<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 2000.
REGISTRATION NOS. 333-80547/811-4001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
[X]
POST-EFFECTIVE AMENDMENT NO. 1
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
[X]
AMENDMENT NO. 29
------------------------
METROPOLITAN LIFE SEPARATE ACCOUNT E
(EXACT NAME OF REGISTRANT)
METROPOLITAN LIFE INSURANCE COMPANY
(EXACT NAME OF DEPOSITOR)
1 MADISON AVENUE, NEW YORK, NEW YORK 10010
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 578-5364
(DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
GARY A. BELLER, ESQ.
SENIOR EXECUTIVE VICE-PRESIDENT AND GENERAL COUNSEL
METROPOLITAN LIFE INSURANCE COMPANY
1 MADISON AVENUE
NEW YORK, NEW YORK 10010
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------
Copies to:
JOHN A. DUDLEY, ESQ.
SULLIVAN & WORCESTER LLP
1025 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20036
------------------------
It is Proposed That The Filing Will Become Effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] on the seventy-fifth day after filing pursuant to paragraph (a)(2) of Rule
485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has registered an indefinite amount of securities. Registrant's Rule 24f-2
Notice for the year ended December 31, 1999 was filed with the Commission on
March 30, 2000.
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<PAGE>
METROPOLITAN LIFE SEPARATE ACCOUNT E
FORM N-4
UNDER
THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940
CROSS REFERENCE SHEET
(PURSUANT TO RULE 481(A))
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PROSPECTUS HEADING
- -------- ------------------------------
<S> <C>
1. Cover Page............................. Cover Page
2. Definitions............................ Important Terms You Should
Know
3. Synopsis............................... Table of Expenses
4. Condensed Financial Information........ General
Information--Advertising
Performance; General
Information--Financial
Statements
5. General Description of Registrant,
Depositor, and Portfolio Companies... MetLife; Metropolitan Life
Separate Account E; Investment
Choices; General
Information--Voting Rights
6. Deductions and Expenses................ Table of Expenses; Contract
Fee; Assignment Fee; Premium
Taxes; Charges; General
Information--Who Sells the
Income Annuity; Appendix;
Premium Tax Table
7. General Description of Variable
Annuity.............................. The Income Annuity--Purchasing
an Income Annuity; Income
Annuity--Allocation; General
Information--
Administration/Changes to
the Income Annuity
8. Annuity Period......................... Important Terms You Should
Know; Income Annuity--Income
Payment Types/The Value of
Your Income Payments
9. Death Benefit.......................... Not Applicable
10. Purchases Values....................... MetLife; Metropolitan Life
Separate Account E; Income
Annuity/Allocation of
Purchase Payment/The Value
of Your Income Payments;
General Information--
Administration
11. Redemptions............................ General Information
12. Taxes.................................. Federal Tax Treatment
13. Legal Proceedings...................... Not Applicable
14. Table of Contents of the Statement of
Additional Information............... Table of Contents of the
Statement of Additional
Information
15. Cover Page............................. Cover Page
16. Table of Contents...................... Table of Contents
17. General Information and History........ Not Applicable
18. Services............................... Independent Auditors;
Services;
Distribution of Certificates
and Interests in the Income
Annuity
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PROSPECTUS HEADING
- -------- ------------------------------
<S> <C>
19. Purchase of Securities Being Offered... Not Applicable
20. Underwriters........................... Distribution of Certificates
and Interests in the Income
Annuity
21. Calculation of Performance Data........ Performance Data
22. Annuity Payments....................... Variable Income Payments
23. Financial Statements................... Financial Statements of the
Separate Account; Financial
Statements of MetLife
</TABLE>
<PAGE>
-----------
May 1, 2000
-----------
MetLife Settlement Plus(SM), A Variable Income Annuity
Issued by Metropolitan Life Insurance Company
This Prospectus describes an income annuity contract (the "Income Annuity")
which may be used to fund the financial obligations for periodic payments under
a structured settlement.
================================================================================
Money is allocated among the Income Annuity's available investment choices. The
choices may include the Fixed Income Option (not described in this Prospectus)
and investment divisions available through Metropolitan Life Separate Account E
which divisions, in turn, invest in the following corresponding portfolios of
the Metropolitan Series Fund, Inc. ("Metropolitan Fund"):
MetLife Stock Index Harris Oakmark Large Cap Value
State Street Research Growth Lehman Brothers Aggregate Bond Index
State Street Reseach Diversified T. Rowe Price Large Cap Growth
How to learn more:
Before agreeing to a structured settlement pursuant to which settlement money
may be invested in an Income Annuity, read this Prospectus. The Prospectus
contains information about the Income Annuity and Metropolitan Life Separate
Account E which you should know before making your decision. Keep this
Prospectus for future reference. For more information, request a copy of the
Statement of Additional Information ("SAI"), dated May 1, 2000. The SAI is
considered part of this Prospectus as though it were included in the Prospectus.
The Table of Contents of the SAI appears on page 22 of this Prospectus. To
request a free copy of the SAI or to ask questions, write or call:
Metropolitan Life Insurance Company
Structured Settlement Group
200 Park Avenue Area 5P [GRAPHIC OMITTED]
New York, NY 10166-0188
Attention: MetLife Settlement Plus
Phone: (800) 638-0051
The Securities and Exchange Commission has a website (http://www.sec.gov) which
you may visit to view this Prospectus, SAI and other information. The Securities
and Exchange Commission has not approved or disapproved these securities or
determined if this Prospectus is truthful or complete. Any representation
otherwise is a criminal offense.
The current Metropolitan Fund Prospectus is attached to the back of this
Prospectus. You should also read the Metropolitan Fund Prospectus carefully
before agreeing to a structured settlement pursuant to which an Income Annuity
may be purchased. This Prospectus is not valid unless attached to a Metropolitan
Fund Prospectus.
- --------------------------------------------------------------------------------
Income Annuity
This Income Annuity provides a stream of payments. Your income payments will
vary to reflect the performance of the portfolios underlying the selected
investment divisions. In addition, the amount of your income payment is also
based on the amount of the purchase payment, the income payment type and
personal factors such as your age.
A word about investment risk:
An investment in any variable annuity involves investment risk. As a result, the
value of your income payments will fluctuate and may decrease. Money invested is
NOT:
o a bank deposit or obligation;
o federally insured or guaranteed; or
o endorsed by any bank or other financial institution.
- --------------------------------------------------------------------------------
MetLife(R)
<PAGE>
TABLE OF CONTENTS
Important Terms You Should Know ........................................... 4
Table of Expenses ......................................................... 6
MetLife ................................................................... 8
Metropolitan Life Separate Account E ...................................... 8
Settling Your Claim ....................................................... 9
The Income Annuity ........................................................ 9
Investment Choices ................................................... 10
Income Payment Types ................................................. 11
Allocation of Purchase Payment ....................................... 12
The Value of Your Income Payments .................................... 13
Initial Variable Income Payment .................................... 13
Annuity Units ...................................................... 13
AIR ................................................................ 13
Valuation .......................................................... 14
Contract Fee ......................................................... 15
Assignment Fee ....................................................... 15
Premium Taxes ........................................................ 15
Charges .............................................................. 15
Separate Account Charge ............................................ 15
Investment-Related Charge .......................................... 16
General Information ....................................................... 16
Administration ....................................................... 16
Purchase Payments .................................................. 16
Receiving Income Payments and Information .......................... 16
Advertising Performance .............................................. 17
Changes to the Income Annuity ........................................ 17
Voting Rights ........................................................ 18
Who Sells the Income Annuity ......................................... 19
Purchases in Certain States .......................................... 19
Financial Statements ................................................. 19
<PAGE>
Federal Tax Treatment ..................................................... 20
Tax Treatment of Income Payments Received in Settlement
of Personal Physical Injury Claims ................................ 20
A Defendant May Assign Its Obligation to Make Income
Payments to You ................................................... 20
Using the Income Annuity to Fund Qualified Assignments ............... 21
Owners Other than MIAC ............................................... 22
Table of Contents for the Statement for Additional Information ............ 23
Appendix for Premium Tax Table ............................................ 24
MetLife does not intend to offer the Income Annuity anywhere it may not lawfully
be offered and sold. MetLife has not authorized any information or
representations about the Income Annuity other than the information in this
Prospectus, the attached prospectus, supplements to the prospectuses or any
supplemental sales material we authorize.
[GRAPHIC OMITTED]
3
<PAGE>
[GRAPHIC OMITTED]
Important Terms You Should Know
Annuity Units
An annuity unit is the unit of measurement used to determine the amount of each
variable income payment. The initial variable income payment is converted into
annuity units for a specific investment division by dividing the initial
variable income payment by the annuity unit value for that investment division
on the day we receive all properly completed documents. The resulting number of
annuity units under the Income Annuity remains constant for the life of the
contract.
Annuity Unit Value
We determine the value of annuity units for each investment division each day
the New York Stock Exchange is open for regular trading. The values increase or
decrease based on the investment performance of the corresponding underlying
portfolios.
Assumed Investment Return (AIR)
Under the Income Annuity, the AIR is a hypothetical percentage rate of return
used to determine the amount of the initial variable income payment. The AIR is
also the benchmark that is used to measure the investment performance of a given
investment division to determine the amount of all subsequent income payments
to you.
Claim
A claim is your request to be compensated or provided with other relief for a
loss because of a personal physical injury or physical sickness. Your claim may
be resolved in a number of ways including, for example, voluntary agreement of
the parties, as in a pre-trial settlement, operation of law, a court ordered
judgment, or an administrative ruling. For convenience, we use this term
regardless of whether or not a legal proceeding has been instituted.
Contract
A contract is the legal agreement between the owner and MetLife. Although you
are not the owner of the contract, usually you will receive a copy of the
contract and the income payments under the contract. The contract contains the
relevant provisions of the Income Annuity. MetLife issues the contract for the
Income Annuity described in this Prospectus. In some cases, you may receive a
certificate rather than a contract which contains the relevant provisions of the
Income Annuity. Throughout this Propectus we refer to either a contract or a
certificate as a contract.
Defendant
The defendant is the person or entity you allege is responsible for your claim.
The defendant's liability insurance company may make payments to you and/or may
assume the responsibility to respond to your claim or may also be a party to
your claim. For convenience, when we refer to the defendant, we also mean the
defendant's liability insurance company. We use the term "defendant" even if no
lawsuit has begun.
4
<PAGE>
Investment Division
Investment divisions are subdivisions of the Separate Account. When money is
allocated to an investment division, the investment division purchases shares of
a portfolio (with the same name) within the Metropolitan Fund.
MetLife
Metropolitan Life Insurance Company is the company that issues the Income
Annuity. Throughout this Prospectus, MetLife is also referred to as "we," "us"
or "our."
MetLife Designated Office
The MetLife Designated Office will handle the processing of all requests
concerning the Income Annuity. MetLife will notify you and provide you with the
address of the MetLife Designated Office.
Metropolitan Insurance and Annuity Company (MIAC)
MIAC is a wholly-owned subsidiary of MetLife. Typically, the liability for
making the payments to an injured party under a settlement of your claim is
assigned by the defendant to MIAC under a qualified assignment. MIAC assumes the
obligation to make income payments to you and may purchase the Income Annuity to
fund its obligation. MIAC owns the Income Annuity. However, another subsidiary
of MetLife may act as the assignee. For convenience, we use MIAC throughout this
Prospectus when discussing assignments to MIAC or any other MetLife affiliate.
Owner
The owner of the Income Annuity is the entity which purchases the Income Annuity
to provide for payments due to you under a settlement of your claim. The owner
exercises all rights of ownership. You are not the owner.
Separate Account
A separate account is an investment account. All assets contributed to
investment divisions under the Income Annuity are pooled in the Separate Account
and maintained for the benefit of investors in the Income Annuity and other
MetLife products.
You (Your)
In this Prospectus, "you" means the injured party(ies) for whom the Income
Annuity is purchased to provide the payments due under a settlement of a claim.
Variable Annuity
A variable annuity is an annuity in which income payments are based upon the
performance of investments such as stocks and bonds held by one or more
underlying portfolios. You assume the investment risk in a variable annuity.
Your income payment will fluctuate based on the performance of the investment
divisions listed in the contract.
5
<PAGE>
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TABLE OF EXPENSES--INCOME ANNUITY
- --------------------------------------------------------------------------------
The following table shows the Separate Account and Metropolitan Fund charges and
expenses applied to the Income Annuity. The numbers in the table for the
Separate Account and the numbers for the Metropolitan Fund are based on past
experience. The numbers in this table are subject to change. It is not intended
to show the actual total combined expenses of the Separate Account and the
Metropolitan Fund which may be higher or lower. The table does not show premium
taxes which may apply.
One Time Contractowner Transaction Expense
Contract Fee (1) ...................................................... $350
Separate Account and Metropolitan Fund Annual Expenses
Separate Account Annual Expenses (as a percentage of average account
value for the fiscal year ending December 31, 1999) (2) ............... 1.25%
Metropolitan Fund Annual Expenses (as a percentage of average net assets for the
fiscal year ending December 31, 1999)
<TABLE>
<CAPTION>
------------------------------
OTHER EXPENSES TOTAL EXPENSES OTHER EXPENSES TOTAL EXPENSES
MANAGEMENT BEFORE BEFORE AFTER AFTER
FEES REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MetLife Stock Index Portfolio (3) ..................... .25 .04 .29 .04 .29
State Street Research Diversified Portfolio (3)(4)(6) . .43 .03 .46 .02 .45
State Street Research Growth Portfolio (3)(4)(6) ...... .47 .04 .51 .02 .49
Harris Oakmark Large Cap Value Portfolio (4)(5)(6) .... .75 .40 1.15 .19 .94
T. Rowe Price Large Cap Growth Portfolio (4)(5)(6) .... .69 .62 1.31 .24 .93
Lehman Brothers Aggregate Bond Index Portfolio (5) .... .25 .15 .40 .15 .40
------------------------------
</TABLE>
Following are the expenses on a $1,000 investment in each investment division
listed below, assuming a 5% annual return on assets(7):
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MetLife Stock Index Portfolio .......................... $ 16 $ 49 $ 84 $ 184
State Street Research Diversified Portfolio ............ 18 54 94 204
State Street Research Growth Portfolio ................. 18 56 96 208
Harris Oakmark Large Cap Value Portfolio ............... 25 76 129 276
T. Rowe Price Large Cap Growth Portfolio ............... 26 81 138 292
Lehman Brothers Aggregate Bond Index Portfolio ......... 17 52 90 197
</TABLE>
(1) In addition, a one time assignment fee of $750 is assessed when the
defendant assigns its liability to make payments to you under the
structured settlement to one of our affiliates, like MIAC. The defendant
pays this fee.
(2) Pursuant to the terms of the contract, our total Separate Account Annual
Expenses will not exceed 1.25% of the average value of amounts in the
investment divisions.
(3) Prior to May 16, 1993, we paid all expenses of the Metropolitan Fund
(other than management fees, brokerage commissions, taxes, interest and
extraordinary or non-recurring expenses)(hereafter "Expenses"). The effect
of such reimbursements is that performance results are increased.
(4) Each Portfolio's management fee decreases when its assets grow to certain
dollar amounts. The "break point" dollar amounts at which the management
fee declines are more fully explained in the prospectus and Statement of
Additional Information for the Metropolitan Fund.
(5) These Portfolios began operating on November 9, 1998. We paid all Expenses
in excess of .20% of the average net assets for each of these Portfolios
until the Portfolio's total assets reached $100 million, or until November
8, 2000, whichever came first. We ceased subsidizing such Expenses for the
Lehman Brothers Aggregate Bond Index Portfolio on July 13, 1999. The
expense information for the Lehman Brothers Aggregate Bond Index Portfolio
reflects current expenses without any reimbursement. The "Other Expenses
Before Reimbursement" for Harris Oakmark Large Cap Value and T. Rowe Price
Large Cap Growth Portfolios assumes no reduction of Expenses of any kind.
The information for the Portfolios which we are still subsidizing reflects
the effect of the anticipated reimbursement of Expenses during the current
year.
6
<PAGE>
- --------------------------------------------------------------------------------
(6) The Metropolitan Series Fund, Inc. directed certain portfolio trades to
brokers who paid a portion of the Fund's expenses. In addition, the Fund
has entered into arrangements with its custodian whereby credits realized
as a result of this practice were used to reduce a portion of each
participating portfolio's custodian fees. The "Other Expenses After
Reimbursement" reflect this reduction. The effect of the reduction is that
performance results are increased.
(7) The example assumes that no income payments were made during the period.
In addition, the example assumes no reimbursement of expenses were in
effect. As a result, the numbers reflect the highest amount you would pay
on a $1,000 investment in each investment division.
Annuity Unit Values
This table shows the change in the Annuity Unit Values for each investment
division. The information has been derived from the Separate Account's
full financial statements or other reports (such as the annual report) and
reflects the application of a 5% AIR.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Beginning of Year End of Year
Year Annuity Unit Value(a) Annuity Unit Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MetLife Stock Index Division ............................. 1999 $9.46 $10.18
State Street Research Diversified Division ............... 1999 9.48 9.94
State Street Research Growth Division .................... 1999 9.20 10.12
Harris Oakmark Large Cap Value Division .................. 1999 8.05 7.92
T. Rowe Price Large Cap Growth Division .................. 1999 9.47 10.68
Lehman Brothers Aggregate Bond Index Division ............ 1999 9.85 9.71
</TABLE>
(a) The inception date for the Income Annuity was November 1, 1999.
[GRAPHIC OMITTED]
7
<PAGE>
[GRAPHIC OMITTED]
MetLife
Metropolitan Life Insurance Company ("MetLife") is a wholly-owned subsidiary of
MetLife, Inc., a publicly traded company. Our main office is located at One
Madison Avenue, New York, New York 10010. MetLife was formed under the laws of
New York State in 1868. Headquartered in New York City, we are a leading
provider of insurance and financial services to a broad spectrum of individual
and group customers. With approximately $420 billion of assets under management
as of December 31, 1999 on a pro-forma basis, including the acquisition of
GenAmerica Corp., MetLife provides individual insurance and investment products
to approximately 9 million households in the United States. MetLife also
provides group insurance and investment products to corporations and other
institutions employing over 33 million employees and members.
Metropolitan Life Separate Account E
We established Metropolitan Life Separate Account E on September 27, 1983. The
purpose of the Separate Account is to hold the variable assets that underlie
some of the variable annuity contracts we issue. We have registered the Separate
Account with the Securities and Exchange Commission as a unit investment trust
under the Investment Company Act of 1940.
The Separate Account's assets are solely for the benefit of those who invest in
the Separate Account and no one else, including our creditors. We are obligated
to pay all money we owe under the Income Annuity even if that amount exceeds the
assets in the Separate Account. The assets of the Separate Account are held in
our name on behalf of the Separate Account and legally belong to us. All the
income, gains, and losses (realized or unrealized) resulting from these assets
are credited to or charged against the contracts issued from this Separate
Account without regard to our other business.
8
<PAGE>
[GRAPHIC OMITTED]
Settling Your Claim
If you have brought a claim for personal physical injury or physical sickness
(sometimes you are called the claimant or plaintiff), your claim may be resolved
to include a schedule of future payments to be made to you. Because the
frequency of the income payments, the period of time over which the payments are
made and the amount of each payment may be "structured" by you and the defendant
to meet your financial and medical needs, it is called a "Structured
Settlement."
This Structured Settlement is then generally reflected in a contract between you
and the defendant based on your mutual agreement (a settlement agreement) or in
an order issued by a court or administrative tribunal (judgment).
Customarily, as part of the Structured Settlement, the defendant will be
released from any further liability related to the claim provided that you
receive future income payments at the specified times. Often the defendant, with
your consent, will assign the liability to make your scheduled income payments
to another person or company (an assignee) through a "qualified assignment."
Under the qualified assignment, the assignee (also the purchaser) assumes the
obligation to pay you according to the schedule of payments contained in the
qualified assignment.
When the liability is assigned to another person or company, the assignee may
purchase the Income Annuity to use as the funding vehicle for making the income
payments to you. The Income Annuity provides a stream of periodic income
payments. MIAC (or other assignee) is the owner of the Income Annuity. As the
owner, MIAC has the right to designate the payee of each income payment we make
under the Income Annuity. Usually, you and/or your beneficiary are designated as
the payees to receive income payments.
You are the annuitant. An annuitant is the person whose life is the measure for
determining the timing and sometimes the dollar amount of payments under an
annuity. If the Income Annuity that is purchased so provides, upon your death,
your beneficiaries may receive continuing payments.
The Income Annuity
This Income Annuity can be designed to provide you with a stream of payments
that is customized to meet your anticipated income needs. This includes payments
for your lifetime or over a specified period. It is a "variable" annuity because
the value of your income payment varies based on the investment performance of
the investment divisions identified in the Structured Settlement. In short, the
value of your income payments under the Income Annuity may go up or down. Since
the investment performance is not guaranteed, the money is at risk. The degree
of risk will depend on the investment divisions selected. The annuity unit value
for each investment
[GRAPHIC OMITTED]
9
<PAGE>
- --------------------------------------------------------------------------------
The investment divisions generally offer the opportunity for greater returns
over the long term than the Fixed Income Option. On the other hand, since your
income payments are subject to risks associated with investing in stocks and
bonds, income payments based upon amounts allocated to the investment divisions
will fluctuate and may be down as well as up.
The degree of investment risk assumed will depend on the investment divisions
chosen. We have listed the choices in the approximate order of risk from the
most conservative to the most aggressive.
While the investment divisions and their comparably named Portfolios may have
names, investment objectives and management which are identical or similar to
publicly available mutual funds, these are not those mutual funds. The
Portfolios most likely will not have the same performance experience as any
publicly available mutual fund.
- --------------------------------------------------------------------------------
division rises or falls relative to the AIR based on the investment performance
(or "experience") of the Portfolio with the same name.
The Income Annuity is purchased with one purchase payment. The amount of the
income payments you receive will depend on such things as personal factors such
as your age, the income payment type selected and the amount of the purchase
payment under the Structured Settlement intended to be allocated to the
investment divisions of the Income Annuity. The frequency you receive income
payments will be in accordance with the schedule of payments stipulated in the
Structured Settlement.
Certain versions of the Income Annuity have a fixed payment option called the
Fixed Income Option. Under the Fixed Income Option, we guarantee the amount of
your fixed income payments. The Fixed Income Option is not described in this
Prospectus although we occasionally refer to it.
Investment Choices
The Metropolitan Fund and each Portfolio are more fully described in the
Metropolitan Fund's prospectus and its SAI. The Metropolitan Fund's prospectus
is attached at the end of this Prospectus. You should read the Metropolitan Fund
prospectus carefully before agreeing to a Structured Settlement pursuant to
which it is contemplated that the Income Annuity will be purchased to fund the
obligation to make periodic payments to you. The SAI is available upon your
request.
The investment choices are:
Lehman Brothers Aggregate Bond Index Portfolio
State Street Research Diversified Portfolio
MetLife Stock Index Portfolio [GRAPHIC OMITTED]
Harris Oakmark Large Cap Value Portfolio
T. Rowe Price Large Cap Growth Portfolio
State Street Research Growth Portfolio
The investment choices are listed in the approximate risk relationship among the
available Portfolios. You should understand that each Portfolio incurs its own
risk which will be dependent upon the investment decisions made by the
respective Portfolio's investment manager. Furthermore, the name of a Portfolio
may not be indicative of all the investments held by the Portfolio. The list is
intended to be a guide. Please consult the Fund prospectus for more information
regarding the Portfolios investment objectives and investment practices of each
Portfolio. Since your variable income payments are subject to risks associated
with investing in stocks and bonds, your income payments based on amounts
allocated to the investment divisions may go down as well as up.
10
<PAGE>
The investment divisions buy and sell shares of corresponding mutual fund
portfolios. These Portfolios, which are part of the Metropolitan Fund, invest in
stocks, bonds and other investments. All dividends declared by the Portfolios
are earned by the Separate Account and reinvested. Therefore, no dividends are
distributed under the Income Annuity. There are no transaction expenses (i.e.,
front-end sales or back-end sales load charges) as a result of the Separate
Account's purchase or sale of these mutual fund shares. The Portfolios of the
Metropolitan Fund are available only by purchasing MetLife annuities and life
insurance policies and are never sold directly to the public.
The Metropolitan Fund is a "series" type fund registered with the Securities and
Exchange Commission as an "open-end management investment company" under the
Investment Company Act of 1940 (the "1940 Act"). A "series" fund means that each
Portfolio is one of several available through the Metropolitan Fund. Each
Portfolio is "diversified" under the 1940 Act.
The Portfolios of the Metropolitan Fund pay us a monthly fee for our services as
investment manager. These fees, as well as the operating expenses paid by each
Portfolio, are described in the Metropolitan Fund prospectus and SAI.
In addition, the Metropolitan Fund prospectus discusses other separate accounts
of MetLife and Metropolitan Tower Life Insurance Company that invest in the
Metropolitan Fund. The risks of these arrangements are also discussed.
Income Payment Types
Currently, we provide a wide variety of income payment types. Based on the terms
of the Structured Settlement, several of these options may be combined within
the provisions of the Income Annuity.
Your income payment amount will depend in large part on the type of income
payment type chosen. For example, if a "Lifetime Income Annuity for Two" is
selected, your income payments will typically be lower than if a "Lifetime
Income Annuity" is selected. The terms of the Structured Settlement will also
determine when your income payments will start and the frequency with which you
will receive income payments. For income payment types providing for a
guaranteed period, we may provide for payment of a commuted value upon your
death if the Structured Settlement so provides.
The following income payment types are available:
Lifetime Income Annuity: A variable income that is paid as long as you are
living. Upon your death, payments stop.
Lifetime Income Annuity with a Guaranteed Period: A variable income that
continues as long as you are living but is guaranteed to be paid for a number of
years. If you die before all of the guaranteed payments have been made, payments
are made to your beneficiary until the end of the guaranteed period. No payments
are made once the guarantee period has expired and you are no longer living.
11
<PAGE>
- --------------------------------------------------------------------------------
Factors to consider when agreeing to the terms for your income payments in the
Structured Settlement are:
o The amount of income you need;
o The amount you expect to receive from other sources;
o The growth potential of other investments; and
o How long you would like your income to last.
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Lifetime With Non-Guaranteed Period Annuity: A variable income payable during
your life or a number of years. Payments stop at your death or at the end of the
time period, whichever happens first.
Lifetime Income Annuity for Two: A variable income that is paid as long as you
and another person are alive. After one of you dies, payments continue to be
made as long as the other person is living. In that event, payments may be the
same as those made while both of you were living or may be a smaller percentage
that is selected when the annuity is purchased. No payments are made once both
of you are no longer living.
