majority of active participants were accruing benefits under the cash balance formula; however, approximately 90% of the Company's obligations result from benefits calculated with the traditional formula. The non-qualified pension plans provide supplemental benefits in excess of limits applicable to a qualified plan. The Company's proportionate share of net pension expense related to its sponsored pension plans was $309 million and $355 million for the years ended December 31, 2010 and 2009, respectively. The Company also provides certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees. Employees of the Company 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 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 costs of postretirement medical benefits. 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 was less than $1 million and $70 million for the years ended December 31, 2010 and 2009, respectively. A December 31 measurement date is used for all of the Company's defined benefit pension and other postretirement benefit plans. F-150 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OBLIGATIONS, FUNDED STATUS AND NET PERIODIC BENEFIT COSTS
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS --------------- --------------- DECEMBER 31, --------------------------------- 2010 2009 2010 2009 ------ ------ ------ ------ (IN MILLIONS) Change in benefit obligation: Benefit obligation at January 1,................... $6,287 $5,993 $1,829 $1,616 Service costs.................................... 150 147 17 22 Interest costs................................... 375 374 111 123 Plan participants' contributions................. -- -- 33 30 Net actuarial (gains) losses..................... 277 393 68 350 Settlements and curtailments..................... 6 12 -- -- Change in benefits............................... -- (7) (81) (167) Net transfer in (out) of controlled group........ -- (251) (17) -- Prescription drug subsidy........................ -- -- 12 12 Benefits paid.................................... (405) (374) (153) (157) ------ ------ ------ ------ Benefit obligation at December 31,................. 6,690 6,287 1,819 1,829 ------ ------ ------ ------ Change in plan assets: Fair value of plan assets at January 1,............ 5,419 5,516 1,118 1,010 Actual return on plan assets..................... 673 486 98 135 Plan participants' contributions................. -- -- 33 2 Employer contribution............................ 289 57 87 4 Net transfer in (out) of controlled group........ -- (266) (12) -- Benefits paid.................................... (405) (374) (140) (33) ------ ------ ------ ------ Fair value of plan assets at December 31,........ 5,976 5,419 1,184 1,118 ------ ------ ------ ------ Funded status at December 31,...................... $ (714) $ (868) $ (635) $ (711) ====== ====== ====== ====== Amounts recognized in the consolidated balance sheets consist of: Other assets..................................... $ 107 $ -- $ -- $ -- Other liabilities................................ (821) (868) (635) (711) ------ ------ ------ ------ Net amount recognized......................... $ (714) $ (868) $ (635) $ (711) ====== ====== ====== ====== Accumulated other comprehensive (income) loss: Net actuarial losses............................. $2,058 $2,226 $ 399 $ 388 Prior service costs (credit)..................... 16 22 (287) (289) ------ ------ ------ ------ Accumulated other comprehensive (income) loss........................................ 2,074 2,248 112 99 Deferred income tax (benefit)...................... (717) (786) (40) (34) ------ ------ ------ ------ Accumulated other comprehensive (income) loss, net of income tax............................. $1,357 $1,462 $ 72 $ 65 ====== ====== ====== ======
F-151 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The aggregate projected benefit obligation and aggregate fair value of plan assets for the pension benefit plans were as follows:
NON-QUALIFIED QUALIFIED PLAN PLAN TOTAL --------------- --------------- --------------- DECEMBER 31, ------------------------------------------------------- 2010 2009 2010 2009 2010 2009 ------ ------ ----- ----- ------ ------ (IN MILLIONS) Aggregate fair value of plan assets... $5,976 $5,419 $ -- $ -- $5,976 $5,419 Aggregate projected benefit obligation.......................... 5,869 5,500 821 787 6,690 6,287 ------ ------ ----- ----- ------ ------ Over (under) funded................... $ 107 $ (81) $(821) $(787) $ (714) $ (868) ====== ====== ===== ===== ====== ======
The accumulated benefit obligations for all defined benefit pension plans were $6,393 million and $5,941 million at December 31, 2010 and 2009, respectively. The aggregate pension accumulated benefit obligation and aggregate fair value of plan assets for pension benefit plans with accumulated benefit obligations in excess of plan assets was as follows:
DECEMBER 31, ----------- 2010 2009 ---- ---- (IN MILLIONS) Projected benefit obligation...................................... $821 $787 Accumulated benefit obligation.................................... $748 $703 Fair value of plan assets......................................... $ -- $ --
Information for pension and other postretirement benefit plans with a projected benefit obligation in excess of plan assets were as follows:
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS ------------- --------------- DECEMBER 31, ------------------------------- 2010 2009 2010 2009 ---- ------ ------ ------ (IN MILLIONS) Projected benefit obligation........................ $821 $6,254 $1,819 $1,829 Fair value of plan assets........................... $ -- $5,400 $1,184 $1,118
Net periodic pension costs and net periodic other postretirement benefit plan costs are comprised of the following: i) Service Costs -- Service costs are the increase in the projected (expected) pension benefit obligation resulting from benefits payable to employees of the Company on service rendered during the current year. ii) Interest Costs on the Liability -- Interest costs are the time value adjustment on the projected (expected) pension benefit obligation at the end of each year. iii) Settlement and Curtailment Costs -- The aggregate amount of net gains (losses) recognized in net periodic benefit costs due to settlements and curtailments. Settlements result from actions that relieve/eliminate the plan's responsibility for benefit obligations or risks associated with the obligations or assets used for the settlement. Curtailments result from an event that significantly reduces/eliminates plan participants' expected years of future services or benefit accruals. iv) Expected Return on Plan Assets -- Expected return on plan assets is the assumed return earned by the accumulated pension and other postretirement fund assets in a particular year. F-152 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) v) Amortization of Net Actuarial Gains (Losses) -- Actuarial gains and losses result from differences between the actual experience and the expected experience on pension and other postretirement plan assets or projected (expected) pension benefit obligation during a particular period. These gains and losses are accumulated and, to the extent they exceed 10% of the greater of the PBO or the fair value of plan assets, the excess is amortized into pension and other postretirement benefit costs over the expected service years of the employees. vi) Amortization of Prior Service Costs -- These costs relate to the recognition of increases or decreases in pension and other postretirement benefit obligation due to amendments in plans or initiation of new plans. These increases or decreases in obligation are recognized in accumulated other comprehensive income (loss) at the time of the amendment. These costs are then amortized to pension and other postretirement benefit costs over the expected service years of the employees affected by the change. The components of net periodic benefit costs and other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:
OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS ---------------------- ------------------- YEARS ENDED DECEMBER 31, -------------------------------------------- 2010 2009 2008 2010 2009 2008 ----- ----- ------ ---- ----- ---- (IN MILLIONS) Net Periodic Benefit Costs: Service costs............................ $ 150 $ 147 $ 159 $ 17 $ 22 $ 20 Interest costs........................... 375 374 375 111 123 101 Settlement and curtailment costs......... 8 18 -- -- -- -- Expected return on plan assets........... (422) (414) (517) (79) (74) (88) Amortization of net actuarial (gains) losses................................ 192 223 24 38 43 -- Amortization of prior service costs (credit).............................. 6 8 15 (83) (36) (36) ----- ----- ------ ---- ----- ---- Total net periodic benefit costs.... 309 356 56 4 78 (3) ----- ----- ------ ---- ----- ---- Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): Net actuarial (gains) losses............. 24 251 1,563 49 284 258 Prior service costs (credit)............. -- (12) (19) (81) (167) 37 Amortization of net actuarial gains (losses).............................. (192) (223) (24) (38) (43) -- Amortization of prior service (costs) credit................................ (6) (8) (15) 83 36 36 ----- ----- ------ ---- ----- ---- Total recognized in other comprehensive income (loss)......... (174) 8 1,505 13 110 331 ----- ----- ------ ---- ----- ---- Total recognized in net periodic benefit costs and other comprehensive income (loss)...... $ 135 $ 364 $1,561 $ 17 $ 188 $328 ===== ===== ====== ==== ===== ====
For the year ended December 31, 2010, included within other comprehensive income (loss) were other changes in plan assets and benefit obligations associated with pension benefits of ($174) million and other postretirement benefits of $13 million for an aggregate reduction in other comprehensive income (loss) of ($161) million before income tax and ($98) million, net of income tax. F-153 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The estimated net actuarial (gains) losses and prior service costs (credit) for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs over the next year are $171 million and $5 million, respectively. The estimated net actuarial (gains) losses and prior service costs (credit) for the defined benefit other postretirement benefit plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs over the next year are $34 million and ($108) million, respectively. The Medicare Modernization Act of 2003 created various subsidies for sponsors of retiree drug programs. Two common ways of providing subsidies were the Retiree Drug Subsidy ("RDS") and Medicare Part D Prescription Drug Plans ("PDP"). From 2006 through 2010, the Company applied for and received the RDS each year. The RDS program provides the subsidy through cash payments made by Medicare to the Company, resulting in smaller net claims paid by the Company. A summary of the reduction to the APBO and the related reduction to the components of net periodic other postretirement benefits plan costs resulting from receipt of the RDS is presented below. As of January 1, 2011, as a result of changes made under the Patient Protection and Affordable Care Act of 2010, the Company will no longer apply for the RDS. Instead it has joined PDP and will indirectly receive Medicare subsidies in the form of smaller gross benefit payments for prescription drug coverage.
DECEMBER 31, ------------------- 2010 2009 2008 ----- ---- ---- (IN MILLIONS) Cumulative reduction in other postretirement benefits obligations: Balance at January 1,..................................... $ 247 $317 $299 Service costs............................................. 3 2 5 Interest costs............................................ 16 16 20 Net actuarial gains (losses).............................. (255) (76) 3 Prescription drug subsidy................................. (11) (12) (10) ----- ---- ---- Balance at December 31,................................ $ -- $247 $317 ===== ==== ====
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Reduction in net periodic other postretirement benefit costs: Service costs............................................. $ 3 $ 2 $ 5 Interest costs............................................ 16 16 20 Amortization of net actuarial gains (losses).............. 10 11 -- --- --- --- Total reduction in net periodic benefit costs.......... $29 $29 $25 === === ===
The Company received subsidies of $8 million, $12 million and $12 million for the years ended December 31, 2010, 2009 and 2008, respectively. F-154 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ASSUMPTIONS Assumptions used in determining benefit obligations were as follows:
OTHER POSTRETIRE- MENT PENSION BENEFITS BENEFITS --------------------- ------------- DECEMBER 31, ------------------------------------- 2010 2009 2010 2009 --------- --------- ----- ----- (IN MILLIONS) Weighted average discount rate................ 5.80% 6.25% 5.80% 6.25% Rate of compensation increase................. 3.5%-7.5% 2.0%-7.5% N/A N/A
Assumptions used in determining net periodic benefit costs were as follows:
OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS ------------------------------- --------------------- DECEMBER 31, ------------------------------------------------------- 2010 2009 2008 2010 2009 2008 --------- --------- ------- ----- ----- ----- (IN MILLIONS) Weighted average discount rate... 6.25% 6.60% 6.65% 6.25% 6.60% 6.65% Weighted average expected rate of return on plan assets.......... 8.00% 8.25% 8.25% 7.20% 7.36% 7.33% Rate of compensation increase.... 3.5%-7.5% 3.5%-7.5% 3.5%-8% N/A N/A N/A
The weighted average 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 weighted average 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 2011 is currently anticipated to be 7.25% for pension benefits and postretirement medical benefits and 5.25% for postretirement life benefits. The assumed healthcare costs trend rates used in measuring the APBO and net periodic benefit costs were as follows:
DECEMBER 31, --------------------------------------------------------------- 2010 2009 ------------------------------ ------------------------------ (IN MILLIONS) Pre-and Post-Medicare eligible 7.8% in 2011, gradually 8.2% in 2010, gradually claims...................... decreasing each year until decreasing each year until 2083 reaching the ultimate 2079 reaching the ultimate rate of 4.4%. rate of 4.1%.
F-155 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Assumed healthcare costs trend rates may have a significant effect on the amounts reported for healthcare plans. A one-percentage point change in assumed healthcare costs trend rates would have the following effects:
ONE PERCENT ONE PERCENT INCREASE DECREASE ----------- ----------- (IN MILLIONS) Effect on total of service and interest costs components... $ 8 $ (8) Effect of accumulated postretirement benefit obligation.... $86 $(104)
PLAN ASSETS The Company has issued group annuity and life insurance contracts supporting the pension and other postretirement benefit plan assets, which are invested primarily in separate accounts. The underlying assets of the separate accounts are principally comprised of cash and cash equivalents, short term investments, fixed maturity and equity securities, mutual funds, real estate, private equity investments and hedge funds investments. The comparative presentation of the 2009 plan assets has been realigned to conform to the 2010 presentation to disclose the estimated fair value of the underlying assets of each separate account at the security level. F-156 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The pension and postretirement plan assets and liabilities measured at estimated fair value on a recurring basis were determined as described below. These estimated fair values and their corresponding placement in the fair value hierarchy are summarized as follows:
DECEMBER 31, 2010 ----------------------------------------------------------------------------------------------- PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS ---------------------------------------------------- ---------------------------------------- FAIR VALUE MEASUREMENTS AT FAIR VALUE MEASUREMENTS AT REPORTING DATE USING REPORTING DATE USING ---------------------------------------- ---------------------------------------- QUOTED QUOTED PRICES PRICES IN ACTIVE IN ACTIVE MARKETS MARKETS FOR SIGNIFICANT FOR SIGNIFICANT IDENTICAL OTHER SIGNIFICANT TOTAL IDENTICAL OTHER SIGNIFICANT ASSETS AND OBSERVABLE UNOBSERVABLE ESTIMATED ASSETS AND OBSERVABLE UNOBSERVABLE LIABILITIES INPUTS INPUTS FAIR LIABILITIES INPUTS INPUTS (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE (LEVEL 1) (LEVEL 2) (LEVEL 3) ----------- ----------- ------------ --------- ----------- ----------- ------------ (IN MILLIONS) ASSETS Fixed maturity securities: Corporate................ $ -- $1,444 $ 45 $1,489 $ -- $ 67 $ 4 Federal agencies......... -- 165 -- 165 -- 15 -- Foreign bonds............ -- 138 4 142 -- 3 -- Municipals............... -- 129 -- 129 -- 37 1 Preferred stocks......... -- 4 -- 4 -- -- -- U.S. government bonds.... 614 129 -- 743 82 -- -- ------ ------ ---- ------ ---- ---- --- Total fixed maturity securities.......... 614 2,009 49 2,672 82 122 5 ------ ------ ---- ------ ---- ---- --- Equity securities: Common stock -- domestic..... 1,329 88 228 1,645 359 3 -- Common stock -- foreign.. 436 -- -- 436 77 -- -- ------ ------ ---- ------ ---- ---- --- Total equity securities.......... 1,765 88 228 2,081 436 3 -- ------ ------ ---- ------ ---- ---- --- Money market securities.... 189 95 -- 284 1 1 -- Pass-through securities.... -- 303 2 305 -- 73 6 Derivative securities...... 2 (4) (1) (3) -- -- -- Short-term investments..... (10) 96 -- 86 8 443 -- Other invested assets...... -- 59 446 505 -- -- -- Other receivables.......... -- 37 -- 37 -- 3 -- Securities receivable...... -- 66 -- 66 -- 2 -- ------ ------ ---- ------ ---- ---- --- Total assets........ $2,560 $2,749 $724 $6,033 $527 $647 $11 ====== ====== ==== ====== ==== ==== === LIABILITIES Securities payable......... $ -- $ 57 $ -- $ 57 $ -- $ 1 $-- ------ ------ ---- ------ ---- ---- --- Total liabilities... $ -- $ 57 $ -- $ 57 $ -- $ 1 $-- ====== ====== ==== ====== ==== ==== === Total assets and liabilities.... $2,560 $2,692 $724 $5,976 $527 $646 $11 ====== ====== ==== ====== ==== ==== === DECEMBER 31, 2010 --------- OTHER POSTRE- TIREMENT BENEFITS --------- TOTAL ESTIMATED FAIR VALUE --------- (IN MILLIONS) ASSETS Fixed maturity securities: Corporate................ $ 71 Federal agencies......... 15 Foreign bonds............ 3 Municipals............... 38 Preferred stocks......... -- U.S. government bonds.... 82 ------ Total fixed maturity securities.......... 209 ------ Equity securities: Common stock -- domestic..... 362 Common stock -- foreign.. 77 ------ Total equity securities.......... 439 ------ Money market securities.... 2 Pass-through securities.... 79 Derivative securities...... -- Short-term investments..... 451 Other invested assets...... -- Other receivables.......... 3 Securities receivable...... 2 ------ Total assets........ $1,185 ====== LIABILITIES Securities payable......... $ 1 ------ Total liabilities... $ 1 ====== Total assets and liabilities.... $1,184 ======
F-157 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2009 ------------------------------------------------------------------------------------------- PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS -------------------------------------------------- -------------------------------------- FAIR VALUE MEASUREMENTS AT FAIR VALUE MEASUREMENTS AT REPORTING DATE USING REPORTING DATE USING -------------------------------------- -------------------------------------- QUOTED QUOTED PRICES PRICES IN ACTIVE IN ACTIVE MARKETS SIGNIFICANT MARKETS SIGNIFICANT FOR OTHER SIGNIFICANT TOTAL FOR OTHER SIGNIFICANT IDENTICAL OBSERVABLE UNOBSERVABLE ESTIMATED IDENTICAL OBSERVABLE UNOBSERVABLE ASSETS INPUTS INPUTS FAIR ASSETS INPUTS INPUTS (LEVEL 1) (LEVEL 2) (LEVEL 3) VALUE (LEVEL 1) (LEVEL 2) (LEVEL 3) --------- ----------- ------------ --------- --------- ----------- ------------ (IN MILLIONS) ASSETS Fixed maturity securities: Corporate................. $ -- $1,385 $ 64 $1,449 $ -- $ 48 $ -- Federal agencies.......... (39) 133 -- 94 -- 30 -- Foreign bonds............. -- 138 5 143 -- 3 -- Municipals................ -- 53 -- 53 -- 21 -- Preferred stocks.......... -- 2 -- 2 -- -- -- U.S. government bonds..... 303 48 -- 351 45 -- -- U.S. treasury notes....... -- -- -- -- 12 -- -- ------ ------ ---- ------ ---- ---- ---- Total fixed maturity securities........... 264 1,759 69 2,092 57 102 -- ------ ------ ---- ------ ---- ---- ---- Equity securities: Common stock -- domestic.. 1,487 227 229 1,943 342 6 -- Common stock -- foreign... 372 -- -- 372 72 -- -- ------ ------ ---- ------ ---- ---- ---- Total equity securities........... 1,859 227 229 2,315 414 6 -- ------ ------ ---- ------ ---- ---- ---- Money market securities..... 69 54 -- 123 12 1 -- Pass-through securities..... 1 357 66 424 -- 75 9 Derivative securities....... 2 -- -- 2 -- -- -- Short-term investments...... -- 109 -- 109 -- 442 -- Other invested assets....... -- -- 354 354 -- -- -- ------ ------ ---- ------ ---- ---- ---- Total assets......... $2,195 $2,506 $718 $5,419 $483 $626 $ 9 ====== ====== ==== ====== ==== ==== ==== DECEMBER 31, 2009 --------- OTHER POSTRE- TIREMENT BENEFITS --------- TOTAL ESTIMATED FAIR VALUE --------- (IN MILLIONS) ASSETS Fixed maturity securities: Corporate................. $ 48 Federal agencies.......... 30 Foreign bonds............. 3 Municipals................ 21 Preferred stocks.......... -- U.S. government bonds..... 45 U.S. treasury notes....... 12 ------ Total fixed maturity securities........... 159 ------ Equity securities: Common stock -- domestic.. 348 Common stock -- foreign... 72 ------ Total equity securities........... 420 ------ Money market securities..... 13 Pass-through securities..... 84 Derivative securities....... -- Short-term investments...... 442 Other invested assets....... -- ------ Total assets......... $1,118 ======