Lifetime Income Annuity for Two with a Guaranteed Period: A variable income that
continues as long as you and another person are alive. but is guaranteed to be
paid (unreduced by any percentage selected) for a number of years. If both of
you die before all of the guaranteed payments have been made, payments are made
to your beneficiary until the end of the guaranteed period. If one of you dies
after the guarantee period has expired, payments continue to be made as long as
the other person is living. In that event, payments may be the same as those
made while both of you were living or may be a smaller percentage that is
selected when the annuity is purchased. No payments are made once the guarantee
period has expired and both of you are no longer living.
Income Annuity for a Guaranteed Period: A variable income payable for a
guaranteed period of 1 to 40 years. As an administrative practice, we will
consider factors such as your age and life expectancy in determining whether to
issue a contract with this income payment type. If you die before the end of the
guarantee period, payments are made to your beneficiary until the end of the
guarantee period. No payments are made after the guarantee period has expired.
Allocation of Purchase Payment
Money is allocated among the Fixed Income Option and the investment divisions
according to the terms of the Structured Settlement and, where applicable, the
qualified assignment agreement. We may require that a certain percentage of the
purchase payment be allocated to the Fixed Income Option. Under certain versions
of the Income Annuity, certain investment divisions or the Fixed Income Option
may not be available. You are not permitted to make transfers between the
investment divisions or between the Fixed Income Option and the investment
divisions.
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The Value of Your Income Payments
Initial Variable Income Payment
The initial variable income payment is a hypothetical payment which is
calculated based on the AIR. This initial variable income payment is used to
establish the number of annuity units. It is not the amount of your actual first
variable income payment unless your first income payment happens to be within 10
days after we issue the Income Annuity.
Annuity Units
Annuity units are credited for that portion of the purchase payment allocated to
an investment division on the day we receive all properly completed documents.
Before we determine the number of annuity units credited under the Income
Annuity, we reduce the purchase payment by the contract fee and premium taxes,
if applicable. We then compute an initial variable income payment amount using
the Assumed Investment Return ("AIR"), the income payment type and the age and
sex of the annuitant which is the measuring life (or lives if income payments
are to be paid over the lives of more than one person). We then divide the
initial variable income payment amount by the Annuity Unit Value. The result is
the number of annuity units credited for that investment division. The number of
annuity units remains the same for the life of the Income Annuity.
Example: Determining the Number of Annuity Units
Assume the following:
o We calculate an initial variable income payment (e.g., $500) based on the
AIR, income payment type, your age and sex, the amount of the purchase
payment and the first income payment date as specified in the Structured
Settlement;
o The Structured Settlement provides that this $500 is allocated in equal
amounts to two investment divisions (e.g., $250 to each); and
o On the day we receive all properly completed documents and issue the
Contract, the annuity unit values for the investment divisions are $9.9926
and $12.4362.
We credit the Income Annuity with annuity units as follows:
$250 / 9.9926 = 25.0185 annuity units
$250 / 12.4362 = 20.1026 annuity units
Then, when we calculate your variable income payment, we multiply the number of
annuity units by the current annuity unit value. See the example under
"Calculating Annuity Unit Values."
AIR as a Benchmark for Income Payments
Your income payments are determined by using the AIR to benchmark the investment
experience of the chosen investment divisions. Your subsequent payments will
increase in proportion to the amount the actual
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The AIR is stated in the contract and may range from 1% to 6%. The current
contract AIR is 5%. A contract could also reflect a different AIR negotiated by
the parties to the Structured Settlement.
Here is how the AIR effects variable income payments: a higher AIR will result
in a higher initial variable income payment. A lower AIR will result in a lower
initial variable income payment. With a lower AIR, subsequent variable income
payments will increase more rapidly or decline more slowly than with a higher
AIR as changes occur in the actual investment experience of the investment
divisions.
- --------------------------------------------------------------------------------
investment experience of the chosen investment divisions exceeds the AIR and
Separate Account charges (the net investment return). Likewise, your income
payments will decrease to the extent the actual investment experience of the
chosen investment divisions is less than the AIR and Separate Account charges.
The amount of each variable income payment is determined ten days prior to your
income payment date or on the contract's issue date, if later than the income
payment date.
The Effect of the AIR on Variable Income Payments
If the net investment experience: Your variable income payment will:
Exceeds the AIR Increase
Equals the AIR Stay the Same
Is less than the AIR Decrease
Example for a 5% AIR
Assume that the initial variable income payment for an investment division is
$1,000. And, one year later when we calculate your actual first income payment
the investment experience for the investment division (minus charges) is up 10%
(exceeds the AIR). Your variable income payment attributed to that investment
division is $1,047.62. The percentage change between the initial variable income
payment and your actual income payment is a 4.7% increase.
However, assume instead that the investment experience (minus charges) is down
10% (does not exceed the AIR). Your variable income payment is $857.14. Note
that the percentage change between the initial variable income payment and your
actual income payment is a 14.3% decrease.
Calculating Annuity Unit Values
We separately determine the annuity unit value for each investment division once
each day when the New York Stock Exchange is open for trading. If permitted by
law, we may change the period between calculations, but we will give the owner
30 days' notice.
This is how we calculate the annuity unit value for each investment division:
o First, we determine the change in investment experience (including any
investment-related charge) for the underlying portfolio from the previous
trading day to the current trading day;
o Next, we subtract the daily equivalent of the Separate Account charge for
each day since the last day the annuity unit value was calculated. The
resulting number is the net investment return;
o Then, we multiply by an adjustment based on the AIR for each day since the
last Annuity Unit Value was calculated; and
o Finally, we multiply the previous annuity unit value by this result.
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Example: Calculating the Annuity Unit Value
Assume the following:
o Yesterday's annuity unit value was $10.20;
o The number we calculate for today's change in investment experience (minus
the investment-related charge) is 1.02 (up 2%);
o The daily equivalent of the Separate Account charge is .000034035; and,
o The daily equivalent of the discount factor AIR for a 5% AIR is .99986634.
The new annuity unit value is:
(1.02 - .000034035) x .99986634 x $10.20 = $10.40
However, now assume that today's change in investment experience (minus
the investment-related charge) is .98 (down 2%) instead of 1.02.
The new annuity unit value is:
(.98 - .000034035) x .99986634 x $10.20 = $9.99
Contract Fee
A one time $350 contract fee is taken from the purchase payment when an Income
Annuity is purchased prior to allocating the remainder of the purchase payment
to the investment divisions. This charge covers our administrative costs
including preparation of the Income Annuity, review of applications and
recordkeeping.
Assignment Fee
If the Income Annuity is purchased by MIAC, there is a one time assignment fee
of $750. You do not pay the fee. The defendant pays the fee only if the
obligation to pay you is assigned to MIAC. This charge covers MIAC's
administrative and recordkeeping costs associated with assuming the liability
for making payments to you and for being the owner of the Income Annuity.
Premium Taxes
Some jurisdictions tax purchase payments for the Income Annuity. We deduct money
from the purchase payment to pay "premium" taxes (also known as "annuity"
taxes).
A chart in the Appendix shows the jurisdictions where premium taxes are
currently charged and the percentage amount which must be added to the purchase
payment to pay for the premium taxes. If an assignment is made and MIAC is the
owner, a premium tax is not applicable.
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The charges paid will not reduce the number of annuity units credited under the
Income Annuity. Instead, we deduct the charges when calculating the annuity unit
value.
- --------------------------------------------------------------------------------
Charges
There are two types of charges paid if any of the purchase payment is allocated
to the investment divisions:
o Separate Account charge; and
o Investment-related charge.
Separate Account Charge
There is a Separate Account charge. This charge is no more than 1.25% annually
of the average value of amounts in the Separate Account. This charge includes
insurance-related charges for the risk that you may live longer than we
estimated. Then, we would be obligated to pay you more in payments than we
anticipated. The charge also includes the risk that our expenses in
administering the Income Annuity will be greater than we estimated. The Separate
Account charge also pays us for our miscellaneous administrative costs. These
costs which we incur include financial, actuarial, accounting and legal
expenses.
Investment-Related Charge
This charge has two components. The first pays the investment managers for
managing money in the Portfolios. The second consists of Portfolio operating
expenses. The percentage paid depends on the selected investment divisions.
Amounts for each investment division for the previous year are listed in the
Table of Expenses.
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General Information
Administration
All transactions will be processed in the manner described below. Generally,
administrative requests are effective the day we receive them at the MetLife
Designated Office.
Purchase Payments
The purchase payment is sent by check or wire made payable to "MetLife" to the
MetLife Designated Office. We will provide all necessary forms. We must have all
completed documents to credit the purchase payment.
Purchase payments are effective and valued as of 4:00 p.m. Eastern time, on the
day we receive them in good order at the MetLife Designated Office, except when
they are received:
o On a day when the annuity unit value is not calculated, or
o After 4:00 p.m. Eastern time.
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In those cases, the purchase payments will be effective the next day the annuity
unit value, as applicable, is calculated.
Usually, the initial purchase payment is credited under the Income Annuity
within two days of receipt at the MetLife Designated Office of documentation
that an Income Annuity is to be purchased. However, if the forms are filled out
incorrectly or incompletely or other documentation is not completed properly, we
have up to five business days to credit the payment. If the problem cannot be
resolved by the fifth business day, we will notify the purchaser and give the
reasons for the delay. At that time, the purchaser will be asked whether to
agree to let us keep the money until the problem is resolved. If the purchaser
does not agree or we cannot reach the purchaser by the fifth business day, the
money will be returned.
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Receiving Income Payments and Information
Based on the provisions of the Structured Settlement, the Income Annuity may
provide you with income payments that begin immediately after the issue date of
the Income Annuity and/or income payments that begin at some future date (i.e.,
delayed income payments). Each income payment stream, whether immediate or
delayed, will be paid from each of the investment divisions and/or Fixed Income
Option based on the allocation for that income payment described in the
Structured Settlement. Lump sum income payments are paid only from the Fixed
Income Option.
You may elect to have your payments sent to your residence or have us deposit
payments directly into your bank account. If you elect to have your payment
direct deposited, you will receive in the mail a stub statement for the payment.
Your stub statement will indicate information, such as the amount of your
payment, the number of units for each investment division and the corresponding
annuity unit value. Periodically, you may receive additional information from us
about the Income Annuity.
Advertising Performance
We periodically advertise the performance of the investment divisions. You may
get performance information from a variety of sources including your statements,
the Internet, annual reports and semiannual reports.
We may demonstrate performance in terms of "yield," "change in annuity unit
value," "average annual total return," or some combination of these terms.
Yield is the net income generated by an investment in a particular investment
division for 30 days or a month. These figures are expressed as percentages.
This percentage yield is compounded semiannually.
Change in Annuity Unit Value is calculated by determining the percentage change
in the value of an annuity unit for a certain period. These numbers may also be
annualized.
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All performance numbers are based upon historical earnings. These numbers are
not intended to indicate future results.
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<PAGE>
Annualized change in annuity unit value (i.e., average annual total return)
calculations reflect the Separate Account charge. These figures also assume a
steady annual rate of return.
We may demonstrate hypothetical values of income payments (e.g., beginning with
an initial income payment of $500) over a specified period based on historical
net asset values of the Portfolios. These presentations reflect the benchmark
AIR, deduction of the Separate Account charge and the investment-related charge.
We may assume that the Income Annuity was in existence prior to its inception
date. When we do so, we calculate performance based on the historical
performance of the underlying Portfolios for the period before the inception
date of the Income Annuity. We use the actual annuity unit data after the
inception date.
Historical performance information should not be relied on as a guarantee of
future performance results.
Changes to the Income Annuity
We have the right to make certain changes to the Income Annuity, but only as
permitted by law. We make changes when we think they would best serve the
interest of annuity owners or would be appropriate in carrying out the purposes
of the Income Annuity. If the law requires, we will also get the owner's
approval and the approval of any appropriate regulatory authorities. Examples of
the changes we may make include the right to:
o Operate the Separate Account in any form permitted by law.
o Take any action necessary to comply with or obtain and continue any
exemptions under the law.
o Transfer any assets in an investment division to another investment
division, or to one or more separate accounts, or to our general account,
or to add, combine or remove investment divisions in the Separate Account.
o Substitute for the Portfolio shares in any investment division, the shares
of another class of the Metropolitan Fund or the shares of another
investment company or any other investment permitted by law.
o Change the way we assess charges, but without increasing the aggregate
amount charged to the Separate Account and any currently available
portfolio in connection with the Income Annuity.
o Make any necessary technical changes in the Income Annuity in order to
conform with any of the above-described actions.
If any changes result in a material change in the underlying investments of an
investment division for which annuity units have been credited, we will notify
the owner of the change. The Structured Settlement may provide for an alternate
choice of investment division in which an equivalent number of annuity units
will be credited if an investment division to which money has been allocated
becomes no longer available or for which there is a change in the underlying
Portfolio. Otherwise, you will not have any right to choose an alternate
investment division. Where required by law, we will ask the owner's approval
before making any technical changes.
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Voting Rights
Based on our current view of applicable law, the owner has voting interests
under the Income Annuity concerning Metropolitan Fund proposals that are subject
to a shareholder vote. Therefore, the owner is entitled to give us instructions
for the number of shares which are deemed attributable to the Income Annuity.
We will vote the shares of each of the underlying Portfolios held by the
Separate Account based on instructions we receive from those having a voting
interest in the corresponding investment divisions. However, if the law or the
interpretation of the law changes, we may decide to exercise the right to vote
the Portfolio's shares based on our own judgment. In those cases where MIAC is
the owner of the Income Annuity, the shares of each underlying Portfolio will be
voted in the same proportion as the shares for which voting instructions are
received by the Separate Account.
There are certain circumstances under which we may disregard voting
instructions. However, in this event, a summary of our action and the reasons
for such action will appear in the next semiannual report. If we do not receive
voting instructions, we will vote the interests under the Income Annuity in the
same proportion as represented by the voting instructions we receive from other
investors. Shares of the Metropolitan Fund that are owned by our general account
or by any of our unregistered separate accounts will be voted in the same
proportion as the aggregate of the shares:
o For which voting instructions are received, and
o That are voted in proportion to such voting instructions.
However, if the law or the interpretation of the law changes, we may decide to
exercise the right to vote the Portfolio's shares based on our judgment.
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Who Sells the Income Annuity
The Income Annuity is sold through registered broker-dealers. The licensed
broker-dealers who sell the annuities may be compensated for these sales by
commissions that we pay. The commissions we pay range from 0% to 5%. There is no
front-end sales load or back-end sales load deducted from purchase payments to
pay sales commissions. The Separate Account does not pay sales commissions.
MetLife pays its distribution expenses from its general account which includes
any profits generated from its Separate Account operations.
Purchases In Certain States
Although we may not cancel the Income Annuity, the owner may cancel the Income
Annuity within a certain time period if the Income Annuity is purchased in New
York, Massachusetts or North Carolina.
Financial Statements
The financial statements and related notes for the Separate Account and MetLife
are in the SAI and are available from MetLife upon request. Deloitte & Touche,
LLP, who are independent auditors, audit these financial statements.
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Federal Tax Treatment
The following tax information is only a general discussion of the tax
consequences of use of the Income Annuity in connection with the settlement of a
claim. The Internal Revenue Code ("Code") is complex and changes regularly.
Because of the complexity of the Code, the applicability of the tax laws to the
Income Annuity and to the parties to a claim and/or an assignment are subject to
varying interpretations, each party should consult his/her own tax advisor about
his/her circumstances and how the tax law and any recent developments may affect
him/her if the Income Annuity is used in connection with the settlement of a
claim.
The Structured Settlement is an arrangement between you, the defendant and/or
the defendant's insurer. Neither we nor any of our affiliates assumes
responsibility for any legal, tax, or financial consequences of the Structured
Settlement to any of the parties to the claim or any assignee. In particular,
neither we nor any of our affiliates make any representations, warranties, or
guarantees as to the tax consequences of any decision you and other parties make
to settle your claim and to have income payments to you funded by an Income
Annuity.
Tax Treatment of Income Payments Received in Settlement of Personal Physical
Injury Claims
Section 104(a)(2) of the Code excludes from gross income any amounts received as
damages on account of personal physical injuries or physical sickness. Any
portion of a Structured Settlement that provides for punitive damages will not
qualify for exclusion under Section 104 (a)(2) of the Code. For qualifying
portions of a Structured Settlement, the treatment applies whether the amounts
are paid as lump sums or as periodic payments.
If the Income Annuity will be used to provide periodic payments to you as a
result of your claim, the periodic payments will be excludable from your income
only if the Income Annuity is owned by a person other than you. The Income
Annuity typically will be owned by MIAC.
We take no responsibility for determining if payments made to you as a result of
a claim, whether by use of the Income Annuity or otherwise, are excludable from
your income under Section 104(a)(2) of the Code.
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A Defendant May Assign Its Obligation to Make Income Payments to You
Pursuant to Section 130 of the Code, the defendant or the defendant's insurer
may assign, with your consent, its obligation under the Structured Settlement to
make income payments to you. The entity, called the assignee, that assumes the
obligation to make income payments to you, typically will be MIAC. The
assignment by the defendant to MIAC of its obligation to make income payments to
you will be treated as a "qualified assignment" under Section 130(c) of the Code
only if the following requirements are met:
o The Structured Settlement provides that you will receive income payments
on specified dates to compensate you for your personal injury or sickness
(in a case involving physical injury or physical sickness);
o MIAC assumes the liability to make payments to you from a party to the
suit or the Structured Settlement;
o The income payments that will be made to you are fixed and determinable as
to amount and time of payment;
o You cannot accelerate, defer, increase, or decrease your income payments;
o The amount MIAC is obligated to pay you under the assignment is no greater
than the obligation of the person who assigned the liability to MIAC; and
o The income payments to you are excludable from your gross income under
Section 104(a)(1) or (2) of the Code.
If these requirements are satisfied, and the assignment to MIAC is treated as a
"qualified assignment," the defendant may deduct the full payment it makes to
MIAC in the year in which the payment is made. In addition, if these
requirements are satisfied and MIAC purchases one or more "qualified funding
assets" to fund its obligation to make income payments to you under the
assignment, the purchase payment MIAC receives from the defendant will be
excluded from MIAC's gross income to the extent the purchase payment does not
exceed the aggregate cost of the qualified funding assets.
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Using the Income Annuity to Fund Qualified Assignments
If you and the defendant intend to have the Income Annuity fund a qualified
assignment, the amount of the purchase payment that is to be allocated to each
investment division, the formula for determining the number of annuity units to
be credited to each investment division, and the schedule for making the
variable income payments must be specified in the Structured Settlement.
The Internal Revenue Service (IRS) has issued a private letter ruling to MIAC as
the assignee of a defendant's obligation to make payments to a party that was
physically injured. In the private letter ruling, MIAC proposed to purchase a
variable income annuity as a "qualified funding asset." Under the settlement
agreement involved in the private ruling, at least 50 percent of the damages to
be applied to the purchase of the variable income annuity was to be allocated to
a fixed income option. In the private letter ruling, the IRS determined, among
other things, that:
o Periodic payments of damages that are calculated pursuant to an objective
formula based on the performance of the S&P 500 Stock Index and/or a
mutual fund designed to achieve long-term growth of capital and moderate
income are fixed and determinable as to amount and time of payment; and
o A variable income annuity purchased by MIAC from MetLife would not fail to
qualify as a qualified funding asset within the meaning of Section 130(c)
of the Code solely because of the variable payments under the annuity,
which would be reasonably related to the periodic payments under the
qualified assignment.
Private letter rulings may be relied upon only by the taxpayer(s) who requested
the ruling and only with respect to the specific facts involved in the ruling.
However, the reasoning used by the IRS in reaching its determinations in the
ruling may be useful to defendants, defendant's liability insurers, and other
assignees considering the tax treatment of the Income Annuity in connection with
the settlement of a claim. Such persons should, of course, consult their own tax
advisors to determine the tax consequences of entering into a Structured
Settlement or assigning (or accepting an assignment of) liability in connection
with which the Income Annuity will be used to fund payments to the claimant.
Transfers may not be made between investment divisions or into or out of the
Fixed Income Option due to the requirements of the Federal law with respect to
the receipt of periodic payments intended to be excludable from the recipient's
income under Section 104(a)(1) or 104(a)(2) of the Code.
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Owners Other than MIAC
Entities (such as a corporations) that are considering purchasing an Income
Annuity should consult with their own tax advisors prior to the purchase to
determine the tax consequences of owning the Income Annuity.
In general, under Section 72(u) of the Code, if an annuity contract is owned by
a non-natural person, the contract is not treated as an annuity for income tax
purposes and the income under the contract is treated as ordinary income
received or accrued by the owner in each taxable year. There are exceptions to
this general rule. These exceptions include contracts that are "qualified
funding assets" within the meaning of Section 130(c) of the Code (without regard
to whether there is a qualified assignment) and contracts that are "immediate
annuities" within the meaning of Section 72(u)(4) of the Code. If a contract
satisfies one of these exceptions, the income under the contract generally is
not taxed until it is received.
In addition, pursuant to Section 264(f) of the Code, if an Income Annuity is
owned by a non-natural person, or held for the benefit of a non-natural person,
a portion of the owner's otherwise deductible interest may no longer be
deductible. Similar adverse income tax consequences may occur pursuant to
Sections 805, 807 and 832 of the Code, if an Income Annuity is owned by or for
the benefit of an insurance company.
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Table of Contents for the Statement of Additional Information
Page
Cover Page ................................................................ 1
Table of Contents ......................................................... 1
Independent Auditors ...................................................... 2
Distribution of Certificates and Interests in the
Income Annuity ...................................................... 2
Experience Factor ......................................................... 2
Variable Income Payments .................................................. 2
Investment Management Fees ................................................ 4
Performance Data and Advertisement of
the Separate Account ................................................ 4
Financial Statements of the Separate Account .............................. 6
Financial Statements of MetLife ........................................... 32
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Appendix
Premium Tax Table
If the owner is a resident of or domiciled in one of the following
jurisdictions, the percentage amount listed by that jurisdiction is the premium
tax rate which will be applied to the Income Annuity.
Income Annuities
California ......... 2.35%
Maine .............. 2.00%
Nevada ............. 3.50%
Puerto Rico ........ 1.00%
South Dakota ....... 1.25%
West Virginia ...... 1.00%
Wyoming ............ 1.00%
Virgin Islands ..... 5.00%
PEANUTS(C) United Feature Syndicate, Inc.
(C) 2000 Metropolitan Life Insurance Company
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METROPOLITAN LIFE INSURANCE COMPANY
METROPOLITAN LIFE SEPARATE ACCOUNT E
METLIFE SETTLEMENT PLUS (Registered),
A VARIABLE INCOME ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
FORM N-4 PART B
May 1, 2000
This Statement of Additional Information is not a prospectus but contains
information in addition to and more detailed than that set forth in the
Prospectus for MetLife Settlement Plus, A Variable Income Annuity dated May 1,
2000 and should be read in conjunction with the Prospectus. Copies of the
Prospectus may be obtained from Metropolitan Life Insurance Company, Structured
Settlement Group, 200 Park Avenue, Area 5P, New York, New York 10166-0188.
A Statement of Additional Information for the Metropolitan Series Fund,
Inc. is attached at the end of this Statement of Additional Information.
Unless otherwise indicated, the Statement of Additional Information
continues the use of certain terms as set forth in the Section entitled
"Important Terms You Should Know" of the Prospectus for MetLife Settlement Plus,
A Variable Income Annuity dated May 1, 2000.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors................................. 2
Distribution of Certificates and Interests in the
Income Annuity..................................... 2
Experience Factor.................................... 2
Variable Income Payments............................. 2
Investment Management Fees........................... 4
Performance Data and Advertisement of the Separate
Account............................................ 4
Financial Statements of the Separate Account......... 35
Financial Statements of MetLife...................... 61
</TABLE>
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INDEPENDENT AUDITORS
The financial statements for the Separate Account for the period ended
December 31, 1999 included in this Statement of Additional Information have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and have been so included in reliance upon such report
given upon the authority of such firm as experts in auditing and accounting.
DISTRIBUTION OF CERTIFICATES AND INTERESTS IN THE INCOME ANNUITY
MetLife is both the depositor and the underwriter (issuer) of the Income
Annuity.
The certificates and interests in the Income Annuity are sold through
registered broker-dealers.
The offering of the Income Annuity is continuous. In certain situations,
the Income Annuity may not include all investment choices or the Fixed Income
Option. Each contract will indicate the available choices.
EXPERIENCE FACTOR
We use the term "experience factor" to describe the investment performance
for an investment division. The experience factor changes from Valuation Period
(described later) to Valuation Period to reflect the upward or downward
performance of the assets in the underlying Portfolios. The experience factor is
calculated as of the end of each Valuation Period using the net asset value per
share of the underlying Portfolio. The net asset value includes the per share
amount of any dividend or capital gain distribution paid by the Portfolio during
the current Valuation Period, and subtracts any per share charges for taxes and
reserve for taxes. We then divide that amount by the net asset value per share
as of the end of the last Valuation Period to obtain a factor that reflects
investment performance. We then subtract a charge for each day in the valuation
period not to exceed .000034035 (the daily equivalent of an effective annual
rate of 1.25%).
VARIABLE INCOME PAYMENTS
"Variable income payments" include variable income payments made under the
various Income Annuities.
ASSUMED INVESTMENT RETURN (AIR)
The following discussion concerning the amount of variable income payments
is based on an Assumed Investment Return of 5% per year. It should not be
inferred that such rates will bear any relationship to the actual net investment
experience of the Separate Account.
AMOUNT OF INCOME PAYMENTS
The income payment you receive periodically from an investment division
(except for any payment paid within 10 days of the the day we receive all
properly completed documents) will depend upon the number of annuity units held
in that investment division (described below) and the Annuity Unit Value
(described later) as of the 10th day prior to a payment date.
The Income Annuity specifies the dollar amount of the initial variable
income payment for each investment division (this equals the first payment
amount if paid within 10 days of the day we receive all properly completed
documents). This initial variable income payment is computed based on the amount
of the purchase payment applied to the specific investment division (net any
applicable premium tax owed or contract charge), the AIR, the age and/or sex of
the measuring lives and the income payment type selected. The initial payment
amount is then divided by the Annuity Unit Value for the investment division to
determine the number of annuity units held in that investment division on the
day we receive all properly completed documents. The number of annuity units
held remains fixed for the duration of the contract.
The dollar amount of subsequent variable income payments will vary with the
amount by which investment performance is greater or less than the AIR and
Separate Account charges.