The pension and other postretirement benefit plan assets are categorized into the three-level fair value hierarchy, as defined in Note 1, based upon the priority of the inputs to the respective valuation technique. The following summarizes the types of assets included within the three-level fair value hierarchy presented in the table above. Level 1 This category includes investments in liquid securities, such as cash, short-term money market and bank time deposits, expected to mature within a year. Level 2 This category includes certain separate accounts that are primarily invested in liquid and readily marketable securities. The estimated fair value of such separate account is based upon reported NAV provided by fund managers and this value represents the amount at which transfers into and out of the respective separate account are effected. These separate accounts provide reasonable levels of price transparency and can be corroborated through observable market data. Certain separate accounts are invested in investment partnerships designated as hedge funds. The values for these separate accounts is determined monthly based on the NAV of the underlying hedge fund investment. Additionally, such hedge funds generally contain lock out or other waiting period provisions for redemption requests to be filled. While the reporting and redemption restrictions may limit the frequency of trading activity in separate accounts invested in hedge funds, the reported F-158 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NAV, and thus the referenced value of the separate account, provides a reasonable level of price transparency that can be corroborated through observable market data. Directly held investments are primarily invested in U.S. and foreign government and corporate securities. Level 3 This category includes separate accounts that are invested in real estate and private equity investments that provide little or no price transparency due to the infrequency with which the underlying assets trade and generally require additional time to liquidate in an orderly manner. Accordingly, the values for separate accounts invested in these alternative asset classes are based on inputs that cannot be readily derived from or corroborated by observable market data. A rollforward of all pension and other postretirement benefit plan assets measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs is as follows:
TOTAL REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN: ------------------------ PURCHASES, OTHER SALES, BALANCE, COMPREHENSIVE ISSUANCES AND TRANSFER INTO TRANSFER OUT BALANCE, JANUARY 1, EARNINGS INCOME (LOSS) SETTLEMENTS LEVEL 3 OF LEVEL 3 DECEMBER 31, ---------- -------- ------------- ------------- ------------- ------------ ------------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2010: PENSION: Fixed maturity securities: Corporate................... $ 64 $ -- $ 7 $(17) $ 4 $(13) $ 45 Foreign bonds............... 5 -- 1 (2) -- -- 4 ---- ---- --- ---- --- ---- ---- Total fixed maturity securities............. 69 -- 8 (19) 4 (13) 49 ---- ---- --- ---- --- ---- ---- Equity securities: Common stock -- domestic.... 229 -- (2) 1 -- -- 228 ---- ---- --- ---- --- ---- ---- Total equity securities.. 229 -- (2) 1 -- -- 228 ---- ---- --- ---- --- ---- ---- Pass-through securities....... 66 (11) 13 (67) 2 (1) 2 Derivative securities......... -- 2 (2) (1) -- -- (1) Other invested assets......... 354 74 (4) 22 -- -- 446 ---- ---- --- ---- --- ---- ---- Total pension assets... $718 $ 65 $13 $(64) $ 6 $(14) $724 ==== ==== === ==== === ==== ==== OTHER POSTRETIREMENT: Fixed maturity securities: Corporate................... $ -- $ -- $ 1 $ -- $ 3 $ -- $ 4 Municipals.................. -- -- -- -- 1 -- 1 ---- ---- --- ---- --- ---- ---- Total fixed maturity securities............. -- -- 1 -- 4 -- 5 Pass-through securities....... 9 (4) 1 (1) 1 -- 6 ---- ---- --- ---- --- ---- ---- Total other postretirement assets.............. $ 9 $ (4) $ 2 $ (1) $ 5 $ -- $ 11 ==== ==== === ==== === ==== ==== Total assets........ $727 $ 61 $15 $(65) $11 $(14) $735 ==== ==== === ==== === ==== ====
F-159 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TOTAL REALIZED/UNREALIZED GAINS (LOSSES) INCLUDED IN: ------------------------- PURCHASES, OTHER SALES, TRANSFER INTO BALANCE, COMPREHENSIVE ISSUANCES AND AND/OR OUT BALANCE, JANUARY 1, EARNINGS INCOME (LOSS) SETTLEMENTS OF LEVEL 3 DECEMBER 31, ---------- -------- ------------- ------------- ------------- ------------ (IN MILLIONS) YEAR ENDED DECEMBER 31, 2009: PENSION: Fixed maturity securities: Corporate.......................... $ 54 $ (5) $ 20 $ (3) $(2) $ 64 Foreign bonds...................... 4 (1) 5 (3) -- 5 ---- ---- ----- ---- --- ---- Total fixed maturity securities.................... 58 (6) 25 (6) (2) 69 ---- ---- ----- ---- --- ---- Equity securities: Common stock -- domestic........... 437 -- (220) 12 -- 229 ---- ---- ----- ---- --- ---- Total equity securities......... 437 -- (220) 12 -- 229 ---- ---- ----- ---- --- ---- Pass-through securities.............. 76 (2) 8 (23) 7 66 Derivative securities................ 38 34 (37) (35) -- -- Other invested assets................ 372 4 (56) 34 -- 354 ---- ---- ----- ---- --- ---- Total pension assets.......... $981 $ 30 $(280) $(18) $ 5 $718 ==== ==== ===== ==== === ==== OTHER POSTRETIREMENT: Pass-through securities.............. $ 13 $(17) $ 17 $ (4) $-- $ 9 ---- ---- ----- ---- --- ---- Total other postretirement.... $ 13 $(17) $ 17 $ (4) $-- $ 9 ==== ==== ===== ==== === ==== Total assets............... $994 $ 13 $(263) $(22) $ 5 $727 ==== ==== ===== ==== === ====
The Company provides employees with benefits under various ERISA benefit plans. These include qualified pension plans, postretirement medical plans and certain retiree life insurance coverage. The assets of the Company's qualified pension plans are held in insurance group annuity contracts, and the vast majority of the assets of the postretirement medical plan and backing the retiree life coverage are held in insurance contracts. All of these contracts are issued by the Company and the assets under the contracts are held in insurance separate accounts that have been established by the Company. The insurance contract provider engages investment management firms ("Managers") to serve as sub-advisors for the separate accounts based on the specific investment needs and requests identified by the plan fiduciary. These Managers have portfolio management discretion over the purchasing and selling of securities and other investment assets pursuant to the respective investment management agreements and guidelines established for each insurance separate account. The assets of the qualified pension plans and postretirement medical plans (the "Invested Plans") are well diversified across multiple asset categories and across a number of different Managers, with the intent of minimizing risk concentrations within any given asset category or with any given Manager. The Invested Plans, other than those held in participant directed investment accounts, are managed in accordance with investment policies consistent with the longer-term nature of related benefit obligations and within prudent risk parameters. Specifically, investment policies are oriented toward (i) maximizing the Invested Plan's funded status; (ii) minimizing the volatility of the Invested Plan's funded status; (iii) generating asset returns that exceed liability increases; and (iv) targeting rates of return in excess of a custom benchmark and industry standards over appropriate reference time periods. These goals are expected to be met through identifying appropriate and diversified asset classes and allocations, ensuring adequate liquidity to pay benefits and expenses when due and controlling the costs of administering and managing the Invested Plan's investments. Independent investment consultants are periodically used to evaluate the investment risk of Invested Plan's assets relative to liabilities, F-160 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) analyze the economic and portfolio impact of various asset allocations and management strategies and to recommend asset allocations. An international subsidiary sponsors a defined benefit plan that covers employees and sales representatives who meet specified eligibility requirements. Pension benefits are provided utilizing either a traditional formula or cash balance formula, similar to the U.S. plans discussed above. The investment objectives are also similar, subject to local regulations. Generally, the international pension plan invests directly in high quality equity and fixed maturity securities. Derivative contracts may be used to reduce investment risk, to manage duration and to replicate the risk/return profile of an asset or asset class. Derivatives may not be used to leverage a portfolio in any manner, such as to magnify exposure to an asset, asset class, interest rates or any other financial variable. Derivatives are also prohibited for use in creating exposures to securities, currencies, indices or any other financial variable that are otherwise restricted. The tables below summarize the actual weighted average allocation by major asset class for the Invested Plans:
ACTUAL ALLOCATION ------------------------------------------------------------------- DEFINED BENEFIT PLAN POSTRETIREMENT MEDICAL POSTRETIREMENT LIFE -------------------- ---------------------- ------------------- YEAR ENDED DECEMBER 31, 2010: ASSET CLASS: Fixed maturity securities (target range).............................. 50% to 80% 20% to 50% -- Corporate........................... 24% 10% -- Federal agency...................... 3 2 -- Foreign bonds....................... 3 -- -- Municipals.......................... 2 5 -- U.S. government bonds............... 12 11 -- --------- --------- --- Total fixed maturity securities.. 44% 28% -- --------- --------- --- Equity securities (target range)...... 0% to 40% 50% to 80% -- Common stock -- domestic............ 27% 49% -- Common stock -- foreign............. 8 10 -- --------- --------- --- Total equity securities.......... 35% 59% -- --------- --------- --- Money market securities............... 5% --% -- Pass-through securities............... 5 11 -- Short-term investments................ 1 1 100% Other invested assets................. 8 -- -- Other receivables..................... 1 1 -- Securities receivable................. 1 -- -- --------- --------- --- Total assets................... 100% 100% 100% ========= ========= ===
F-161 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ACTUAL ALLOCATION ------------------------------------------------------------------- DEFINED BENEFIT PLAN POSTRETIREMENT MEDICAL POSTRETIREMENT LIFE -------------------- ---------------------- ------------------- YEAR ENDED DECEMBER 31, 2009: ASSET CLASS: Fixed maturity securities (target range).............................. 35% to 55% 10% to 40% -- Corporate........................... 26% 7% -- Federal agency...................... 2 4 -- Foreign bonds....................... 3 -- -- Municipals.......................... 1 3 -- U.S. government bonds............... 6 7 -- U.S. treasury notes................. -- 2 -- --------- --------- --- Total fixed maturity securities.. 38% 23% -- --------- --------- --- Equity securities (target range)...... 25% to 45% 50% to 80% -- Common stock -- domestic............ 36% 52% -- Common stock -- foreign............. 7 11 -- --------- --------- --- Total equity securities.......... 43% 63% -- --------- --------- --- Money market securities............... 2% 2% -- Pass-through securities............... 8 12 -- Short-term investments................ 2 -- 100% Other invested assets................. 7 -- -- --------- --------- --- Total assets................... 100% 100% 100% ========= ========= ===
The target ranges in the tables above are forward-looking as of the dates presented. EXPECTED FUTURE CONTRIBUTIONS AND BENEFIT PAYMENTS It is the Company's practice to make contributions to the qualified pension plan to comply with minimum funding requirements of ERISA. In accordance with such practice, no contributions were required for both of the years ended December 31, 2010 and 2009. No contributions will be required for 2011. The Company made discretionary contributions of $219 million to the qualified pension plan during the year ended December 31, 2010. The Company made no discretionary contributions to the qualified pension plan during the year ended December 31, 2009. The Company expects to make additional discretionary contributions to the qualified pension plan of $152 million in 2011. 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 $70 million and $57 million for the years ended December 31, 2010 and 2009, respectively. These payments are expected to be at approximately the same level in 2011. Postretirement benefits, other than those provided under qualified pension plans, are either: (i) not vested under law; (ii) a non-funded obligation of the Company; or (iii) both. Current regulations do not require funding for these benefits. The Company uses its general assets, net of participant's contributions, to pay postretirement medical claims as they come due in lieu of utilizing any plan assets. Total payments equaled $153 million and $157 million for the years ended December 31, 2010 and 2009, respectively. The Company expects to make contributions of $117 million, net of participant's contributions, towards benefit obligations (other than those under qualified pension plans) in 2011. As noted previously, the Subsidiaries no longer expect to receive the RDS under the Medicare Modernization Act of 2003 to partially offset payment of such benefits. Instead, the gross benefit payments that will be made under the PDP will already reflect subsidies. F-162 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Gross benefit payments for the next ten years, which reflect expected future service where appropriate, are expected to be as follows:
OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS -------- -------------- (IN MILLIONS) 2011........................................................ $ 399 $117 2012........................................................ $ 400 $119 2013........................................................ $ 405 $120 2014........................................................ $ 422 $121 2015........................................................ $ 430 $122 2016-2020................................................... $2,375 $622
ADDITIONAL INFORMATION As previously discussed, the assets of the pension and other postretirement benefit plans are held in group annuity and life insurance contracts issued by the Company. Total revenues from these contracts recognized in the consolidated statements of operations were $46 million, $42 million and $42 million for the years ended December 31, 2010, 2009 and 2008, respectively, and included policy charges and net investment income from investments backing the contracts and administrative fees. Total investment income (loss), including realized and unrealized gains (losses), credited to the account balances was $767 million, $689 million and ($1,090) million for the years ended December 31, 2010, 2009 and 2008, respectively. The terms of these contracts are consistent in all material respects with those the Company offers to unaffiliated parties that are similarly situated. SAVINGS AND INVESTMENT PLANS The Company sponsors savings and investment plans for substantially all Company employees under which a portion of employee contributions are matched. The Company contributed $72 million, $79 million and $63 million for the years ended December 31, 2010, 2009 and 2008, respectively. 15. EQUITY CAPITAL CONTRIBUTIONS During the years ended December 31, 2010, 2009 and 2008, MetLife, Inc. contributed and paid $3 million, $3 million and $4 million, respectively, in the form of line of credit fees on the Company's behalf. During the year ended December 31, 2008, in connection with an acquisition by MetLife, Inc., MetLife, Inc. contributed $9 million to the Company in the form of intangible assets and the associated deferred income tax liability, for which the Company receives the benefit. See Note 8. STOCK-BASED COMPENSATION PLANS Overview The stock-based compensation expense recognized by the Company is related to awards payable in shares of MetLife, Inc. common stock, or options to purchase MetLife, Inc. common stock. The Company does not issue any awards payable in its common stock or options to purchase its common stock. F-163 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Description of Plans for Employees and Agents -- General Terms The MetLife, Inc. 2000 Stock Incentive Plan, as amended (the "2000 Stock Plan") authorized the granting of awards to employees and agents in the form of options to buy shares of MetLife, Inc. common stock ("Stock Options") that either qualify as incentive Stock Options under Section 422A of the Code or are non-qualified. By December 31, 2009 all awards under the 2000 Stock Plan had either vested or been forfeited. No awards were made under the 2000 Stock Plan in 2010. Under the MetLife, Inc. 2005 Stock and Incentive Compensation Plan (the "2005 Stock Plan"), awards granted to employees and agents 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 with reference to MetLife, Inc. common stock). The aggregate number of shares authorized for issuance under the 2005 Stock Plan is 68,000,000, plus those shares available but not utilized under the 2000 Stock Plan and those shares utilized under the 2000 Stock Plan that are recovered due to forfeiture of Stock Options. 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. At December 31, 2010, the aggregate number of shares of MetLife, Inc. common stock remaining available for issuance pursuant to the 2005 Stock Plan was 40,477,451. Stock Option exercises and other awards settled in shares are satisfied through the issuance of shares held in treasury by MetLife, Inc. or by the issuance of new shares. Of the stock-based compensation for the years ended December 31, 2010, 2009 and 2008, 79%, 88% and 89%, respectively, was allocated to the Company. No expense amounts related to stock-based awards to MetLife, Inc. non-management directors were allocated to the Company. This allocation represents substantially all stock-based compensation recognized in the Company's consolidated results of operations. Accordingly, this discussion addresses MetLife, Inc.'s practices for recognizing expense for awards under the Incentive Plans. References to compensation expense in this note refer to the Company's allocated portion of that expense. All other references relevant to awards under the Incentive Plans pertain to all awards under those plans. Compensation expense related to awards under the 2005 Stock Plan 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 forfeiture 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 related to awards under the 2005 Stock Plan is principally related to the issuance of Stock Options, Performance Shares and Restricted Stock Units. The majority of the awards granted by MetLife, Inc. each year under the 2005 Stock Plan are made in the first quarter of each year. F-164 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Compensation Expense Related to Stock-Based Compensation The components of compensation expense related to stock-based compensation is as follows:
YEARS ENDED DECEMBER 31, --------------------- 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Stock Options............................................. $39 $48 $ 44 Performance Shares (1).................................... 19 10 64 Restricted Stock Units.................................... 9 3 2 --- --- ---- Total compensation expenses related to the Incentive Plans................................................... $67 $61 $110 === === ==== Income tax benefits....................................... $23 $21 $ 38 === === ====
-------- (1) 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. At December 31, 2010, the Company's allocated portion of expense for Stock Options, Performance Shares and Restricted Stock Units was 87%, 65% and 88%, respectively. The following table presents the total unrecognized compensation expense related to stock-based compensation and the expected weighted average period over which these expenses will be recognized at:
DECEMBER 31, 2010 -------------------------------- WEIGHTED AVERAGE EXPENSE PERIOD ------------- ---------------- (IN MILLIONS) (YEARS) Stock Options........................................... $39 1.73 Performance Shares...................................... $30 1.74 Restricted Stock Units.................................. $14 1.87
Stock Options Stock Options are the contingent right of award holders to purchase shares of MetLife, Inc. common stock at a stated price for a limited time. All Stock Options have an exercise price equal to the closing price of MetLife, Inc. common stock reported on the New York Stock Exchange on the date of grant, and have a maximum term of ten years. The vast majority of Stock Options granted have become or will become exercisable at a rate of one-third of each award on each of the first three anniversaries of the grant date. Other Stock Options have become or will become exercisable on the third anniversary of the grant date. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. F-165 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A summary of the activity related to Stock Options for the year ended December 31, 2010 is as follows:
WEIGHTED AVERAGE REMAINING AGGREGATE SHARES UNDER WEIGHTED AVERAGE CONTRACTUAL INTRINSIC OPTION EXERCISE PRICE TERM VALUE (1) ------------ ---------------- ----------- ------------- (YEARS) (IN MILLIONS) Outstanding at January 1, 2010......... 30,152,405 $38.51 5.50 $ -- Granted (2)............................ 4,683,144 $35.06 Exercised.............................. (1,742,003) $29.74 Expired................................ (154,947) $47.78 Forfeited.............................. (236,268) $34.64 ---------- Outstanding at December 31, 2010....... 32,702,331 $38.47 5.30 $195 ========== ====== ==== ==== Aggregate number of stock options expected to vest at December 31, 2010................................. 31,930,964 $38.62 5.21 $186 ========== ====== ==== ==== Exercisable at December 31, 2010....... 23,405,998 $40.43 4.00 $ 94 ========== ====== ==== ====
-------- (1) The aggregate intrinsic value was computed using the closing share price on December 31, 2010 of $44.44 and December 31, 2009 of $35.35, as applicable. (2) The total fair value of the shares MetLife, Inc. granted on the date of the grant was $53 million. The fair value of Stock Options is estimated on the date of grant using a binomial lattice model. Significant assumptions used in MetLife, Inc.'s binomial lattice model, which are further described below, include: expected volatility of the price of MetLife, Inc. common stock; risk-free rate of return; expected dividend yield on MetLife, Inc. common stock; exercise multiple; and the post- vesting termination rate. Expected volatility is based upon an analysis of historical prices of MetLife, Inc. common stock and call options on that common stock traded on the open market. MetLife, Inc. 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 MetLife, Inc.'s common stock. MetLife, Inc. 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 binomial lattice model used by MetLife, Inc. incorporates different risk-free rates based on the imputed forward rates for U.S. Treasury Strips for each year over the contractual term of the option. The table below presents the full range of rates that were used for options granted during the respective periods. 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. The binomial lattice model used by MetLife, Inc. incorporates the contractual term of the Stock Options and then factors in 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. Exercise behavior in the binomial lattice model used by MetLife, Inc. 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 post-vesting termination rate is determined from actual historical exercise experience and expiration activity under the Incentive Plans. F-166 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the weighted average assumptions, with the exception of risk-free rate, which is expressed as a range, used to determine the fair value of Stock Options issued:
YEARS ENDED DECEMBER 31, --------------------------------------- 2010 2009 2008 ----------- ----------- ----------- Dividend yield............................... 2.11% 3.15% 1.21% Risk-free rate of return..................... 0.35%-5.88% 0.73%-6.67% 1.91%-7.21% Expected volatility.......................... 34.41% 44.39% 24.85% Exercise multiple............................ 1.75 1.76 1.73 Post-vesting termination rate................ 3.64% 3.70% 3.05% Contractual term (years)..................... 10 10 10 Expected life (years)........................ 7 6 6 Weighted average exercise price of stock options granted............................ $35.06 $23.61 $59.48 Weighted average fair value of stock options granted.................................... $11.29 $8.37 $17.51
MetLife, Inc. deducts 35% of the compensation amount of a Stock Option from its income on its tax return. The compensation amount is the price of shares on the date the Stock Option is exercised less the exercise price of the Stock Option. This tax benefit is allocated to the subsidiary of MetLife, Inc. that is the current or former employer of the associate, or is or was the principle for the non-employee insurance agent, who exercised the Stock Option. The following table presents a summary of Stock Option exercise activity for the:
YEARS ENDED DECEMBER 31, ---------------------- 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Total intrinsic value of stock options exercised......... $22 $ 1 $36 Cash received from exercise of stock options............. $52 $ 8 $45 Tax benefit realized from stock options exercised........ $ 8 $-- $13
Performance Shares Performance Shares are units that, if they vest, are multiplied by a performance factor to produce a number of final Performance Shares which are payable in shares of MetLife, Inc. common stock. Performance Shares are accounted for as equity awards, but are not credited with dividend-equivalents for actual dividends paid on MetLife, Inc. common stock during the performance period. Accordingly, the estimated fair value of Performance Shares is based upon the closing price of MetLife, Inc. 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. Performance Share awards normally vest in their entirety at the end of the three-year performance period. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. Vested Performance Shares are multiplied by a performance factor of 0.0 to 2.0 based largely on MetLife, Inc.'s performance in change in annual net operating earnings and total shareholder return over the applicable three- year performance period compared to the performance of its competitors. A performance factor of 0.94 was applied for the January 1, 2007 -- December 31, 2009 performance period. F-167 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents a summary of Performance Share activity for the year ended December 31, 2010:
WEIGHTED AVERAGE PERFORMANCE GRANT DATE SHARES FAIR VALUE ----------- ---------------- Outstanding at January 1, 2010.......................... 3,493,435 $38.43 Granted (1)............................................. 1,528,065 $32.24 Forfeited............................................... (58,176) $30.06 Payable (2)............................................. (807,750) $60.83 --------- Outstanding at December 31, 2010........................ 4,155,574 $31.91 ========= ====== Performance Shares expected to vest at December 31, 2010.................................................. 3,972,769 $33.40 ========= ======
-------- (1) The total fair value of the shares MetLife, Inc. granted on the date of the grant was $49 million. (2) Includes both shares paid and shares deferred for later payment. Performance Share amounts above represent aggregate initial target awards and do not reflect potential increases or decreases resulting from the performance factor determined after the end of the respective performance periods. At December 31, 2010, the three year performance period for the 2008 Performance Share grants was completed, but the performance factor has not yet been calculated. Included in the immediately preceding table are 824,825 outstanding Performance Shares to which the performance factor will be applied. Restricted Stock Units Restricted Stock Units are units that, if they vest, are payable in shares of MetLife, Inc. common stock. Restricted Stock Units are accounted for as equity awards, but are not credited with dividend-equivalents for actual dividends paid on MetLife, Inc. common stock during the performance period. Accordingly, the estimated fair value of Restricted Stock Units is based upon the closing price of MetLife, Inc. 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. The vast majority of Restricted Stock Units normally vest in their entirety on the third anniversary of their grant date. Other Restricted Stock Units normally vest in their entirety on the fifth anniversary of their grant date. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. The following table presents a summary of Restricted Stock Unit activity for the year ended December 31, 2010:
------------------------------------------------------------------------------------------- WEIGHTED AVERAGE RESTRICTED STOCK GRANT DATE UNITS FAIR VALUE ---------------- ---------------- Outstanding at January 1, 2010........................ 393,362 $28.05 Granted (1)........................................... 607,200 $32.32 Forfeited............................................. (31,275) $27.31 Payable (2)........................................... (32,115) $63.32 ------- Outstanding at December 31, 2010...................... 937,172 $29.63 ======= ====== Restricted Stock Units expected to vest at December 31, 2010............................................ 937,172 $29.63 ======= ======
-------- (1) The total fair value of the shares MetLife, Inc. granted on the date of the grant was $20 million. (2) Includes both shares paid and shares deferred for later payment. F-168 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE 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 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 has adopted the Codification of Statutory Accounting Principles ("Statutory Codification"). Statutory Codification is intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted practices. The Department has adopted Statutory Codification with certain modifications for the preparation of statutory financial statements of insurance companies domiciled in New York. Modifications by the various state insurance departments may impact the effect of Statutory 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, reporting of reinsurance contracts 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 three years. Further, statutory accounting principles do not give recognition to purchase accounting adjustments. Statutory net income (loss) of Metropolitan Life Insurance Company, a New York domiciled insurer, was $2,066 million, $1,221 million and ($338) million for the years ended December 31, 2010, 2009 and 2008, respectively. Statutory capital and surplus, as filed with the Department, was $13.2 billion and $12.6 billion at December 31, 2010 and 2009, 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 MetLife, Inc. 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 dividend to MetLife, Inc. 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 dividend 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 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 year ended December 31, 2010, Metropolitan Life Insurance Company paid a dividend of $631 million, of which $399 million was a transfer of securities. During the year ended December 31, 2009, Metropolitan Life Insurance Company did not pay a dividend. During the year ended December 31, 2008, Metropolitan Life Insurance Company distributed shares of RGA stock to F-169 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) MetLife, Inc. as an in-kind extraordinary dividend of $1,318 million. The maximum amount of dividends which Metropolitan Life Insurance Company may pay in 2011 without prior regulatory approval is $1,321 million. Under Massachusetts State Insurance Law, NELICO is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to Metropolitan Life Insurance Company as long as the amount of such dividends, when aggregated with all other dividends in the preceding 12 months, does not exceed the greater 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. NELICO will be permitted to pay a dividend to Metropolitan Life Insurance Company in excess of the greater of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Massachusetts Commissioner of Insurance (the "Commissioner") and the Commissioner does not disapprove the payment within 30 days of its filing. In addition, any dividend that exceeds statutory unassigned funds surplus as of the last filed annual statutory statement requires insurance regulatory approval. During the years ended December 31, 2010, 2009 and 2008, NELICO paid a dividend of $84 million, $19 million and $94 million, respectively. The maximum amount of dividends which NELICO may pay in 2011 without prior regulatory approval is $107 million. For the years ended December 31, 2010, 2009 and 2008, Metropolitan Life Insurance Company received dividends from non-insurance subsidiaries of $397 million, $148 million and $48 million, respectively. F-170 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OTHER COMPREHENSIVE INCOME (LOSS) The following table sets forth the reclassification adjustments required for the years ended December 31, 2010, 2009 and 2008 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, ---------------------------- 2010 2009 2008 ------- ------- -------- (IN MILLIONS) Holding gains (losses) on investments arising during the year............................................. $ 7,350 $12,267 $(18,334) Income tax effect of holding gains (losses)............ (2,568) (4,233) 6,273 Reclassification adjustments: Recognized holding (gains) losses included in current year income....................................... (74) 1,021 1,214 Amortization of premiums and accretion of discounts associated with investments....................... (471) (459) (504) Income tax effect...................................... 190 (194) (245) Allocation of holding (gains) losses on investments relating to other policyholder amounts............... (2,329) (1,948) 3,592 Income tax effect of allocation of holding (gains) losses to other policyholder amounts................. 814 672 (1,231) Unrealized investment loss on dividend of interests in subsidiary........................................... -- -- 88 Deferred income tax on unrealized investment loss on dividend of interests in subsidiary.................. -- -- (46) ------- ------- -------- Net unrealized investment gains (losses), net of income tax.................................................. 2,912 7,126 (9,193) Foreign currency translation adjustments, net of income tax.................................................. (16) (92) (247) Defined benefit plans adjustment, net of income tax.... 98 (90) (1,149) ------- ------- -------- Other comprehensive income (loss)...................... 2,994 6,944 (10,589) Other comprehensive income (loss) attributable to noncontrolling interests............................. (6) 5 -- Other comprehensive income (loss) attributable to noncontrolling interests of subsidiary at date of dividend of interests in subsidiary.................. -- -- 150 Foreign currency translation adjustments attributable to noncontrolling interests of subsidiary at date of dividend of interests in subsidiary.................. -- -- 107 Defined benefit plans adjustment attributable to noncontrolling interests of subsidiary at date of dividend of interests in subsidiary.................. -- -- (4) ------- ------- -------- Other comprehensive income (loss) attributable to Metropolitan Life Insurance Company, excluding cumulative effect of change in accounting principle.. 2,988 6,949 (10,336) Cumulative effect of change in accounting principle, net of income tax expense (benefit) of $6 million, ($19) million and $0 (see Note 1).................... 10 (36) -- ------- ------- -------- Other comprehensive income (loss) attributable to Metropolitan Life Insurance Company.................. $ 2,998 $ 6,913 $(10,336) ======= ======= ========
F-171 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 16. OTHER EXPENSES Information on other expenses was as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ------ ------ ------ (IN MILLIONS) Compensation............................................. $2,230 $2,433 $2,482 Pension, postretirement & postemployment benefit costs... 331 411 108 Commissions.............................................. 651 758 901 Volume-related costs..................................... 173 36 29 Affiliated interest costs on ceded reinsurance........... 1,386 1,236 1,072 Capitalization of DAC.................................... (804) (857) (901) Amortization of DAC and VOBA............................. 950 415 1,081 Interest expense on debt and debt issue costs............ 217 166 192 Premium taxes, licenses & fees........................... 288 317 275 Professional services.................................... 743 701 740 Rent, net of sublease income............................. 147 262 264 Other.................................................... (53) 131 335 ------ ------ ------ Total other expenses..................................... $6,259 $6,009 $6,578 ====== ====== ======
CAPITALIZATION OF DAC AND AMORTIZATION OF DAC AND VOBA See Note 6 for DAC and VOBA by segment and a rollforward of each including impacts of capitalization and amortization. See also Note 10 for a description of the DAC amortization impact associated with the closed block. INTEREST EXPENSE ON DEBT AND DEBT ISSUE COSTS See Note 11 for attribution of interest expense by debt issuance. Interest expense on debt and debt issue costs includes interest expense related to CSEs of $15 million for the year ended December 31, 2010, and $0 for both of the years ended December 31, 2009 and 2008. See Note 3. AFFILIATED EXPENSES Commissions, capitalization of DAC and amortization of DAC and VOBA include the impact of affiliated reinsurance transactions. See Notes 9, 11 and 19 for discussion of affiliated expenses included in the table above. LEASE IMPAIRMENTS See Note 13 for description of lease impairments included within other expenses. RESTRUCTURING CHARGES In September 2008, MetLife, Inc. began an enterprise-wide cost reduction and revenue enhancement initiative which is expected to be fully implemented by December 31, 2011. This initiative is focused on reducing complexity, leveraging scale, increasing productivity and improving the effectiveness of MetLife, Inc.'s and its subsidiaries' operations, as well as providing a foundation for future growth. Estimated restructuring costs may change as management continues to execute its restructuring plans. Restructuring charges associated with this F-172 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) enterprise-wide initiative and allocated to the Company were included in other expenses within Corporate & Other and are as follows:
YEARS ENDED DECEMBER 31, --------------------- 2010 2009 2008 ---- ----- ---- (IN MILLIONS) Balance at January 1,...................................... $ 19 $ 61 $-- Severance charges........................................ 14 70 67 Change in severance charge estimates..................... (2) (8) (6) Cash payments............................................ (28) (104) -- ---- ----- --- Balance at December 31,.................................... $ 3 $ 19 $61 ==== ===== === Restructuring charges incurred in current period........... $ 12 $ 62 $61 ==== ===== === Total restructuring charges incurred since inception of program.................................................. $135 $ 123 $61 ==== ===== ===
For the years ended December 31, 2010, 2009 and 2008, the change in severance charge estimates of ($2) million, ($8) million and ($6) million, respectively, was due to changes in estimates for variable incentive compensation, COBRA benefits, employee outplacement services and for employees whose severance status changed. In addition to the above charges, the Company has recognized lease charges of $28 million associated with the consolidation of office space since the inception of the initiative. Management anticipates further restructuring charges, including severance, lease and asset impairments, will be incurred during the year ending December 31, 2011. However, such restructuring plans were not sufficiently developed to enable MetLife, Inc. to make an estimate of such restructuring charges at December 31, 2010. 17. BUSINESS SEGMENT INFORMATION The Company is organized into three segments: Insurance Products, Retirement Products and Corporate Benefit Funding. In addition, the Company reports certain of its results of operations in Corporate & Other. Insurance Products offers a broad range of protection products and services to individuals and corporations, as well as other institutions and their respective employees, and is organized into three distinct businesses: Group Life, Individual Life and Non-Medical Health. Group Life insurance products and services include variable life, universal life and term life products. Individual Life insurance products and services include variable life, universal life, term life and whole life products. Non-Medical Health products and services include dental insurance, short- and long-term disability, long-term care and other insurance products. Retirement Products offers asset accumulation and income products, including a wide variety of annuities. Corporate Benefit Funding offers pension risk solutions, structured settlements, stable value and investment products and other benefit funding products. In the fourth quarter of 2010, management realigned certain income annuity products within the Company's segments to better conform to the way it manages and assesses its business and began reporting such product results in the Retirement Products segment, previously reported in the Corporate Benefit Funding segment. Accordingly, prior period results for these segments have been adjusted by $29 million and $13 million of operating losses, net of $15 million and $8 million of income tax benefits, for the years ended December 31, 2009 and 2008, respectively, to reflect such product reclassifications. Corporate & Other contains the excess capital not allocated to the 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 F-173 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) elimination of intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings. Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources. Consistent with GAAP accounting guidance for segment reporting, it is the Company's measure of segment performance reported below. Operating earnings does not equate to income (loss) from continuing operations, net of income tax or net income (loss) as determined in accordance with GAAP and should not be viewed as a substitute for those GAAP measures. The Company believes the presentation of operating earnings herein as the Company measures it for management purposes enhances the understanding of its performance by highlighting the results from operations and the underlying profitability drivers of the businesses. Operating earnings is defined as operating revenues less operating expenses, net of income tax. Operating revenues is defined as GAAP revenues (i) less net investment gains (losses) and net derivative gains (losses); (ii) less amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses); (iii) plus scheduled periodic settlement payments on derivatives that are hedges of investments but do not qualify for hedge accounting treatment; and (iv) plus income from discontinued real estate operations. Operating expenses is defined as GAAP expenses (i) less changes in policyholder benefits associated with asset value fluctuations related to experience-rated contractholder liabilities; (ii) less costs related to noncontrolling interests; (iii) less amortization of DAC and VOBA and changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses); and (iv) plus scheduled periodic settlement payments on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment. In addition, operating revenues and operating expenses do not reflect the consolidation of certain securitization entities that are VIEs as required under GAAP. F-174 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 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, 2010, 2009 and 2008 and at December 31, 2010 and 2009. 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. Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company's 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. The Company allocates certain non-recurring items, such as expenses associated with certain legal proceedings, to Corporate & Other.