For example, on an annual basis, if an investment division has a cumulative
net investment performance of 6% over a one year period, the first variable
income payment in the next year will be approximately 1% greater than the
payment on the same date in the preceding year, and subsequent payments will
continue to vary with the investment experience of the investment division. If
such investment performance return is 4% over a one year period, the first
variable income payment in the next year will be approximately 1% less than the
payment on the same date in the preceding year, and subsequent payments will
continue to vary with the investment performance of the applicable division.
2
<PAGE>
ANNUITY UNIT VALUE
The Annuity Unit Value is based on the same change in investment
performance in the Separate Account. (See "The Value of Your Income Payment"
in the Prospectus.)
CALCULATING THE ANNUITY UNIT VALUE
We calculate Annuity Unit Values once a day on every day the New York Stock
Exchange is open for trading. We call the time between two consecutive Annuity
Unit Value calculations the "Valuation Period." We have the right to change the
basis for the Valuation Period, on 30 days' notice, as long as it is consistent
with the law. All income payments are valued as of the end of the Valuation
Period during which the transaction occurred. The Annuity Unit Values can
increase or decrease, based on the investment performance of the corresponding
underlying portfolios. If the investment performance is positive, after payment
of Separate Account expenses and the deduction for the AIR, Annuity Unit Values
will go up. Conversely, if the investment performance is negative, after payment
of Separate Account expenses and the deduction for the AIR, Annuity Unit Values
will go down.
To calculate an Annuity Unit Value, we first multiply the experience factor
for the period by a factor based on the AIR and the number of days in the
Valuation Period. For an AIR of 5% and a one day Valuation Period, the factor is
.99986634, which is the daily discount factor for an effective annual rate of
5%. (The AIR may be in the range of 1% to 6%, as defined in your Income Annuity
and the laws in the state.) The resulting number is then multiplied by the last
previously calculated Annuity Unit Value to produce the new Annuity Unit Value.
The following examples show, by use of hypothetical examples, the method of
determining the Annuity Unit Value and the amount of variable income payments:
EXAMPLE OF CALCULATION OF ANNUITY UNIT VALUE
<TABLE>
<S> <C>
1. Annuity Unit Value, beginning of period........................ $ 10.20000
2. "Experience factor" for period................................. 1.023558
3. Daily adjustment for 5% of Assumed Investment Return........... .99986634
4. (2) X (3)...................................................... 1.023421
5. Annuity Unit Value, end of period (1) X (4).................... $ 10.43889
</TABLE>
DETERMINING THE VARIABLE INCOME PAYMENT
Variable income payments can go up or down based upon the investment
performance of the investment divisions in the Separate Account. The AIR is the
rate used to determine the initial variable income payment and serves as a
benchmark against which the investment performance of the investment divisions
is compared. The higher the AIR, the higher the initial variable income payment
will be. Variable income payments will increase only to the extent that the
investment performance of the investment divisions exceeds the AIR (and Separate
Account charges). Variable income payments will decline if the investment
performance of the Separate Account does not exceed the AIR (and Separate
Account charges). A lower AIR will result in a lower initial variable income
payment, but variable income payments will increase more rapidly or decline more
slowly as changes occur in the investment performance of the investment
divisions.
EXAMPLE OF INCOME PAYMENTS
(ASSUMES THE FIRST MONTHLY PAYMENT IS MADE WITHIN 10 DAYS OF THE ISSUE DATE OF
THE INCOME ANNUITY)
Annuitant age 65, Life Annuity with 120 Payments Guaranteed
<TABLE>
<S> <C>
1. Net Purchase Payment........................................... $50,000.00
2. First monthly income payment per $1,000 of Annuity Value....... $ 7.71
3. First monthly income payment (1) X (2) divided by 1,000........ $ 385.50
4. Annuity Unit Value (see Example of Calculation of Annuity Unit
Value above) as of Annuity Date................................. $ 10.80000
5. Number of Annuity Units (3) divided by (4)..................... 35.69444
6. Assume Annuity Unit Value for the second month equal to (10
days prior to payment).......................................... $ 10.97000
7. Second monthly Annuity Payment (5) X (6)....................... $ 391.57
8. Assume Annuity Unit Value for third month equal to............. $ 10.52684
9. Next monthly Annuity Payment (5) X (8)......................... $ 375.75
</TABLE>
3
<PAGE>
INVESTMENT MANAGEMENT FEES
Each of the currently available Metropolitan Fund Portfolios pays us, the
investment manager of the Metropolitan Fund, an investment management fee. For
providing investment management services to the Lehman Brothers Aggregated Bond
Index and MetLife Stock Index, we receive monthly compensation from each
Portfolio at an annual rate of .25% of the average daily value of the aggregate
net assets of each Portfolio. For providing investment management services to
the State Street Research Growth Portfolio, we receive monthly compensation from
the Portfolio at an annual rate of .55% of the average daily value of the
aggregate net assets of the Portfolio up to $500 million, .50% of such assets on
the next $500 million and .45% of such assets on amounts over $1 billion. For
providing investment management services to the State Street Research
Diversified Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .50% of the average daily value of the aggregate net assets of
the Portfolio up to $500 million, .45% of such assets on the next $500 million
and .40% of such assets on amounts over $1 billion. We pay State Street Research
& Management Company, one of our subsidiaries, to provide us with sub-investment
management services for the State Street Research Diversified and State Street
Research Growth Portfolio.
For providing investment management services to the Harris Oakmark Large
Cap Value Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $250 million and .70% of such assets in excess of
$250 million. Harris Associates L.P., whose general partner is indirectly owned
by MetLife, is the sub-investment manager with respect to the Harris Oakmark
Large Cap Value Portfolio.
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets of
the Portfolio up to $50 million, and .60% of such assets over $50 million. T.
Rowe Price Associates, Inc. is the sub-investment manager for the T. Rowe Price
Large Cap Growth Portfolio.
WHEN VOTING INSTRUCTIONS MAY BE DISREGARDED
MetLife may disregard voting instructions under the following circumstances
(1) to make or refrain from making any change in the investments or investment
policies for any portfolio if required by any insurance regulatory authority;
(2) to refrain from making any change in the investment policies or any
investment adviser or principal underwriter or any portfolio which may be
initiated by those having voting interests or the Metropolitan Fund's board of
directors, provided MetLife's disapproval of the change is reasonable and, in
the case of a change in investment policies or investment manager, based on a
good faith determination that such change would be contrary to state law or
otherwise inappropriate in light of the portfolio's objective and purposes; or
(3) to enter into or refrain from entering into any advisory agreement or
underwriting contract, if required by any insurance regulatory authority.
In the event that MetLife does disregard voting instructions, a summary of
the action and the reasons for such action will be included in the next
semiannual report.
PERFORMANCE DATA AND ADVERTISEMENT OF THE SEPARATE ACCOUNT
From time to time we advertise the performance of various Separate Account
investment divisions. Performance will be stated in terms of either yield,
"change in annuity unit value" or "average annual total return" or some
combination of the foregoing. Yield, change in annuity unit value and average
annual total return figures are based on historical earnings and are not
intended to indicate future performance. Yield figures quoted in advertisements
will refer to the net income generated by an investment in a particular
investment division for a thirty-day period or month, which is specified in the
advertisement, and then expressed as a percentage yield of that investment. This
percentage yield is then compounded semiannually. Change in annuity unit value
refers to the comparison between values of annuity units over specified periods
in which an investment division has been in operation, expressed as a percentage
and may also be expressed as an annualized figure. Average annual total return
differs from the change in annuity unit value because it assumes a steady rate
of return. It also reflects all expenses.
We may demonstrate hypothetical values of income payments (e.g. beginning
with an initial income payment of $500) over a specified period based on
historical net asset values of the Portfolios. These presentations reflect the
benchmark AIR, deduction of the Separate Account charge and the
investment-related charge. We may assume that the Income Annuity was in
existence prior to its inception date. When we do so, we calculate performance
based on the historical performance of the underlying Portfolios for the period
before the inception date of the Income Annuity. We use the actual annuity unit
data after the inception date.
Advertisements regarding the Separate Account may contain comparisons of
hypothetical after-tax returns of currently taxable investments versus returns
of tax deferred or tax-exempt investments. From time to time, the Separate
Account may compare the performance of its investment divisions with the
performance of common stocks, long-term government bonds, long-term corporate
bonds, intermediate-term government bonds, Treasury Bills, certificates of
deposit and savings accounts. The Separate Account may use the Consumer Price
Index in its advertisements as a measure of inflation for comparison purposes.
From time to time, the Separate Account may advertise its performance ranking
among similar investments or compare its performance to averages as compiled by
independent organizations, such as Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS(Registered) and The Wall Street Journal. The Separate
Account may also advertise its performance in comparison to appropriate indices,
such as the Standard & Poor's 500 Composite Stock Price Index, the Lehman
Brothers, Aggregate Bond Index, and/or the Lehman Brothers Government/
Corporate Bond Index, the Merrill Lynch High Yield Bond Index.
4
<PAGE>
The following data is illustrative only, and should not be relied upon. Figures
for annualized change in the annuity unit value (i.e., average annual total
return) reflect only two months of performance which most likely is not
indicative of the Portfolios' historical long-term performance. Therefore, we
have not included these numbers in this presentation. Refer to the most recent
performance data for the Portfolios for more current data. Past performance is
not a guarantee of future results.
Inception (11/99) to December 31, 1999
--------------------------------------
Annualized Change
in Annuity
Unit Value
(i.e. Average
Change in Annual
Annuity Total
Investment Division Unit Value Return)
- ------------------- ---------- -------
Lehman Brothers Aggregate
Bond Index Division -1.42% -
State Street Research
Diversified Division 4.85% -
MetLife Stock Index
Division 7.72% -
Harris Oakmark Large
Cap Value Division -1.61% -
T. Rowe Price Large Cap
Growth Division 12.78% -
State Street Research
Growth Division 10.00% -
The following data for the Portfolios has been restated to reflect the deduction
of the 1.25% Separate Account charge and the investment-related charge for the
period before the inception date of the Income Annuity.
Average Annual Total Return for the Portfolios of the
Metropolitan Series Fund for the Period Ending 12/31/99
For periods of 1, 5, and 10 years (or since inception as applicable)
<TABLE>
<CAPTION>
5 Year 10 Year
(or inception (or inception
Portfolio Inception Date 1 Year if less) if less)
- ------------------- -------------- ------ ------- -------
<S> <C> <C> <C> <C>
Lehman Brothers Aggregate Bond Index 11/09/98 -2.57% -1.23%
State Street Research Diversified 07/25/86 7.36% 16.46% 11.65%
MetLife Stock Index 05/01/90 19.31% 26.40% 17.60%
Harris Oakmark Large Cap Value 11/09/98 -8.03% -9.43%
T. Rowe Price Large Cap 11/09/98 20.71% 28.27%
State Street Research Growth 06/24/83 17.03% 24.39% 15.47%
</TABLE>
The following data for the Income Annuity has been restated to reflect the 5%
AIR, the deduction of the 1.25% Separate Account charge and the
investment-related charge. It includes performance based on the historical
performance of the underlying Portfolios for the period before the inception
date of the Income Annuity. We use the actual annuity unit data after the
inception date.
Hypothetical Change in Annuity Unit Values
(based on inception date of the Portfolio to 10/31/99 and actual return for
the period 11/1/99 to 12/31/99)
<TABLE>
<CAPTION>
5 Year 10 Year
(or inception (or inception
Investment Division Inception Date 1 Year if less) if less)
- ------------------- -------------- ------ ------- -------
<S> <C> <C> <C> <C>
Lehman Brothers Aggregate Bond Index 11/09/98 -7.16% -5.92%
State Street Research Diversified 07/25/86 2.27% 10.91% 6.32%
MetLife Stock Index 05/01/90 13.71% 20.41% 12.00%
Harris Oakmark Large Cap Value 11/09/98 -12.53% -13.82%
T. Rowe Price Large Cap 11/09/98 15.02% 22.25%
State Street Research Growth 06/24/83 11.45% 18.47% 9.97%
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Contractholders of
Metropolitan Life Separate Account E:
We have audited the accompanying statement of assets and liabilities of
Metropolitan Life Separate Account E (including the State Street Research
Growth, State Street Research Income, State Street Research Money Market,
State Street Research Diversified, Variable B, Variable C, Variable D, State
Street Research Aggressive Growth, MetLife Stock Index, Santander
International Stock, Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe
Price Small Cap Growth, Scudder Global Equity, Harris Oakmark Large Cap Value,
Neuberger Berman Partners Mid Cap Value, T. Rowe Price Large Cap Growth,
Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE(R) Index, Russell
2000(R) Index, Fidelity Money Market, Fidelity Equity-Income, Fidelity Growth,
Fidelity Overseas, Fidelity Investment Grade Bond, Fidelity Asset Manager,
Calvert Social Balanced and the Calvert Social Mid Cap Growth Divisions,
collectively the "Separate Account E") as of December 31, 1999, the related
statements of operations for the year then ended, and the statements of
changes in net assets for years ended December 31, 1999 and 1998. These
financial statements are the responsibility of the Separate Account E's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999,
by correspondence with the custodian. An audit also includes 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, the financial statements referred to above present fairly, in
all material respects, the financial position of the Separate Account E as of
December 31, 1999, the results of its operations and changes in its net assets
for the years ended December 31, 1999 and 1998 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
March 3, 2000
1
<PAGE>
Metropolitan Life Separate Account E
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
State Street
State Street State Street Research State Street
Research Research Money Research
Growth Income Market Diversified
Division Division Division Division
-------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in
Metropolitan Series
Fund, Inc. at Value
(Note 1A):
State Street Research
Growth Portfolio
(77,691,420 Shares;
cost $2,369,169,265)... $2,943,335,593 -- -- --
State Street Research
Income Portfolio
(33,927,963 Shares;
cost $432,000,031)..... -- $396,278,612 -- --
State Street Research
Money Market Portfolio
(1,386,327 Shares; cost
$14,662,649)........... -- -- $14,338,780 --
State Street Research
Diversified Portfolio
(135,123,188 Shares;
cost $2,236,243,719)... -- -- -- $2,468,700,640
State Street Research
Aggressive Growth
Portfolio
(34,466,893 Shares;
cost $919,522,846)..... -- -- -- --
MetLife Stock Index
Portfolio
(94,736,586 Shares;
cost $2,525,501,665)... -- -- -- --
Santander International
Stock Portfolio
(18,942,941 Shares;
cost $257,448,652)..... -- -- -- --
Loomis Sayles High Yield
Bond Portfolio
(6,073,840 Shares; cost
$59,810,704)........... -- -- -- --
Janus Mid Cap Portfolio
(48,516,692 Shares;
cost $1,066,602,135)... -- -- -- --
T.Rowe Price Small Cap
Growth Portfolio
(14,546,010 Shares;
cost $176,447,578)..... -- -- -- --
Scudder Global Equity
Portfolio
(10,218,341 Shares;
cost $125,516,194)..... -- -- -- --
Harris Oakmark Large Cap
Value Portfolio
(3,722,279 Shares; cost
$37,664,217)........... -- -- -- --
Neuberger Berman
Partners Mid Cap Value
Portfolio
(2,633,587 Shares; cost
$31,258,158)........... -- -- -- --
T. Rowe Price Large Cap
Growth Portfolio
(3,481,175 Shares; cost
$40,642,372)........... -- -- -- --
Lehman Brothers
Aggregate Bond Index
Portfolio
(8,252,388 Shares; cost
$81,657,758)........... -- -- -- --
Morgan Stanley EAFE
Index Portfolio
(4,007,541 Shares; cost
$46,807,364)........... -- -- -- --
Russell 2000 Index
Portfolio
(5,705,319 Shares; cost
$61,816,817)........... -- -- -- --
Total investments...... 2,943,335,593 396,278,612 14,338,780 2,468,700,640
Cash.................... -- -- -- --
-------------- ------------ ----------- --------------
Total assets........... 2,943,335,593 396,278,612 14,338,780 2,468,700,640
LIABILITIES............. -- -- -- 81
-------------- ------------ ----------- --------------
NET ASSETS.............. $2,943,335,593 $396,278,612 $14,338,780 $2,468,700,559
============== ============ =========== ==============
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
State Street Loomis
Research MetLife Santander Sayles
Variable Variable Variable Aggressive Stock International High Yield
B C D Growth Index Stock Bond
Division Division Division Division Division Division Division
-------- -------- -------- ------------ -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
$93,941,724 $3,523,461 $41,395 -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- $1,325,252,021 -- -- --
-- -- -- -- $3,845,358,027 -- --
-- -- -- -- -- $262,738,596 --
-- -- -- -- -- -- $55,211,208
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
93,941,724 3,523,461 41,395 1,325,252,021 3,845,358,027 262,738,596 55,211,208
-- -- -- 15 -- -- --
- ----------- ---------- ------- -------------- -------------- ------------ -----------
93,941,724 3,523,461 41,395 1,325,252,036 3,845,358,027 262,738,596 55,211,208
-- -- -- -- 36 -- --
- ----------- ---------- ------- -------------- -------------- ------------ -----------
$93,941,724 $3,523,461 $41,395 $1,325,252,036 $3,845,357,991 $262,738,596 $55,211,208
=========== ========== ======= ============== ============== ============ ===========
</TABLE>
3
<PAGE>
Metropolitan Life Separate Account E
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
T. Rowe Harris
Price Scudder Oakmark
Janus Small Cap Global Large Cap
Mid Cap Growth Equity Value
Division Division Division Division
-------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in
Metropolitan Series
Fund, Inc. at Value
(Note 1A):
State Street Research
Growth Portfolio
(77,691,420 Shares; cost
$2,369,169,265)......... -- -- -- --
State Street Research
Income Portfolio
(33,927,963 Shares; cost
$432,000,031)........... -- -- -- --
State Street Research
Money Market Portfolio
(1,386,327 Shares; cost
$14,662,649)............ -- -- -- --
State Street Research
Diversified Portfolio
(135,123,188 Shares;
cost $2,236,243,719).... -- -- -- --
State Street Research
Aggressive Growth
Portfolio
(34,466,893 Shares; cost
$919,522,846)........... -- -- -- --
MetLife Stock Index
Portfolio
(94,736,586 Shares; cost
$2,525,501,665)......... -- -- -- --
Santander International
Stock Portfolio
(18,942,941 Shares; cost
$257,448,652)........... -- -- -- --
Loomis Sayles High Yield
Bond Portfolio
(6,073,840 Shares; cost
$59,810,704)............ -- -- -- --
Janus Mid Cap Portfolio
(48,516,692 Shares; cost
$1,066,602,135)......... $1,772,799,944 -- -- --
T.Rowe Price Small Cap
Growth Portfolio
(14,546,010 Shares; cost
$176,447,578)........... -- $228,808,731 -- --
Scudder Global Equity
Portfolio
(10,218,341 Shares; cost
$125,516,194)........... -- -- $152,355,460 --
Harris Oakmark Large Cap
Value Portfolio
(3,722,279 Shares; cost
$37,664,217)............ -- -- -- $33,239,953
Neuberger Berman Partners
Mid Cap Value Portfolio
(2,633,587 Shares; cost
$31,258,158)............ -- -- -- --
T. Rowe Price Large Cap
Growth Portfolio
(3,481,175 Shares; cost
$40,642,372)............ -- -- -- --
Lehman Brothers Aggregate
Bond Index Portfolio
(8,252,388 Shares; cost
$81,657,758)............ -- -- -- --
Morgan Stanley EAFE Index
Portfolio
(4,007,541 Shares; cost
$46,807,364)............ -- -- -- --
Russell 2000 Index
Portfolio
(5,705,319 Shares; cost
$61,816,817)............ -- -- -- --
-------------- ------------ ------------ -----------
Total investments....... 1,772,799,944 228,808,731 152,355,460 33,239,953
Cash..................... -- 44 -- --
-------------- ------------ ------------ -----------
Total assets............ 1,772,799,944 228,808,775 152,355,460 33,239,953
LIABILITIES.............. 964 -- -- 48
-------------- ------------ ------------ -----------
NET ASSETS............... $1,772,798,980 $228,808,775 $152,355,460 $33,239,905
============== ============ ============ ===========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
Neuberger
Berman T. Rowe Lehman
Partners Price Brothers Morgan
Mid Cap Large Cap Aggregate Stanley Russell
Value Growth Bond Index EAFE Index 2000 Index
Division Division Division Division Division
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
$31,524,039 -- -- -- --
-- $46,682,553 -- -- --
-- -- $77,985,063 -- --
-- -- -- $53,460,599 --
-- -- -- -- $71,430,599
----------- ----------- ----------- ----------- -----------
31,524,039 46,682,553 77,985,063 53,460,599 71,430,599
10 -- -- 14 2
----------- ----------- ----------- ----------- -----------
31,524,049 46,682,553 77,985,063 53,460,613 71,430,601
-- -- -- -- --
----------- ----------- ----------- ----------- -----------
$31,524,049 $46,682,553 $77,985,063 $53,460,613 $71,430,601
=========== =========== =========== =========== ===========
</TABLE>
5
<PAGE>
Metropolitan Life Separate Account E
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Fidelity Fidelity Fidelity Fidelity
Money Market Equity-Income Growth Overseas
Division Division Division Division
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Fidelity
Variable Insurance
Products Funds At Value
(Note 1A):
Fidelity VIP Money Market
Portfolio
(10,319,078 Shares; cost
$10,319,078)............. $10,319,078 -- -- --
Fidelity VIP Equity-Income
Portfolio
(5,167,623 Shares; cost
$109,067,057)............ -- $132,859,589 -- --
Fidelity VIP Growth
Portfolio
(4,469,498 Shares; cost
$149,929,294)............ -- -- $245,509,514 --
Fidelity VIP Overseas
Portfolio
(1,278,457 Shares; cost
$31,635,802)............. -- -- -- $35,080,863
Fidelity VIP II Investment
Grade Bond Portfolio
(763,593 Shares; cost
$9,375,044).............. -- -- -- --
Fidelity VIP II Asset
Manager Portfolio
(3,222,980 Shares; cost
$50,989,152)............. -- -- -- --
Investments in Calvert
Variable Series, Inc. at
Value (Note 1A):
Calvert Social Balanced
Portfolio
(25,035,526 Shares; cost
$47,278,157)............. -- -- -- --
Calvert Social Mid Cap
Growth Portfolio
(266,845 Shares; cost
$7,492,696).............. -- -- -- --
----------- ------------ ------------ -----------
Total investments......... 10,319,078 132,859,589 245,509,514 35,080,863
Cash....................... -- -- -- --
----------- ------------ ------------ -----------
Total assets.............. 10,319,078 132,859,589 245,509,514 35,080,863
LIABILITIES................ -- -- -- --
----------- ------------ ------------ -----------
NET ASSETS................. $10,319,078 $132,859,589 $245,509,514 $35,080,863
=========== ============ ============ ===========
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
Fidelity Calvert Calvert
Investment Fidelity Social Social Mid Cap
Grade Bond Asset Manager Balanced Growth
Division Division Division Division
---------- ------------- ----------- --------------
<S> <C> <C> <C>
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
$9,285,286 -- -- --
-- $60,173,030 -- --
-- -- $54,302,056 --
-- -- -- $8,013,346
---------- ----------- ----------- ----------
9,285,286 60,173,030 54,302,056 8,013,346
-- -- -- --
---------- ----------- ----------- ----------
9,285,286 60,173,030 54,302,056 8,013,346
-- -- -- --
---------- ----------- ----------- ----------
$9,285,286 $60,173,030 $54,302,056 $8,013,346
========== =========== =========== ==========
</TABLE>
7
<PAGE>
Metropolitan Life Separate Account E
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
State Street
State Street State Street Research State Street
Research Research Money Research
Growth Income Market Diversified
Division Division Division Division
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends (Note 2)..... $312,332,694 $ 25,596,607 $673,364 $209,323,264
Expenses (Note 3)...... 34,204,641 5,344,116 219,620 30,308,765
------------ ------------ -------- ------------
Net investment income
(loss)................. 278,128,053 20,252,491 453,744 179,014,499
------------ ------------ -------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss)
from security
transactions........... 62,166,340 (1,218,121) (32,887) 28,959,695
Change in net unrealized
appreciation
(depreciation) of
investments for the
period................. 89,025,372 (34,603,213) 62,159 (39,501,729)
------------ ------------ -------- ------------
Net realized and
unrealized gain (loss)
on investments (Note
1B).................... 151,191,712 (35,821,334) 29,272 (10,542,034)
------------ ------------ -------- ------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $429,319,765 $(15,568,843) $483,016 $168,472,465
============ ============ ======== ============
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
State Street
Research Santander Loomis Sayles
Aggressive MetLife International High Yield
Variable B Variable C Variable D Growth Stock Index Stock Bond
Division Division Division Division Division Division Division
----------- ---------- ---------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$10,075,972 $373,385 $4,364 $ 28,442,616 $184,825,378 $41,421,269 $4,339,807
861,573 -- -- 13,929,760 41,218,438 3,063,490 573,037
----------- -------- ------ ------------ ------------ ----------- ----------
9,214,399 373,385 4,364 14,512,856 143,606,940 38,357,779 3,766,770
----------- -------- ------ ------------ ------------ ----------- ----------
8,316,913 154,760 -- 77,224,327 141,933,683 12,224,938 (1,002,119)
(3,045,574) 37,844 2,089 232,588,654 312,858,179 (13,893,204) 4,099,504
----------- -------- ------ ------------ ------------ ----------- ----------
5,271,339 192,604 2,089 309,812,981 454,791,862 (1,668,266) 3,097,385
----------- -------- ------ ------------ ------------ ----------- ----------
$14,485,738 $565,989 $6,453 $324,325,837 $598,398,802 $36,689,513 $6,864,155
=========== ======== ====== ============ ============ =========== ==========
</TABLE>
9
<PAGE>
Metropolitan Life Separate Account E
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
T. Rowe Harris
Price Scudder Oakmark
Janus Small Cap Global Large Cap
Mid Cap Growth Equity Value
Division Division Division Division
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends (Note 2)......... $ 86,515,076 -- $ 5,157,718 $ 347,609
Expenses (Note 3).......... 9,773,157 2,107,943 1,445,714 254,434
------------ ----------- ----------- -----------
Net investment income
(loss)..................... 76,741,919 (2,107,943) 3,712,004 93,175
------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
from security
transactions............... 102,627,814 5,272,038 2,471,119 (89,794)
Change in net unrealized
appreciation (depreciation)
of investments for the
period..................... 631,364,390 44,474,798 21,316,192 (4,447,057)
------------ ----------- ----------- -----------
Net realized and unrealized
gain (loss) on investments
(Note 1B).................. 733,992,204 49,746,836 23,787,311 (4,536,851)
------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS................. $810,734,123 $47,638,893 $27,499,315 $(4,443,676)
============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
Neuberger
Berman T. Rowe Lehman
Partners Price Brothers Morgan Fidelity Fidelity
Mid Cap Large Cap Aggregate Stanley Russell Money Equity-
Value Growth Bond Index EAFE Index 2000 Index Market Income
Division Division Division Division Division Division Division
---------- ---------- ----------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
$1,375,021 $ 182,727 $ 3,369,814 $ 549,558 $ 2,081,201 $179,961 $ 6,058,921
223,904 279,506 560,784 320,458 443,137 35,659 1,244,145
---------- ---------- ----------- ---------- ----------- -------- -----------
1,151,117 (96,779) 2,809,030 229,100 1,638,064 144,302 4,814,776
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
---------- ---------- ----------- ---------- ----------- -------- -----------
662,939 188,181 (65,373) 1,530,194 400,083 -- 3,770,581
163,745 5,837,101 (3,639,449) 6,558,714 9,296,566 -- (1,968,262)
---------- ---------- ----------- ---------- ----------- -------- -----------
826,684 6,025,282 (3,704,822) 8,088,908 9,696,649 -- 1,802,319
---------- ---------- ----------- ---------- ----------- -------- -----------
$1,977,801 $5,928,503 $ (895,792) $8,318,008 $11,334,713 $144,302 $ 6,617,095
========== ========== =========== ========== =========== ======== ===========
</TABLE>
11
<PAGE>
Metropolitan Life Separate Account E
STATEMENT OF OPERATIONS
For the period ended December 31, 1999
<TABLE>
<CAPTION>
Fidelity Fidelity
Fidelity Fidelity Investment Asset
Growth Overseas Grade Bond Manager
Division Division Division Division
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends (Note 2)...... $18,361,174 $ 943,215 $ 490,093 $4,079,414
Expenses (Note 3)....... 1,827,739 244,700 88,708 527,898
----------- ----------- --------- ----------
Net investment income
(loss).................. 16,533,435 698,515 401,385 3,551,516
----------- ----------- --------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss)
from security
transactions............ 1,690,620 7,899,918 57,436 807,833
Change in net unrealized
appreciation
(depreciation) of
investments for the
period.................. 44,508,514 1,741,692 (641,467) 1,127,977
----------- ----------- --------- ----------
Net realized and
unrealized gain (loss)
on investments (Note
1B)..................... 46,199,134 9,641,610 (584,031) 1,935,810
----------- ----------- --------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS......... $62,732,569 $10,340,125 $(182,646) $5,487,326
=========== =========== ========= ==========
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
<TABLE>
<CAPTION>
Calvert Calvert
Social Social Mid Cap
Balanced Growth
Division Division
- ---------- --------------
<S> <C>
$5,178,041 $617,370
574,129 69,135
- ---------- --------
4,603,912 548,235
- ---------- --------
603,710 276,373
13,211 (349,562)
- ---------- --------
616,921 (73,189)
- ---------- --------
$5,220,833 $475,046
========== ========
</TABLE>
13
<PAGE>
Metropolitan Life Separate Account E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
State Street Research State Street Research
Growth Division Income Division
------------------------------ --------------------------
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
From operations:
Net investment income
(loss)............... $ 278,128,053 $ 204,616,327 $ 20,252,491 $ 29,082,224
Net realized gain
(loss) from security
transactions......... 62,166,340 26,298,215 (1,218,121) 1,273,744
Change in net
unrealized apprecia-
tion (depreciation)
of investments....... 89,025,372 280,912,929 (34,603,213) (200,044)
-------------- -------------- ------------ ------------
Net increase (de-
crease) in net assets
resulting from opera-
tions................ 429,319,765 511,827,471 (15,568,843) 30,155,924
-------------- -------------- ------------ ------------
From capital transac-
tions:
Purchases............. 265,161,445 271,042,284 55,913,381 64,640,719
Redemptions........... (171,009,194) (122,272,961) (38,156,879) (28,530,070)
-------------- -------------- ------------ ------------
Total net purchase
payments (redemp-
tions).............. 94,152,251 148,769,323 17,756,502 36,110,649
Net portfolio trans-
fers................. (109,728,292) (26,963,363) (55,018,970) 33,277,896
Net other transfers... (406,507) (508,271) (157,467) (77,316)
-------------- -------------- ------------ ------------
Net increase
(decrease) in net
assets resulting from
capital
transactions......... (15,982,548) 121,297,689 (37,419,935) 69,311,229
-------------- -------------- ------------ ------------
NET CHANGE IN NET AS-
SETS.................. 413,337,217 633,125,160 (52,988,778) 99,467,153
NET ASSETS--BEGINNING
OF PERIOD............. 2,529,998,376 1,896,873,216 449,267,390 349,800,237
-------------- -------------- ------------ ------------
NET ASSETS--END OF PE-
RIOD.................. $2,943,335,593 $2,529,998,376 $396,278,612 $449,267,390
============== ============== ============ ============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
<TABLE>
<CAPTION>
State Street Research State Street Research
Money Market Division Diversified Division Variable B Division
---------------------------- ------------------------------ --------------------------
For the Year For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
------------ ------------ -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
$453,744 $ 508,951 $ 179,014,499 $ 187,134,254 $ 9,214,399 $ 7,696,652
(32,887) 34,837 28,959,695 5,466,303 8,316,913 5,782,962
62,159 (5,989) (39,501,729) 134,318,516 (3,045,574) 6,978,552
----------- ----------- -------------- -------------- ----------- -----------
483,016 537,799 168,472,465 326,919,073 14,485,738 20,458,166
----------- ----------- -------------- -------------- ----------- -----------
452,736 255,102 307,244,358 333,211,219 233,613 226,228
(3,850,645) (3,418,636) (168,992,672) (117,752,204) (10,881,209) (11,306,407)
----------- ----------- -------------- -------------- ----------- -----------
(3,397,909) (3,163,534) 138,251,686 215,459,015 (10,647,596) (11,080,179)
2,974,885 1,749,990 (121,768,364) 61,274,635 90 22
(3,391) (3,315) (804,885) (673,377) 77,106 (2,764)
----------- ----------- -------------- -------------- ----------- -----------
(426,415) (1,416,859) 15,678,437 276,060,273 (10,570,400) (11,082,921)
----------- ----------- -------------- -------------- ----------- -----------
56,601 (879,060) 184,150,902 602,979,346 3,915,338 9,375,245
14,282,179 15,161,239 2,284,549,657 1,681,570,311 90,026,386 80,651,141
----------- ----------- -------------- -------------- ----------- -----------
$14,338,780 $14,282,179 $2,468,700,559 $2,284,549,657 $93,941,724 $90,026,386
=========== =========== ============== ============== =========== ===========
</TABLE>
15
<PAGE>
Metropolitan Life Separate Account E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Variable C Division Variable D Division
------------------------- -------------------------
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
From operations:
Net investment income
(loss)................... $ 373,385 $ 312,967 $ 4,364 $ 3,215
Net realized gain (loss)
from security transac-
tions.................... 154,760 441,254 -- --
Change in net unrealized
appreciation (deprecia-
tion) of investments..... 37,844 70,584 2,089 4,467
---------- ---------- ------- -------
Net increase (decrease) in
net assets resulting from
operations............... 565,989 824,805 6,453 7,682
---------- ---------- ------- -------
From capital transactions:
Purchases................. -- 25,268 -- --
Redemptions............... (305,902) (935,863) -- --
---------- ---------- ------- -------
Total net purchase pay-
ments (redemptions)..... (305,902) (910,595) -- --
Net portfolio transfers... -- (309) -- --
Net other transfers....... 2,730 (11,069) -- --
---------- ---------- ------- -------
Net increase (decrease) in
net assets resulting from
capital transactions..... (303,172) (921,973) -- --
---------- ---------- ------- -------
NET CHANGE IN NET ASSETS... 262,817 (97,168) 6,453 7,682
NET ASSETS--BEGINNING OF
PERIOD.................... 3,260,644 3,357,812 34,942 27,260
---------- ---------- ------- -------
NET ASSETS--END OF PERIOD.. $3,523,461 $3,260,644 $41,395 $34,942
========== ========== ======= =======
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
<TABLE>
<CAPTION>
Santander
State Street Research MetLife International Stock
Aggressive Growth Division Stock Index Division Division
- ------------------------------ ------------------------------ --------------------------
For the Year For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
- -------------- -------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 14,512,856 $ 56,171,296 $ 143,606,940 $ 89,125,955 $ 38,357,779 $ (145,246)
77,224,327 35,680,553 141,933,683 68,017,631 12,224,938 7,654,046
232,588,654 45,940,529 312,858,179 398,393,213 (13,893,204) 38,302,726
- -------------- -------------- -------------- -------------- ------------ ------------
324,325,837 137,792,378 598,398,802 555,536,799 36,689,513 45,811,526
- -------------- -------------- -------------- -------------- ------------ ------------
75,870,705 108,436,372 504,735,590 403,472,148 21,979,327 25,765,813
(84,909,572) (78,737,642) (201,712,483) (122,924,047) (16,662,946) (16,037,510)
- -------------- -------------- -------------- -------------- ------------ ------------
(9,038,867) 29,698,730 303,023,107 280,548,101 5,316,381 9,728,303
(207,792,091) (158,421,934) 74,385,432 159,663,776 (29,169,982) (33,426,187)
46 (363,723) (507,670) (770,595) (62,350) (84,341)
- -------------- -------------- -------------- -------------- ------------ ------------
(216,830,912) (129,086,927) 376,900,869 439,441,282 (23,915,951) (23,782,225)
- -------------- -------------- -------------- -------------- ------------ ------------
107,494,925 8,705,451 975,299,671 994,978,081 12,773,562 22,029,301
1,217,757,111 1,209,051,660 2,870,058,320 1,875,080,239 249,965,034 227,935,733
- -------------- -------------- -------------- -------------- ------------ ------------
$1,325,252,036 $1,217,757,111 $3,845,357,991 $2,870,058,320 $262,738,596 $249,965,034
============== ============== ============== ============== ============ ============
</TABLE>
17
<PAGE>
Metropolitan Life Separate Account E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Loomis Sayles High Yield Janus Mid Cap
Bond Division Division
-------------------------- ----------------------------
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
From operations:
Net investment income
(loss)................ $ 3,766,770 $ 3,568,151 $ 76,741,919 $ (907,747)
Net realized gain
(loss) from security
transactions.......... (1,002,119) (343,705) 102,627,814 8,354,115
Change in net
unrealized
appreciation
(depreciation) of
investments........... 4,099,504 (7,314,238) 631,364,390 66,659,923
----------- ----------- -------------- ------------
Net increase (decrease)
in net assets
resulting from
operations............ 6,864,155 (4,089,792) 810,734,123 74,106,291
----------- ----------- -------------- ------------
From capital
transactions:
Purchases.............. 9,511,700 14,100,048 262,621,252 103,125,247
Redemptions............ (2,531,875) (1,956,958) (35,345,823) (7,555,010)
----------- ----------- -------------- ------------
Total net purchase
payments
(redemptions)......... 6,979,825 12,143,090 227,275,429 95,570,237
Net portfolio
transfers............. 2,589,191 5,001,434 394,697,486 73,431,163
Net other transfers.... (3,422) 4,283 (328,916) (307,458)
----------- ----------- -------------- ------------
Net increase (decrease)
in net assets
resulting from capital
transactions.......... 9,565,594 17,148,807 621,643,999 168,693,942
----------- ----------- -------------- ------------
NET CHANGE IN NET
ASSETS................. 16,429,749 13,059,015 1,432,378,122 242,800,233
NET ASSETS--BEGINNING OF
PERIOD................. 38,781,459 25,722,444 340,420,858 97,620,625
----------- ----------- -------------- ------------
NET ASSETS--END OF
PERIOD................. $55,211,208 $38,781,459 $1,772,798,980 $340,420,858
=========== =========== ============== ============
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
<TABLE>
<CAPTION>
T. Rowe Price Scudder Global Harris Oakmark Large
Small Cap Growth Division Equity Division Cap Value Division
------------------------------ -------------------------- --------------------------
For the Year For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ (2,107,943) $ (1,596,579) $ 3,712,004 $ 551,635 $ 93,175 $ 6,654
5,272,038 (1,844,850) 2,471,119 3,761,734 (89,794) (192)
44,474,798 7,150,268 21,316,192 5,427,106 (4,447,057) 22,793
------------- ------------- ------------ ------------ ----------- ----------
47,638,893 3,708,839 27,499,315 9,740,475 (4,443,676) 29,255
------------- ------------- ------------ ------------ ----------- ----------
36,495,836 59,726,669 25,895,458 27,935,594 17,050,410 1,011,345
(9,131,942) (5,689,823) (5,620,294) (2,923,122) (1,022,417) (12,703)
------------- ------------- ------------ ------------ ----------- ----------
27,363,894 54,036,846 20,275,164 25,012,472 16,027,993 998,642
(15,988,758) 24,916,661 2,623,332 12,284,725 17,887,362 2,738,739
(19,608) (16,742) (21,564) 14,374 1,728 (138)
------------- ------------- ------------ ------------ ----------- ----------
11,355,528 78,936,765 22,876,932 37,311,571 33,917,083 3,737,243
------------- ------------- ------------ ------------ ----------- ----------
58,994,421 82,645,604 50,376,247 47,052,046 29,473,407 3,766,498
169,814,354 87,168,750 101,979,213 54,927,167 3,766,498 --
------------- ------------- ------------ ------------ ----------- ----------
$ 228,808,775 $ 169,814,354 $152,355,460 $101,979,213 $33,239,905 $3,766,498
============= ============= ============ ============ =========== ==========
</TABLE>
19
<PAGE>
Metropolitan Life Separate Account E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Neuberger Berman Partners T. Rowe Price Large
Mid Cap Value Division Cap Growth Division
---------------------------- ----------------------------
For the Period For the Period
For the Year Nov. 9, 1998 For the Year Nov. 9, 1998
Ended to Ended to
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
From operations:
Net investment income
(loss)................ $ 1,151,117 $ 1,462 $ (96,779) $ (264)
Net realized gain
(loss) from security
transactions.......... 662,939 5,610 188,181 481
Change in net
unrealized
appreciation
(depreciation) of
investments........... 163,745 102,136 5,837,101 203,080
----------- ---------- ----------- ----------
Net increase (decrease)
in net assets
resulting from
operations............ 1,977,801 109,208 5,928,503 203,297
----------- ---------- ----------- ----------
From capital
transactions:
Purchases.............. 13,058,613 528,225 17,679,944 1,011,671
Redemptions............ (748,540) (8,079) (1,063,352) (15,197)
----------- ---------- ----------- ----------
Total net purchase
payments
(redemptions)......... 12,310,073 520,146 16,616,592 996,474
Net portfolio
transfers............. 13,991,061 2,608,509 19,630,907 3,312,056
Net other transfers.... 7,270 (19) (5,434) 158
----------- ---------- ----------- ----------
Net increase (decrease)
in net assets
resulting from capital
transactions.......... 26,308,404 3,128,636 36,242,065 4,308,688
----------- ---------- ----------- ----------
NET CHANGE IN NET
ASSETS................. 28,286,205 3,237,844 42,170,568 4,511,985
NET ASSETS--BEGINNING OF
PERIOD................. 3,237,844 -- 4,511,985 --
----------- ---------- ----------- ----------
NET ASSETS--END OF
PERIOD................. $31,524,049 $3,237,844 $46,682,553 $4,511,985
=========== ========== =========== ==========
</TABLE>
See Notes To Financial Statements.
20
<PAGE>
<TABLE>
<CAPTION>
Lehman Brothers Aggregate Morgan Stanley EAFE
Bond Index Division Index Division Russell 2000 Index Division
--------------------------------------------------------- ----------------------------
For the Period For the Period For the Period
For the Year Nov. 9, 1998 For the Year Nov. 9, 1998 For the Year Nov. 9, 1998
Ended to Ended to Ended to
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
------------ -------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
$2,809,030 $ 42,997 $ 229,100 $ 695 $ 1,638,064 $ 4,244
(65,373) 8,661 1,530,194 2,965 400,083 299
(3,639,449) (33,246) 6,558,714 94,521 9,296,566 317,216
----------- ---------- ----------- ---------- ----------- ----------
(895,792) 18,412 8,318,008 98,181 11,334,713 321,759
----------- ---------- ----------- ---------- ----------- ----------
44,917,262 2,383,753 26,127,439 939,109 32,650,492 1,458,407
(2,176,680) (16,786) (1,184,409) (4,888) (1,393,965) (10,084)
----------- ---------- ----------- ---------- ----------- ----------
42,740,582 2,366,967 24,943,030 934,221 31,256,527 1,448,323
27,995,578 5,756,045 16,362,043 2,798,711 22,368,433 4,694,140
3,258 14 6,400 19 6,901 (195)
----------- ---------- ----------- ---------- ----------- ----------
70,739,418 8,123,025 41,311,473 3,732,951 53,631,861 6,142,268
----------- ---------- ----------- ---------- ----------- ----------
69,843,626 8,141,437 49,629,481 3,831,132 64,966,574 6,464,027
8,141,437 -- 3,831,132 -- 6,464,027 --
----------- ---------- ----------- ---------- ----------- ----------
$77,985,063 $8,141,437 $53,460,613 $3,831,132 $71,430,601 $6,464,027
=========== ========== =========== ========== =========== ==========
</TABLE>
21
<PAGE>
Metropolitan Life Separate Account E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Fidelity Fidelity
Money Market Division Equity-Income Division
-------------------------- --------------------------
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
From operations:
Net investment income
(loss)................ $ 144,302 $ 70,816 $ 4,814,776 $ 5,849,442
Net realized gain
(loss) from security
transactions.......... -- -- 3,770,581 2,573,653
Change in net
unrealized
appreciation
(depreciation) of
investments........... -- -- (1,968,262) 3,204,174
----------- ----------- ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 144,302 70,816 6,617,095 11,627,269
----------- ----------- ------------ ------------
From capital
transactions:
Purchases.............. 8,015,817 1,265,510 22,859,455 24,530,054
Redemptions............ (1,757,138) (1,516,869) (8,066,343) (9,385,105)
----------- ----------- ------------ ------------
Total net purchase
payments
(redemptions)........ 6,258,679 (251,359) 14,793,112 15,144,949
Net portfolio
transfers............. 2,057,532 1,078,004 (15,924,137) (5,053,322)
Net other transfers.... (4,811) (571) (36,424) (64,670)
----------- ----------- ------------ ------------
Net increase (decrease)
in net assets
resulting from capital
transactions.......... 8,311,400 826,074 (1,167,449) 10,026,957
----------- ----------- ------------ ------------
NET CHANGE IN NET
ASSETS................. 8,455,702 896,890 5,449,646 21,654,226
NET ASSETS--BEGINNING OF
PERIOD................. 1,863,376 966,486 127,409,943 105,755,717
----------- ----------- ------------ ------------
NET ASSETS--END OF
PERIOD................. $10,319,078 $ 1,863,376 $132,859,589 $127,409,943
=========== =========== ============ ============
</TABLE>
See Notes To Financial Statements.
22
<PAGE>
<TABLE>
<CAPTION>
Fidelity Overseas Fidelity Investment
Fidelity Growth Division Division Grade Bond Division
- -------------------------- -------------------------- --------------------------
For the Year For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 16,533,435 $ 13,632,842 $ 698,515 $ 1,389,339 $ 401,385 $ 279,415
1,690,620 3,491,143 7,899,918 924,598 57,436 84,679
44,508,514 24,850,739 1,741,692 42,139 (641,467) 234,217
- ------------ ------------ ----------- ----------- ----------- ----------
62,732,569 41,974,724 10,340,125 2,356,076 (182,646) 598,311
- ------------ ------------ ----------- ----------- ----------- ----------
29,193,313 23,670,952 3,990,736 5,122,845 1,956,738 2,187,773
(10,933,417) (11,519,342) (1,453,009) (1,927,541) (611,744) (810,073)
- ------------ ------------ ----------- ----------- ----------- ----------
18,259,896 12,151,610 2,537,727 3,195,304 1,344,994 1,377,700
7,609,412 (3,683,855) (806,163) (3,286,287) (1,300,166) 1,086,486
(17,359) (105,446) (182,955) (8,379) (9,037) (7,460)
- ------------ ------------ ----------- ----------- ----------- ----------
25,851,949 8,362,309 1,548,609 (99,362) 35,791 2,456,726
- ------------ ------------ ----------- ----------- ----------- ----------
88,584,518 50,337,033 11,888,734 2,256,714 (146,855) 3,055,037
156,924,996 106,587,963 23,192,129 20,935,415 9,432,141 6,377,104
- ------------ ------------ ----------- ----------- ----------- ----------
$245,509,514 $156,924,996 $35,080,863 $23,192,129 $ 9,285,286 $9,432,141
============ ============ =========== =========== =========== ==========
</TABLE>
23
<PAGE>
Metropolitan Life Separate Account E
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Fidelity Calvert Social Calvert Social Mid Cap
Asset Manager Division Balanced Division Growth Division
-------------------------- -------------------------- -------------------------
For the Year For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended Ended
December 31, December 31, December 31, December 31, December 31, December 31,
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
From operations:
Net investment income
(loss)................ $ 3,551,516 $ 5,718,492 $ 4,603,912 $ 2,803,917 $ 548,235 $ 763,151
Net realized gain
(loss) from security
transactions.......... 807,833 860,649 603,710 404,517 276,373 200,832
Change in net
unrealized
appreciation
(depreciation) of
investments........... 1,127,977 149,631 13,211 2,341,578 (349,562) 395,768
----------- ----------- ----------- ----------- ---------- ----------
Net increase (decrease)
in net assets
resulting from
operations............ 5,487,326 6,728,772 5,220,833 5,550,012 475,046 1,359,751
----------- ----------- ----------- ----------- ---------- ----------
From capital
transactions:
Purchases.............. 8,191,507 8,448,368 7,293,509 7,171,631 1,644,955 1,423,352
Redemptions............ (3,989,450) (3,988,838) (1,876,553) (1,653,370) (242,225) (451,262)
----------- ----------- ----------- ----------- ---------- ----------
Total net purchase
payments
(redemptions)......... 4,202,057 4,459,530 5,416,956 5,518,261 1,402,730 972,090
Net portfolio
transfers............. (4,054,499) (2,379,056) (1,485,236) 80,963 (806,101) 485,270
Net other transfers.... (60,514) (2,755,577) (12,300) (149,713) (1,935) (61,198)
----------- ----------- ----------- ----------- ---------- ----------
Net increase (decrease)
in net assets
resulting from capital
transactions.......... 87,044 (675,103) 3,919,420 5,449,511 594,694 1,396,162
----------- ----------- ----------- ----------- ---------- ----------
NET CHANGE IN NET
ASSETS................. 5,574,370 6,053,669 9,140,253 10,999,523 1,069,740 2,755,913
NET ASSETS--BEGINNING OF
PERIOD................. 54,598,660 48,544,991 45,161,803 34,162,280 6,943,606 4,187,693
----------- ----------- ----------- ----------- ---------- ----------
NET ASSETS--END OF
PERIOD................. $60,173,030 $54,598,660 $54,302,056 $45,161,803 $8,013,346 $6,943,606
=========== =========== =========== =========== ========== ==========
</TABLE>
See Notes To Financial Statements.
24
<PAGE>
Metropolitan Life Separate Account E
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Metropolitan Life Separate Account E (the "Separate Account") is a multi-
division unit investment trust registered under the Investment Company Act of
1940. Seventeen investment divisions correspond to the State Street Research
Growth, State Street Research Income, State Street Research Money Market,
State Street Research Diversified, State Street Research Aggressive Growth,
MetLife Stock Index, Santander International Stock, Loomis Sayles High Yield
Bond, Janus Mid Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity,
Harris Oakmark Large Cap Value, Neuberger Berman Partners Mid Cap Value, T.
Rowe Price Large Cap Growth, Lehman Brothers Aggregate Bond Index, Morgan
Stanley EAFE Index, and Russell 2000 Index Portfolios of the Metropolitan
Series Fund, Inc. (the "Fund"). The assets in the Variable B, Variable C, and
Variable D Divisions are restricted to investing in the Growth Portfolio of
the Fund.
The Fidelity Money Market, Equity-Income, Growth, Overseas, Investment Grade
Bond, and Asset Manager Divisions correspond to the Money Market, Equity-
Income, Growth, Overseas, Investment Grade Bond, and Asset Manager Portfolios
of Fidelity's Variable Insurance Products Fund and Fidelity's Variable
Insurance Products Fund II ("Fidelity").
The Calvert Social Balanced Division and Calvert Social Mid-Cap Growth
Division correspond to the Calvert Social Balanced Portfolio and Calvert
Social Mid-Cap Growth Portfolio, respectively, of the Calvert Variable Series,
Inc. ("Calvert"). Each portfolio has specific objectives relative to growth of
capital and income.
The Separate Account was formed by Metropolitan Life Insurance Company
("Metropolitan Life") on September 27, 1983, and registered as a unit
investment trust on April 6, 1984. The assets of the Separate Account are the
property of Metropolitan Life.
A summary of significant accounting policies, all of which are in accordance
with generally accepted accounting principles, is set forth below:
1. SIGNIFICANT ACCOUNTING POLICIES
A. Valuation of Investments
Investments in shares of the Fund are valued at the reported net asset
values of the respective portfolios. The method used to value the Fund's
investments at December 31, 1999 are described in the Fund's 1999 Annual
Report.
Investments in shares of Fidelity are valued at the reported net asset
values of the respective portfolios. The methods used to value
Fidelity's investments at December 31, 1999 are described in Fidelity's
1999 Annual Report.
Investments in shares of Calvert are valued at the reported net asset
value of the Calvert Social Balanced Portfolio and Calvert Social Mid-
Cap Growth Portfolio. The methods used to value Calvert's investments at
December 31, 1999 are described in Calvert's 1999 Annual Report.
B. Security Transactions
Purchases and sales are recorded on the trade date. Realized gains and
losses on sales of investments are determined on the basis of identified
cost.
C. Federal Income Taxes
In the opinion of counsel of Metropolitan Life, the Separate Account
will be treated as a part of Metropolitan Life and its operations, and
the Separate Account will not be taxed separately as a "regulated
investment company" under existing law. Metropolitan Life is taxed as a
life insurance company. The contracts permit Metropolitan Life to charge
against the Separate Account any taxes, attributable to the maintenance
or operation of the Separate Account. Metropolitan Life does not
anticipate, under existing law, that any federal income taxes will be
charged against the Separate Account in determining the value of amounts
under a contract.