OPERATING EARNINGS -------------------------------------------------------- CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE TOTAL YEAR ENDED DECEMBER 31, 2010 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ADJUSTMENTS CONSOLIDATED ------------------------------ --------- ---------- --------- --------- ------- ----------- ------------ (IN MILLIONS) REVENUES Premiums...................... $16,615 $ 608 $1,295 $ 1 $18,519 $ -- $18,519 Universal life and investment- type product policy fees......... 1,363 515 196 -- 2,074 1 2,075 Net investment income......... 5,344 2,274 3,830 146 11,594 11 11,605 Other revenues................ 444 78 239 964 1,725 -- 1,725 Net investment gains (losses).................... -- -- -- -- -- (170) (170) Net derivative gains (losses).................... -- -- -- -- -- (266) (266) ------- ------ ------ ------ ------- ----- ------- Total revenues.............. 23,766 3,475 5,560 1,111 33,912 (424) 33,488 ------- ------ ------ ------ ------- ----- ------- EXPENSES Policyholder benefits and claims and policyholder dividends.. 18,299 978 2,875 (18) 22,134 16 22,150 Interest credited to policyholder account balances............ 507 712 1,251 -- 2,470 53 2,523 Capitalization of DAC......... (398) (392) (14) -- (804) -- (804) Amortization of DAC and VOBA.. 546 262 15 1 824 126 950 Interest expense on debt...... 4 4 5 189 202 15 217 Other expenses................ 2,968 1,320 425 1,181 5,894 2 5,896 ------- ------ ------ ------ ------- ----- ------- Total expenses.............. 21,926 2,884 4,557 1,353 30,720 212 30,932 ------- ------ ------ ------ ------- ----- ------- Provision for income tax expense (benefit)................... 645 208 350 (208) 995 (213) 782 ------- ------ ------ ------ ------- ------- OPERATING EARNINGS............ $ 1,195 $ 383 $ 653 $ (34) 2,197 ======= ====== ====== ====== Adjustments to: Total revenues.............. (424) Total expenses.............. (212) Provision for income tax (expense) benefit........ 213 ------- INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF INCOME TAX......................... $ 1,774 $ 1,774 ======= =======
CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE AT DECEMBER 31, 2010: PRODUCTS PRODUCTS FUNDING & OTHER TOTAL -------------------------------------------- --------- ---------- --------- --------- -------- (IN MILLIONS) TOTAL ASSETS................................ $123,915 $77,633 $143,530 $30,329 $375,407 SEPARATE ACCOUNT ASSETS..................... $ 8,343 $34,540 $ 54,946 $ -- $ 97,829 SEPARATE ACCOUNT LIABILITIES................ $ 8,343 $34,540 $ 54,946 $ -- $ 97,829
F-175 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OPERATING EARNINGS -------------------------------------------------------- CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE TOTAL YEAR ENDED DECEMBER 31, 2009 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ADJUSTMENTS CONSOLIDATED ------------------------------ --------- ---------- --------- --------- ------- ----------- ------------ (IN MILLIONS) REVENUES Premiums...................... $16,651 $ 553 $1,414 $ 11 $18,629 $ -- $18,629 Universal life and investment- type product policy fees......... 1,486 441 145 -- 2,072 (5) 2,067 Net investment income......... 4,968 2,006 3,466 (328) 10,112 77 10,189 Other revenues................ 511 73 230 925 1,739 -- 1,739 Net investment gains (losses).................... -- -- -- -- -- (1,667) (1,667) Net derivative gains (losses).................... -- -- -- -- -- (4,428) (4,428) ------- ------ ------ ------ ------- ------- ------- Total revenues.............. 23,616 3,073 5,255 608 32,552 (6,023) 26,529 ------- ------ ------ ------ ------- ------- ------- EXPENSES Policyholder benefits and claims and policyholder dividends.. 18,447 922 2,879 7 22,255 19 22,274 Interest credited to policyholder account balances............ 513 754 1,366 -- 2,633 36 2,669 Capitalization of DAC......... (396) (449) (12) -- (857) -- (857) Amortization of DAC and VOBA.. 410 246 12 2 670 (255) 415 Interest expense on debt...... 2 -- 1 163 166 -- 166 Other expenses................ 3,145 1,391 422 1,320 6,278 7 6,285 ------- ------ ------ ------ ------- ------- ------- Total expenses.............. 22,121 2,864 4,668 1,492 31,145 (193) 30,952 ------- ------ ------ ------ ------- ------- ------- Provision for income tax expense (benefit)................... 498 61 187 (489) 257 (2,147) (1,890) ------- ------ ------ ------ ------- ------- OPERATING EARNINGS............ $ 997 $ 148 $ 400 $ (395) 1,150 ======= ====== ====== ====== Adjustments to: Total revenues.............. (6,023) Total expenses.............. 193 Provision for income tax (expense) benefit........ 2,147 ------- INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF INCOME TAX......................... $(2,533) $(2,533) ======= =======
CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE AT DECEMBER 31, 2009: PRODUCTS PRODUCTS FUNDING & OTHER TOTAL -------------------------------------------- --------- ---------- --------- --------- -------- (IN MILLIONS) TOTAL ASSETS................................ $117,867 $70,201 $125,811 $29,078 $342,957 SEPARATE ACCOUNT ASSETS..................... $ 7,749 $28,442 $ 44,186 $ -- $ 80,377 SEPARATE ACCOUNT LIABILITIES................ $ 7,749 $28,442 $ 44,186 $ -- $ 80,377
F-176 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OPERATING EARNINGS -------------------------------------------------------- CORPORATE INSURANCE RETIREMENT BENEFIT CORPORATE TOTAL YEAR ENDED DECEMBER 31, 2008 PRODUCTS PRODUCTS FUNDING & OTHER TOTAL ADJUSTMENTS CONSOLIDATED ------------------------------ --------- ---------- --------- --------- ------- ----------- ------------ (IN MILLIONS) REVENUES Premiums...................... $15,937 $ 564 $1,933 $ 10 $18,444 $ -- $18,444 Universal life and investment- type product policy fees......... 1,515 584 184 -- 2,283 2 2,285 Net investment income......... 5,148 1,754 4,279 (119) 11,062 52 11,114 Other revenues................ 510 57 349 966 1,882 -- 1,882 Net investment gains (losses).................... -- -- -- -- -- (1,529) (1,529) Net derivative gains (losses).................... -- -- -- -- -- 5,001 5,001 ------- ------ ------ ------ ------- ------- ------- Total revenues.............. 23,110 2,959 6,745 857 33,671 3,526 37,197 ------- ------ ------ ------ ------- ------- ------- EXPENSES Policyholder benefits and claims and policyholder dividends.. 17,637 1,009 3,500 22 22,168 247 22,415 Interest credited to policyholder account balances............ 520 757 1,871 7 3,155 26 3,181 Capitalization of DAC......... (484) (396) (13) (8) (901) -- (901) Amortization of DAC and VOBA.. 513 390 16 9 928 153 1,081 Interest expense on debt...... 1 2 -- 189 192 -- 192 Other expenses................ 3,245 1,214 403 1,350 6,212 (6) 6,206 ------- ------ ------ ------ ------- ------- ------- Total expenses.............. 21,432 2,976 5,777 1,569 31,754 420 32,174 ------- ------ ------ ------ ------- ------- ------- Provision for income tax expense (benefit)................... 572 (25) 335 (336) 546 1,104 1,650 ------- ------ ------ ------ ------- ------- OPERATING EARNINGS............ $ 1,106 $ 8 $ 633 $ (376) 1,371 ======= ====== ====== ====== Adjustments to: Total revenues.............. 3,526 Total expenses.............. (420) Provision for income tax (expense) benefit........ (1,104) ------- INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF INCOME TAX......................... $ 3,373 $ 3,373 ======= =======
Net investment income is 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. Operating revenues derived from any customer did not exceed 10% of consolidated operating revenues for the years ended December 31, 2010, 2009 and 2008. Substantially all of the Company's revenues originated in the United States. 18. 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 estimated fair value less expected disposition costs. Income from discontinued real estate operations, net of income tax, was $12 million, $11 million and $13 million for the years ended December 31, 2010, 2009 and 2008, respectively. F-177 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The carrying value of real estate related to discontinued operations was $4 million and $55 million at December 31, 2010 and 2009, respectively. OPERATIONS Reinsurance Group of America, Incorporated The following table presents the amounts related to the operations of RGA that have been reflected as discontinued operations (see Note 2) in the consolidated statements of operations:
----------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 2008 ----------------- Total revenues.................................................. $3,952 Total expenses.................................................. 3,796 ------ Income before provision for income tax.......................... 156 Provision for income tax........................................ 53 ------ Income from discontinued operations, net of income tax, attributable to Metropolitan Life Insurance Company........... 103 Income from discontinued operations, net of income tax, attributable to noncontrolling interests...................... 94 Loss in connection with the dividend of interests in subsidiary, net of income tax............................................. (398) ------ Income (loss) from discontinued operations, net of income tax... $ (201) ======
The operations of RGA included direct policies and reinsurance agreements with Metropolitan Life Insurance Company and some of its subsidiaries. These agreements are generally terminable by either party upon 90 days written notice with respect to future new business. Agreements related to existing business generally are not terminable, unless the underlying policies terminate or are recaptured. These direct policies and reinsurance agreements do not constitute significant continuing involvement by the Company with RGA. Included in continuing operations in the Company's consolidated statements of operations are amounts related to these transactions, including ceded amounts that reduced premiums and fees by $117 million and ceded amounts that reduced policyholder benefits and claims by $90 million for the year ended December 31, 2008 that have not been eliminated as these transactions have continued after the RGA disposition. 19. RELATED PARTY TRANSACTIONS SERVICE AGREEMENTS The Company has entered into various agreements with affiliates for services necessary to conduct its activities. Typical services provided under these agreements include personnel, policy administrative functions and distribution services. For certain of the agreements, charges are based on various performance measures or activity-based costing. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $2,700 million, $2,965 million and $2,839 million for the years ended December 31, 2010, 2009 and 2008, respectively. The Company also entered into agreements with affiliates to provide additional services necessary to conduct the affiliates' activities. Typical services provided under these agreements include management, policy administrative functions, investment advice and distribution services. Expenses incurred by the Company related to these agreements, included in other expenses, were $1,189 million, $1,074 million and $815 million for the years F-178 METROPOLITAN LIFE INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ended December 31, 2010, 2009 and 2008, respectively, and were reimbursed to the Company by these affiliates. The aforementioned expenses and fees incurred with affiliates were comprised of the following:
YEARS ENDED DECEMBER 31, ------------------------ 2010 2009 2008 ------ ------ ------ (IN MILLIONS) Compensation............................................. $1,770 $2,255 $2,172 Commissions.............................................. 801 638 658 Volume-related costs..................................... (269) (284) (309) Professional services.................................... (18) -- -- Rent..................................................... (28) -- -- Other.................................................... (745) (718) (497) ------ ------ ------ Total other expenses................................... $1,511 $1,891 $2,024 ====== ====== ======
Revenues received from affiliates related to these agreements were recorded as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2010 2009 2008 ---- ---- ---- (IN MILLIONS) Universal life and investment-type product policy fees... $84 $55 $16 Other revenues........................................... $34 $22 $17
The Company had net payables to affiliates of $243 million and $205 million at December 31, 2010 and 2009, respectively, related to the items discussed above. These payables exclude affiliated reinsurance balances discussed in Note 9. See Notes 3, 8 and 11 for discussion of additional related party transactions. 20. SUBSEQUENT EVENTS CREDIT FACILITY On February 1, 2011, MetLife, Inc. entered into a committed facility with a third-party bank to provide letters of credit for the benefit of Missouri Reinsurance (Barbados) Inc. ("MoRe"), a captive reinsurance subsidiary, to address its short-term solvency needs based on guidance from the regulator. This one-year facility provides for the issuance of letters of credit in amounts up to $350 million. Under the facility, a letter of credit for $250 million was issued on February 2, 2011 and increased to $295 million on February 23, 2011, which management believes satisfies MoRe's solvency requirements. F-179 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 5 (b) Not Applicable (c) (i) Not Applicable (ii) Form of Selected Broker Agreement 4 (iii) Schedule of Sales Commissions 1 (iv) Form of Retail Sales Agreement 17 (v) Principal Underwriting Agreement with MLIDC 19 (vi) Enterprise Sales Agreement between MetLife Investors Distribution Company and broker-dealers dated February 2010 22 (d) (i) Specimen Flexible Premium Variable Life Insurance Policy 4 (ii) Alternative pages required by state law 4 (iii) Endorsement for calculation of minimum death benefit using the Cash Value Accumulation test 4 (iv) Accelerated Death Benefit and Zero Cost Loan Riders 4 (v) Yearly Renewable Term rider 3 (vi) Refund of sales load rider 3 (vii) Amended Policy Specifications Page indicating alternate premium expense charges 3 (viii) Enhanced Cash Surrender Value Rider 11 (ix) Term Insurance Rider 13 (e) Amended Application Forms for Policy and Form of Receipt (including State variations) 4 (f) (i) Restated Charter and By-Laws of Metropolitan Life 8 (ii) Amended and Restated By-Laws of Metropolitan Life 19 (g) Reinsurance Contracts 12 (h) (i) Participation Agreements with INVESCO and Janus Aspen 7 (ii) Participation Agreement with Templeton Variable 7 (iii) Participation Agreements with Alliance 9 (iv) Participation Agreement with Met Investors Series Trust 10 (v) Participation Agreement with Fidelity Investments 6 (vi) Supplemental Agreements with Fidelity Investments 9 (vii) Participation Agreements with AIM, American Century, Delaware Management, Dreyfus, Templeton, Goldman Sachs, MFS, Janus, Van Kampen and Wells Fargo 13 (viii) Participation Agreement among Metropolitan Series Fund, Inc., MetLife Advisers, LLC and Metropolitan Life Insurance Company (8/31/07) 18 (ix) Amended and Restated Participation Agreement and First Amendment with Fidelity Variable Insurance Products funds I, II, III, IV and V 20 (x) First & Second Amendments to the Participation Agreement with Met Investors Series Trust 21 (xi) Amendments to the Participation Agreements for AIM/Invesco, American Century, American Funds, Fidelity, Franklin Templeton, Legg Mason, and Royce. (i) Not Applicable (j) Not Applicable (k) Opinion and Consent of Marie C. Swift as to the legality of the securities being registered 15 (l) Not Applicable (m) Not Applicable (n) Consent of Independent Registered Public Accounting Firm (o) Not Applicable (p) Not Applicable (q) (i) Memoranda describing certain procedures filed pursuant to Rule 6e-3(T)(b)(12)(iii) 4 (r) Powers of Attorney
1 Incorporated by reference from "Sales and Administration of the Policies" in the Prospectuses included herein and "Distribution of the Policies" in the Statement of Additional Information. 2 Incorporated herein by reference to Post-Effective Amendment No. 4 to this Registration Statement (File No. 033-57320) filed March 1, 1996. 3 Incorporated herein by reference to Post-Effective Amendment No. 5 to the Registration Statement (File No. 033-57320) filed on April 26,1996. 4 Incorporated herein by reference to Post-Effective Amendment No. 6 to the Registration Statement (File No. 033-57320) filed on April 30, 1997. 5 Incorporated herein by reference to Post-Effective Amendment No. 5 to the Registration Statement of Separate Account UL (File No. 33-47927) filed on April 30, 1997. 6 Incorporated herein by reference to Post-Effective Amendment No. 26 to the Registration Statement of MetLife Separate Account E (File No. 002-90380) on Form N-4 filed on April 30, 1997. 7 Incorporated herein by reference to Post-Effective Amendment No. 8 to the Registration Statement (File No. 033-57320) filed on April 23, 1999. 8 Incorporated herein by reference to Post-Effective Amendment No. 3 to the Registration Statement (File No. 333-40161) filed on April 6, 2000. 9 Incorporated herein by reference to Post-Effective Amendment No. 10 to the Registration Statement (File No. 033-57320) filed on September 18, 2000. 10 Incorporated herein by reference to the Registration Statement for MetLife Separate Account E (File No. 333-83716) filed on March 5, 2002. 11 Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement (File No. 033-57320) filed on April 22, 2002. 12 Incorporated herein by reference to Post-Effective Amendment No. 18 to the Registration Statement (File No. 033-47927) filed on April 30, 2004. 13 Incorporated herein by reference to Post-Effective Amendment No. 16 to the Registration Statement (File No. 033-57320) filed on April 30, 2004. 14 Incorporated herein by reference to the Registration Statement for MetLife Separate Account E (File No. 333-122883) filed on February 17, 2005. 15 Incorporated herein by reference to the Post-Effective Amendment No. 17 to the Registration Statement on Form N-6 (033-57320) filed on April 28, 2005. 16 Incorporated herein by reference to the Registration Statement on Form N-6 (File No. 033-57320) filed on February 7, 2006. 17 Incorporated herein by reference to the Post-Effective Amendment No. 20 to the Registration Statement on Form N-6 (033-47927) filed on April 25, 2006. 18 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. 19 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. 20 Incorporated herein by reference to Post-Effective Amendment No. 20 to the Registrant's Registration Statement on Form N-6 (File No. 033-57320) filed April 18, 2008. 21 Incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant's Registration Statement on Form N-6 (File No. 033-57320) filed April 16, 2009. 22 Incorporated herein by reference to Exhibit 3(b)(ii) in Post-Effective Amendment No. 14 to the MetLife Separate Account E's Registration Statement on Form N-4 (File No. 333-83716) as filed April 13, 2010.
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 Executive Officer MetLife, Inc and Metropolitan Life Insurance Company 1095 Avenue of the Americas New York, NY 10036 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 8/th/ Street Bentonville, AK 72716 Cheryl W. Grise Director Retired Executive Vice President Northeast Utilities 24 Stratford Road West Hartford, CT 06117 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
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION AND OFFICES WITH DEPOSITOR ----------------------------------- ----------------------------------- John M. Keane Director Co-Founder and Senior Managing Director Keane Advisors, LLC 2020 K St., N.W. Washington, DC 20006 Alfred F. Kelly, Jr. Director President American Express Company 200 Vesey Street New York, NY 10285 James M. Kilts Director Partner Centerview Partners Management, LLC 16 School Street Rye, NY 10580 Catherine R. Kinney Director Retired President and Co-Chief Operating Officer NYSE 1158 5th Avenue New York, NY 10029 Hugh B. Price Director Senior Fellow Brookings Institution 1775 Massachusetts Avenue, N.W. 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
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION AND OFFICES WITH DEPOSITOR ----------------------------------- ----------------------------------- Lulu C. Wang Director Chief Executive Officer Tupelo Capital Management LLC 12 E. 49/th/ 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 1095 Avenue of the Americas, New York, NY 10036.
NAME POSITION WITH METLIFE ---- ------------------------------------------------------------- C. Robert Henrikson Chairman of the Board, President and Chief Executive Officer Jeffrey A. Welikson Senior Vice President and Secretary Steven A. Kandarian * Executive Vice President and Chief Investment Officer Nicholas D. Latrenta Executive Vice President and General Counsel Maria R. Morris Executive Vice President, Technology and Operations William J. Mullaney President, Institutional Business Peter M. Carlson Executive Vice President and Chief Accounting Officer William J. Toppeta President, International William J. Wheeler Executive Vice President and Chief Financial Officer