25
<PAGE>
D. Purchase Payments
Purchase payments received by Metropolitan Life are credited as
Accumulation Units as of the end of the valuation period in which received,
as provided in the prospectus.
E. Accumulation Units
As of December 31, 1999, there were 424,599,147 Accumulation Units
outstanding, which consisted of:
<TABLE>
<CAPTION>
Accumulation
Division Units
-------- ------------
<S> <C>
State Street Research Growth Division........................... 68,186,817
State Street Research Income Division........................... 20,028,295
State Street Research Money Market Division..................... 766,554
State Street Research Diversified Division...................... 81,803,533
State Street Research Aggressive Growth Division................ 34,476,844
MetLife Stock Index Division.................................... 86,194,645
Santander International Stock Division.......................... 14,166,000
Loomis Sayles High Yield Bond Division.......................... 4,939,193
Janus Mid Cap Division.......................................... 46,723,767
T. Rowe Price Small Cap Growth Division......................... 15,032,736
Scudder Global Equity Division.................................. 9,905,262
Harris Oakmark Large Cap Value Division......................... 3,705,619
Neuberger Berman Partners Mid Cap Value Division................ 2,517,069
T. Rowe Price Large Cap Growth Division......................... 3,509,482
Lehman Brothers Aggregate Bond Index Division................... 7,899,005
Morgan Stanley EAFE Index Division.............................. 4,009,779
Russell 2000 Index Division..................................... 5,590,923
Fidelity Money Market Division.................................. 756,966
Fidelity Equity-Income Division................................. 3,703,407
Fidelity Growth Division........................................ 4,417,859
Fidelity Overseas Division...................................... 1,220,096
Fidelity Investment Grade Bond Division......................... 560,146
Fidelity Asset Manager Division................................. 2,253,306
Calvert Social Balanced Division................................ 1,948,896
Calvert Social Mid-Cap Growth Division.......................... 282,948
</TABLE>
In addition to the above mentioned Accumulation Units, there were cash
reserves applicable to contracts receiving annuity payout under the
Variable Account B Division and cash reserves for Preference Plus (PPA)
Immediate Annuities.
<TABLE>
<S> <C>
Variable Account B Division..................................... $ 2,915,679
Cash Reserves for PPA Immediate Annuities....................... $42,968,371
</TABLE>
26
<PAGE>
2. DIVIDENDS
The amount of dividends received by the Separate Account during the year
were $952,895,633. The dividends were paid to Metropolitan Life and were
immediately reinvested in additional shares of the portfolio in which each
of the investment divisions invest. As a result of these reinvestments,
number of shares held by each of the investment divisions increased by the
following:
<TABLE>
<CAPTION>
Division: Shares
--------- ----------
<S> <C>
State Street Research Growth Division............................. 8,285,667
State Street Research Income Division............................. 2,186,881
State Street Research Money Market Division....................... 65,195
State Street Research Diversified Division........................ 11,683,635
Variable B Division............................................... 267,238
Variable C Division............................................... 9,905
Variable D Division............................................... 116
State Street Research Aggressive Growth Division.................. 809,854
MetLife Stock Index Division...................................... 4,707,799
Santander International Stock Division............................ 3,044,329
Loomis Sayles High Yield Bond Division............................ 478,479
Janus Mid Cap Division............................................ 2,638,977
T. Rowe Price Small Cap Growth Division........................... --
Scudder Global Equity Division.................................... 370,368
Harris Oakmark Large Cap Value Division........................... 40,140
Neuberger Berman Partners Mid Cap Value Division.................. 119,910
T. Rowe Price Large Cap Growth Division........................... 14,207
Lehman Brothers Aggregate Bond Index Division..................... 356,913
Morgan Stanley EAFE Index Division................................ 43,409
Russell 2000 Index Division....................................... 176,227
Fidelity Money Market Division.................................... 179,961
Fidelity Equity-Income Division................................... 254,791
Fidelity Growth Division.......................................... 440,739
Fidelity Overseas Division........................................ 49,075
Fidelity Investment Grade Bond Division........................... 39,942
Fidelity Asset Manager Division................................... 241,672
Calvert Social Balanced Division.................................. 2,389,497
Calvert Social Mid-Cap Growth Division............................ 20,634
</TABLE>
3. EXPENSES
Metropolitan Life applies a daily charge against the Separate Account for
general administrative expenses and for the mortality and expense risk
assumed by Metropolitan Life. This charge is equivalent to an effective
annual rate of 1.5% of the average daily values of the assets in the
Separate Account for VestMet contracts and 1.25% for Preference Plus
contracts. Of this charge, Metropolitan Life estimates .75% is for general
administrative expenses for VestMet contracts and .50% is for Preference
Plus contracts and .75% is for the mortality and expense risk on both
contracts. However, for the enhanced and Financial Freedom Account
Contracts, the charge is equivalent to an effective annual rate of .95% of
the average daily value of the assets for these contracts. Of this charge,
Metropolitan Life estimates .20% is for general administrative expenses and
.75% is for mortality and expense risk. The Variable B, C, and D contracts
are charged for administrative expenses and mortality and expense risk
according to the rates under their respective contracts.
4. NEW DIVISIONS
On November 9, 1998, six divisions were added to the Separate Account:
Harris Oakmark Large Cap Value Division, Neuberger Berman Partners Mid Cap
Value Division, T. Rowe Price Large Cap Growth Division, Lehman Brothers
Aggregate Bond Index Division, Morgan Stanley EAFE Index Division, and
Russell 2000 Index Division.
27
<PAGE> 1
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
METROPOLITAN LIFE INSURANCE COMPANY
Independent Auditors' Report................................
Consolidated Statements of Income for the years ended
December 31, 1999, 1998 and 1997..........................
Consolidated Balance Sheets at December 31, 1999 and 1998...
Consolidated Statements of Equity for the years ended
December 31, 1999, 1998 and 1997..........................
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997..........................
Notes to Consolidated Financial Statements..................
</TABLE>
<PAGE> 2
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Policyholders 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, 1999 and 1998, and the related consolidated statements of income,
equity and cash flows for each of the three years in the period ended December
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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 consolidated financial position of Metropolitan Life
Insurance Company and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
February 7, 2000
<PAGE> 3
METROPOLITAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
REVENUES
Premiums.................................................... $12,088 $11,503 $11,278
Universal life and investment-type product policy fees...... 1,438 1,360 1,418
Net investment income....................................... 9,816 10,228 9,491
Other revenues.............................................. 2,154 1,994 1,491
Net realized investment gains (losses) (net of amounts
allocable to other accounts of $(67), $608 and $231,
respectively)............................................. (70) 2,021 787
------- ------- -------
25,426 27,106 24,465
------- ------- -------
EXPENSES
Policyholder benefits and claims (excludes amounts directly
related to net realized investment gains (losses) of
$(21), $368 and $161, respectively)....................... 13,105 12,638 12,403
Interest credited to policyholder account balances.......... 2,441 2,711 2,878
Policyholder dividends...................................... 1,690 1,651 1,742
Other expenses (excludes amounts directly related to net
realized investment gains (losses) of $(46), $240 and $70,
respectively)............................................. 6,755 8,019 5,771
------- ------- -------
23,991 25,019 22,794
------- ------- -------
Income before provision for income taxes and extraordinary
item...................................................... 1,435 2,087 1,671
Provision for income taxes.................................. 593 740 468
------- ------- -------
Income before extraordinary item............................ 842 1,347 1,203
Extraordinary item -- demutualization expense............... 225 4 --
------- ------- -------
Net income.................................................. $ 617 $ 1,343 $ 1,203
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
METROPOLITAN LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value........ $ 96,981 $100,767
Equity securities, at fair value.......................... 2,006 2,340
Mortgage loans on real estate............................. 19,739 16,827
Real estate and real estate joint ventures................ 5,649 6,287
Policy loans.............................................. 5,598 5,600
Other limited partnership interests....................... 1,331 1,047
Short-term investments.................................... 3,055 1,369
Other invested assets..................................... 1,501 1,484
-------- --------
135,860 135,721
Cash and cash equivalents................................... 2,789 3,301
Accrued investment income................................... 1,725 1,994
Premiums and other receivables.............................. 6,681 5,972
Deferred policy acquisition costs........................... 8,492 6,538
Deferred income taxes....................................... 603 --
Other....................................................... 4,141 3,752
Separate account assets..................................... 64,941 58,068
-------- --------
$225,232 $215,346
======== ========
LIABILITIES AND EQUITY
Liabilities:
Future policy benefits...................................... $ 73,582 $ 72,701
Policyholder account balances............................... 45,901 46,494
Other policyholder funds.................................... 4,498 4,061
Policyholder dividends payable.............................. 974 947
Short-term debt............................................. 4,208 3,585
Long-term debt.............................................. 2,514 2,903
Current income taxes payable................................ 548 403
Deferred income taxes payable............................... -- 545
Other....................................................... 14,376 10,772
Separate account liabilities................................ 64,941 58,068
-------- --------
211,542 200,479
-------- --------
Commitments and contingencies (Note 9)
Equity:
Retained earnings........................................... 14,100 13,483
Accumulated other comprehensive income (loss)............... (410) 1,384
-------- --------
13,690 14,867
-------- --------
$225,232 $215,346
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
METROPOLITAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE INCOME (LOSS)
-----------------------------------------
NET FOREIGN MINIMUM
UNREALIZED CURRENCY PENSION
COMPREHENSIVE RETAINED INVESTMENT TRANSLATION LIABILITY
TOTAL INCOME (LOSS) EARNINGS GAINS (LOSSES) ADJUSTMENT ADJUSTMENT
----- ------------- -------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997....... $11,983 $10,937 $ 1,028 $ 18 $ --
Comprehensive income:
Net income..................... 1,203 $ 1,203 1,203
-------
Other comprehensive income:
Unrealized investment gains,
net of related offsets,
reclassification
adjustments and income
taxes...................... 870 870
Foreign currency translation
adjustments................ (49) (49)
-------
Other comprehensive income... 821 821
-------
Comprehensive income........... $ 2,024
=======
------- ------- ------- ----- ----
Balance at December 31, 1997..... 14,007 12,140 1,898 (31) --
Comprehensive income:
Net income..................... 1,343 $ 1,343 1,343
-------
Other comprehensive loss:
Unrealized investment losses,
net of related offsets,
reclassification
adjustments and income
taxes...................... (358) (358)
Foreign currency translation
adjustments................ (113) (113)
Minimum pension liability
adjustment................. (12) (12)
-------
Other comprehensive loss..... (483) (483)
-------
Comprehensive income........... $ 860
=======
------- ------- ------- ----- ----
Balance at December 31, 1998..... 14,867 13,483 1,540 (144) (12)
Comprehensive loss:
Net income..................... 617 $ 617 617
-------
Other comprehensive loss:
Unrealized investment losses,
net of related offsets,
reclassification
adjustments and income
taxes...................... (1,837) (1,837)
Foreign currency translation
adjustments................ 50 50
Minimum pension liability
adjustment................. (7) (7)
-------
Other comprehensive loss..... (1,794) (1,794)
-------
Comprehensive loss............. $(1,177)
=======
------- ------- ------- ----- ----
Balance at December 31, 1999..... $13,690 $14,100 $ (297) $ (94) $(19)
======= ======= ======= ===== ====
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
METROPOLITAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $ 617 $ 1,343 $ 1,203
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization expenses.................. 173 56 (36)
(Gains) losses from sales of investments and businesses,
net................................................... 137 (2,629) (1,018)
Change in undistributed income of real estate joint
ventures and other limited partnership interests...... (322) (91) 157
Interest credited to policyholder account balances...... 2,441 2,711 2,878
Universal life and investment-type product policy
fees.................................................. (1,438) (1,360) (1,418)
Change in accrued investment income..................... 269 (181) (215)
Change in premiums and other receivables................ (619) (2,681) (792)
Change in deferred policy acquisition costs, net........ (389) (188) (159)
Change in insurance related liabilities................. 2,248 1,481 2,364
Change in income taxes payable.......................... 22 251 (99)
Change in other liabilities............................. 857 2,390 (206)
Other, net.............................................. (131) (260) 213
-------- -------- --------
Net cash provided by operating activities................... 3,865 842 2,872
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Sales, maturities and repayments of:
Fixed maturities........................................ 73,120 57,857 75,346
Equity securities....................................... 760 3,085 1,821
Mortgage loans on real estate........................... 1,992 2,296 2,784
Real estate and real estate joint ventures.............. 1,062 1,122 2,046
Other limited partnership interests..................... 469 146 166
Purchases of:
Fixed maturities........................................ (72,253) (67,543) (76,603)
Equity securities....................................... (410) (854) (2,121)
Mortgage loans on real estate........................... (4,395) (2,610) (4,119)
Real estate and real estate joint ventures.............. (341) (423) (624)
Other limited partnership interests..................... (465) (723) (338)
Net change in short-term investments...................... (1,577) (761) 63
Net change in policy loans................................ 2 133 17
Purchase of businesses, net of cash received.............. (2,972) -- (430)
Proceeds from sales of businesses......................... -- 7,372 135
Net change in investment collateral....................... 2,692 3,769 --
Other, net................................................ (73) (183) 191
-------- -------- --------
Net cash provided by (used in) investing activities......... (2,389) 2,683 (1,666)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Policyholder account balances:
Deposits................................................ 18,428 19,361 16,061
Withdrawals............................................. (20,650) (21,706) (18,831)
Short-term debt, net...................................... 623 (1,002) 1,265
Long-term debt issued..................................... 44 693 989
Long-term debt repaid..................................... (433) (481) (104)
-------- -------- --------
Net cash used in financing activities....................... (1,988) (3,135) (620)
-------- -------- --------
Change in cash and cash equivalents......................... (512) 390 586
Cash and cash equivalents, beginning of year................ 3,301 2,911 2,325
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 2,789 $ 3,301 $ 2,911
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest.................................................. $ 388 $ 367 $ 422
======== ======== ========
Income taxes.............................................. $ 587 $ 579 $ 589
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS ARE IN MILLIONS UNLESS OTHERWISE STATED.)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Metropolitan Life Insurance Company ("MetLife") and its subsidiaries (the
"Company") is a leading provider of insurance and financial services to a broad
section of institutional and individual customers. The Company offers life
insurance, annuities and mutual funds to individuals and group insurance and
retirement and savings products and services to corporations and other
institutions.
PLAN OF REORGANIZATION
On September 28, 1999, the board of directors of MetLife adopted, pursuant
to the New York Insurance Law, a plan of reorganization, and subsequently
adopted amendments to the plan, pursuant to which MetLife proposes to convert
from a mutual life insurance company to a stock life insurance company and
become a wholly-owned subsidiary of MetLife, Inc. The plan was approved by
MetLife's voting policyholders on February 7, 2000. The plan will become
effective at such time as the New York Superintendent of Insurance
("Superintendent") approves it based on finding, among other things, that the
plan is fair and equitable to policyholders. The plan requires an initial public
offering of common stock and provides for other capital raising transactions on
the effective date of the plan.
On the date the plan of reorganization becomes effective, each
policyholder's membership interest will be extinguished and each eligible
policyholder will be entitled to receive, in exchange for that interest, trust
interests representing shares of common stock of MetLife, Inc. to be held in a
trust, cash or an adjustment to their policy values in the form of policy
credits, as provided in the plan. In addition, when MetLife demutualizes,
MetLife's Canadian branch will make cash payments to holders of certain policies
transferred to Clarica Life Insurance Company ("Clarica Life") in connection
with the sale of a substantial portion of MetLife's Canadian operations in 1998.
See Note 9.
The plan of reorganization requires that MetLife establish and operate a
closed block for the benefit of holders of certain individual life insurance
policies of MetLife. Assets will be allocated to the closed block in an amount
that is expected to produce cash flows which, together with anticipated revenue
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 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. 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 these policies included 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 relating to the closed block are, in the aggregate, more or
less favorable than assumed in establishing the closed block, total dividends
paid to the closed block policyholders in the future may be greater than or less
than which 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. The closed block will
continue in effect until the last policy in the closed block is no longer in
force.
<PAGE> 8
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The accounting principles to account for the participating policies
included in the closed block will be those used prior to the date of the
demutualization. However, a policyholder dividend obligation will be established
for earnings that will be paid to policyholders as additional dividends in the
amounts described below, unless these earnings are offset by future unfavorable
experience in the closed block. Although all of the cash flows of the closed
block are for the benefit of closed block policyholders, the excess of closed
block liabilities over closed block assets at the effective date will represent
the estimated maximum future contributions from the closed block expected to be
reported in income as the contribution from the closed block after income taxes.
The contribution from the closed block will be 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 contributions from the
closed block will approximately equal the expected cumulative contributions, due
to the effect of dividend changes. If, over the period the closed block remains
in existence, the actual cumulative contribution from the closed block is
greater than the expected cumulative contribution from the closed block, the
expected cumulative contribution will be recognized in income with the excess
recorded as a policyholder dividend obligation, because the excess of the actual
cumulative contribution from the closed block over the expected cumulative
contribution will be paid to closed block policyholders as additional
policyholder dividends unless offset by future unfavorable experience of the
closed block. If over such period, the actual cumulative contribution from the
closed block is less than the expected cumulative contribution from the closed
block, the actual contribution will be recognized in income. However, dividends
in the future may be changed, which would be intended to increase future actual
contribution until the actual contribution equal the expected cumulative
contribution.
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP"). The New York
State Insurance Department (the "Department") recognizes only statutory
accounting practices for determining and reporting the financial condition and
results of operations of an insurance company for determining solvency under the
New York Insurance Law. No consideration is given by the Department to financial
statements prepared in accordance with GAAP in making such determination.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. The most significant estimates include those used
in determining deferred policy acquisition costs, investment allowances and the
liability for future policyholder benefits. Actual results could differ from
those estimates.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
MetLife and its subsidiaries, partnerships and joint ventures in which MetLife
has a majority voting interest or general partner interest with limited removal
rights by limited partners. All material intercompany accounts and transactions
have been eliminated.
The Company accounts for its investments in real estate joint ventures and
other limited partnership interests in which it does not have a controlling
interest, but more than a minimal interest, under the equity method of
accounting.
Minority interest related to consolidated entities included in other
liabilities was $245 and $274 at December 31, 1999 and 1998, respectively.
<PAGE> 9
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the 1999 presentation.
INVESTMENTS
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 securities are recorded as a separate component
of other comprehensive income (loss), net of policyholder related amounts and
deferred income taxes. The cost of fixed maturity and equity securities is
adjusted for impairments in value deemed to be other than temporary. These
adjustments are recorded as realized losses on investments. Realized gains and
losses on sales of securities are determined on a specific identification basis.
All security transactions are recorded on a trade date basis.
Mortgage loans on real estate are stated at amortized cost, net of
valuation allowances. Valuation allowances are established for the excess
carrying value of the mortgage loan over its estimated fair value when it is
probable that, based upon current information and events, the Company will be
unable to collect all amounts due under the contractual terms of the loan
agreement. Valuation allowances are based upon the present value of expected
future cash flows discounted at the loan's original effective interest rate or
the collateral value if the loan is collateral dependent. Interest income earned
on impaired loans is accrued on the net carrying value amount of the loan based
on the loan's effective interest rate.
Real estate, 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 40 years). Cost is
adjusted for impairment whenever events or changes in circumstances indicate the
carrying amount of the asset may not be recoverable. Impaired real estate is
written down to estimated fair value with the impairment loss being included in
realized losses on investments. 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 in satisfaction of
debt is recorded at estimated fair value at the date of foreclosure. Valuation
allowances on real estate held-for-sale are computed using the lower of
depreciated cost or estimated fair value, net of disposition costs.
Policy loans are stated at unpaid principal balances.
Short-term investments are stated at amortized cost, which approximates
fair value.
DERIVATIVE INSTRUMENTS
The Company uses derivative instruments to manage market risk through one
of four principal risk management strategies: the hedging of invested assets,
liabilities, portfolios of assets or liabilities and anticipated transactions.
The Company's derivative strategy employs a variety of instruments including
financial futures, financial forwards, interest rate and foreign currency swaps,
floors, foreign exchange contracts, caps and options.
The Company's derivative program is monitored by senior management. The
Company's risk of loss is typically limited to the fair value of its derivative
instruments and not to the notional or contractual amounts of these derivatives.
Risk arises from changes in the fair value of the underlying instruments and,
with respect to over-the-counter transactions, from the possible inability of
counterparties to meet the terms of the contracts. The Company has strict
policies regarding the financial stability and credit standing of its major
counterparties.
<PAGE> 10
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's derivative instruments are designated as hedges and are
highly correlated to the underlying risk at contract inception. The Company
monitors the effectiveness of its hedges throughout the contract term using an
offset ratio of 80 to 125 percent as its minimum acceptable threshold for hedge
effectiveness. Derivative instruments that lose their effectiveness are marked
to market through net investment income.
Gains or losses on financial futures contracts entered into in anticipation
of investment transactions are deferred and, at the time of the ultimate
investment purchase or disposition, recorded as an adjustment to the basis of
the purchased assets or to the proceeds on disposition. Gains or losses on
financial futures used in asset risk management are deferred and amortized into
net investment income over the remaining term of the investment. Gains or losses
on financial futures used in portfolio risk management are deferred and
amortized into net investment income or policyholder benefits over the remaining
life of the hedged sector of the underlying portfolio.
Financial forward contracts that are entered into to purchase securities
are marked to fair value through other comprehensive income (loss), similar to
the accounting for the investment security. Such contracts are accounted for at
settlement by recording the purchase of the specified securities at the
contracted value. Gains or losses resulting from the termination of forward
contracts are recognized immediately as a component of net investment income.
Interest rate and certain foreign currency swaps involve the periodic
exchange of payments without the exchange of underlying principal or notional
amounts. Net receipts or payments are accrued and recognized over the term of
the swap agreement as an adjustment to net investment income or other expense.
Gains or losses resulting from swap terminations are amortized over the
remaining term of the underlying asset or liability. Gains and losses on swaps
and certain foreign forward exchange contracts entered into in anticipation of
investment transactions are deferred and, at the time of the ultimate investment
purchase or disposition, reflected as an adjustment to the basis of the
purchased assets or to the proceeds of disposition. In the event the asset or
liability underlying a swap is disposed of, the swap position is closed
immediately and any gain or loss is recorded as an adjustment to the proceeds
from disposition.
The Company periodically enters into collars, which consist of purchased
put and written call options, to lock in unrealized gains on equity securities.
Collars are marked to market through other comprehensive income (loss), similar
to the accounting for the underlying equity securities. Purchased interest rate
caps and floors are used to offset the risk of interest rate changes related to
insurance liabilities. Premiums paid on floors, caps and options are split into
two components, time value and intrinsic value. Time value is amortized over the
life of the applicable derivative instrument. The intrinsic value and any gains
or losses relating to these derivative instruments adjust the basis of the
underlying asset or liability and are recognized as a component of net
investment income over the term of the underlying asset or liability being
hedged as an adjustment to the yield.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
<PAGE> 11
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements, which are included in other
assets, are stated at cost, less accumulated depreciation and amortization.
Depreciation is determined using either the straight-line or
sum-of-the-years-digits method over the estimated useful lives of the assets.
Estimated lives range from 20 to 40 years for real estate and 5 to 15 years for
all other property and equipment. Accumulated depreciation of property and
equipment and accumulated amortization on leasehold improvements was $1,130 and
$1,098 at December 31, 1999 and 1998, respectively. Related depreciation and
amortization expense was $103, $116 and $103 for the years ended December 31,
1999, 1998 and 1997, respectively.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new insurance business that vary with, and are
primarily related to, the production of new business are deferred. Such costs,
which consist principally of commissions, agency and policy issue expenses, are
amortized with interest over the expected life of the contract for participating
traditional life, universal life and investment-type products. Generally,
deferred policy acquisition costs are amortized in proportion to the present
value of estimated gross margins or profits from investment, mortality, expense
margins and surrender charges. Interest rates are based on rates in effect at
the inception of the contracts. Actual gross margins or profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates and evaluates the
recoverability of deferred policy acquisition costs. When appropriate,
management revises its assumptions of the estimated gross margins or profits of
these contracts, and the cumulative amortization is re-estimated and adjusted by
a cumulative charge or credit to current operations.
Deferred policy acquisition costs for non-participating traditional life,
non-medical health and annuity policies with life contingencies are amortized in
proportion to anticipated premiums. Assumptions as to anticipated premiums are
made at the date of policy issuance and are consistently applied during the
lives of the contracts. Deviations from estimated experience are included in
operations when they occur. For these contracts, the amortization period is
typically the estimated life of the policy.
Deferred policy acquisition costs related to internally replaced contracts
are expensed at date of replacement.
Deferred policy acquisition costs for property and casualty insurance
contracts, which are primarily comprised of commissions and certain underwriting
expenses, are deferred and amortized on a pro rata basis over the applicable
contract term or reinsurance treaty.
On September 28, 1999, the Company's Board of Directors adopted a plan of
reorganization. Consequently, in the fourth quarter of 1999, the Company was
able to commit to state insurance regulatory authorities that it would establish
investment sub-segments to further align investments with the traditional
individual life business of the Individual segment. As a result, future
dividends for the traditional individual life business will be determined based
on the results of the new investment sub-segments. Additionally, estimated
future gross margins used to determine amortization of deferred policy
acquisition costs and the amount of unrealized investment gains and losses
relating to these products are based on investments in the new sub-segments.
Using the investments in the sub-segments to determine estimated gross margins
and unrealized investment gains and losses increased 1999 amortization of
deferred policy acquisition costs by $56 (net of income taxes of $32) and
decreased other comprehensive loss in 1999 by $123 (net of income taxes of $70).
<PAGE> 12
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information regarding deferred policy acquisition costs is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at January 1.................................. $ 6,538 $6,436 $7,227
Capitalized during the year........................... 1,160 1,025 1,000
------- ------ ------
Total............................................ 7,698 7,461 8,227
------- ------ ------
Amortization allocated to:
Net realized investment gains (losses).............. (46) 240 70
Unrealized investment gains (losses)................ (1,628) (216) 727
Other expenses...................................... 862 587 771
------- ------ ------
Total amortization............................... (812) 611 1,568
------- ------ ------
Dispositions and other................................ (18) (312) (223)
------- ------ ------
Balance at December 31................................ $ 8,492 $6,538 $6,436
======= ====== ======
</TABLE>
Amortization of deferred policy acquisition costs is allocated to (1)
realized investment gains and losses to provide consolidated statement of income
information regarding the impact of such gains and losses on the amount of the
amortization, (2) unrealized investment gains and losses to provide information
regarding the amount of deferred policy acquisition costs that would have been
amortized if such gains and losses had been realized and (3) other expenses to
provide amounts related to the gross margins or profits originating from
transactions other than investment gains and losses.
Realized investment gains and losses related to certain products have a
direct impact on the amortization of deferred policy acquisition costs.
Presenting realized investment gains and losses net of related amortization of
deferred policy acquisition costs provides information useful in evaluating the
operating performance of the Company. This presentation may not be comparable to
presentations made by other insurers.
INTANGIBLE ASSETS
The excess of cost over the fair value of net assets acquired ("goodwill")
and other intangible assets, including the value of business acquired, are
included in other assets. Goodwill is amortized on a straight-line basis over a
period ranging from 10 to 30 years. The Company continually reviews goodwill to
assess recoverability from future operations using undiscounted cash flows.
Impairments are recognized in operating results if a permanent diminution in
value is deemed to have occurred. Other intangible assets are amortized over the
expected policy or contract duration in relation to the present value of
estimated gross profits from such policies and contracts.
<PAGE> 13
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
GOODWILL OTHER INTANGIBLE ASSETS
-------------------- --------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31
Net Balance at January 1.............. $404 $359 $136 $1,006 $1,055 $ 767
Acquisitions.......................... 237 67 240 156 39 355
Amortization.......................... (30) (22) (17) (114) (88) (67)
---- ---- ---- ------ ------ ------
Net Balance at December 31............ $611 $404 $359 $1,048 $1,006 $1,055
==== ==== ==== ====== ====== ======
DECEMBER 31
Accumulated amortization.............. $118 $ 88 $ 392 $ 278
==== ==== ====== ======
</TABLE>
FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES
Future policy benefit liabilities for participating traditional life
insurance policies are equal to the aggregate of (a) net level premium reserves
for death and endowment policy benefits (calculated based upon the nonforfeiture
interest rate, ranging from 3% to 10%, and mortality rates guaranteed in
calculating the cash surrender values described in such contracts), (b) the
liability for terminal dividends and (c) premium deficiency reserves, which are
established when the liabilities for future policy benefits plus the present
value of expected future gross premiums are insufficient to provide for expected
future policy benefits and expenses after deferred policy acquisition costs are
written off.
Future policy benefit liabilities for traditional annuities are equal to
accumulated contractholder fund balances during the accumulation period and the
present value of expected future payments after annuitization. Interest rates
used in establishing such liabilities range from 3% to 8%. Future policy benefit
liabilities for non-medical health insurance are calculated using the net level
premium method and assumptions as to future morbidity, withdrawals and interest,
which provide a margin for adverse deviation. Interest rates used in
establishing such liabilities range from 3% to 10%. Future policy benefit
liabilities for disabled lives are estimated using the present value of benefits
method and experience assumptions as to claim terminations, expenses and
interest. Interest rates used in establishing such liabilities range from 3% to
10%.
Policyholder account balances for universal life and investment-type
contracts are equal to the policy account values, which consist of an
accumulation of gross premium payments plus credited interest, ranging from 2%
to 17%, less expenses, mortality charges and withdrawals.
The liability for unpaid claims and claim expenses for property and
casualty insurance represents 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. Revisions of these estimates
are included in operations in the year such refinements are made.
RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS
Premiums related to traditional life and annuity policies with life
contingencies are recognized as revenues when due. 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.
<PAGE> 14
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Premiums related to non-medical health contracts are recognized on a pro
rata basis over the applicable contract term.
Premiums related to universal life 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. Amounts that are charged to operations
include interest credited and benefit claims incurred in excess of related
policyholder account balances.
Premiums related to property and casualty contracts are recognized as
revenue on a pro rata basis over the applicable contract term. Unearned premiums
are included in other liabilities.
DIVIDENDS TO POLICYHOLDERS
Dividends to policyholders are determined annually by the board of
directors. The aggregate amount of policyholders' 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 MetLife and its insurance subsidiaries.
DIVIDEND RESTRICTIONS
MetLife, when it converts from a mutual life insurance company to a stock
life insurance company, may be restricted as to the amounts it may pay as
dividends to MetLife, Inc. Under the New York Insurance Law, the Superintendent
has broad discretion to determine whether the financial condition of a stock
life insurance company would support the payment of dividends to its
shareholders. The Department has established informal guidelines for the
Superintendent's determinations which focus upon, among other things, the
overall financial condition and profitability of the insurer under statutory
accounting practices.
PARTICIPATING BUSINESS
Participating business represented approximately 19% and 21% of the
Company's life insurance in-force, and 84% and 81% of the number of life
insurance policies in-force, at December 31, 1999 and 1998, respectively.
Participating policies represented approximately 42% and 44%, 39% and 40%, and
41% and 41% of gross and net life insurance premiums for the years ended
December 31, 1999, 1998 and 1997, respectively.
INCOME TAXES
MetLife and its includable life insurance and non-life insurance
subsidiaries file a consolidated U.S. federal income tax return in accordance
with the provisions of the Internal Revenue Code, as amended (the "Code"). Under
the Code, the amount of federal income tax expense incurred by mutual life
insurance companies includes an equity tax calculated based upon a prescribed
formula that incorporates a differential earnings rate between stock and mutual
life insurance companies. MetLife will not be subject to the equity tax when it
converts to a stock life insurance company. The future tax consequences of
temporary differences between financial reporting and tax bases of assets and
liabilities are measured at the balance sheet dates and are recorded as deferred
income tax assets and liabilities.
REINSURANCE
The Company has reinsured certain of its life insurance and property and
casualty insurance contracts with other insurance companies under various
agreements. Amounts due from
<PAGE> 15
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reinsurers are estimated based upon assumptions consistent with those used in
establishing the liabilities related to the underlying reinsured contracts.
Policy and contract liabilities are reported gross of reinsurance credits.
Deferred policy acquisition costs are reduced by amounts recovered under
reinsurance contracts. Amounts received from reinsurers for policy
administration are reported in other revenues.
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.
Investments (stated at estimated fair value) and liabilities of the separate
accounts are reported separately as assets and liabilities. Deposits to separate
accounts, investment income and realized and unrealized gains and losses on the
investments of the separate accounts accrue directly to contractholders and,
accordingly, are not reflected in the Company's consolidated statements of
income and cash flows. Mortality, policy administration and surrender charges to
all separate accounts are included in revenues. See Note 6.
FOREIGN CURRENCY TRANSLATION
Balance sheet accounts of foreign operations are translated at the exchange
rates in effect at each year-end and income and expense accounts are translated
at the average rates of exchange prevailing during the year. The local
currencies of foreign operations are the functional currencies unless the local
economy is highly inflationary. Translation adjustments are charged or credited
directly to other comprehensive income (loss). Gains and losses from foreign
currency transactions are reported in other expenses and were insignificant for
all years presented.
EXTRAORDINARY ITEM -- DEMUTUALIZATION EXPENSE
The accompanying consolidated statements of income include extraordinary
charges of $225 (net of income taxes of $35) and $4 (net of income taxes of $2)
for the years ended December 31, 1999 and 1998, respectively, related to costs
associated with the demutualization.
APPLICATION OF ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1999, the Company adopted Statement of Position
("SOP") 98-5, Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP
98-5 broadly defines start-up activities. SOP 98-5 requires costs of start-up
activities and organization costs to be expensed as incurred. Adoption of SOP
98-5 did not have a material effect on the Company's consolidated financial
statements.
Effective January 1, 1999, the Company adopted SOP 98-1, Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use ("SOP 98-1").
SOP 98-1 provides guidance for determining when an entity should capitalize or
expense external and internal costs of computer software developed or obtained
for internal use. Adoption of the provisions of SOP 98-1 had the effect of
increasing other assets by $82 at December 31, 1999.
Effective January 1, 1999, the Company adopted SOP 97-3, Accounting for
Insurance and Other Enterprises for Insurance Related Assessments ("SOP 97-3").
SOP 97-3 provides guidance on accounting by insurance and other enterprises for
assessments related to insurance activities including recognition, measurement
and disclosure of guaranty fund and other insurance related
<PAGE> 16
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
assessments. Adoption of SOP 97-3 did not have a material effect on the
Company's consolidated financial statements.
In 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities ("SFAS 125") which were
deferred by SFAS 127, Deferral of the Effective Date of Certain Provisions of
FASB Statement No. 125. The deferred provisions provide accounting and reporting
standards related to repurchase agreements, dollar rolls, securities lending and
similar transactions. Adoption of the provisions had the effect of increasing
assets and liabilities by $3,769 at December 31, 1998 and increasing other
revenues and other expenses by $266 for the year ended December 31, 1998.
During 1997, the Company changed to the retrospective interest method of
accounting for investment income on structured notes in accordance with Emerging
Issues Task Force Consensus No. 96-12, Recognition of Interest Income and
Balance Sheet Classification of Structured Notes. This accounting change
increased 1997 net investment income by $175, which included an immaterial
amount related to prior years.
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, Accounting for Derivative Instruments
and Hedging Activities -- Deferral of the Effective Date of FASB Statement No.
133 ("SFAS 137"). SFAS 137 defers the provisions of Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("SFAS 133") until January 1, 2001. SFAS 133 requires, among other
things, that all derivatives be recognized in the consolidated balance sheets as
either assets or liabilities and measured at fair value. The corresponding
derivative gains and losses should be reported based upon the hedge
relationship, if such a relationship exists. Changes in the fair value of
derivatives that are not designated as hedges or that do not meet the hedge
accounting criteria in SFAS 133 are required to be reported in income. The
Company is in the process of quantifying the impact of SFAS 133 on its
consolidated financial statements.
In October 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-7, Accounting for Insurance
and Reinsurance Contracts That Do Not Transfer Insurance Risk ("SOP 98-7"). SOP
98-7 provides guidance on the method of accounting for insurance and reinsurance
contracts that do not transfer insurance risk, defined in the SOP as the deposit
method. SOP 98-7 classifies insurance and reinsurance contracts for which the
deposit method is appropriate into those that 1) transfer only significant
timing risk, 2) transfer only significant underwriting risk, 3) transfer neither
significant timing or underwriting risk and 4) have an indeterminate risk. The
Company is required to adopt SOP 98-7 as of January 1, 2000. Adoption of SOP
98-7 is not expected to have a material effect on the Company's consolidated
financial statements.
<PAGE> 17
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. INVESTMENTS
The components of net investment income were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed maturities.................................... $ 6,766 $ 6,563 $ 6,445
Equity securities................................... 40 78 50
Mortgage loans on real estate....................... 1,479 1,572 1,684
Real estate and real estate joint ventures.......... 1,426 1,529 1,718
Policy loans........................................ 340 387 368
Other limited partnership interests................. 199 196 302
Cash, cash equivalents and short-term investments... 173 187 169
Other............................................... 501 841 368
------- ------- -------
10,924 11,353 11,104
Less: Investment expenses........................... 1,108 1,125 1,613
------- ------- -------
$ 9,816 $10,228 $ 9,491
======= ======= =======
</TABLE>
Net realized investment gains (losses), including changes in valuation
allowances, were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed maturities........................................ $(538) $ 573 $ 118
Equity securities....................................... 99 994 224
Mortgage loans on real estate........................... 28 23 56
Real estate and real estate joint ventures.............. 265 424 446
Other limited partnership interests..................... 33 13 12
Sales of businesses..................................... -- 531 139
Other................................................... (24) 71 23
----- ------ ------
(137) 2,629 1,018
Amounts allocable to:
Future policy benefit loss recognition................ -- (272) (126)
Deferred policy acquisition costs..................... 46 (240) (70)
Participating contracts............................... 21 (96) (35)
----- ------ ------
$ (70) $2,021 $ 787
===== ====== ======
</TABLE>
Realized investment gains (losses) have been reduced by (1) additions to
future policy benefits resulting from the need to establish additional
liabilities due to the recognition of investment gains, (2) deferred policy
acquisition cost amortization to the extent that such amortization results from
realized investment gains and losses, and (3) additions to participating
contractholder accounts when amounts equal to such investment gains and losses
are credited to the contractholders' accounts. This presentation may not be
comparable to presentations made by other insurers.
<PAGE> 18
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of net unrealized investment gains (losses), included in
accumulated other comprehensive income (loss), were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed maturities.................................... $(1,828) $ 4,809 $ 4,766
Equity securities................................... 875 832 1,605
Other invested assets............................... 165 154 294
------- ------- -------
(788) 5,795 6,665
------- ------- -------
Amounts allocable to:
Future policy benefit loss recognition............ (249) (2,248) (2,189)
Deferred policy acquisition costs................. 697 (931) (1,147)
Participating contracts........................... (118) (212) (312)
Deferred income taxes............................... 161 (864) (1,119)
------- ------- -------
491 (4,255) (4,767)
------- ------- -------
$ (297) $ 1,540 $ 1,898
======= ======= =======
</TABLE>
The changes in net unrealized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at January 1.................................. $ 1,540 $1,898 $1,028
Unrealized investment gains (losses) during the
year................................................ (6,583) (870) 3,402
Unrealized investment (gains) losses relating to:
Future policy benefit loss recognition.............. 1,999 (59) (970)
Deferred policy acquisition costs................... 1,628 216 (727)
Participating contracts............................. 94 100 (303)
Deferred income taxes................................. 1,025 255 (532)
------- ------ ------
Balance at December 31................................ $ (297) $1,540 $1,898
======= ====== ======
Net change in unrealized investment gains (losses).... $(1,837) $ (358) $ 870
======= ====== ======
</TABLE>
<PAGE> 19
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FIXED MATURITIES AND EQUITY SECURITIES
Fixed maturities and equity securities at December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
COST OR GROSS UNREALIZED
AMORTIZED ---------------- ESTIMATED
COST GAIN LOSS FAIR VALUE
--------- ---- ---- ----------
<S> <C> <C> <C> <C>
Fixed Maturities:
Bonds:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies.......... $ 5,990 $ 456 $ 147 $ 6,299
States and political subdivisions.... 1,583 4 45 1,542
Foreign governments.................. 4,090 210 94 4,206
Corporate............................ 47,505 585 1,913 46,177
Mortgage and asset-backed
securities......................... 27,396 112 847 26,661
Other................................ 12,235 313 462 12,086
------- ------ ------ -------
98,799 1,680 3,508 96,971
Redeemable preferred stocks............. 10 -- -- 10
------- ------ ------ -------
$98,809 $1,680 $3,508 $96,981
======= ====== ====== =======
Equity Securities:
Common stocks........................... $ 980 $ 921 $ 35 $ 1,866
Nonredeemable preferred stocks.......... 151 -- 11 140
------- ------ ------ -------
$ 1,131 $ 921 $ 46 $ 2,006
======= ====== ====== =======
</TABLE>
Fixed maturities and equity securities at December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
COST OR GROSS UNREALIZED
AMORTIZED ----------------- ESTIMATED
COST GAIN LOSS FAIR VALUE
--------- ---- ---- ----------
<S> <C> <C> <C> <C>
Fixed Maturities:
Bonds:
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies.......... $ 6,640 $1,117 $ 10 $ 7,747
States and political subdivisions.... 597 26 -- 623
Foreign governments.................. 3,435 254 88 3,601
Corporate............................ 46,377 2,471 260 48,588
Mortgage and asset-backed
securities......................... 26,456 569 46 26,979
Other................................ 12,438 1,069 293 13,214
------- ------ ---- --------
95,943 5,506 697 100,752
Redeemable preferred stocks............. 15 -- -- 15
------- ------ ---- --------
$95,958 $5,506 $697 $100,767
======= ====== ==== ========
Equity Securities:
Common stocks........................... $ 1,286 $ 923 $ 77 $ 2,132
Nonredeemable preferred stocks.......... 222 4 18 208
------- ------ ---- --------
$ 1,508 $ 927 $ 95 $ 2,340
======= ====== ==== ========
</TABLE>
<PAGE> 20
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company held foreign currency derivatives with notional amounts of
$4,002 and $716 to hedge the exchange rate risk associated with foreign bonds at
December 31, 1999 and 1998, respectively. The Company also held options with
fair values of $(11) to hedge the market value of common stocks at December 31,
1998.
At December 31, 1999, fixed maturities held by the Company that were below
investment grade or not rated by an independent rating agency had an estimated
fair value of $8,813. At December 31, 1999, non-income producing fixed
maturities were insignificant.
The amortized cost and estimated fair value of bonds at December 31, 1999,
by contractual maturity date, are shown below:
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
<S> <C> <C>
Due in one year or less............................... $ 3,180 $ 3,217
Due after one year through five years................. 18,152 18,061
Due after five years through ten years................ 23,755 23,114
Due after ten years................................... 26,316 25,918
------- -------
71,403 70,310
Mortgage and asset-backed securities.................. 27,396 26,661
------- -------
$98,799 $96,971
======= =======
</TABLE>
Fixed maturities not due at a single maturity date have been included in
the above table in the year of final maturity. Actual maturities may differ from
contractual maturities due to the exercise of prepayment options.
Sales of securities were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Securities classified as available-for-sale:
Proceeds.......................................... $59,852 $46,913 $69,275
Gross realized gains.............................. $ 605 $ 2,053 $ 965
Gross realized losses............................. $ 911 $ 486 $ 627
Fixed maturities classified as held-to-maturity:
Proceeds.......................................... $ -- $ -- $ 352
Gross realized gains.............................. $ -- $ -- $ 5
Gross realized losses............................. $ -- $ -- $ 1
</TABLE>
Gross realized losses above exclude writedowns recorded during 1999 for
permanently impaired available-for-sale securities of $133.
During 1997, fixed maturities with an amortized cost of $11,682 were
transferred from held-to-maturity to available-for-sale. Other comprehensive
income at the date of reclassification was increased by $198 excluding the
effects of deferred income taxes and policyholder related amounts.
Excluding investments in U.S. governments and agencies, the Company is not
exposed to any significant concentration of credit risk in its fixed maturities
portfolio.
<PAGE> 21
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SECURITIES LENDING PROGRAM
The Company participates in securities lending programs whereby large
blocks of securities, which are returnable to the Company on short notice and
included in investments, are loaned to third parties, primarily major brokerage
firms. The Company requires a minimum of 102% of the fair value of the loaned
securities to be separately maintained as collateral for the loans. Securities
with a cost or amortized cost of $6,458 and $4,005 and estimated fair value of
$6,391 and $4,552 were on loan under the program at December 31, 1999 and 1998,
respectively. The Company was liable for cash collateral under its control of
$6,461 and $3,769 at December 31, 1999 and 1998, respectively. This liability is
included in other liabilities. Security collateral on deposit from securities
borrowers is returnable to them on short notice and is not reflected in the
consolidated financial statements.
STATUTORY DEPOSITS
The Company had investment assets on deposit with regulatory agencies of
$476 and $466 at December 31, 1999 and 1998, respectively.
MORTGAGE LOANS ON REAL ESTATE
Mortgage loans were categorized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1999 1998
------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C>
Commercial mortgage loans.................. $14,931 75% $12,503 74%
Agricultural mortgage loans................ 4,816 24% 4,256 25%
Residential mortgage loans................. 82 1% 241 1%
------- --- ------- ---
19,829 100% 17,000 100%
=== ===
Less: Valuation allowances................. 90 173
------- -------
$19,739 $16,827
======= =======
</TABLE>
Mortgage loans on real estate are collateralized by properties primarily
located throughout the United States. At December 31, 1999, approximately 16%,
8% and 8% of the properties were located in California, New York and Florida,
respectively. Generally, the Company (as the lender) requires that a minimum of
one-fourth of the purchase price of the underlying real estate be paid by the
borrower.
Certain of the Company's real estate joint ventures have mortgage loans
with the Company. The carrying values of such mortgages were $547 and $606 at
December 31, 1999 and 1998, respectively.
<PAGE> 22
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Changes in mortgage loan valuation allowances were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at January 1................................. $ 173 $ 289 $ 469
Additions............................................ 40 40 61
Deductions for writedowns and dispositions........... (123) (130) (241)
Deductions for disposition of affiliates............. -- (26) --
----- ----- -----
Balance at December 31............................... $ 90 $ 173 $ 289
===== ===== =====
</TABLE>
A portion of the Company's mortgage loans on real estate was impaired and
consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1999 1998
---- ----
<S> <C> <C>
Impaired mortgage loans with valuation allowances.......... $540 $ 823
Impaired mortgage loans without valuation allowances....... 437 375
---- ------
977 1,198
Less: Valuation allowances................................. 83 149
---- ------
$894 $1,049
==== ======
</TABLE>
The average investment in impaired mortgage loans on real estate was
$1,134, $1,282 and $1,680 for the years ended December 31, 1999, 1998 and 1997,
respectively. Interest income on impaired mortgages was $101, $109 and $110 for
the years ended December 31, 1999, 1998 and 1997, respectively.
The investment in restructured mortgage loans on real estate was $980 and
$1,140 at December 31, 1999 and 1998, respectively. Interest income of $80, $74
and $91 was recognized on restructured loans for the years ended December 31,
1999, 1998 and 1997, respectively. Gross interest income that would have been
recorded in accordance with the original terms of such loans amounted to $92,
$87 and $116 for the years ended December 31, 1999, 1998 and 1997, respectively.
Mortgage loans on real estate with scheduled payments of 60 days (90 days
for agriculture mortgages) or more past due or in foreclosure had an amortized
cost of $44 and $65 at December 31, 1999 and 1998, respectively.
<PAGE> 23
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
REAL ESTATE AND REAL ESTATE JOINT VENTURES
Real estate and real estate joint ventures consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1999 1998
---- ----
<S> <C> <C>
Real estate and real estate joint ventures
held-for-investment....................................... $5,440 $6,301
Impairments................................................. (289) (408)
------ ------
5,151 5,893
------ ------
Real estate and real estate joint ventures held-for-sale.... 719 546
Impairments................................................. (187) (119)
Valuation allowance......................................... (34) (33)
------ ------
498 394
------ ------
$5,649 $6,287
====== ======
</TABLE>
Accumulated depreciation on real estate was $2,235 and $2,065 at December
31, 1999 and 1998, respectively. Related depreciation expense was $247, $282 and
$338 for the years ended December 31, 1999, 1998 and 1997, respectively.
Real estate and real estate joint ventures were categorized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1999 1998
----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C>
Office........................................ $3,846 68% $4,265 68%
Retail........................................ 587 10% 640 10%
Apartments.................................... 474 8% 418 7%
Land.......................................... 258 5% 313 5%
Agriculture................................... 96 2% 195 3%
Other......................................... 388 7% 456 7%
------ --- ------ ---
$5,649 100% $6,287 100%
====== === ====== ===
</TABLE>
The Company's real estate holdings are primarily located throughout the
United States. At December 31, 1999, approximately 25%, 24% and 10% of the
Company's real estate holdings were located in New York, California and Texas,
respectively.
Changes in real estate and real estate joint ventures held-for-sale
valuation allowance were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at January 1....................................... $ 33 $110 $ 661
Additions charged (credited) to operations................. 36 (5) (76)
Deductions for writedowns and dispositions................. (35) (72) (475)
---- ---- -----
Balance at December 31..................................... $ 34 $ 33 $ 110
==== ==== =====
</TABLE>
Investment income related to impaired real estate and real estate joint
ventures held-for-investment was $61, $105 and $28 for the years ended December
31, 1999, 1998 and 1997, respectively. Investment income related to real estate
and real estate joint ventures held-for-sale
<PAGE> 24
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
was $14, $3 and $11 for the years ended December 31, 1999, 1998 and 1997,
respectively. The carrying value of non-income producing real estate and real
estate joint ventures was $22 and $1 at December 31, 1999 and 1998,
respectively.
The Company owned real estate acquired in satisfaction of debt of $47 and
$154 at December 31, 1999 and 1998, respectively.
Real estate of $37, $69 and $151 was acquired in satisfaction of debt
during the years ended December 31, 1999, 1998 and 1997, respectively.
LEVERAGED LEASES
Leveraged leases, included in other invested assets, consisted of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1999 1998
---- ----
<S> <C> <C>
Investment............................................... $1,016 $1,067
Estimated residual values................................ 559 607
------ ------
1,575 1,674
Unearned income.......................................... (417) (471)
------ ------
$1,158 $1,203
====== ======
</TABLE>
The investment amounts set forth above are generally due in monthly
installments. The payment periods generally range from four to 15 years, but in
certain circumstances are as long as 30 years. Average yields range from 7% to
12%. These receivables are generally collateralized by the related property.
3. DERIVATIVE INSTRUMENTS
The table below provides a summary of the carrying value, notional amount
and current market or fair value of derivative financial instruments (other than
equity options) held at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
------------------------------------------ ------------------------------------------
CURRENT MARKET CURRENT MARKET
OR FAIR VALUE OR FAIR VALUE
CARRYING NOTIONAL -------------------- CARRYING NOTIONAL --------------------
VALUE AMOUNT ASSETS LIABILITIES VALUE AMOUNT ASSETS LIABILITIES
-------- -------- ------ ----------- -------- -------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Financial futures.................. $ 27 $ 3,140 $37 $ 10 $ 3 $ 2,190 $ 8 $ 6
Foreign exchange contracts......... -- -- -- -- -- 136 -- 2
Interest rate swaps................ (32) 1,316 11 40 (9) 1,621 17 50
Foreign currency swaps............. -- 4,002 26 103 (1) 580 3 62
Caps............................... 1 12,376 3 -- -- 8,391 -- --
---- ------- --- ---- --- ------- --- ----
Total contractual commitments...... $ (4) $20,834 $77 $153 $(7) $12,918 $28 $120
==== ======= === ==== === ======= === ====
</TABLE>
<PAGE> 25
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a reconciliation of the notional amounts by derivative
type and strategy at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 TERMINATIONS/ DECEMBER 31, 1999
NOTIONAL AMOUNT ADDITIONS MATURITIES NOTIONAL AMOUNT
----------------- --------- ------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
Financial futures................... $ 2,190 $18,259 $17,309 $ 3,140
Foreign exchange contracts.......... 136 702 838 --
Interest rate swaps................. 1,621 429 734 1,316
Foreign currency swaps.............. 580 3,501 79 4,002
Caps................................ 8,391 5,860 1,875 12,376
------- ------- ------- -------
Total contractual commitments....... $12,918 $28,751 $20,835 $20,834
======= ======= ======= =======
BY STRATEGY
Liability hedging................... $ 8,741 $ 5,865 $ 2,035 $12,571
Invested asset hedging.............. 864 4,288 937 4,215
Portfolio hedging................... 2,830 13,920 14,729 2,021
Anticipated transaction hedging..... 483 4,678 3,134 2,027
------- ------- ------- -------
Total contractual commitments....... $12,918 $28,751 $20,835 $20,834
======= ======= ======= =======
</TABLE>
The following table presents the notional amounts of derivative financial
instruments by maturity at December 31, 1999:
<TABLE>
<CAPTION>
REMAINING LIFE
-------------------------------------------------------------------
ONE YEAR AFTER ONE YEAR AFTER FIVE YEARS
OR LESS THROUGH FIVE YEARS THROUGH TEN YEARS AFTER TEN YEARS TOTAL
-------- ------------------ ----------------- --------------- -----
<S> <C> <C> <C> <C> <C>
Financial futures......... $3,140 $ -- $ -- $ -- $ 3,140
Interest rate swaps....... 833 483 -- -- 1,316
Foreign currency swaps.... 7 3,371 503 121 4,002
Caps...................... 3,426 8,930 20 -- 12,376
------ ------- ---- ---- -------
Total contractual
commitments............. $7,406 $12,784 $523 $121 $20,834
====== ======= ==== ==== =======
</TABLE>
In addition to the derivative instruments above, the Company uses equity
option contracts as invested asset hedges. There were ninety-two thousand equity
option contracts outstanding with a carrying value of $(11) and a market value
of $(11) at December 31, 1998.