* Effective May 1, 2011, Mr. Kandarian will become President and Chief Executive 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, 2010 The following is a list of subsidiaries of MetLife, Inc. updated as of December 31, 2010. 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) 1. Federal Flood Certification Corp. (TX) 2. MetLife Affiliated Insurance Agency LLC (DE) 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. 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. d) PREFCO Vingt LLC (CT) e) 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. 5. Plaza Drive Properties, LLC (DE) 6. 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 Chile Inversiones Limitada (Chile)- 87.98% is owned by MetLife, Inc., 12.01% is owned by Inversiones MetLife Holdco Dos Limitada and 0.01% 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. G. Metropolitan Life Seguros de Vida S.A. (Uruguay) H. MetLife Securities, Inc. (DE) I. Enterprise General Insurance Agency, Inc. (DE) 1. MetLife General Insurance Agency of Texas, Inc. (TX) 2. MetLife General Insurance Agency of Massachusetts, Inc. (MA) 1 J. 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) K. MetLife Investors Insurance Company (MO) L. First MetLife Investors Insurance Company (NY) M. Walnut Street Securities, Inc. (MO) N. Newbury Insurance Company, Limited (Bermuda) O. MetLife Investors Group, Inc. (DE) 1. MetLife Investors Distribution Company (MO) 2. MetLife Advisers, LLC (MA) 2 P. 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) i) 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. ii) 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 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)- 99.99935% is owned by MetLife International Holdings, Inc. and 0.00065% is owned by Natiloporterm Holdings, Inc. 5. MetLife Seguros de Vida S.A. (Argentina)- 96.7372% is owned by MetLife International Holdings, Inc. and 3.2628% is owned by Natiloportem Holdings, Inc. 6. Metropolitan Life Seguros e Previdencia Privada S.A. (Brazil)- 66.6617540% is owned by MetLife International Holdings, Inc., 33.3382457% is owned by MetLife Worldwide Holdings, Inc. and 0.0000003% is owned by Natiloportem Holdings, Inc. 7. MetLife Global, Inc. (DE) 8. MetLife Administradora de Fundos Multipatrocinados Ltda. (Brazil) - 95.46% is owned by MetLife International Holdings, Inc. and 4.54% is owned by Natiloportem Holdings, Inc. 9. MetLife Insurance Limited (United Kingdom) 10. MetLife Limited (United Kingdom) 11. MetLife Insurance S.A./NV (Belgium) - 99.99999% of MetLife Insurance S.A./NV is owned by MetLife International Holdings, Inc. and 0.00001% by Natiloportem Holdings, Inc. 12. MetLife Services Limited (United Kingdom) 13. MetLife Europe R Limited (Ireland) 14. MetLife Seguros de Retiro S.A. (Argentina) - 96.8488% is owned by MetLife International Holdings, Inc. and 3.1512% is owned by Natiloportem Holdings, Inc. 15. Best Market S.A. (Argentina) - 5% of the shares are held by Natiloportem Holdings, Inc. and 95% is owned by MetLife International Holdings Inc. 16. Compania Previsional MetLife S.A. (Brazil) - 95.46% is owned by MetLife International Holdings, Inc. and 4.54% is owned by Natiloportem Holdings, Inc. (a) Met AFJP S.A. (Argentina) - 75.41% of the shares of Met AFJP S.A. are held by Compania Previsional MetLife S.A., 19.59% is owned by MetLife Seguros de Vida S.A., 3.97% is held by Natiloportem Holdings, Inc. and 1.03% is held by MetLife Seguros de Retiro S.A. 17. MetLife Worldwide Holdings, Inc. (DE) a) MetLife Towarzystwo Ubezpieczen na Zycie Spolka Akcyjna. (Poland) b) MetLife Direct Co., LTD. (Japan) c) MetLife Limited (Hong Kong) 18. MetLife NC Limited (Ireland) 19. MetLife Europe Services Limited (Ireland) 20. MetLife International Limited, LLC (DE) 21. MetLife Planos Odontologicos Ltda. (Brazil) - 99.999% is owned by MetLife International Holdings, Inc. and .001% is owned by Natiloportem Holdings, Inc. 22. MetLife Ireland Holdings One Limited (Ireland) A. MetLife Global Holdings Corporation S.A. de C.V. (Mexico) - 98.9% is owned by MetLife Ireland Holdings One Limited and 1.1% is owned by MetLife International Limited, LLC. i) MetLife Ireland Treasury Limited (Ireland) a) MetLife General Insurance Limited (Australia) b) MetLife Insurance Limited (Australia) 1) MetLife Services (Singapore) PTE Limited (Singapore) 2) The Direct Call Centre PTY Limited (Australia) 3) MetLife Investments PTY Limited (Australia) 4) MetLife Insurance and Investment Trust (Australia) - MetLife Insurance and Investment Trust is a trust vehicle, the trustee of which is MetLife Investments PTY Limited ("MIPL"). MIPL is a wholly owned subsidiary of MetLife Insurance Limited. ii) Metropolitan Global Management, LLC (DE) - 99.7% is owned by MetLife Global Holdings Corporation, S.A. de C.V. and 0.3% is owned by MetLife International Holdings, Inc. a) MetLife Pensiones Mexico S.A. (Mexico)- 97.4738% is owned by Metropolitan Global Management, LLC and 2.5262% is owned by MetLife International Holdings, Inc. b) MetLife Mexico Servicios, S.A. de C.V. (Mexico) - 98% is owned by Metropolitan Global Management, LLC and 2% is owned by MetLife International Holdings, Inc. c) MetLife Mexico S.A. (Mexico)- 98.70541% is owned by Metropolitan Global Management, LLC and 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. and 0.01% is owned by MetLife Pensiones Mexico S.A. aa) 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. bb) 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. cc) MetA SIEFORE Adicional, 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. dd) Met3 SIEFORE Basica, 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. ee) Met4 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. ff) Met5 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. 2. ML Capacitacion Comercial S.A. de C.V. (Mexico) - 99% is owned by MetLife Mexico S.A. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. d. MetLife Insurance Company of Korea Limited (South Korea)- 14.64% of MetLife Insurance Company of Korea Limited is owned by MetLife, Mexico, S.A. and 85.36% is owned by Metropolitan Global Management, LLC 23. Inversiones Metlife Holdco Dos Limitada (Chile)- 99% is owned by Metlife International Holdings, Inc. and 1% is owned by Natiloportem Holdings, Inc. Q. Metropolitan Life Insurance Company (NY) 1. 334 Madison Euro Investments, Inc. (DE) 2. St. James Fleet Investments Two Limited (Cayman Islands) a) Park Twenty Three Investments Company (United Kingdom) i) Convent Station Euro Investments Four Company (United Kingdom) aa) One Madison Investments (Cayco) Limited (Cayman Islands)- 99.99999% voting control of One Madison Investments (Cayco) Limited is held by Convent Station Euro Investments Four Company and 0.00001% by St. James Fleet Investments Two Limited. 3. 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. 4. MLIC Asset Holdings II LLC (DE) 3 5. Thorngate, LLC (DE) 6. Alternative Fuel I, LLC (DE) 7. Transmountain Land & Livestock Company (MT) 8. MetPark Funding, Inc. (DE) 9. HPZ Assets LLC (DE) 10. Missouri Reinsurance (Barbados), Inc. (Barbados) 11. Metropolitan Tower Realty Company, Inc. (DE) a) Midtown Heights, LLC (DE) 12. MetLife Real Estate Cayman Company (Cayman Islands) 13. Metropolitan Marine Way Investments Limited (Canada) 14. MetLife Private Equity Holdings, LLC (DE) 15. 23rd Street Investments, Inc. (DE) a) MetLife Capital Credit L.P. (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc. and 99% Limited Partnership interest is held by Metropolitan Life Insurance Company. b) MetLife Capital Limited Partnership (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc. and 99% Limited Partnership Interest is held by Metropolitan Life Insurance Company. 16. Hyatt Legal Plans, Inc. (DE) a) Hyatt Legal Plans of Florida, Inc. (FL) 17. MetLife Holdings, Inc. (DE) a) MetLife Credit Corp. (DE) b) MetLife Funding, Inc. (DE) 4 18. MetLife Investments Asia Limited (Hong Kong). 19. MetLife Investments Limited (United Kingdom)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited. 20. MetLife Latin America Asesorias e Inversiones Limitada (Chile)- 23rd Street Investments, Inc. holds 0.01% of MetLife Latin America Asesorias e Inversiones Limitada. 21. New England Life Insurance Company (MA) a) New England Securities Corporation (MA) 22. GenAmerica Financial, LLC (DE) a) GenAmerica Capital I (DE) b) General American Life Insurance Company (MO) 5 23. Corporate Real Estate Holdings, LLC (DE) 24. Ten Park SPC (Cayman Islands) - 1% voting control of Ten Park SPC is held by 23rd Street Investments, Inc. 25. MetLife Tower Resources Group, Inc. (DE) 26. Headland - Pacific Palisades, LLC (CA) 27. Headland Properties Associates (CA) - 1% is owned by Headland - Pacific Palisades, LLC and 99% is owned by Metropolitan Life Insurance Company. 28. Krisman, Inc. (MO) 29. Special Multi-Asset Receivables Trust (DE) 30. White Oak Royalty Company (OK) 31. 500 Grant Street GP LLC (DE) 32. 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 33. MetLife Canada/MetVie Canada (Canada) 34. MetLife Retirement Services LLC (NJ) a) MetLife Investment Funds Services LLC (NJ) (i) MetLife Associates LLC (DE) 35. Euro CL Investments LLC (DE) 36. MEX DF Properties, LLC (DE) 37. 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 38. MetLife Properties Ventures, LLC (DE) a) Citypoint Holdings II Limited (United Kingdom) 39. Housing Fund Manager, LLC (DE) a) MTC Fund I, LLC (DE) 0.01% of MTC Fund I, LLC is held by Housing Fund Manager, LLC. - Housing Fund Manager, LLC is the managing member LLC and the remaining interests are held by a third party member. b) MTC Fund II, LLC (DE) - 0.01% of MTC Fund II, LLC is held by Housing Fund Manager, LLC. - Housing Fund Manager, LLC is the managing member LLC and the remaining interests are held by a third party member. c) MTC Fund III, LLC (DE) - 0.01% of MTC Fund III, LLC is held by Housing Fund Manager, LLC. - Housing Fund Manager, LLC is the managing member LLC and the remaining interests are held by a third party member. 40. MLIC Asset Holdings, LLC (DE) 41. 85 Broad Street Mezzanine LLC (DE) (a) 85 Broad Street LLC (DE) 42. The Building at 575 Fifth Avenue Mezzanine LLC (DE) (a) The Building at 575 Fifth LLC (DE) 43. CML Columbia Park Fund I, LLC (DE)- 10% of membership interest is held by MetLife Insurance Company of Connecticut and 90% membership interest is held by Metropolitan Life Insurance Company. 44. Para-Met Plaza Associates (FL)- 75% of the General Partnership is held by Metropolitan Life Insurance Company and 25% of the General Partnership is held by Metropolitan Tower Realty Company, Inc. R. MetLife Capital Trust IV (DE) S. MetLife Insurance Company of Connecticut (CT) - 86.72% is owned by MetLife, Inc. and 13.28% by MetLife Investors Group, Inc. 1. MetLife Property Ventures Canada ULC (Canada) 2. Pilgrim Alternative Investments Opportunity Fund I, LLC (DE) - 67% is owned by MetLife Insurance Company of Connecticut and 33% is owned by third party. 3. 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. 4. Metropolitan Connecticut Properties Ventures, LLC (DE) a) ML/VCC UT West Jordan, LLC (DE) 5. MetLife Canadian Property Ventures LLC (NY) 6. Euro TI Investments LLC (DE) 7. Greenwich Street Investments, LLC (DE) a) Greenwich Street Capital Offshore Fund, Ltd. (Virgin Islands) b) Greenwich Street Investments, L.P. (DE) 8. One Financial Place Corporation (DE) - 100% is owned in the aggregate by MetLife Insurance Company of Connecticut. 9. Plaza LLC (CT) a) Tower Square Securities, Inc. (CT) 10. TIC European Real Estate LP, LLC (DE) 11. MetLife European Holdings, LLC (DE) a) MetLife Europe Limited (Ireland) i) MetLife Pension Trustees Limited (United Kingdom) b) MetLife Assurance Limited (United Kingdom) 12. Travelers International Investments Ltd. (Cayman Islands) 13. Euro TL Investments LLC (DE) 14. Corrigan TLP LLC (DE) 15. TLA Holdings LLC (DE) a) The Prospect Company (DE) i) Panther Valley, Inc. (NJ) 16. TRAL & Co. (CT) - TRAL & Co. is a general partnership. Its partners are MetLife Insurance Company of Connecticut and Metropolitan Life Insurance Company. 17. MetLife Investors USA Insurance Company (DE) a) MetLife Renewables Holding, LLC (DE) i) Greater Sandhill I, LLC (DE) 18. TLA Holdings II LLC (DE) 19. TLA Holdings III LLC (DE) 20. MetLife Greenstone Southeast Ventures, LLC (DE) - 95% of MetLife Greenstone Southeast Ventures, LLC is owned by MetLife Insurance Company of Connecticut and 5% is owned by Metropolitan Connecticut Properties Ventures, LLC a. MLGP Lakeside, LLC (DE) T. MetLife Reinsurance Company of South Carolina (SC) U. MetLife Investment Advisors Company, LLC (DE) V. MetLife Standby I, LLC (DE) 1. MetLife Exchange Trust I (DE) W. MetLife Services and Solutions, LLC (DE) 1. MetLife Solutions Pte. Ltd. (Singapore) i) MetLife Services East Private Limited (India) ii) MetLife Global Operations Support Center Private Limited (India) - 99.99999% is owned by MetLife Solutions Pte. Ltd. and 0.00001% is owned by Natiloportem Holdings, Inc. X. SafeGuard Health Enterprises, Inc. (DE) 1. SafeGuard Dental Services, Inc. (DE) 2. SafeGuard Health Plans, Inc. (CA) 3. SafeHealth Life Insurance Company (CA) 4. SafeGuard Health Plans, Inc. (FL) 5. SafeGuard Health Plans, Inc. (NV) 6. SafeGuard Health Plans, Inc. (TX) Y. MetLife Capital Trust X (DE) Z. Cova Life Management Company (DE) AA. MetLife Reinsurance Company of Charleston (SC) AB. MetLife Reinsurance Company of Vermont (VT) AC. Delaware American Life Insurance Company (US) 1. GBN, LLC (US) AD. American Life Insurance Company (ALICO) (US) 1. ALICO Nagasaki Operation Yugen Kaisha (Japan) 2. Communication One Kabushiki Kaisha (Japan) 3. Financial Learning Kabushiki Kaisha (Japan) 4. Pharaonic American Life Insurance Company (Egypt) - 84.125% of Pharaonic American Life Insurance Company is owned by ALICO and the remaining interests are owned by third parties. 5. A.I.G. Limited (Nigeria) 6. ALICO Limited (Nigeria) 7. American Life Limited (Nigeria) 8. American Life Insurance Company (Pakistan) Ltd. (Pakistan) - 66.47% of American Life Insurance Company (Pakistan) Ltd. Is owned by ALICO and the remaining interests are owned by third parties. 9. American Life Hayat Sigorta A.S. (Turkey) 10. ALICO (Bulgaria) Zhivotozastrahovatelno Druzestvo EAD (Bulgaria) 11. UBB - ALICO Zhivotozastrahovatelno Druzestvo AD (Bulgaria) - 40% of UBB-ALICO Zhivotozastrahovatelno Druzestvo is owned by ALICO and the remaining interests are owned by third parties. 12. Amcico Pojistovna A.S. (Czech Republic) 13. Hellenic ALICO Life Insurance Company Ltd. (Cyprus) - 27.5% of Hellenic ALICO Life Insurance Company Ltd. is owned by ALICO and the remaining interests are owned by third parties. 14. ALICO S.A. (France) a. ALICO Direct (France) - 50% of ALICO Direct is owned by ALICO S.A. and the remaining interests by AIG Europe, S.A. b. ALICO Solutions S.A.S. (France) 15. ALICO Mutual Fund Management Company (Greece) - 90% of ALICO Mutual Fund Management Company is owned by ALICO and the remaining interests are owned by third parties. 16. Hestis S.A. (France) - 66.06% of Hestis S.A. is owned by ALICO and the remaining interests are owned by third parties. a. Hestis Courtage Sarl (France) 17. AHICO First American Hungarian Insurance Company (Elso Amerikai-Magyar Biztosito) Zrt (Hungary) a. First Hungarian-American Insurance Agency Limited (Hungary) 18. ALICO Life International Limited (Ireland) 19. ALICO Isle of Man Limited (Isle of Man) 20. ALICO Italia S.p.A. (Italy) a. Agenvita S.r.L. (Italy) - 95% of Agenvita S.r.L. is owned by ALICO Italia S.p.A., the remaining 5% is owned by ALICO. 21. AMPLICO Life-First American Polish Life Insurance & Reinsurance Company, S.A. (Poland) a. Amplico Services Sp z.o.o. (Poland) b. AMPLICO Towartzystwo Funduszky Inwestycyjnych, S.A. (Poland) c. AMPLICO Powszechne Towartzystwo Emerytalne S.A. (Poland) - 50% of AMPLICO Powszechne Towarzystwo Emerytalne S.A. is owned by AMPLICO Life-First American Polish Life Insurance & Reinsurance Company, S.A. and the remaining 50% is owned by ALICO. 22. AIG Polska Towartzystwo Ubezpieczen S.A. (AIG PTU) (Poland) - 0.748% of AIG PTU is owned by ALICO and the remaining interests are owned by third parties. 23. ALICO Asigurari Romania S.A. (Romania) a. ALICO Societate de Administrare a unui Fond de Pensii Administrat Privat S.A. (Romania) - 99.9748% of ALICO Societate de Administrare a unui Fond de Pensii Administrat Privat S.A.is owned by ALICO Asigurari Romania S.A. and .0252% is owned by AMPLICO Services Sp z.o.o. 24. International Investment Holding Company Limited (Russia) 25. ALICO European Holdings Limited (Ireland) a. ZAO Master D (Russia) i. ZAO ALICO Insurance Company (Russia) - 51% of ZAO ALICO Insurance Company is owned by ZAO Master D and 49% is owned by ALICO. 26. ALICO Akcionarska Drustvoza za Zivotno Osiguranje (Serbia) 27. AMSLICO poist'ovna ALICO a.s. (Slovakia) a. ALICO Services Central Europe s.r.o. (Slovakia) b. ALICO Funds Central Europe sprav.spol., a.s. (Slovakia) 28. ALICO AIG Europe A.I.E. (Spain) - 50% of Alico AIG Europe A.I.E. is owned by ALICO and the remaining interests are owned by a third party. 29. ALICO Gestora de Fondos y Planos de Pensiones S.A. (Spain) 30. ALICO Management Services Limited (United Kingdom) 31. ZEUS Aministration Services Limited (United Kingdom) 32. ALICO Trustees (UK) Ltd. (UK) - 50% of ALICO Trustees (UK) Ltd. is owned by ALICO and the remaining interests are owned by International Technical and Advisory Services Limited. 33. PJSC ALICO Ukraine (Ukraine) 34. Borderland Investments Limited (USA-Delaware) a. ALICO Hellas Single Member Limited Liability Company (Greece) 35. International Technical and Advisory Services Limited (USA-Delaware) 36. International Services Incorporated (Delaware) 37. ALICO Operations Inc. (USA-Delaware) a. ALICO Asset Management Corp. (Japan) 38. ALICO Compania de Seguros de Retiro, S.A. (Argentina) - 90% of ALICO Compania de Seguros de Retiro, S.A. is owned by ALICO and 10% by International Technical & Advisory Services. 39. ALICO Compania de Suguros, S.A. (Argentina) - 90% of ALICO Compania de Suguros, S.A. is owned by ALICO and 10% by International Technical & Advisory Services. 40. ALICO Colombia Seguros de Vida S.A. (Colombia) - 94.989811% of ALICO Colombia Seguros de Vida S.A. is owned by ALICO, 5.0100030% is owned by International Technical and Advisory Services Limited and the remaining interests are owned by third parties. 41. Inversiones Interamericana S.A. (Chile) 99.99% of Inversiones Interamericana S.A. is owned by ALICO and .01% by International Technical & Advisory Services. a. Administradora de Fondos Para la Vivienda Intercajas S.A. (Chile) - 40% of Administradora De Fondos Para la Vivienda Intercajas S.A. is owned by Inversiones Interamericana S.A. and the remaining interests are owned by a third party. b. La Interamericana Compania de Seguros de Vida S.A. (Chile) c. ALICO Costa Rica S.A. (Costa Rica) - 99.99% of ALICO Costa Rica S.A. is owned by Inversiones Interamericana S.A. and .01% by La Interamericana Compania de Seguros de Vida S.A. d. Legal Chile S.A. (Chile) - 51% of Legal Chile S.A. is owned by Inversiones Interamericana S.A. and the remaining interests by a third party. i. Legagroup S.A. (Chile) - 99% is owned by Legal Chile and 1% is owned by a third party. 42. ALICO Mexico Compania de Seguros, S.A. de C.V. (Mexico) 43. ALICO Services, Inc. (Panama) 44. American Life and General Insurance Company (Trinidad & Tobago) Ltd. - 80.92373% of American Life and General Insurance Company (Trinidad & Tobago) Ltd. is owned by ALICO and the remaining interests are owned by a third party. a. ALGICO Properties, Ltd. (Trinidad & Tobago) 45. Inversiones Inversegven C.A. (Venezuela) - 50% of Inversiones Inversegven C.A. is owned by ALICO and the remaining interests are owned by a third party. a. Seguros Venezuela C.A. (Venezuela) - 92.797% of Seguros Venzuela C.A. is owned by Inversiones Inversegven C.A. and the remaining interests are owned by others. i. Sindicato El Trigal C.A. (Venzuela) ii. Servicios Segveca C.A. (Venezuela) - 50% of Servicios Segveca C.A. is owned by Seguros Venezuela C.A. and the remaining interests are owned by a third party. iii. Inversiones 601 C.A. (Venezuela) - 30% of Inversiones 601 C.A. is owned by Seguros Venezuela C.A. and the remaining interests are owned by a third party. 46. ALICO Compania de Seguros de Vida, S.A. (Uruguay) 47. ALICO Properties, Inc. (USA-Delaware) - 51% of ALICO Properties, Inc. is owned by ALICO and the remaining interests are owned by a third party. 48. Global Properties, Inc. (USA-Delaware) 49. Alpha Properties, Inc. (USA-Delaware) 50. Beta Properties, Inc. (USA-Delaware) 51. Delta Properties Japan, Inc. (USA-Delaware) 52. Epsilon Properties Japan, Inc. 53. Iris Properties, Inc. (USA-Delaware) 54. Kappa Properties Japan, Inc. (USA-Delaware) 1) 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. 2) 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. 3) 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. 6 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 USA Variable Life Account A, MetLife Investors Variable Annuity Account One, MetLife Investors Variable Life Account One, 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 Separate Account Eleven for Variable Annuities, MetLife of CT Separate Account QPN for Variable Annuities, MetLife of CT Fund UL for Variable Life Insurance, MetLife of CT Fund UL III for Variable Life Insurance, Metropolitan Life Variable Annuity Separate Account II, Paragon Separate Account A, Paragon Separate Account B, Paragon Separate Account C, Paragon Separate Account D, Metropolitan Tower Separate Accounts One & Two. (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 John G. Martinez***** Vice President, Chief Financial Officer Paul A. LaPiana * Executive Vice President, National Sales Manager-Life Craig W. Markham **** Director Paul A. Sylvester * President, National Sales Manager-Annuities & LTC William J. Toppeta *** Director
* MetLife Investors, 5 Park Plaza, Suite 1900, Irvine, CA 92614 ** MetLife, 10 Park Avenue, Morristown, NJ 07962 *** MetLife, 1095 Avenue of the Americas, New York, NY 10036 ****MetLife, 13045 Tesson Ferry Road, St. Louis, MO 63128 *****MetLife,501 Route 22, Bridgewater, NJ 08807 (c) Compensation from the Registrant. (1) (2) (3) (4) (5) COMPENSATION ON EVENTS OCCASIONING NET UNDERWRITING THE DEDUCTION OF A DISCOUNTS AND DEFERRED SALES BROKERAGE OTHER NAME OF PRINCIPAL UNDERWRITER COMMISSIONS LOAD COMMISSIONS COMPENSATION ----------------------------- ---------------- ------------------ ----------- ------------ MetLife Investors Distribution Company. $2,059,970 $ 0 $ 0 $ 0
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 13th day of April, 2011. Metropolitan Life Separate Account UL By: Metropolitan Life Insurance Company By: /s/ Paul G. Cellupica ------------------------------------- Paul G. Cellupica, Esq. Chief Counsel 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 13th day of April, 2011. Metropolitan Life Insurance Company By: /s/ Paul G. Cellupica ------------------------------------------- Paul G. Cellupica, Esq. Chief Counsel 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 13, 2011. SIGNATURE TITLE --------- ----- * Chairman of the Board, Chief ------------------------------------- Executive Officer and C. Robert Henrikson President * Executive Vice President and ------------------------------------- Chief Accounting Officer Peter M. Carlson ------------------------------------- Director Sylvia Mathews Burwell * Director ------------------------------------- Eduardo Castro-Wright * Director ------------------------------------- Cheryl W. Grise * Director ------------------------------------- R. Glenn Hubbard * Director ------------------------------------- John M. Keane * Director ------------------------------------- Alfred F. Kelly, Jr. * Director ------------------------------------- James M. Kilts * Director ------------------------------------- Catherine R. Kinney * Director ------------------------------------- Hugh B. Price * Director ------------------------------------- David Satcher * Director ------------------------------------- Kenton J. Sicchitano ------------------------------------- Director Lulu C. Wang * 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)(xi) Amendments to the Participation Agreements for AIM/Invesco, American Century, American Funds, Fidelity, Franklin Templeton, Legg Mason, and Royce (n) Consent of Independent Registered Public Accounting Firm (r) Power of Attorney EX-99.(H)(XI) 2 dex99hxi.txt AMENDMENTS TO THE PARTICIPATION AGREEMENTS AMENDMENT TO PARTICIPATION AGREEMENT This Amendment to each of the Participation Agreements ("Agreement") currently in effect between AIM Variable Insurance Funds (Invesco Variable Insurance Funds) ("AVIF"), Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc. and A I M Distributors, Inc.) ("Invesco"), and Metropolitan Life Insurance Company, MetLife Insurance Company of Connecticut, MetLife Investors USA Insurance Company, MetLife Investors Insurance Company, MetLife Investors Insurance Company of California, First MetLife Investors Insurance Company, and General American Life Insurance Company (collectively, the "Company"), respectively, is effective this 30th day of April, 2010. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the respective Agreements. 1. All references in the Agreement to the defined term "AVIF Prospectus," or to a "prospectus" or "prospectuses" of or relating a Fund or AVIF, shall mean and include a Summary Prospectus as defined in Rule 498 under the 1933 Act ("Rule 498") of a Fund or AVIF ("AVIF Summary Prospectus"), except as required by Section 2, below. 