4. FAIR VALUE INFORMATION
The estimated fair values of financial instruments have been determined by
using available market information and the valuation methodologies described
below. Considerable judgment is often required in interpreting market data to
develop estimates of fair value. Accordingly, the estimates presented herein may
not necessarily be indicative of amounts that could be realized in a current
market exchange. The use of different assumptions or valuation methodologies may
have a material effect on the estimated fair value amounts.
<PAGE> 26
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amounts related to the Company's financial instruments were as follows:
<TABLE>
<CAPTION>
NOTIONAL CARRYING ESTIMATED
DECEMBER 31, 1999 AMOUNT VALUE FAIR VALUE
- ----------------- -------- -------- ----------
<S> <C> <C> <C>
Assets:
Fixed maturities.................................. $96,981 $96,981
Equity securities................................. 2,006 2,006
Mortgage loans on real estate..................... 19,739 19,452
Policy loans...................................... 5,598 5,618
Short-term investments............................ 3,055 3,055
Cash and cash equivalents......................... 2,789 2,789
Mortgage loan commitments......................... $465 -- (7)
Liabilities:
Policyholder account balances..................... 37,170 36,893
Short-term debt................................... 4,208 4,208
Long-term debt.................................... 2,514 2,466
Investment collateral............................. 6,451 6,451
</TABLE>
<TABLE>
<CAPTION>
NOTIONAL CARRYING ESTIMATED
DECEMBER 31, 1998 AMOUNT VALUE FAIR VALUE
- ----------------- -------- -------- ----------
<S> <C> <C> <C>
Assets:
Fixed maturities................................. $100,767 $100,767
Equity securities................................ 2,340 2,340
Mortgage loans on real estate.................... 16,827 17,793
Policy loans..................................... 5,600 6,143
Short-term investments........................... 1,369 1,369
Cash and cash equivalents........................ 3,301 3,301
Mortgage loan commitments........................ $472 -- 14
Liabilities:
Policyholder account balances.................... 37,448 37,664
Short-term debt.................................. 3,585 3,585
Long-term debt................................... 2,903 3,006
Investment collateral............................ 3,769 3,769
</TABLE>
The methods and assumptions used to estimate the fair values of financial
instruments are summarized as follows:
FIXED MATURITIES AND EQUITY SECURITIES
The fair value of fixed maturities and equity securities are based upon
quotations published by applicable stock exchanges or received from other
reliable sources. For securities in which the market values were not readily
available, fair values were estimated using quoted market prices of comparable
investments.
MORTGAGE LOANS ON REAL ESTATE AND MORTGAGE LOAN COMMITMENTS
Fair values for mortgage loans on real estate are estimated by discounting
expected future cash flows, using current interest rates for similar loans with
similar credit risk. For mortgage loan commitments, the estimated fair value is
the net premium or discount of the commitments.
<PAGE> 27
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
POLICY LOANS
Fair values for policy loans are estimated by discounting expected future
cash flows using U.S. treasury rates to approximate interest rates and the
Company's past experiences to project patterns of loan accrual and repayment
characteristics.
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The carrying values for cash and cash equivalents and short-term
investments approximated fair market values due to the short-term maturities of
these instruments.
POLICYHOLDER ACCOUNT BALANCES
The fair value of policyholder account balances are estimated by
discounting expected future cash flows, based on interest rates currently being
offered for similar contracts with maturities consistent with those remaining
for the agreements being valued.
SHORT-TERM AND LONG-TERM DEBT AND INVESTMENT COLLATERAL
The fair values of short-term and long-term debt and investment collateral
are determined by discounting expected future cash flows, using risk rates
currently available for debt with similar terms and remaining maturities.
DERIVATIVE INSTRUMENTS
The fair value of derivative instruments, including financial futures,
financial forwards, interest rate and foreign currency swaps, floors, foreign
exchange contracts, caps and options are based upon quotations obtained from
dealers or other reliable sources. See Note 3 for derivative fair value
disclosures.
5. EMPLOYEE BENEFIT PLANS
PENSION BENEFIT AND OTHER BENEFIT PLANS
The Company is both the sponsor and administrator of defined benefit
pension plans covering all eligible employees and sales representatives of
MetLife and certain of its subsidiaries. Retirement benefits are based upon
years of credited service and final average earnings history.
The Company also provides certain postemployment benefits and certain
postretirement health care and life insurance benefits for retired employees
through insurance contracts. Substantially all of the Company's employees may,
in accordance with the plans applicable to the
<PAGE> 28
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
postretirement benefits, become eligible for these benefits if they attain
retirement age, with sufficient service, while working for the Company.
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
PENSION BENEFITS OTHER BENEFITS
---------------- ----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in projected benefit obligation:
Projected benefit obligation at beginning of year.... $3,920 $3,573 $1,708 $1,763
Service cost....................................... 100 90 28 31
Interest cost...................................... 271 257 107 114
Actuarial (gains) losses........................... (260) 212 (281) (74)
Divestitures, curtailments and terminations........ (22) 24 10 (13)
Change in benefits................................. -- 12 -- --
Benefits paid........................................ (272) (248) (89) (113)
------ ------ ------ ------
Projected benefit obligation at end of year.......... 3,737 3,920 1,483 1,708
------ ------ ------ ------
Change in plan assets:
Contract value of plan assets at beginning of year... 4,403 4,056 1,123 1,004
Actuarial return on plan assets.................... 575 680 141 171
Employer contribution.............................. 20 15 24 61
Benefits paid...................................... (272) (248) (89) (113)
Other payments..................................... -- (100) -- --
------ ------ ------ ------
Contract value of plan assets at end of year......... 4,726 4,403 1,199 1,123
------ ------ ------ ------
Over (under) funded.................................. 989 483 (284) (585)
------ ------ ------ ------
Unrecognized net asset at transition................. (66) (98) -- --
Unrecognized net actuarial gains..................... (564) (78) (487) (322)
Unrecognized prior service cost...................... 127 145 (2) (2)
------ ------ ------ ------
Prepaid (accrued) benefit cost....................... $ 486 $ 452 $ (773) $ (909)
====== ====== ====== ======
Qualified plan prepaid pension cost.................. $ 632 $ 568 $ -- $ --
Non-qualified plan accrued pension cost.............. (146) (116) -- --
------ ------ ------ ------
Prepaid benefit cost................................. $ 486 $ 452 $ -- $ --
====== ====== ====== ======
</TABLE>
The aggregate projected benefit obligation and aggregate contract value of
plan assets for the pension plans were as follows:
<TABLE>
<CAPTION>
NON-QUALIFIED
QUALIFIED PLAN PLAN TOTAL
---------------- -------------- ----------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Aggregate projected benefit
obligation...................... $3,482 $3,697 $ 255 $ 223 $3,737 $3,920
Aggregate contract value of plan
assets (principally Company
contracts)...................... 4,726 4,403 -- -- 4,726 4,403
------ ------ ----- ----- ------ ------
Over (under) funded............... $1,244 $ 706 $(255) $(223) $ 989 $ 483
====== ====== ===== ===== ====== ======
</TABLE>
<PAGE> 29
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The assumptions used in determining the aggregate projected benefit
obligation and aggregate contract value for the pension and other benefits were
as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------------------- -----------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average assumptions at
December 31,
Discount rate....................... 6.25% - 7.75% 6.5% - 7.25% 6% - 7.75% 7%
Expected rate of return on plan
assets............................ 8% - 10.5% 8.5% - 10.5% 6% - 9% 7.25% - 9%
Rate of compensation increase....... 4.5% - 8.5% 4.5% - 8.5% N/A N/A
</TABLE>
The assumed health care cost trend rates used in measuring the accumulated
nonpension postretirement benefit obligation were 6.5% for pre-Medicare eligible
claims and 6% for Medicare eligible claims in both 1999 and 1998.
Assumed health care cost trend rates may have a significant effect on the
amounts reported for health care plans. A one-percentage point change in assumed
health care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
ONE PERCENT ONE PERCENT
INCREASE DECREASE
----------- -----------
<S> <C> <C>
Effect on total of service and interest cost components.... $ 14 $ 11
Effect of accumulated postretirement benefit obligation.... $134 $111
</TABLE>
The components of periodic benefit costs were as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
--------------------- ------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Service cost............................... $ 100 $ 90 $ 74 $ 28 $ 31 $ 30
Interest cost.............................. 271 257 247 107 114 122
Expected return on plan assets............. (363) (337) (324) (89) (79) (66)
Amortization of prior actuarial gains...... (6) (11) (5) (11) (13) (4)
Curtailment (credit) cost.................. (17) (10) -- 10 4 --
----- ----- ----- ---- ---- ----
Net periodic benefit cost (credit)......... $ (15) $ (11) $ (8) $ 45 $ 57 $ 82
===== ===== ===== ==== ==== ====
</TABLE>
SAVINGS AND INVESTMENT PLANS
The Company sponsors savings and investment plans for substantially all
employees under which the Company matches a portion of employee contributions.
The Company contributed $45, $43 and $44 for the years ended December 31, 1999,
1998 and 1997, respectively.
6. SEPARATE ACCOUNTS
Separate accounts reflect two categories of risk assumption: non-guaranteed
separate accounts totaling $47,618 and $39,490 at December 31, 1999 and 1998,
respectively, for which the policyholder assumes the investment risk, and
guaranteed separate accounts totaling $17,323 and $18,578 at December 31, 1999
and 1998, respectively, for which MetLife contractually guarantees either a
minimum return or account value to the policyholder.
<PAGE> 30
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Fees charged to the separate accounts by the Company (including mortality
charges, policy administration fees and surrender charges) are reflected in the
Company's revenues as universal life and investment-type product policy fees and
totaled $485, $413 and $287 for the years ended December 31, 1999, 1998 and
1997, respectively. Guaranteed separate accounts consisted primarily of Met
Managed Guaranteed Interest Contracts and participating close out contracts. The
average interest rates credited on these contracts were 6.5% and 7% at December
31, 1999 and 1998, respectively. The assets that support these liabilities were
comprised of $16,874 and $16,639 in fixed maturities at December 31, 1999 and
1998, respectively. The portfolios are segregated from other investments and are
managed to minimize liquidity and interest rate risk. In order to minimize the
risk of disintermediation associated with early withdrawals, these investment
products carry a graded surrender charge as well as a market value adjustment.
7. DEBT
Debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1999 1998
---- ----
<S> <C> <C>
MetLife:
6.300% surplus notes due 2003.......................... $ 397 $ 397
7.000% surplus notes due 2005.......................... 249 249
7.700% surplus notes due 2015.......................... 198 198
7.450% surplus notes due 2023.......................... 296 296
7.785% surplus notes due 2024.......................... 148 148
7.800% surplus notes due 2025.......................... 248 248
Other.................................................... 130 207
------ ------
1,666 1,743
------ ------
Investment related:
Floating rate debt, interest based on LIBOR............ -- 212
Exchangeable debt, interest rates ranging from 4.90% to
5.80%, due 2001 and 2002............................ 369 371
------ ------
369 583
------ ------
Total MetLife............................................ 2,035 2,326
------ ------
Nvest:
7.060% senior notes due 2003........................... 110 110
7.290% senior notes due 2007........................... 160 160
------ ------
270 270
------ ------
Other Affiliated Companies:
Fixed rate notes, interest rates ranging from 6.96% to
8.51%, maturity dates ranging from 2000 to 2008..... 170 179
Other.................................................. 39 128
------ ------
209 307
------ ------
Total long-term debt..................................... 2,514 2,903
Total short-term debt.................................... 4,208 3,585
------ ------
$6,722 $6,488
====== ======
</TABLE>
<PAGE> 31
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Short-term debt consisted of commercial paper with a weighted average
interest rate of 6.05% and 5.31% and a weighted average maturity of 74 and 44
days at December 31, 1999 and 1998, respectively.
The Company maintains unsecured credit facilities aggregating $7,000
(five-year facility of $1,000 expiring in April 2003; 364-day facility of $1,000
expiring in April 2000; 364-day facility of $5,000 expiring in September 2000).
Both $1,000 facilities bear interest at LIBOR plus 20 basis points. The $5,000
facility bears interest at various rates under specified borrowing scenarios.
The facilities can be used for general corporate purposes and also provide
backup for the Company's commercial paper program. At December 31, 1999, there
were no outstanding borrowings under any of the facilities.
Payments of interest and principal on the surplus notes, subordinated to
all other indebtedness, may be made only with the prior approval of the
Superintendent. Subject to the prior approval of the Superintendent, the 7.45%
surplus notes may be redeemed, in whole or in part, at the election of the
Company at any time on or after November 1, 2003.
Each issue of investment related debt is payable in cash or by delivery of
an underlying security owned by the Company. The amount payable at maturity of
the debt is greater than the principal of the debt if the market value of the
underlying security appreciates above certain levels at the date of debt
repayment as compared to the market value of the underlying security at the date
of debt issuance.
The aggregate maturities of long-term debt are $93 in 2000, $194 in 2001,
$210 in 2002, $415 in 2003, $126 in 2004 and $1,477 thereafter.
Interest expense related to the Company's outstanding indebtedness was
$358, $333 and $344 for the years ended December 31, 1999, 1998 and 1997,
respectively.
8. ACQUISITIONS AND DISPOSITIONS
In 1999 and 1997, respectively, the Company acquired assets of $4,832 and
$3,777 and assumed liabilities of $1,860 and $3,347 through the acquisition of
certain insurance and non-insurance operations. The aggregate purchase prices
were allocated to the assets and liabilities acquired based on their estimated
fair values.
During 1998, the Company sold MetLife Capital Holdings, Inc. (a commercial
financing company) and a substantial portion of its Canadian and Mexican
insurance operations, which resulted in a realized investment gain of $531.
During 1997, the Company sold its United Kingdom insurance operations, which
resulted in a realized investment gain of $139. Such sales caused a reduction in
assets of $10,663 and $4,342 and liabilities of $3,691 and $4,207 in 1998 and
1997, respectively.
See Note 16 for information regarding the Company's acquisition of
GenAmerica Corporation.
9. COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is currently a defendant in approximately 500 lawsuits raising
allegations of improper marketing and sales of individual life insurance
policies or annuities. These lawsuits are generally referred to as "sales
practices claims".
<PAGE> 32
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On December 28, 1999, after a fairness hearing, the United States District
Court for the Western District of Pennsylvania approved a class action
settlement resolving a multidistrict litigation proceeding involving alleged
sales practices claims. The settlement class includes most of the owners of
permanent life insurance policies and annuity contracts or certificates issued
pursuant to individual sales in the United States by Metropolitan Life Insurance
Company, Metropolitan Insurance and Annuity Company or Metropolitan Tower Life
Insurance Company between January 1, 1982 and December 31, 1997. This class
includes owners of approximately six million in-force or terminated insurance
policies and approximately one million in-force or terminated annuity contracts
or certificates.
In addition to dismissing the consolidated class actions, the District
Court's order also bars sales practices claims by class members for sales by the
defendant insurers during the class period, effectively resolving all pending
class actions against these insurers. The defendants are in the process of
having these claims dismissed.
Under the terms of the order, only those class members who excluded
themselves from the settlement may continue an existing, or start a new, sales
practices lawsuit against Metropolitan Life Insurance Company, Metropolitan
Insurance and Annuity Company or Metropolitan Tower Life Insurance Company for
sales that occurred during the class period. Approximately 20,000 class members
elected to exclude themselves from the settlement. Over 400 of the approximately
500 lawsuits noted above are brought by individuals who elected to exclude
themselves from the settlement.
The settlement provides three forms of relief. General relief, in the form
of free death benefits, is provided automatically to class members who did not
exclude themselves from the settlement or who did not elect the claim evaluation
procedures set forth in the settlement. The claim evaluation procedures permit a
class member to have a claim evaluated by a third party under procedures set
forth in the settlement. Claim awards made under the claim evaluation procedures
will be in the form of policy adjustments, free death benefits or, in some
instances, cash payments. In addition, class members who have or had an
ownership interest in specified policies will also automatically receive
deferred acquisition cost tax relief in the form of free death benefits. The
settlement fixes the aggregate amounts that are available under each form of
relief.
The Company expects that the total cost of the settlement will be
approximately $957. This amount is equal to the amount of the increase in
liabilities for the death benefits and policy adjustments and the present value
of expected cash payments to be provided to included class members, as well as
attorneys' fees and expenses and estimated other administrative costs, but does
not include the cost of litigation with policyholders who are excluded from the
settlement. The Company believes that the cost of the settlement will be
substantially covered by available reinsurance and the provisions made in its
consolidated financial statements, and thus will not have a material adverse
effect on its business, results of operations or financial position. The Company
has not yet made a claim under those reinsurance agreements and, although there
is a risk that the carriers will refuse coverage for all or part of the claim,
the Company believes this is very unlikely to occur. The Company believes it has
made adequate provision in its consolidated financial statements for all
probable losses for sales practices claims, including litigation costs involving
policyholders who are excluded from the settlement.
The class action settlement does not resolve nine purported or certified
class actions currently pending against New England Mutual Life Insurance
Company with which the Company merged in 1996. Eight of those actions have been
consolidated as a multidistrict proceeding for pre-trial purposes in the United
States District Court in Massachusetts. That Court certified a mandatory class
as to those claims. Following an appeal of that certification, the United States
<PAGE> 33
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Court of Appeals remanded the case to the District Court for further
consideration. The Company is negotiating a settlement with class counsel.
The class action settlement also does not resolve three putative sales
practices class action lawsuits which have been brought against General American
Life Insurance Company. These lawsuits have been consolidated in a single
proceeding in the United States District Court for the Eastern District of
Missouri. General American Life Insurance Company and counsel for plaintiffs
have negotiated a settlement in principle of this consolidated proceeding.
General American Life Insurance Company has not reached agreement with
plaintiffs' counsel on the attorneys' fees to be paid. However, negotiations are
ongoing.
In addition, the class action settlement does not resolve two putative
class actions involving sales practices claims filed against Metropolitan Life
Insurance Company in Canada. The class action settlement also does not resolve a
certified class action with conditionally certified subclasses against
Metropolitan Life Insurance Company, Metropolitan Insurance and Annuity Company,
Metropolitan Tower Life Insurance Company and various individual defendants
alleging improper sales abroad. That lawsuit is pending in a New York federal
court.
In the past, the Company has resolved some individual sales practices
claims through settlement, dispositive motion or, in a few instances, trial.
Most of the current cases seek substantial damages, including in some cases
punitive and treble damages and attorneys' fees. Additional litigation relating
to the Company's marketing and sales of individual life insurance may be
commenced in the future.
Regulatory authorities in a small number of states, including both
insurance departments and one state attorney general, as well as the National
Association of Securities Dealers, Inc., have ongoing investigations or
inquiries relating to the Company's sales of individual life insurance policies
or annuities, including investigations of alleged improper replacement
transactions and alleged improper sales of insurance with inaccurate or
inadequate disclosures as to the period for which premiums would be payable.
Over the past several years, the Company has resolved a number of investigations
by other regulatory authorities for monetary payments and certain other relief,
and may continue to do so in the future.
MetLife is also a defendant in numerous lawsuits seeking compensatory and
punitive damages for personal injuries allegedly caused by exposure to asbestos
or asbestos-containing products. MetLife has never engaged in the business of
manufacturing, producing, distributing or selling asbestos or
asbestos-containing products. Rather, these lawsuits, currently numbering in the
thousands, have principally been based upon allegations relating to certain
research, publication and other activities of one or more of MetLife's employees
during the period from the 1920s through approximately the 1950s and alleging
that MetLife learned or should have learned of certain health risks posed by
asbestos and, among other things, improperly publicized or failed to disclose
those health risks. Legal theories asserted against MetLife have included
negligence, intentional tort claims and conspiracy claims concerning the health
risks associated with asbestos. While MetLife believes it has meritorious
defenses to these claims, and has not suffered any adverse judgments in respect
of these claims, most of the cases have been resolved by settlements. MetLife
intends to continue to exercise its best judgment regarding settlement or
defense of such cases. The number of such cases that may be brought or the
aggregate amount of any liability that MetLife may ultimately incur is
uncertain.
Significant portions of amounts paid in settlement of such cases have been
funded with proceeds from a previously resolved dispute with MetLife's primary,
umbrella and first level excess liability insurance carriers. MetLife is
presently in litigation with several of its excess
<PAGE> 34
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
liability insurers regarding amounts payable under its policies with respect to
coverage for these claims. The trial court has granted summary judgment to these
insurers. MetLife has appealed. There can be no assurances regarding the outcome
of this litigation or the amount and timing of recoveries, if any, from these
excess liability insurers. MetLife's asbestos-related litigation with these
insurers should have no effect on recoveries under the excess insurance policies
described below.
The Company has recorded, in other expenses, charges of $499 ($317
after-tax), $1,895 ($1,203 after-tax) and $300 ($190 after-tax) for the years
ended December 31, 1999, 1998 and 1997, respectively, for sales practices claims
and claims for personal injuries caused by exposure to asbestos or
asbestos-containing products. The 1999 charge was principally related to the
settlement of the multidistrict litigation proceeding involving alleged improper
sales practices, accruals for sales practices claims not covered by the
settlement and other legal costs. The 1998 charge was comprised of $925 and $970
for sales practices claims and asbestos-related claims, respectively. The
Company recorded the charges for sales practices claims based on preliminary
settlement discussions and the settlement history of other insurers.
Prior to the fourth quarter of 1998, the Company established a liability
for asbestos-related claims based on settlement costs for claims that the
Company had settled, estimates of settlement costs for claims pending against
the Company and an estimate of settlement costs for unasserted claims. The
amount for unasserted claims was based on management's estimate of unasserted
claims that would be probable of assertion. A liability is not established for
claims which management believes are only reasonably possible of assertion.
Based on this process, the accrual for asbestos-related claims at December 31,
1997 was $386. Potential liabilities for asbestos-related claims are not easily
quantified, due to the nature of the allegations against the Company, which are
not related to the business of manufacturing, producing, distributing or selling
asbestos or asbestos-containing products, adding to the uncertainty as to the
number of claims that may be brought against the Company.
During 1998, the Company decided to pursue the purchase of excess insurance
to limit its exposure to asbestos-related claims. In connection with the
negotiations with the casualty insurers to obtain this insurance, the Company
obtained information that caused management to reassess the accruals for
asbestos-related claims. This information included:
- Information from the insurers regarding the asbestos-related claims
experience of other insureds, which indicated that the number of claims
that were probable of assertion against the Company in the future was
significantly greater than it had assumed in its accruals. The number of
claims brought against the Company is generally a reflection of the
number of asbestos-related claims brought against asbestos defendants
generally and the percentage of those claims in which the Company is
included as a defendant. The information provided to the Company relating
to other insureds indicated that the Company had been included as a
defendant for a significant percentage of total asbestos-related claims
and that it may be included in a larger percentage of claims in the
future, because of greater awareness of asbestos litigation generally by
potential plaintiffs and plaintiffs' lawyers and because of the
bankruptcy and reorganization or the exhaustion of insurance coverage of
other asbestos defendants; and that, although volatile, there was an
upward trend in the number of total claims brought against asbestos
defendants.
- Information derived from actuarial calculations the Company made in the
fourth quarter of 1998 in connection with these negotiations, which
helped to frame, define and quantify this liability. These calculations
were made using, among other things, current information regarding the
Company's claims and settlement experience (which reflected the Com-
<PAGE> 35
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
pany's decision to resolve an increased number of these claims by
settlement), recent and historic claims and settlement experience of
selected other companies and information obtained from the insurers.
Based on this information, the Company concluded that certain claims that
previously were considered as only reasonably possible of assertion were now
probable of assertion, increasing the number of assumed claims to approximately
three times the number assumed in prior periods. As a result of this
reassessment, the Company increased its liability for asbestos-related claims to
$1,278 at December 31, 1998.
During 1998, the Company paid $1,407 of premiums for excess of loss
reinsurance agreements and excess insurance policies, consisting of $529 for the
excess of loss reinsurance agreements for sales practices claims and excess
mortality losses and $878 for the excess insurance policies for asbestos-related
claims.
The Company obtained the excess of loss reinsurance agreements to provide
reinsurance with respect to sales practices claims made on or prior to December
31, 1999 and for certain mortality losses in 1999. These reinsurance agreements
have a maximum aggregate limit of $650, with a maximum sublimit of $550 for
losses for sales practices claims. This coverage is in excess of an aggregate
self-insured retention of $385 with respect to sales practices claims and $506,
plus the Company's statutory policy reserves released upon the death of
insureds, with respect to life mortality losses. At December 31, 1999, the
subject losses under the reinsurance agreements due to sales practices claims
and related counsel fees from the time the Company entered into the reinsurance
agreements did not exceed that self-insured retention. The maximum sublimit of
$550 for sales practices claims was within a range of losses that management
believed were reasonably possible at December 31, 1998. Each excess of loss
reinsurance agreement for sales practices claims and mortality losses contains
an experience fund, which provides for payments to the Company at the
commutation date if experience is favorable at such date. The Company accounts
for the aggregate excess of loss reinsurance agreements as reinsurance; however,
if deposit accounting were applied, the effect on the Company's consolidated
financial statements in 1998, 1999 and 2000 would not be significant.