2. Each Party's representations, warranties, and obligations under the Agreement with respect to the text composition, printing, mailing, and distribution of the AVIF Prospectus shall remain as they currently are, except that: a. LIFE COMPANY may, in its discretion and upon [10] days' advance written notice to AVIF and Invesco, print, mail, and distribute the AVIF Summary Prospectus IN LIEU OF the Statutory Prospectus as defined in Rule 498 of AVIF or a Fund thereof ("AVIF Statutory Prospectus"), i. unless required by applicable law or regulation to deliver an AVIF Statutory Prospectus, or ii.unless AVIF determines to no longer authorize the use of the AVIF Summary Prospectus, in which case AVIF shall give LIFE COMPANY [60] days' advance written notice of the effectiveness of such determination to the extent necessary for LIFE COMPANY to arrange for the delivery of an AVIF Statutory Prospectus, PROVIDED that AVIF or Invesco shall be responsible for compliance with all provisions of Rule 498 other than paragraphs (1) and (2) of Rule 498(c) and (d), and paragraph (2) of Rule 498(f), or any successor provisions, which shall be the responsibility of LIFE COMPANY; PROVIDED FURTHER, that LIFE COMPANY shall be responsible for timely responding to any request that it may receive directly from a Participant investing in a Fund for a paper or an electronic copy of an AVIF Statutory Prospectus, Statement of Additional Information, or periodic report (each, an "AVIF Document") pursuant to Rule 498(f)(1) or any successor provision. It being understood that LIFE COMPANY will not direct Participants or prospective Participants to AVIF or Invesco for fulfillment thereof. b. LIFE COMPANY may, in its discretion and upon [10] days' advance written notice to AVIF and Invesco, print, mail, and distribute the AVIF Summary Prospectus IN ADDITION TO, rather than in lieu of, the AVIF Statutory Prospectus, in which case AVIF or Invesco shall be responsible for compliance with paragraphs (a) and (b) of Rule 498, but not the other paragraphs of the Rule. c. AVIF or Invesco shall deliver to LIFE COMPANY electronic copies of both the AVIF Summary Prospectus and AVIF Statutory Prospectus for use by LIFE COMPANY. AVIF or Invesco also shall deliver to LIFE COMPANY the URL (uniform resource locator) for each AVIF Document to enable LIFE COMPANY to send a direct link to the document on the Internet by email in response to Participant requests for an electronic copy of any such document, as permitted by Rule 498(f)(1). d. LIFE COMPANY shall promptly notify AVIF and Invesco if it determines to no longer deliver the AVIF Summary Prospectus, and each Party shall promptly notify the other Parties if it becomes aware of facts or circumstances that may prevent the use or continued use of the AVIF Summary Prospectus in the manner contemplated hereby. 3. None of the foregoing shall in any way limit the ability of AVIF's Board of Trustees to require the delivery of the AVIF Summary Prospectus in lieu of the AVIF Statutory Prospectus in the future. 4. In all other respects, the Agreement shall remain the same. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the Agreement. IN WITNESS WHEREOF, each of undersigned parties hereto has caused this Amendment to be executed in its name and behalf by its duly authorized officer as of the Effective Date. AIM VARIABLE INSURANCE FUNDS INVESCO DISTRIBUTORS, INC. (INVESCO VARIABLE INSURANCE FUNDS) By: /s/ John M. Zerr By: /s/ John S. Cooper ----------------------------- ----------------------------- Name: John M. Zerr Name: John S. Cooper Title: Senior Vice President Title: President METROPOLITAN LIFE INSURANCE METLIFE INSURANCE COMPANY OF COMPANY CONNECTICUT By: /s/ Alan C. Leland, Jr. By: /s/ Paul L. LeClair -------------------------- -------------------------- Name: Alan C. Leland, Jr. Name: Paul L. LeClair Title: Vice President Title: Vice President and Actuary METLIFE INVESTORS USA METLIFE INVESTORS INSURANCE INSURANCE COMPANY COMPANY By: /s/ Paul L. LeClair By: /s/ Paul L. LeClair -------------------------- -------------------------- Name: Paul L. LeClair Name: Paul L. LeClair Title: Vice President Title: Vice President METLIFE INVESTORS INSURANCE FIRST METLIFE INVESTORS COMPANY OF CALIFORNIA INSURANCE COMPANY By: By: /s/ Paul L. LeClair -------------------------- Name: Name: Paul L. LeClair Title: Title: Vice President GENERAL AMERICAN INSURANCE COMPANY By: Paul L. LeClair -------------------------- Name: Paul L. LeClair Title: Vice President AMENDMENT NO. 3 PARTICIPATION AGREEMENT The Participation Agreement (the "Agreement"), dated April 30, 2004, by and among AIM Variable Insurance Funds, a Delaware trust ("AVIF'); Invesco Aim Distributors, Inc., a Delaware corporation ("AIM"), Metropolitan Life Insurance Company, a New York life insurance company, ("LIFE COMPANY"), on behalf of itself and each of its segregated asset accounts listed in Schedule A hereto, as the parties hereto may amend from time to time (each an "Account," and collectively, the "Accounts"), is hereby amended as follows: WHEREAS, effective April 30, 2010, AIM Variable Insurance Funds will be renamed AIM Variable Insurance Funds (Invesco Variable Insurance Funds). All references to AIM Variable Insurance Funds will hereby be deleted and replaced with AIM Variable Insurance Funds (Invesco Variable Insurance Funds); WHEREAS, effective April 30, 2010, Invesco Aim Distributors, Inc. will be renamed Invesco Distributors, Inc. All references to Invesco Aim Distributors, Inc. will hereby be deleted and replaced with Invesco Distributors, Inc. WHEREAS the parties desire to amend, the list of the Accounts and the list of Funds set forth in Schedule A to the Agreement. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following: SCHEDULE A FUNDS AVAILABLE UNDER THE CONTRACTS ----------------------------------- ALL SERIES I SHARES AND SERIES II SHARES OF AIM VARIABLE INSURANCE FUNDS (INVESCO VARIABLE INSURANCE FUNDS) ACCOUNTS UTILIZING THE FUNDS ---------------------------- ALL ACCOUNTS UTILIZING THE FUNDS CONTRACTS FUNDED BY THE ACCOUNTS -------------------------------- ALL CONTRACTS FUNDED BY THE ACCOUNTS Except as expressly supplemented, amended or consented to hereby, all of the representations and conditions of the Agreement will remain unamended and will continue to be in full force and effect. 1 IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 3 to be executed in their name and on their behalf by and through their duly authorized officers signing below. Effective date: April 30, 2010 AIM VARIABLE INSURANCE FUNDS (INVESCO VARIABLE INSURANCE FUNDS) Attest: /s/ Peter Davidson By: /s/ John M. Zerr -------------------------- -------------------------- Name: Peter Davidson Name: John M. Zerr Title: Assistant Secretary Title: Senior Vice President INVESCO DISTRIBUTORS, INC. Attest: /s/ Peter Davidson By: /s/ John S. Cooper -------------------------- -------------------------- Name: Peter Davidson Name: John S. Cooper Title: Assistant Secretary Title: President METROPOLITAN LIFE INSURANCE COMPANY (on behalf of the Accounts and itself) Attest: /s/ Paula J. Minella By: /s/ Alan C. Leland, Jr. -------------------------- -------------------------- Name: Paula J. Minellia Name: Alan C. Leland, Jr. Title: Counsel Title: Vice President 2 Amendment No. 2 to Shareholder Services Agreement Dated July 12, 2004 This Amendment to the Shareholder Services Agreement ("Agreement") currently in effect between American Century Investment Services, Inc. ("Distributor") and Metropolitan Life Insurance Company (the "Company"), respectively, is effective this 1st day of May, 2010. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the respective Agreement. WHEREAS, Distributor and the Company agree to permit the distribution of the prospectuses of the Funds of the Issuer pursuant to Rule 498 of the Securities Act of 1933 ("Rule 498"); and WHEREAS, the parties desire to set out the roles and responsibilities for complying with Rule 498 and other applicable laws. NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, and intending to be legally bound, the Agreement is hereby amended as follows: A. Amendments Related to Rule 498 1. For purposes of this Amendment, the terms Summary Prospectus and Statutory Prospectus shall have the same meaning as set forth in Rule 498. 2. Distributor shall provide the Company with copies of the Summary Prospectuses and any Supplements thereto in the same manner and at the same times as the Agreement requires that Distributor provide the Company with Statutory Prospectuses. 3. Distributor represents and warrants that the Summary Prospectuses and the hosting of such Summary Prospectuses will comply with the requirements of Rule 498 applicable to the Issuer and its Funds. Distributor further represents and warrants that it has appropriate policies and procedures in place to ensure that such web site continuously complies with Rule 498. 4. Distributor agrees that the URL indicated on each Summary Prospectus will lead contract owners directly to a central web page with prominent links to the Funds' Summary Prospectuses and such other current Fund documents required to be posted in compliance with Rule 498, and that such web page will not contain any additional materials not required by Rule 498. Notwithstanding the foregoing, Insurance Company understands and agrees that the central website hosting Fund documents will include links to all variable portfolio funds offered by the Issuers, not just the Funds made available by Insurance Company under the Agreement. Distributor shall immediately notify the Company of any unexpected interruptions in the availability of this web page. 1 5. Distributor represents and warrants that it will be responsible for compliance with the provisions of Rule 498(f)(1) involving contract owner requests for additional Fund documents made directly to the Issuer, the Funds, Distributor or one of their affiliates. Distributor further represents and warrants that any information obtained about contract owners will be used solely for the purposes of responding to requests for additional Fund documents. 6. The Company represents and warrants that it will respond to requests for additional Fund documents made by contract owners directly to the Company or one of its affiliates. 7. Company represents and warrants that any bundling of Summary Prospectuses and Statutory Prospectuses will be done in compliance with Rule 498. 8. At the Company's request, Distributor will provide the Company with URLs to the Funds' current documents for use with the Company's electronic delivery of Fund documents or on the Company's website. Distributor will be responsible for ensuring the integrity of the URLs and for maintaining the Funds' current documents on the site to which such URLs originally navigate. 9. Distributor represents and warrants that it has reasonable safeguards in place to prevent the documents contained on the web page, and the documents provided to the Company for purposes of electronic delivery, from containing any Virus. 10.If the Issuer determines that it will end its use of the Summary Prospectus delivery option, Distributor will provide the Company with at least 60 days' advance notice of its intent. 11.The parties agree that all other provisions of the Agreement, including the Indemnification provisions, will apply to the terms of this Amendment as applicable. 12.The parties agree that the Company is not required to distribute Summary Prospectuses to its contract owners, but rather use of the Summary Prospectus will be at the discretion of the Company. The Company agrees that it will give Distributor sufficient notice of its intended use of the Summary Prospectuses or the Statutory Prospectus. To the extent that Distributor is required under the Agreement to reimburse the Company for applicable printing and mailing costs associated with distribution of the Funds' prospectuses, the parties agree that Distributor will only be required to reimburse printing and mailing costs associated with distribution of the Funds' Summary Prospectuses. If the Company determines, in its discretion, to distribute Statutory Prospectuses to underlying investors in the Funds, Insurance Company will be responsible for all printing and mailing costs for Fund Statutory Prospectus distribution that are in excess of the costs that would have been incurred had the Company distributed Summary Prospectuses to underlying investors in the Funds. 2 IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed as of the date first set forth above. AMERICAN CENTURY INVESTMENT SERVICES, INC. By: /s/ Cindy A. Johnson -------------------------- Name: Cindy A. Johnson Its: Vice President METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. -------------------------- Name: Alan C. Leland, Jr. Its: Vice President 3 SCHEDULE I REGULATORY REPORT EXPENSES American Century and the Company will coordinate the functions and pay the costs of the completing distribution to shareholders of required Fund documents or other shareholder communications based upon an allocation of costs in the tables below. Costs shall be allocated to reflect the Fund's share of the total costs determined according to the number of pages of the Fund's respective portions of the documents. Notwithstanding anything to the contrary, the parties agree that in the event the Company undertakes to print and/or distribute Fund materials itself, Distributor will only be required to reimburse Company's expenses up to the amount Distributor would have paid its own shareholder communications vendor for such printing and distribution. Company shall send invoices for such expense to Distributor within 90 days of the event, along with such other supporting data as may be reasonably requested. The invoice will reference the applicable Item and Function, along with Distributor's number of pages printed. The Company invoices should be sent to the following email message group: INTOPS@americancenturv.com. Fees will be --------------------------- payable within 45 days of receipt of the invoice, as long as such supporting data defines the appropriate expenses. Party Responsible for Party Responsible for Item Function Coordination Expense ---- ------------------ --------------------- --------------------- Mutual Fund Printing of Company Inforce -Distributor Summary Insurance (Distributor to Prospectus Company provide Company Prospective -Company Product with document in Prospectus or PDF format or Mutual Fund Data File) Prospectus Printing of Distributor Distributor Mutual Fund Prospectus Distribution Company Distributor (including postage) to Inforce Clients Distribution Company Company (including postage) to Prospective Clients Mutual Fund If Required by Distributor Distributor Summary Fund, Distributor Prospectus Annual Update If Required by Company Company Company (Distributor to provide Company with document in PDF format) 4 PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR ITEM FUNCTION COORDINATION EXPENSE ---- ----------------- --------------------- --------------------- Mutual Fund Printing Distributor Distributor Statutory Prospectus Distribution Party who receives Party who receives (including the request the request postage) Mutual Fund Printing Distributor Distributor Statement of Additional Information Distribution Party who receives Party who receives (including the request the request postage) Proxy Material Printing of Distributor Distributor for Mutual proxy required Fund by Law Distribution of Company Distributor proxy (including postage) required by Law Mutual Fund Printing of Distributor Distributor Annual & reports Semi-Annual Report Printing of Company Distributor reports (Distributor to provide Company with document in PDF format) Distribution Company Company (including postage) Other If Required by Company Distributor communication Law, the Fund, to New and Distributor or Prospective Adviser clients If Required by Company Company Company Other Distribution, if Company Distributor communication required by the to inforce, Distributor including Prospectus Supplements Distribution, if Company Company required by Company 5 Amendment to Participation Agreement This Amendment to each of the Participation Agreements ("Agreement") currently in effect between American Funds Insurance Series (the "Series"), Capital Research and Management Company ("CRMC") and Metropolitan Life Insurance Company, MetLife Insurance Company of Connecticut, MetLife Investors USA Insurance Company, MetLife Investors Insurance Company, First MetLife Investors Insurance Company, New England Life Insurance Company and General American Life Insurance Company (collectively, the "Company"), respectively, is effective this 30th day of April 2010. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the respective Agreements. WHEREAS, the Series and the Company agree to distribute the prospectuses of the funds within the Series pursuant to Rule 498 of the Securities Act of 1933 ("Rule 498"); and WHEREAS, the parties desire to set out the roles and responsibilities for complying with Rule 498 and other applicable laws. NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, and intending to be legally bound, the Agreement is hereby amended as follows: 1. For purposes of this Amendment, the terms Summary Prospectus and Statutory Prospectus shall have the same meaning as set forth in Rule 498. 2. The Series and CRMC each represents and warrants that the Summary Prospectuses and the hosting of such Summary Prospectuses will comply with the requirements of Rule 498 applicable to the Series and its funds. The Series further represents and warrants that it has reasonable policies and procedures in place designed to monitor such web site for compliance with the requirements of Rule 498. 3. The Series and CRMC each agrees that the URL indicated on each Summary Prospectus will lead contract owners directly to the web page used for hosting Summary Prospectuses and that such web page will contain the current Series' and funds' documents required to be posted in compliance with Rule 498. The Series shall notify the Company of any unexpected interruptions in the availability of this web page promptly upon the Series' or CRMC's discovery of such interruption. 4. The Series and CRMC represent and warrant that they will be responsible for compliance with the provisions of Rule 498(f)(1) involving contract owner requests for additional Fund documents made directly to the Series, CRMC or one of their affiliates. The Series and CRMC further represent and warrant that any information obtained about contract owners pursuant to this provision will be used solely for the purposes of responding to requests for additional Fund documents. 5. The Company represents and warrants that it will be responsible for compliance with the provisions of Rule 498(f)(1) involving contract owner requests for additional fund documents made directly to the Company or one of its affiliates. 6. Company represents and warrants that any bundling of Summary Prospectuses and Statutory Prospectuses will be done in compliance with Rule 498. 7. CRMC and the Series may, at the Company's request, provide the Company with URLs to the current Series' and funds' documents for use with Company's electronic delivery of fund documents or on the Company's website. CRMC and the Series will be responsible for ensuring the integrity of the URLs and for maintaining the Series' and funds' current documents on the site to which such URLs originally navigate to. The Company will be responsible for the maintenance of any web links to such URLs on the Company's website. 8. The Series and CRMC make no warranty, express or implied, that the American Funds' website or the documents contained thereon will be free from any defects, bugs, errors or malfunctions; provided, however that the Series and CRMC hereby agree to use commercially reasonable efforts to employ procedures consistent with industry practices designed to reduce exposure to viruses. 9. If the Series determines that it will end its use of the Summary Prospectus delivery option, the Series and CRMC will provide the Company with at least 60 days' advance notice of its intent. 10.The parties agree that all other provisions of the Participation Agreement, including the Indemnification provisions, will apply to the terms of this Amendment as applicable. 11.The parties agree that the Company is not required to distribute Summary Prospectuses to its contract owners, but rather use of the Summary Prospectus will be at the discretion of the Company. The Company agrees that it will give CRMC and the Series sufficient notice of its intended use of the Summary Prospectuses or the Statutory Prospectus. IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and behalf by its duly authorized officer as of the date first set forth above. AMERICAN FUNDS INSURANCE SERIES By: /s/ Steven I. Koszalka -------------------------- Name: Steven I. Koszalka Its: Secretary CAPITAL RESEARCH AND MANAGEMENT COMPANY By: /s/ Michael J. Downer -------------------------- Name: Michael J. Downer Its: Senior Vice President and Secretary Approved for Signature by CRMC legal Dept. ~ METROPOLITAN LIFE INSURANCE COMPANY By: Name: Its: METLIFE INSURANCE COMPANY OF CONNECTICUT By: Name: Its: METLIFE INVESTORS USA INSURANCE COMPANY By: Name: Its:
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and behalf by its duly authorized officer as of the date first set forth above. ------------------------------------------ AMERICAN FUNDS INSURANCE SERIES ------------------------------------------ By: Name: Its: CAPITAL RESEARCH AND MANAGEMENT COMPANY By: Name: Its: METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ------------------------------------- Name: Alan C. Leland, Jr. Its: Vice President METLIFE INSURANCE COMPANY OF CONNECTICUT By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President and Actuary METLIFE INVESTORS USA INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President METLIFE INVESTORS INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President FIRST METLIFE INVESTORS INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President NEW ENGLAND LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ------------------------------------- Name: Alan C. Leland, Jr. Its: Senior Vice President GENERAL AMERICAN LIFE INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President and Actuary Summary Prospectus Agreement This Summary Prospectus Agreement ("Agreement") currently in effect among Fidelity Distributors Corporation (the "Underwriter"), and Metropolitan Life Insurance Company, MetLife Insurance Company of Connecticut, MetLife Investors USA Insurance Company, First MetLife Investors Insurance Company, MetLife Investors Insurance Company, New England Life Insurance Company and General American Life Insurance Company (collectively, the "Company") is effective this 30th day of April, 2010. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the respective Agreements. WHEREAS, 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 (collectively the "Fund") have entered into distribution agreements pursuant to which the Underwriter acts as distributor of the Fund; WHEREAS, the Fund and the Company agree to distribute the prospectuses of the Portfolios of the Fund pursuant to Rule 498 of the Securities Act of 1933 ("Rule 498"); and WHEREAS, the parties desire to set out the roles and responsibilities for complying with Rule 498 NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, and intending to be legally bound, the Agreement is hereby amended as follows: 1. For purposes of this Amendment, the terms Summary Prospectus and Statutory Prospectus shall have the same meaning as set forth in Rule 498. 2. The Underwriter represents and warrants that the hosting of such Summary Prospectuses at the URL disclosed on such Summary Prospectus is designed to comply with the requirements of Rule 498(e) and (f)(3) applicable to the Fund and its Portfolios. 3. The Underwriter represent and warrant that it will respond to contract owner requests for additional Fund documents in a manner designed to comply with the provisions of Rule 498(f)(1). The Underwriter further represents and warrants that any information obtained about contract owners will be used solely for the purposes of responding to requests for additional Fund documents. 4. Company represents and warrants that any binding of Summary Prospectuses and Statutory Prospectuses will be done in compliance with Rule 498. 5. The parties agree that the Indemnification provisions of the Participation Agreement among the Underwriter, the Company and the Fund will apply to the terms of this Summary Prospectus Agreement as applicable. 6. The parties agree that the Company is not required to distribute Summary Prospectuses to its contract owners, but rather distribution of the Summary Prospectus will be at the discretion of the Company. The Company agrees that it will give the Fund and the Underwriter sufficient notice of its intended use of the Summary Prospectuses or the Statutory Prospectus. IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and behalf by its duly authorized officer as of the date first set forth above. FIDELITY DISTRIBUTORS CORPORATION By: /s/ Thomas J. Corra ----------------------------------- Name: Thomas J. Corra Its: METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ----------------------------------- Name: Alan C. Leland, Jr. Its: Vice President METLIFE INSURANCE COMPANY OF CONNECTICUT By:/s/ Paul L. LeClair ----------------------------------- Name: Paul L. LeClair Its: Vice President and Actuary METLIFE INVESTORS USA INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------- Name: Paul L. LeClair METLIFE INVESTORS INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------- Name: Paul L. LeClair Its: Vice President FIRST METLIFE INVESTORS INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------- Name: Paul L. LeClair Its: Vice President NEW ENGLAND LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ------------------------------- Name: Alan C. Leland, Jr. Its: Senior Vice President GENERAL AMERICAN LIFE INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------- Name: Paul L. LeClair Its: Vice President and Actuary AMENDMENT NO. 3 TO AMENDED AND RESTATED PARTICIPATION AGREEMENT Franklin Templeton Variable Insurance Products Trust Franklin/Templeton Distributors, Inc. Metropolitan Life Insurance Company MetLife Investors Distribution Company Franklin Templeton Variable Insurance Products Trust (the "Trust"), Franklin/Templeton Distributors, Inc. (the "Underwriter," and together with the Trust, "we" or "us"), Metropolitan Life Insurance Company (the "Company" or "you"), and MetLife Investors Distribution Company, your distributor, on your behalf and on behalf of certain Accounts, have previously entered into an Amended and Restated Participation Agreement dated May 1,2004 and subsequently amended May 1,2007 and November 10,2008 (the "Agreement"). The parties now desire to further amend the Agreement by this amendment (the "Amendment"). Except as modified hereby, all other terms and conditions of the Agreement shall remain in full force and effect. Unless otherwise indicated, the terms defined in the Agreement shall have the same meaning in this Amendment. AMENDMENT WHEREAS, the parties desire to amend the Agreement to update the information on Schedules B, C, D and G; WHEREAS, the parties desire to amend Section 6 of the agreement, and NOW, THEREFORE, in consideration of past and prospective business relations, the parties agree to amend the Agreement as follows: 1. Paragraphs 6.1 through 6.7 of Section 6 are amended and restated in their entirety as set forth in Attachment A to this Amendment. The remaining paragraph 6.8 of Section 6 not amended herein shall be re-numbered 6.10. 2. Schedules B, C, D and G of the Agreement are deleted and replaced in their entirety with the Schedules B, C, D and G attached hereto, respectively. 3. All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. IN WITNESS WHEREOF, each of the parties has caused its duly authorized officers to execute this Amendment effective as of October 05, 2010. The Trust: FRANKLIN TEMPLETON VARIABLE INSURANCE ONLY ON BEHALF OF PRODUCTS TRUST EACH PORTFOLIO LISTED ON SCHEDULE C OF THE AGREEMENT. By: /s/ Karen L. Skidmore ------------------------------------------ Name: Karen L. Skidmore Title: Vice President The Underwriter: FRANKLIN/TEMPLETON DISTRIBUTORS, INC. By: /s/ Thomas M. Regner ------------------------------------------ Name: Thomas M. Regner Title: Executive Vice President The Company: METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ------------------------------------------ Name: Alan C. Leland Jr. Title: Vice President The Distributor: METLIFE INVESTORS DISTRIBUTION COMPANY By: /s/ Paul M. Kos ------------------------------------------ Name: Paul M. Kos Title: Vice President 2 ATTACHMENT A 6. SALES MATERIAL. INFORMATION AND TRADEMARKS ------------------------------------------ 6.1 For purposes of this Section 6, "Sales Literature/ Promotional Material" includes, but is not limited to, portions of the following that use any logo or other trademark related to the Trust, or Underwriter or its affiliates, or refer to the Trust: 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, web-sites and other electronic communications 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 or any other advertisement, sales literature or published article or electronic communication), educational or training materials or other communications distributed or made generally available to some or all agents or employees in any media, and disclosure documents, shareholder reports and proxy materials. 6.2 You may use the name of the Trust and trademarks and the logo of the Underwriter in Sales Literature/Promotional Material as reasonably necessary to carry out your performance and obligations under this Agreement provided that you comply with the provisions of this Agreement. You agree to abide by any reasonable use guidelines regarding use of such trademarks and logos that we may give from time to time. You shall, as we may request from time to time, promptly furnish, or cause to be furnished to us or our designee, at least one complete copy of each registration statement, prospectus, statement of additional information, private placement memorandum, retirement plan disclosure information or other disclosure documents or similar information, as applicable (collectively "Disclosure Documents"), as well as any report, solicitation for voting instructions, Sales Literature/ Promotional Material created and approved by you, and all amendments to any of the above that relate to the Contracts, the Accounts, the Trust, or Underwriter or its affiliates. 6.3 You and your agents shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust, the Underwriter or an Adviser, other than information or representations contained in and accurately derived from the registration statement or prospectus for the Trust shares (as such registration statement and prospectus may be amended or supplemented from time to time), annual and semi-annual reports of the Trust, Trust-sponsored proxy statements, or in Sales Literature/Promotional Material created by us for the Trust and provided by the Trust or its designee to you, except as required by legal process or regulatory authorities or with the written permission of the Trust or its designee. 6.4 You agree, represent and warrant that you are solely responsible for any Sales Literature/ Promotional Material prepared by you and that such material will: (a) conform to all requirements of any applicable laws or regulations of any government or authorized agency having jurisdiction over the offering or sale of shares of the Portfolios or Contracts; (b) be solely based upon and not contrary to or inconsistent with the information or materials 3 provided to you by us or a Portfolio; and (c) be made available promptly to us upon our request. You agree to file any Sales Literature/Promotional Material prepared by you with FINRA, or other applicable legal or regulatory authority, within the timeframes that may be required from time to time by FINRA or such other legal or regulatory authority. Unless otherwise expressly agreed to in writing, it is understood that we will neither review nor approve for use any materials prepared by you and will not be materially involved in the preparation of, or have any responsibility for, any such materials prepared by you. You are not authorized to modify or translate any materials we have provided to you. 6.5 You shall promptly notify us of any written customer complaint or notice of any regulatory investigation or proceeding received by you relating to any Disclosure Documents or Sales Literature/Promotional Material. 6.6 We shall not give any information or make any representations or statements on behalf of you or concerning you, the Accounts or the Contracts other than information or representations, including naming you as a Trust shareholder, contained in and accurately derived from Disclosure Documents for the Contracts (as such Disclosure Documents may be amended or supplemented from time to time), or in materials approved by you for distribution, including Sales Literature/ Promotional Material, except as required by legal process or regulatory authorities or with your written permission. 6.7 Except as provided in Section 6.2, you shall not use any designation comprised in whole or part of the names or marks "Franklin" or "Templeton" or any logo or other trademark relating to the Trust or the Underwriter without prior written consent, and upon termination of this Agreement for any reason, you shall cease all use of any such name or mark as soon as reasonably practicable. 6.8 You shall furnish to us ten (10) Business Days prior to its first submission to the SEC or its staff, any request or filing for no-action assurance or exemptive relief naming, pertaining to, or affecting, the Trust, the Underwriter or any of the Portfolios. 6.9 You agree that any posting of Designated Portfolio Documents on your website or use of Designated Portfolio Documents in any other electronic format will result in the Designated Portfolio Documents: (i) appearing identical to the hard copy printed version or .pdf format file provided to you by us (except that you may reformat .pdf format prospectus files in order to delete blank pages and to insert .pdf format prospectus supplement files provided by us to you); (ii) being clearly associated with the particular Contracts in which they are available and posted in close proximity to the applicable Contract prospectuses; (iii) having no less prominence than prospectuses of any other underlying funds available under the Contracts; (iv) in compliance with any statutory prospectus delivery requirements and (v) being used in an authorized manner. Notwithstanding the above, you understand and agree that you are responsible for ensuring that participation in the Portfolios, and any website posting, or other use, of the Designated Portfolio Documents is in compliance with this Agreement and applicable state and federal securities and insurance laws and regulations, including as they relate to paper or electronic delivery or use of fund prospectuses. We reserve the right to inspect and review your website if any Designated Portfolio Documents 4 and/or other Trust documents are posted on your website and you shall, upon our reasonable request, provide us timely access to your website materials to perform such inspection and review. In addition, you agree to be solely responsible for maintaining and updating the Designated Portfolio Documents' .pdf files and removing and/or replacing promptly any outdated prospectuses and other documents, as necessary, ensuring that any accompanying instructions by us, for using or stopping use, are followed. You agree to designate and make available to us a person to act as a single point of communication contact for these purposes. We are not responsible for any additional costs or additional liabilities that may be incurred as a result of your election to place the Designated Portfolio Documents on your website. We reserve the right to revoke this authorization, at any time and for any reason, although we may instead make our authorization subject to new procedures. 5 SCHEDULE B ACCOUNTS OF THE COMPANY
SEC REGISTRATION NAME OF ACCOUNT YES/NO --------------- ---------------- Separate Account UL Yes Separate Account DCVL No Metropolitan Life Variable Annuity Separate Account II Yes
6 SCHEDULE C AVAILABLE PORTFOLIOS AND CLASSES OF SHARES OF THE TRUST 1. Franklin Small-Mid Cap Growth Securities Fund - Class 2 2. Mutual Global Discovery Securities Fund - Class 2 3. Templeton Developing Markets Securities Fund - Class 2 4. Templeton Foreign Securities Fund, Class 1 and Class 2 5. Templeton Global Bond Securities Fund - Class 1 In addition to portfolios and classes of shares listed above, any additional Portfolios and classes of shares other than Class 3 shares are included in this Schedule C listing provided that: (1)the General Counsel of Franklin Templeton Investments receives from a person authorized by you a written notice in the form attached (which may be electronic mail or sent by electronic mail) ("Notice") identifying this Agreement as provided in the Notice and specifying: (i) the names and classes of shares of additional Portfolios that you propose to offer as investment options of the Separate Accounts under the Contracts; and (ii) the date that you propose to begin offering Separate Account interests investing in the additional Portfolios under the Contracts; and (2)we do not within ten (10) Business Days following receipt of the Notice send you a writing (which may be electronic mail) objecting to your offering such Separate Accounts investing in the additional Portfolios and classes of shares under the Contracts. Provided that we do not object as provided above, your Notice shall amend, supplement and become a part of this Schedule C and the Agreement. 7 FORM OF NOTICE PURSUANT TO SCHEDULE C OF PARTICIPATION AGREEMENT To:General Counsel c/o Linda Lai (Llai@frk.com;) or Kevin Kirchoff (kkircho@frk.com) Fax: 650 525-7059 Franklin Templeton Investments 1 Franklin Parkway, Bldg. 920, 2nd Floor San Mateo, CA 94403 With respect to the following agreement(s) (collectively, the "Agreement") (please reproduce and complete table for multiple agreements): DATE OF PARTICIPATION AGREEMENT: INSURANCE COMPANY(IES): INSURANCE COMPANY DISTRIBUTOR(S): As provided by Schedule C of the Agreement, this Notice proposes to Franklin Templeton Variable Insurance Products Trust, and Franklin/Templeton Distributors, Inc. the addition as of the offering date(s) listed below of the following Portfolios as additional investment options listed on Schedule C: NAMES AND CLASSES OF SHARES OF ADDITIONAL PORTFOLIOS OFFERING DATE(S) Listing of current classes for your reference: Class 1 (no 12b-1 fee); Class 2 (12b-1 fee of25 bps); or Class 4 (12b-1 fee of35 bps). NAME AND TITLE OF AUTHORIZED PERSON OF INSURANCE COMPANY: CONTACT INFORMATION: 8 SCHEDULE D CONTRACTS OF THE COMPANY All variable life and variable annuity contracts issued by separate accounts listed on Schedule B of this Agreement. 9 SCHEDULE G ADDRESSES FOR NOTICES To the Company and MetLife Distributor: 501 Boylston Street, 5th Floor Boston, MA 02116 Attn: Legal Department To the Trust: Franklin Templeton Variable Insurance Products Trust One Franklin Parkway, Bldg. 920 2nd Floor San Mateo, California 94403 Attention: Karen L. Skidmore, Vice President To the Underwriter: Franklin/Templeton Distributors, Inc. 100 Fountain Parkway, Bldg. 140 7th Floor St. Petersburg, FL 33716 Attention: Peter Jones, President If to the Trust or Franklin Templeton Investments Underwriter with a One Franklin Parkway, Bldg. 920 2nd copy to: Floor San Mateo, California 94403 Attention: General Counsel 10 AMENDMENT TO PARTICIPATION AGREEMENT This Amendment to each of the Participation Agreements ("Agreement") currently in effect between Legg Mason Partners Variable Equity Trust, Legg Mason Partners Variable Income Trust (each a "Fund", collectively the "Funds"), Legg Mason Investor Services, LLC (the "Distributor"), and Legg Mason Partners Fund Advisor, LLC (the "Adviser") and Metropolitan Life Insurance Company, MetLife Insurance Company of Connecticut, MetLife Investors USA Insurance Company, and First MetLife Investors Insurance Company (collectively, the "Company"), respectively, is effective this 30th day of April, 2010. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the respective Agreements. WHEREAS, the Funds and the Company agree to distribute the prospectuses of the Portfolios within the Funds pursuant to Rule 498 of the Securities Act of 1933 ("Rule 498"); and WHEREAS, the parties desire to set out the roles and responsibilities for complying with Rule 498 and other applicable laws. NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, and intending to be legally bound, the Agreement is hereby amended as follows: 1. For purposes of this Amendment, the terms Summary Prospectus and Statutory Prospectus shall have the same meaning as set forth in Rule 498. 2. The Funds shall provide the Company with copies of the Summary Prospectuses and any Supplements thereto in the same manner and at the same times as the Participation Agreement requires that the Funds provide the Company with Statutory Prospectuses. 3. The Funds and the Advisor each represents and warrants that the Summary Prospectuses and the hosting of such Summary Prospectuses will comply with the requirements of Rule 498 applicable to the Funds and its Portfolios. The Funds further represent and warrant that they have appropriate policies and procedures in place to ensure that such web site continuously complies with Rule 498. 4. The Funds and Advisor each agrees that the URL indicated on each Summary Prospectus will lead contract owners directly to the web page used for hosting Summary Prospectuses, that such web page will contain the current Funds' and Portfolios' documents required to be posted in compliance with Rule 498, and that such web page will not contain any additional materials not required by Rule 498. The Advisor shall promptly notify the Company upon its discovery of any unexpected interruptions in the availability of this web page. 5. The Funds and Adviser represent and warrant that they will be responsible for compliance with the provisions of Rule 498(f)(1) involving contract owner requests for additional Fund documents made directly to the Funds, Advisers, or one of their affiliates. The Funds and Adviser further represent and warrant that any information obtained about contract owners will be used solely for the purposes of responding to requests for additional Fund documents. 6. The Company represents and warrants that it will respond to requests for additional Fund documents made by contract owners directly to the Company or one of its affiliates. 7. Company represents and warrants that any bundling of Summary Prospectuses and Statutory Prospectuses will be done in compliance with Rule 498. 8. At the Company's request, Adviser and Funds will provide the Company with URLs to the current Funds' documents for use with the Company's electronic delivery of fund documents or on the Company's website. Adviser and the Funds will be responsible for ensuring the integrity of the URLs and for maintaining the Funds' current documents on the site to which such URLs originally navigate. 9. The Funds and Adviser represent and warrant that they have reasonable safeguards in place to prevent the documents contained on the web page, and the documents provided to the Company for purposes of electronic delivery, from containing any virus. 10.If the Fund detennines that it will end its use of the Summary Prospectus delivery option, the Fund and Adviser will provide the Company with at least 60 days' advance notice of its intent. 11.The parties agree that all other provisions of the Participation Agreement, including the Indemnification provisions, will apply to the tenns of this Amendment as applicable. 12.The parties agree that the Company is not required to distribute Summary Prospectuses to its contract owners, but rather use of the Summary Prospectus will be at the discretion of the Company. The Company agrees that it will give Adviser and Funds sufficient notice of its intended use of the Summary Prospectuses or the Statutory Prospectus. IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and behalf by its duly authorized officer as of the date first set forth above. LEGG MASON PARTNERS EQUITY TRUST By: /s/ R.J. Gerken ------------------------------------- Name: R.J. Gerken Its: Chairman, Mutual Fund Boards LEGG MASON PARTNERS INCOME TRUST By: /s/ R.J. Gerken ------------------------------------- Name: R.J. Gerken Its: Chairman, Mutual Fund Boards LEGG MASON PARTNERS FUND ADVISOR, LLC By: /s/ Thomas C. Mandia ------------------------------------- Name: Thomas C. Mandia Its: Secretary LEGG MASON INVESTOR SERVICES, LLC By: /s/ Kimberly Mustin ------------------------------------- Name: Kimberly Mustin Its: MANAGING DIRECTOR METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Alan C. Leland, Jr. ------------------------------------- Name: Alan C. Leland, Jr. Its: Vice President METLIFE INSURANCE COMPANY OF CONNECTICUT By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President and Actuary METLIFE INVESTORS USA INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President FIRST METLIFE INVESTORS INSURANCE COMPANY By: /s/ Paul L. LeClair ------------------------------------- Name: Paul L. LeClair Its: Vice President Amendment to Participation Agreement This Amendment to each of the Participation Agreements ("Agreement") currently in effect between Royce Capital Fund (the "Fund"), Royce & Associates, LLC (the "Adviser"), and Metropolitan Life Insurance Company and MetLife Insurance Company of Connecticut (collectively, the "Company"), respectively, is effective this 30th day of April, 2010. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the respective Agreements. WHEREAS, the Fund and the Company agree to distribute the prospectuses of the Portfolios of the Fund pursuant to Rule 498 of the Securities Act of 1933 ("Rule 498"); and WHEREAS, the parties desire to set out the roles and responsibilities for complying with Rule 498 and other applicable laws. NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, and intending to be legally bound, the Agreement is hereby amended as follows: 1. For purposes of this Amendment, the terms Summary Prospectus and Statutory Prospectus shall have the same meaning as set forth in Rule 498. 2. The Fund shall provide the Company with copies of the Summary Prospectuses and any Supplements thereto in the same manner and at the same times as the Participation Agreement requires that the Fund provide the Company with Statutory Prospectuses. 3. The Fund and the Adviser each represents and warrants that the Summary Prospectuses and the hosting of such Summary Prospectuses will comply with the requirements of Rule 498 applicable to the Fund and its Portfolios. The Fund further represents and warrants that it has appropriate policies and procedures in place to ensure that such web site continuously complies with Rule 498. 4. The Fund and the Adviser each agrees that the URL indicated on each Summary Prospectus will lead contract owners directly to the web page used for hosting Summary Prospectuses and that such web page will contain the current Fund documents required to be posted in compliance with Rule 498. The Fund shall immediately notify the Company of any unexpected interruptions in the availability of this web page. 5. The Fund and the Adviser represent and warrant that they will be responsible for compliance with the provisions of Rule 498(f)(1) involving contract owner requests for additional Fund documents made directly to the Fund, the Adviser or one of their affiliates. The Fund and the Adviser further represent and warrant that any information obtained about contract owners will be used solely for the purposes of responding to requests for additional Fund documents. 6. The Company represents and warrants that it will respond to requests for additional Fund documents made by contract owners directly to the Company or one of its affiliates. 7. Company represents and warrants that any bundling of Summary Prospectuses and Statutory Prospectuses will be done in compliance with Rule 498. 8. At the Company's request, the Fund and the Adviser will provide the Company with URLs to the Fund's current documents for use with the Company's electronic delivery of fund documents or on the Company's website. The Fund and the Adviser will be responsible for ensuring the integrity of the URLs and for maintaining the Fund's current documents on the site to which such URLs originally navigate. 9. The Fund and the Adviser represent and warrant that they have reasonable safeguards in place to prevent the documents contained on the web page, and the documents provided to the Company for purposes of electronic delivery, from containing any virus. 10.If the Fund determines that it will end its use of the Summary Prospectus delivery option, the Fund and the Adviser will provide the Company with at least 60 days' advance notice of its intent. 11.The parties agree that all other provisions of the Participation Agreement, including the Indemnification provisions, will apply to the terms of this Amendment as applicable. 12.The parties agree that the Company is not required to distribute Summary Prospectuses to its contract owners, but rather use of the Summary Prospectus will be at the discretion of the Company. The Company agrees that it will give the Fund and the Adviser sufficient notice of its intended use of the Summary Prospectuses or the Statutory Prospectus. IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed in its name and behalf by its duly authorized officer. Dated as of April 30, 2010. ROYCE CAPITAL FUND By: /s/ John D. Diederich ----------------------------- Name: John D. Diederich Its: Vice President ROYCE & ASSOCIATES, LLC By: /s/ John D. Diederich ----------------------------- Name: John D. Diederich Its: Chief Operating Officer METROPOLITAN LIFE INSURANCE COMPANY By: Name: Paul L. LeClair Its: Vice President and Actuary METLIFE INSURANCE COMPANY OF CONNECTICUT By: Name: Paul L. LeClair Its: Vice President and Actuary ROYCE CAPITAL FUND By: Name: Its: ROYCE & ASSOCIATES, LLC By: Name: Its: METROPOLITAN LIFE INSURANCE COMPANY By: /s/ Paul L. LeClair ----------------------------- Name: Paul L. LeClair Its: Vice President and Actuary METLIFE INSURANCE COMPANY OF CONNECTICUT By: /s/ Paul L. LeClair ----------------------------- Name: Paul L. LeClair Its: Vice President and Actuary 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. 24/Amendment No. 52 to Registration Statement Nos. 033-57320/811-06025 on Form N-6 of our report dated March 31, 2011, relating to the financial statements and financial highlights comprising each of the Investment Divisions of Metropolitan Life Separate Account UL appearing in the Prospectus, which is part of such Registration Statement, and our report dated March 31, 2011, relating to the consolidated financial statements of Metropolitan Life Insurance Company and subsidiaries (the "Company") (which report expresses an unqualified opinion and includes an explanatory paragraph referring to changes in the Company's method of accounting for the recognition and presentation of other-than-temporary impairment losses for certain investments as required by accounting guidance adopted on April 1, 2009, and its method of accounting for certain assets and liabilities to a fair value measurement approach as required by accounting guidance adopted on January 1, 2008), appearing in the Statement of Additional Information, which is also part of such Registration Statement and to the references to us under the headings "Independent Registered Public Accounting Firm" in the Prospectus, and "Independent Registered Public Accounting Firm" in the Statement of Additional Information. /s/ DELOITTE & TOUCHE LLP Tampa, Florida April 13, 2011 EX-99.R 4 dex99r.txt POWERS OF ATTORNEY POWERS OF ATTORNEY DESIGNATION OF AGENT(S): Each person whose signature appears below under the heading "Signatures for Powers of Attorney" hereby individually, and not jointly with the other signatories, and as if this constituted a separate power of attorney for each principal, authorizes and appoints Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, each of whom may act individually and none of whom is required to act jointly with any of the others, as such person's attorney-in-fact and agent, with full power of substitution and resubstitution, to sign and file on such person's behalf in each capacity stated below, and 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 Metropolitan Life Insurance 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 and UL II 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, MetLife UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet 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 VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier Variable Annuity File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586 and Variable Annuity File No. 333-_________), . 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 (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity 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 D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Variable Deferred Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in each person's 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 each person 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. This Power of Attorney does not revoke any prior powers of attorney. NOTICES RELATED TO POWERS OF ATTORNEY The following notices are provided pursuant to the New York General Obligations Law since this power of attorney may be executed in New York State. CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority. When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities. Your agent can act on your behalf only after signing the Power of Attorney before a notary public. You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located. You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly. Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this. The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us. ---------------------- ------------------------ If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you. SIGNATURES FOR POWERS OF ATTORNEY NAME TITLE DATE ---- ----- ---- Director -------------------------------------- ------------- Sylvia Mathews Burwell /s/ Eduardo Castro-Wright Director June 15, 2010 -------------------------------------- Eduardo Castro-Wright /s/ Cheryl W. Grise Director June 15. 2010 -------------------------------------- Cheryl W. Grise /s/ C. Robert Henrikson Chairman, President and June 15, 2010 -------------------------------------- Chief Executive Officer C. Robert Henrikson /s/ R. Glenn Hubbard Director June 15, 2010 -------------------------------------- R. Glenn Hubbard /s/ John M. Keane Director June 15, 2010 -------------------------------------- John M. Keane /s/ Alfred F. Kelly, Jr. Director June 15, 2010 -------------------------------------- Alfred F. Kelly, Jr. /s/ James M. Kilts Director June 15, 2010 -------------------------------------- James M. Kilts /s/ Catherine R. Kinney Director June 15, 2010 -------------------------------------- Catherine R. Kinney /s/ Hugh B. Price Director June 15, 2010 -------------------------------------- Hugh B. Price /s/ David Satcher Director June 15, 2010 -------------------------------------- David Satcher /s/ Kenton J. Sicchitano Director June 15, 2010 -------------------------------------- Kenton J. Sicchitano /s/ Lulu C. Wang Director June 15, 2010 -------------------------------------- Lulu C. Wang IMPORTANT INFORMATION FOR THE AGENT: When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must: (1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest; (2) avoid conflicts that would impair your ability to act in the principal's best interest; (3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law; (4) keep a record or all receipts, payments, and transactions conducted for the principal; and (5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name). You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian, if one had been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice. Liability of agent: The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation. AGENTS' SIGNATURES AND ACKNOWLEDGMENTS OF APPOINTMENT: It is not required that the principal(s) and the agent(s) sign at the same time, nor that multiple agents sign at the same time. We, Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, have read the foregoing Power of Attorney. We are the persons identified therein as agent(s) for the principal(s) named therein. We acknowledge our legal responsibilities. DATE ------- Agent(s) sign(s) here:==> /s/ Nicholas D. Latrenta 6/14/10 ------------------------------------- Nicholas D. Latrenta Agent(s) sign(s) here:==> /s/ Paul G. Cellupica 6/11/10 ------------------------------------- Paul G. Cellupica Agent(s) sign(s) here:==> /s/ Marie C. Swift 6/14/10 ------------------------------------- Marie C. Swift Agent(s) sign(s) here:==> /s/ Myra L. Saul 6/10/10 ------------------------------------- Myra L. Saul Agent(s) sign(s) here:==> /s/ John E. Connolly, Jr. 6/14/10 ------------------------------------- John E. Connolly, Jr. Agent(s) sign(s) here:==> /s/ Michele H. Abate 6/14/10 ------------------------------------- Michele H. Abate NOTARIZATION STATE OF NEW YORK COUNTY OF NEW YORK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [_] Sylvia Mathews Burwell [X] Eduardo Castro-Wright [X] Cheryl W. Grise [X] C. Robert Henrikson [X] R. Glenn Hubbard [X] John M. Keane [X] Alfred F. Kelly, Jr. [X] James M. Kilts [X] Catherine R. Kinney [X] Hugh B. Price [X] David Satcher [X] Kenton J. Sicchitano [X] Lulu C. Wang personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 15th DAY OF June, 2010. (SEAL) /s/ Susan May ---------------------------------------- NOTARY PUBLIC Susan May Notary Public State of New York No. 01DI6086282 Qualified in Queens County My Commission Expires May 21, 2011 NOTARIZATION STATE OF NEW YORK COUNTY OF NEW YORK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] Nicholas D. Latrenta [X] Paul G. Cellupica [X] Myra L. Saul personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 14 DAY OF June, 2010. (SEAL) /s/ Sharon Fulton ---------------------------------------- NOTARY PUBLIC Sharon Fulton Notary public, State of New York No. 01FU6089820 Commission Expires March 31, 2011 NOTARIZATION COMMONWEALTH OF MASSACHUSETTS COUNTY OF SUFFLOK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] Marie C. Swift [X] John E. Connolly, Jr. [X] Michele H. Abate personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 14th DAY OF June, 2010. (SEAL) /s/ Robin M. Dateo ---------------------------------------- NOTARY PUBLIC Robin M. Dateo Notary Public Commonwealth of Massachusetts My Commission Expires December 28, 2012 POWERS OF ATTORNEY DESIGNATION OF AGENT(S): Each person whose signature appears below under the heading "Signature for Powers of Attorney" hereby individually, and not jointly with the other signatories, and as if this constituted a separate power of attorney for each principal, authorizes and appoints Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, each of whom may act individually and none of whom is required to act jointly with any of the others, as such person's attorney-in-fact and agent, with full power of substitution and resubstitution, to sign and file on such person's behalf in each capacity stated below, and 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 Metropolitan Life Insurance 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 and UL II 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, MetLife UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet 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 VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier Variable Annuity File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586 and Variable Annuity File No. 333-_________), . 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 (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity 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 D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Variable Deferred Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in each person's 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 each person 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. This Power of Attorney does not revoke any prior powers of attorney. NOTICES RELATED TO POWERS OF ATTORNEY The following notices are provided pursuant to the New York General Obligations Law since this power of attorney may be executed in New York State. CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority. When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities. Your agent can act on your behalf only after signing the Power of Attorney before a notary public. You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located. You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly. Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this. The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us. ---------------------- ------------------------ If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you. SIGNATURE FOR POWERS OF ATTORNEY NAME TITLE DATE ---- ----- ---- /s/ William J. Wheeler Executive Vice President and June 10, 2010 --------------------------------- Chief Financial Officer William J. Wheeler IMPORTANT INFORMATION FOR THE AGENT: When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must: (1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest; (2) avoid conflicts that would impair your ability to act in the principal's best interest; (3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law; (4) keep a record or all receipts, payments, and transactions conducted for the principal; and (5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name). You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian, if one had been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice. Liability of agent: The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation. AGENTS' SIGNATURES AND ACKNOWLEDGMENTS OF APPOINTMENT: It is not required that the principal(s) and the agent(s) sign at the same time, nor that multiple agents sign at the same time. We, Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, have read the foregoing Power of Attorney. We are the persons identified therein as agent(s) for the principal(s) named therein. We acknowledge our legal responsibilities. DATE ------- Agent(s) sign(s) here:==> /s/ Nicholas D. Latrenta 6/14/10 ------------------------------------- Nicholas D. Latrenta Agent(s) sign(s) here:==> /s/ Paul G. Cellupica 6/11/10 ------------------------------------- Paul G. Cellupica Agent(s) sign(s) here:==> /s/ Marie C. Swift 6/14/10 ------------------------------------- Marie C. Swift Agent(s) sign(s) here:==> /s/ Myra L. Saul 6/10/10 ------------------------------------- Myra L. Saul Agent(s) sign(s) here:==> /s/ John E. Connolly, Jr. 6/14/10 ------------------------------------- John E. Connolly, Jr. Agent(s) sign(s) here:==> /s/ Michele H. Abate 6/14/10 ------------------------------------- Michele H. Abate NOTARIZATION STATE OF NEW YORK COUNTY OF NEW YORK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] William J. Wheeler personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 10th DAY OF June, 2010. (SEAL) /s/ Dennis V. Gill ---------------------------------------- NOTARY PUBLIC Dennis V. Gill Notary Public State of New York No. 01-G16049109 Qualified in Nassau County Commission Expires Oct. 10, 2010 NOTARIZATION STATE OF NEW YORK COUNTY OF NEW YORK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] Nicholas D. Latrenta [X] Paul G. Cellupica [X] Myra L. Saul personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 14 DAY OF June, 2010. (SEAL) /s/ Sharon Fulton ---------------------------------------- NOTARY PUBLIC Sharon Fulton Notary public, State of New York No. 01FU6089820 Commission Expires March 31, 2011 NOTARIZATION COMMONWEALTH OF MASSACHUSETTS COUNTY OF SUFFLOK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] Marie C. Swift [X] John E. Connolly, Jr. [X] Michele H. Abate personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 14th DAY OF June, 2010. (SEAL) /s/ Robin M. Dateo ---------------------------------------- NOTARY PUBLIC Robin M. Dateo Notary Public Commonwealth of Massachusetts My Commission Expires December 28, 2012 POWERS OF ATTORNEY DESIGNATION OF AGENT(S): Each person whose signature appears below under the heading "Signature for Powers of Attorney" hereby individually, and not jointly with the other signatories, and as if this constituted a separate power of attorney for each principal, authorizes and appoints Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, each of whom may act individually and none of whom is required to act jointly with any of the others, as such person's attorney-in-fact and agent, with full power of substitution and resubstitution, to sign and file on such person's behalf in each capacity stated below, and 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 Metropolitan Life Insurance 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 and UL II 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, MetLife UL II File No. 033-32813), . Metropolitan Life Separate Account E (Preference Plus Account (APPA and BPPA), Enhanced Preference Plus Account (EPPA), Financial Freedom Account (FFA), Preference Plus Account for Enhanced Contracts (CPPA) and VestMet 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 VA File 333-69320, MetLife Financial Freedom Select B, L and C Class and MetLife Financial Freedom Select e and e Bonus Class File No. 333-83716, Preference Plus Income Advantage File No. 333-122883, MetLife Personal IncomePlus File No. 333-122897, Preference Premier Variable Annuity File No. 333-153109, Zenith Accumulator File No. 333-160722, MetLife Growth and Guaranteed Income File No. 333-162586 and Variable Annuity File No. 333-_________), . 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 (LCL2 Flexible Premium Variable Life File No. 333-110185), . Security Equity Separate Account 26 (Variable Annuity File No. 333-110183), . Security Equity Separate Account 27 (Variable Annuity 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 D, Met Flex GVUL D and Multi Manager D, and Multi Manager II File No. 333-133675, DWS C, Met Flex GVUL C and Multi Manager C, Morgan Stanley product, Putnam product, MFS product, Multi Manager III File No. 333-133671), . Paragon Separate Account C (Fidelity D File No. 333-133678 and Fidelity C File No. 333-133673), . Paragon Separate Account D (Joint Survivor VUL File No. 333-133698 and Individual Variable Life File No. 333-133672), and . Metropolitan Life Variable Annuity Separate Account II (Flexible Premium Deferred Variable Annuity File No. 333-138115, Flexible Premium Variable Annuity File No. 333-138113, Flexible Premium Variable Deferred Annuity (B) File No. 333-161094 and Flexible Premium Variable Annuity (B) File No. 333-161093), and to have full power and authority to do or cause to be done in each person's 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 each person 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. This Power of Attorney does not revoke any prior powers of attorney. NOTICES RELATED TO POWERS OF ATTORNEY The following notices are provided pursuant to the New York General Obligations Law since this power of attorney may be executed in New York State. CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority. When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities. Your agent can act on your behalf only after signing the Power of Attorney before a notary public. You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located. You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly. Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this. The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us. ---------------------- ------------------------ If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you. SIGNATURE FOR POWERS OF ATTORNEY NAME TITLE DATE ---- ----- ---- /s/ Peter M. Carlson Executive Vice President and June 10, 2010 --------------------------------- Chief Accounting Officer Peter M. Carlson IMPORTANT INFORMATION FOR THE AGENT: When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must: (1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest; (2) avoid conflicts that would impair your ability to act in the principal's best interest; (3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law; (4) keep a record or all receipts, payments, and transactions conducted for the principal; and (5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name). You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian, if one had been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice. Liability of agent: The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation. AGENTS' SIGNATURES AND ACKNOWLEDGMENTS OF APPOINTMENT: It is not required that the principal(s) and the agent(s) sign at the same time, nor that multiple agents sign at the same time. We, Nicholas D. Latrenta, Paul G. Cellupica, Marie C. Swift, Myra L. Saul, John E. Connolly, Jr. and Michele H. Abate, have read the foregoing Power of Attorney. We are the persons identified therein as agent(s) for the principal(s) named therein. We acknowledge our legal responsibilities. DATE ------- Agent(s) sign(s) here:==> /s/ Nicholas D. Latrenta 6/14/10 ------------------------------------- Nicholas D. Latrenta Agent(s) sign(s) here:==> /s/ Paul G. Cellupica 6/11/10 ------------------------------------- Paul G. Cellupica Agent(s) sign(s) here:==> /s/ Marie C. Swift 6/14/10 ------------------------------------- Marie C. Swift Agent(s) sign(s) here:==> /s/ Myra L. Saul 6/10/10 ------------------------------------- Myra L. Saul Agent(s) sign(s) here:==> /s/ John E. Connolly, Jr. 6/14/10 ------------------------------------- John E. Connolly, Jr. Agent(s) sign(s) here:==> /s/ Michele H. Abate 6/14/10 ------------------------------------- Michele H. Abate NOTARIZATION STATE OF NEW YORK COUNTY OF NEW YORK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] Peter M. Carlson personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 10 DAY OF June, 2010. (SEAL) /s/ Barbara E. Ruder ---------------------------------------- NOTARY PUBLIC Barbara E. Ruder Notary Public State of New York No. 30-4773244 Qualified in Bronx County Certificate Filed in New York County Commission Expires September 30, 2010 NOTARIZATION STATE OF NEW YORK COUNTY OF NEW YORK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] Nicholas D. Latrenta [X] Paul G. Cellupica [X] Myra L. Saul personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 14 DAY OF June, 2010. (SEAL) /s/ Sharon Fulton ---------------------------------------- NOTARY PUBLIC Sharon Fulton Notary public, State of New York No. 01FU6089820 Commission Expires March 31, 2011 NOTARIZATION COMMONWEALTH OF MASSACHUSETTS COUNTY OF SUFFLOK Before me, the undersigned authority, on this day personally appeared (check applicable individual(s)): [X] Marie C. Swift [X] John E. Connolly, Jr. [X] Michele H. Abate personally known to me or proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the foregoing instrument, and acknowledged to me that he/she/they executed the same in his/her/their capacities, and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of whom the individual(s) acted, executed this instrument for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 14th DAY OF June, 2010. (SEAL) /s/ Robin M. Dateo ---------------------------------------- NOTARY PUBLIC Robin M. Dateo Notary Public Commonwealth of Massachusetts My Commission Expires December 28, 2012