Under reinsurance accounting, the excess of the liability recorded for
sales practices losses recoverable under the agreements of $550 over the premium
paid of $529 results in a deferred gain of $21 which is being amortized into
income over the settlement period from January 1999 through April 2000. Under
deposit accounting, the premium would be recorded as an other asset rather than
as an expense, and the reinsurance loss recoverable and the deferred gain would
not have been recorded. Because the agreements also contain an experience fund
which increases with the passage of time, the increase in the experience fund in
1999 and 2000 under deposit accounting would be recognized as interest income in
an amount approximately equal to the deferred gain that will be amortized into
income under reinsurance accounting.
The excess insurance policies for asbestos-related claims provide for
recovery of losses up to $1,500, which is in excess of a $400 self-insured
retention ($878 of which was recorded as a recoverable at December 31, 1999 and
1998). The asbestos-related policies are also subject to annual and per-claim
sublimits. Amounts are recoverable under the policies annually with respect to
claims paid during the prior calendar year. Although amounts paid in any given
year that are recoverable under the policies will be reflected as a reduction in
the Company's operating cash flows for that year, management believes that the
payments will not have a material adverse effect on the Company's liquidity.
Each asbestos-related policy contains an experience fund and a reference fund
that provides for payments to the Company at the commutation date if experience
under the policy to such date has been favorable, or pro rata reductions from
time to
<PAGE> 36
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
time in the loss reimbursements to the Company if the cumulative return on the
reference fund is less than the return specified in the experience fund.
A purported class action suit involving policyholders in 32 states has been
filed in a Rhode Island state court against MetLife's subsidiary, Metropolitan
Property and Casualty Insurance Company, with respect to claims by policyholders
for the alleged diminished value of automobiles after accident-related repairs.
A similar "diminished value" allegation was made recently in a Texas Deceptive
Trade Practices Act letter and lawsuit which involve a Metropolitan Property and
Casualty Company policyholder. A purported class action has been filed against
Metropolitan Property and Casualty Insurance Company and its subsidiary,
Metropolitan Casualty Insurance Company, in Florida by a policyholder alleging
breach of contract and unfair trade practices with respect to Metropolitan
Casualty Insurance Company allowing the use of parts not made by the original
manufacturer to repair damaged automobiles. These suits are in the early stages
of litigation and Metropolitan Property and Casualty Insurance Company and
Metropolitan Casualty Insurance Company intend to vigorously defend themselves
against these suits. Similar suits have been filed against several other
personal lines property and casualty insurers.
The United States, the Commonwealth of Puerto Rico and various hotels and
individuals have sued MetLife Capital Corporation, a former subsidiary of the
Company, seeking damages for clean up costs, natural resource damages, personal
injuries and lost profits and taxes based upon, among other things, a release of
oil from a barge which was being towed by the M/V Emily S. In connection with
the sale of MetLife Capital, the Company acquired MetLife Capital's potential
liability with respect to the M/V Emily S lawsuit. MetLife Capital had entered
into a sale and leaseback financing arrangement with respect to the M/V Emily S.
The plaintiffs have taken the position that MetLife Capital, as the owner of
record of the M/V Emily S, is responsible for all damages caused by the barge,
including the oil spill. The governments of the United States and Puerto Rico
have claimed damages in excess of $150. At a mediation, the action brought by
the United States and Puerto Rico was conditionally settled, provided that the
governments have access to additional sums from a fund contributed to by oil
companies to help remediate oil spills. The Company can provide no assurance
that this action will be settled in this manner.
Three putative class actions have been filed by Conning Corporation
shareholders alleging that the Company's announced offer to purchase the
publicly-held Conning shares is inadequate and constitutes a breach of fiduciary
duty (see Note 16). The Company believes the actions are without merit, and
expects that they will not materially affect its offer to purchase the shares.
A civil complaint challenging the fairness of the plan of reorganization
and the adequacy and accuracy of the disclosures to policyholders regarding the
plan has been filed in New York Supreme Court for Kings County on behalf of an
alleged class consisting of the policyholders of MetLife who should have
membership benefits in MetLife and were and are eligible to receive notice, vote
and receive consideration in the demutualization. The complaint seeks to enjoin
or rescind the plan and seeks other relief. The defendants named in the
complaint are MetLife and the individual members of its board of directors and
MetLife, Inc. MetLife believes that the allegations made in the complaint are
wholly without merit, and intends to vigorously contest the complaint.
Various litigation, claims and assessments against the Company, in addition
to those discussed above 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
<PAGE> 37
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
make inquiries and conduct investigations concerning the Company's compliance
with applicable insurance and other laws and regulations.
In some of the matters referred to above, very large and/or indeterminate
amounts, including punitive and treble damages, are sought. While it is not
feasible to predict or determine the ultimate outcome of all pending
investigations and legal proceedings or provide reasonable ranges of potential
losses, it is the opinion of the Company's management that their outcomes, after
consideration of available insurance and reinsurance and the provisions made in
the Company's consolidated financial statements, are not likely to have a
material adverse effect on the Company's consolidated financial position.
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 operating results or cash flows in particular
quarterly or annual periods.
TRANSFERRED CANADIAN POLICIES
In July 1998, MetLife sold a substantial portion of its Canadian operations
to Clarica Life. As part of that sale, a large block of policies in effect with
MetLife in Canada were transferred to Clarica Life, and the holders of the
transferred Canadian policies became policyholders of Clarica Life. Those
transferred policyholders are no longer policyholders of MetLife and, therefore,
are not entitled to compensation under the plan of reorganization. However, as a
result of a commitment made in connection with obtaining Canadian regulatory
approval of that sale, if MetLife demutualizes, its Canadian branch will make
cash payments to those who are, or are deemed to be, holders of those
transferred Canadian policies. The payments, which will be recorded in other
expenses in the same period as the effective date of the plan, will be
determined in a manner that is consistent with the treatment of, and fair and
equitable to, eligible policyholders of MetLife. The amount of the payment is
dependent upon the initial public offering price of common stock to be issued on
the effective date of the plan of demutualization.
YEAR 2000
The Year 2000 issue was the result of the widespread use of computer
programs written using two digits (rather than four) to define the applicable
year. Such programming was a common industry practice designed to avoid the
significant costs associated with additional mainframe capacity necessary to
accommodate a four-digit field. As a result, any of the Company's computer
systems that have time-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in major system failures
or miscalculations. The Company has conducted a comprehensive review of its
computer systems to identify the systems that could be affected by the Year 2000
issue and has implemented a plan to resolve the issue. There can be no
assurances that the Year 2000 plan of the Company or that of its vendors or
third parties have resolved all Year 2000 issues. Further, there can be no
assurance that there will not be any future system failure or that such failure,
if any, will not have a material impact on the operations of the Company.
LEASES
In accordance with industry practice, certain of the Company's income from
lease agreements with retail tenants is contingent upon the level of the
tenants' sales revenues. Additionally, the Company, as lessee, has entered into
various lease and sublease agreements
<PAGE> 38
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
for office space, data processing and other equipment. Future minimum rental and
subrental income and minimum gross rental payments relating to these lease
agreements were as follows:
<TABLE>
<CAPTION>
GROSS
RENTAL SUBLEASE RENTAL
INCOME INCOME PAYMENTS
------ -------- --------
<S> <C> <C> <C>
2000......................................... $ 817 $13 $156
2001......................................... 740 12 135
2002......................................... 689 11 111
2003......................................... 612 9 90
2004......................................... 542 9 69
Thereafter................................... 2,032 27 299
</TABLE>
10. INCOME TAXES
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current:
Federal................................................... $643 $668 $370
State and local........................................... 24 60 10
Foreign................................................... 4 99 26
---- ---- ----
671 827 406
---- ---- ----
Deferred:
Federal................................................... (78) (25) 28
State and local........................................... 2 (8) 9
Foreign................................................... (2) (54) 25
---- ---- ----
(78) (87) 62
---- ---- ----
Provision for income taxes.................................. $593 $740 $468
==== ==== ====
</TABLE>
Reconciliations of the income tax provision at the U.S. statutory rate to
the provision for income taxes as reported were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Tax provision at U.S. statutory rate........................ $502 $730 $585
Tax effect of:
Tax exempt investment income.............................. (39) (40) (30)
Surplus tax............................................... 125 18 (40)
State and local income taxes.............................. 18 31 15
Tax credits............................................... (5) (25) (15)
Prior year taxes.......................................... (31) 4 (2)
Sale of businesses........................................ -- (19) (41)
Other, net................................................ 23 41 (4)
---- ---- ----
Provision for income taxes.................................. $593 $740 $468
==== ==== ====
</TABLE>
<PAGE> 39
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes represent 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:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1999 1998
---- ----
<S> <C> <C>
Deferred income tax assets:
Policyholder liabilities and receivables............... $3,042 $3,108
Net operating losses................................... 72 22
Net unrealized investment losses....................... 161 --
Employee benefits...................................... 192 174
Litigation related..................................... 468 312
Other.................................................. 242 158
------ ------
4,177 3,774
Less: Valuation allowance.............................. 72 21
------ ------
4,105 3,753
------ ------
Deferred income tax liabilities:
Investments............................................ 1,472 1,529
Deferred policy acquisition costs...................... 1,967 1,887
Net unrealized investment gains........................ -- 864
Other.................................................. 63 18
------ ------
3,502 4,298
------ ------
Net deferred income tax asset (liability)................ $ 603 $ (545)
====== ======
</TABLE>
Foreign net operating loss carryforwards generated deferred income tax
benefits of $72 and $21 at December 31, 1999 and 1998, respectively. The Company
has recorded a valuation allowance related to these tax benefits. 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 foreign net
operating loss carryforwards will not be realized. The benefit will be
recognized when management believes that it is more likely than not that the
portion of the deferred income tax asset is realizable.
The Company has been audited by the Internal Revenue Service for the years
through and including 1993. The Company is being audited for the years 1994,
1995 and 1996. The Company believes that any adjustments that might be required
for open years will not have a material effect on the Company's consolidated
financial statements.
11. REINSURANCE
The Company assumes and cedes insurance with other insurance companies. The
Company continually evaluates the financial condition of its reinsurers and
monitors concentration of credit risk in an effort to minimize its exposure to
significant losses from reinsurer insolvencies. The Company is contingently
liable with respect to ceded reinsurance should any reinsurer be unable to meet
its obligations under these agreements. The amounts in the consolidated
statements of income are presented net of reinsurance ceded.
The Company's life insurance operations participate in reinsurance in order
to limit losses, minimize exposure to large risks and to provide additional
capacity for future growth. During
<PAGE> 40
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1998, the Company began reinsuring, under yearly renewal term policies, 90
percent of the mortality risk on universal life policies issued after 1983. The
Company also reinsures 90 percent of the mortality risk on term life insurance
policies issued after 1995 under yearly renewal term policies and coinsures 100
percent of the mortality risk in excess of $25 and $35 on single and joint
survivorship policies, respectively.
During 1997, the Company obtained a 100 percent coinsurance policy to
provide coverage for contractual payments generated by certain portions of the
Company's non-life contingency long-term guaranteed interest contracts and
structured settlement lump sum contracts issued during the periods 1991 through
1993. The policy was amended in 1998 to include structured settlement lump sum
payments issued during the period 1983 through 1990, 1994 and 1995. Reinsurance
recoverables under the contract, which has been accounted for as a financing
transaction, were $1,372 and $1,374 at December 31, 1999 and 1998, respectively.
See Note 9 for information regarding certain excess of loss reinsurance
agreements providing coverage for risks associated primarily with sales
practices claims.
The Company has exposure to catastrophes, which are an inherent risk of the
property and casualty insurance business and could contribute to material
fluctuations in the Company's results of operations. The Company uses excess of
loss and quota share reinsurance arrangements to limit its maximum loss, provide
greater diversification of risk and minimize exposure to larger risks. The
Company's reinsurance program is designed to limit a catastrophe loss to no more
than 10% of the Auto & Home segment's statutory surplus.
The effects of reinsurance were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Direct premiums..................................... $13,249 $12,763 $12,728
Reinsurance assumed................................. 484 409 360
Reinsurance ceded................................... (1,645) (1,669) (1,810)
------- ------- -------
Net premiums........................................ $12,088 $11,503 $11,278
======= ======= =======
Reinsurance recoveries netted against policyholder
benefits.......................................... $ 1,626 $ 1,744 $ 1,648
======= ======= =======
</TABLE>
The effects of reinsurance with GenAmerica Corporation ("GenAmerica") were
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Premiums ceded to GenAmerica.............................. $108 $113 $61
==== ==== ===
Reinsurance recoveries from GenAmerica netted against
policyholder benefits................................... $ 74 $ 28 $24
==== ==== ===
</TABLE>
Reinsurance recoverables, included in other receivables, were $2,898 and
$3,134 at December 31, 1999 and 1998, respectively, of which $5 and $5,
respectively, were recoverable from GenAmerica. Reinsurance and ceded
commissions payables, included in other liabilities, were $148 and $105 at
December 31, 1999 and 1998, respectively.
<PAGE> 41
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following provides an analysis of the activity in the liability for
benefits relating to property and casualty and group accident and non-medical
health policies and contracts:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at January 1................................ $ 3,320 $ 3,655 $ 3,345
Reinsurance recoverables.......................... (233) (229) (215)
------- ------- -------
Net balance at January 1............................ 3,087 3,426 3,130
------- ------- -------
Acquisition of business............................. 204 -- --
------- ------- -------
Incurred related to:
Current year...................................... 3,129 2,726 2,855
Prior years....................................... (16) (245) 88
------- ------- -------
3,113 2,481 2,943
------- ------- -------
Paid related to:
Current year...................................... (2,128) (1,967) (1,832)
Prior years....................................... (759) (853) (815)
------- ------- -------
(2,887) (2,820) (2,647)
------- ------- -------
Balance at December 31.............................. 3,517 3,087 3,426
Add: Reinsurance recoverables..................... 272 233 229
------- ------- -------
Balance at December 31.............................. $ 3,789 $ 3,320 $ 3,655
======= ======= =======
</TABLE>
12. OTHER EXPENSES
Other expenses were comprised of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Compensation........................................ $ 2,590 $ 2,478 $ 2,078
Commissions......................................... 937 902 766
Interest and debt issue costs....................... 405 379 453
Amortization of policy acquisition costs (excludes
amortization of $(46), $240 and $70, respectively,
related to realized investment gains and
(losses))......................................... 862 587 771
Capitalization of policy acquisition costs.......... (1,160) (1,025) (1,000)
Rent, net of sublease income........................ 239 155 179
Minority interest................................... 55 67 56
Restructuring charge................................ -- 81 --
Other............................................... 2,827 4,395 2,468
------- ------- -------
$ 6,755 $ 8,019 $ 5,771
======= ======= =======
</TABLE>
During 1998, the Company recorded charges of $81 to restructure
headquarters operations and consolidate certain agencies and other operations.
These costs have been fully paid at December 31, 1999.
<PAGE> 42
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. STATUTORY FINANCIAL INFORMATION
The reconciliations of MetLife's statutory surplus and net change in
statutory surplus, determined in accordance with accounting practices prescribed
or permitted by insurance regulatory authorities, with equity and net income
determined in conformity with generally accepted accounting principles were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1999 1998
---- ----
<S> <C> <C>
Statutory surplus........................................... $ 7,630 $ 7,388
GAAP adjustments for:
Future policy benefits and policyholder account
balances............................................... (4,167) (6,830)
Deferred policy acquisition costs......................... 8,381 6,560
Deferred income taxes..................................... 886 (190)
Valuation of investments.................................. (2,102) 3,981
Statutory asset valuation reserves........................ 3,189 3,381
Statutory interest maintenance reserves................... 1,114 1,486
Surplus notes............................................. (1,602) (1,595)
Other, net................................................ 361 686
------- -------
Equity...................................................... $13,690 $14,867
======= =======
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net change in statutory surplus......................... $ 242 $ 10 $ 227
GAAP adjustments for:
Future policy benefits and policyholder account
balances........................................... 556 127 (38)
Deferred policy acquisition costs..................... 379 224 149
Deferred income taxes................................. 154 234 62
Valuation of investments.............................. 473 1,158 (387)
Statutory asset valuation reserves.................... (226) (461) 1,136
Statutory interest maintenance reserves............... (368) 312 53
Other, net............................................ (593) (261) 1
----- ------ ------
Net income.............................................. $ 617 $1,343 $1,203
===== ====== ======
</TABLE>
<PAGE> 43
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. OTHER COMPREHENSIVE INCOME (LOSS)
The following table sets forth the reclassification adjustments required
for the years ended December 31, 1999, 1998 and 1997 to avoid double-counting in
other comprehensive income (loss) items 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:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Holding (losses) gains on investments arising during the
year...................................................... $(6,314) $ 1,493 $ 4,257
Income tax effect of holding gains or losses................ 2,262 (617) (1,615)
Transfer of securities from held-to-maturity to
available-for-sale:
Holding gains on investments.............................. -- -- 198
Income tax effect......................................... -- -- (75)
Reclassification adjustments:
Realized holding (gains) losses included in current year
net income............................................. 38 (2,013) (844)
Amortization of premium and discount on investments....... (307) (350) (209)
Realized holding (losses) gains allocated to other
policyholder amounts................................... (67) 608 231
Income tax effect......................................... 120 729 312
Allocation of holding losses (gains) on investments relating
to other policyholder amounts............................. 3,788 (351) (2,231)
Income tax effect of allocation of holding gains and losses
to other policyholder amounts............................. (1,357) 143 846
------- ------- -------
Net unrealized investment (losses) gains.................... (1,837) (358) 870
------- ------- -------
Foreign currency translation adjustments arising during the
year...................................................... 50 (115) (46)
Reclassification adjustment for sale of investment in
foreign operation......................................... -- 2 (3)
------- ------- -------
Foreign currency translation adjustment..................... 50 (113) (49)
------- ------- -------
Minimum pension liability adjustment........................ (7) (12) --
------- ------- -------
Other comprehensive income (loss)........................... $(1,794) $ (483) $ 821
======= ======= =======
</TABLE>
15. BUSINESS SEGMENT INFORMATION
The Company provides insurance and financial services to customers in the
United States, Canada, Central America, South America, Europe and Asia. The
Company's business is divided into six segments: Individual, Institutional, Auto
& Home, International, Asset Management and Corporate. These segments are
managed separately because they either provide different products and services,
require different strategies or have different technology requirements.
Individual offers a wide variety of individual insurance and investment
products, including life insurance, annuities and mutual funds. Institutional
offers a broad range of group insurance and retirement and savings products and
services, including group life insurance, non-medical health insurance such as
short and long-term disability, long-term care and dental insurance and other
insurance products and services. Auto & Home provides insurance coverages
including private passenger automobile, homeowners and personal excess liability
insurance. International provides life insurance, accident and health insurance,
annuities and retirement and savings
<PAGE> 44
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
products to both individuals and groups, and auto and homeowners coverage to
individuals. Asset Management provides a broad variety of asset management
products and services to individuals and institutions such as mutual funds for
savings and retirement needs, commercial real estate advisory and management
services, and institutional and retail investment management. Through its
Corporate segment, the Company reports items that are not allocated to any of
the business segments.
Set forth in the tables below is certain financial information with respect
to the Company's operating segments for the years ended December 31, 1999, 1998
and 1997. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies, except for the
method of capital allocation. The Company allocates capital to each segment
based upon an internal capital allocation system that allows the Company to more
effectively manage its capital. The Company has divested operations that did not
meet targeted rates of return, including its commercial leasing business
(Corporate segment) and substantial portions of its Canadian operations
(International segment), and insurance operations in the United Kingdom
(International segment). The Company evaluates the performance of each operating
segment based upon income or loss from operations before provision for income
taxes and non-recurring items (e.g. items of unusual or infrequent nature). The
Company allocates non-recurring items (primarily consisting of sales practices
claims and claims for personal injuries caused by exposure to asbestos or
asbestos-containing products) and prior to its sale in 1998, the results of
MetLife Capital Holdings, Inc. to the Corporate segment.
<TABLE>
<CAPTION>
AUTO
AT OR FOR THE YEAR ENDED & ASSET CONSOLIDATION/
DECEMBER 31, 1999 INDIVIDUAL INSTITUTIONAL HOME INTERNATIONAL MANAGEMENT CORPORATE ELIMINATION TOTAL
- ------------------------ ---------- ------------- ---- ------------- ---------- --------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premiums................ $ 4,289 $ 5,525 $1,751 $ 523 $ -- $ -- $ -- $ 12,088
Universal life and
investment-type
product policy fees... 888 502 -- 48 -- -- -- 1,438
Net investment income... 5,346 3,755 103 206 80 605 (279) 9,816
Other revenues.......... 558 629 21 12 803 59 72 2,154
Net realized investment
gains (losses)........ (14) (31) 1 1 -- (41) 14 (70)
Policyholder benefits
and claims............ 4,625 6,712 1,301 463 -- -- 4 13,105
Interest credited to
policyholder account
balances.............. 1,359 1,030 -- 52 -- -- -- 2,441
Policyholder
dividends............. 1,509 159 -- 22 -- -- -- 1,690
Other expenses.......... 2,719 1,589 514 248 795 1,031 (141) 6,755
Income (loss) before
provision for income
taxes and
extraordinary item.... 855 890 61 5 88 (408) (56) 1,435
Income (loss) after
provision for income
taxes before
extraordinary item.... 555 567 56 21 51 (358) (50) 842
Total assets............ 109,401 88,127 4,443 4,381 1,036 19,834 (1,990) 225,232
Deferred policy
acquisition costs..... 8,049 106 93 244 -- -- -- 8,492
Separate account
assets................ 28,828 35,236 -- 877 -- -- -- 64,941
Policyholder
liabilities........... 72,956 47,781 2,318 2,187 -- 6 (293) 124,955
Separate account
liabilities........... 28,828 35,236 -- 877 -- -- -- 64,941
</TABLE>
<PAGE> 45
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
AUTO
AT OR FOR THE YEAR ENDED & ASSET CONSOLIDATION/
DECEMBER 31, 1998 INDIVIDUAL INSTITUTIONAL HOME INTERNATIONAL MANAGEMENT CORPORATE ELIMINATION TOTAL
- ------------------------ ---------- ------------- ---- ------------- ---------- --------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premiums................ $ 4,323 $ 5,159 $1,403 $ 618 $ -- $ -- $ -- $ 11,503
Universal life and
investment-type
product policy fees... 817 475 -- 68 -- -- -- 1,360
Net investment income... 5,480 3,885 81 343 75 682 (318) 10,228
Other revenues.......... 474 575 36 33 817 111 (52) 1,994
Net realized investment
gains................. 659 557 122 117 -- 679 (113) 2,021
Policyholder benefits
and claims............ 4,606 6,416 1,029 597 -- (10) -- 12,638
Interest credited to
policyholder account
balances.............. 1,423 1,199 -- 89 -- -- -- 2,711
Policyholder
dividends............. 1,445 142 -- 64 -- -- -- 1,651
Other expenses.......... 2,577 1,613 386 352 799 2,601 (309) 8,019
Income (loss) before
provision for income
taxes and
extraordinary item.... 1,702 1,281 227 77 93 (1,119) (174) 2,087
Income (loss) after
provision for income
taxes before
extraordinary item.... 1,069 846 161 56 49 (691) (143) 1,347
Total assets............ 103,614 88,741 2,763 3,432 1,164 20,852 (5,220) 215,346
Deferred policy
acquisition costs..... 6,194 82 57 205 -- -- -- 6,538
Separate account
assets................ 23,013 35,029 -- 26 -- -- -- 58,068
Policyholder
liabilities........... 71,571 49,406 1,477 2,043 -- 1 (295) 124,203
Separate account
liabilities........... 23,013 35,029 -- 26 -- -- -- 58,068
</TABLE>
<TABLE>
<CAPTION>
AUTO
AT OR FOR THE YEAR ENDED & ASSET CONSOLIDATION/
DECEMBER 31, 1997 INDIVIDUAL INSTITUTIONAL HOME INTERNATIONAL MANAGEMENT CORPORATE ELIMINATION TOTAL
- ------------------------ ---------- ------------- ---- ------------- ---------- --------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premiums................. $ 4,327 $ 4,689 $1,354 $ 908 $ -- $ -- $ -- $ 11,278
Universal life and
investment-type product
policy fees............ 855 426 -- 137 -- -- -- 1,418
Net investment income.... 4,754 3,754 71 504 78 700 (370) 9,491
Other revenues........... 338 357 25 54 682 19 16 1,491
Net realized investment
gains.................. 356 45 9 142 -- 326 (91) 787
Policyholder benefits and
claims................. 4,597 5,934 1,003 869 -- -- -- 12,403
Interest credited to
policyholder account
balances............... 1,422 1,319 -- 137 -- -- -- 2,878
Policyholder dividends... 1,340 305 -- 97 -- -- -- 1,742
Other expenses........... 2,394 1,178 351 497 679 966 (294) 5,771
Income before provision
for income taxes....... 877 535 105 145 81 79 (151) 1,671
Income after provision
for income taxes....... 599 339 74 126 45 163 (143) 1,203
Total assets............. 95,323 83,473 2,542 7,412 1,136 18,641 (5,745) 202,782
Deferred policy
acquisition costs...... 5,912 40 56 428 -- -- -- 6,436
Separate account assets.. 17,345 30,473 -- 520 -- -- -- 48,338
Policyholder
liabilities............ 70,686 49,547 1,509 5,615 -- 1 -- 127,358
Separate account
liabilities............ 17,345 30,473 -- 520 -- -- -- 48,338
</TABLE>
<PAGE> 46
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Individual segment includes an equity ownership interest in Nvest
Companies, L.P. ("Nvest") under the equity method of accounting. Nvest has been
included within the Asset Management segment due to the types of products and
strategies employed by the entity. The individual segment's equity in earnings
of Nvest, which is included in net investment income, was $48, $49 and $45 for
the years ended December 31, 1999, 1998 and 1997, respectively. The investment
in Nvest was $196, $252 and $216 at December 31, 1999, 1998 and 1997,
respectively.
Net investment income and net realized investment gains are based upon the
actual results of each segment's specifically identifiable asset portfolio.
Other costs and operating costs were allocated to each of the segments based
upon: (1) a review of the nature of such costs, (2) time studies analyzing the
amount of employee compensation costs incurred by each segment, and (3) cost
estimates included in the Company's product pricing.
The consolidation/elimination column includes the elimination of all
intersegment amounts and the Individual segment's ownership interest in Nvest.
The principal component of the intersegment amounts related to intersegment
loans, which bore interest at rates commensurate with related borrowings.
Revenues derived from any customer did not exceed 10% of consolidated
revenues. Revenues from U.S. operations were $24,637, $25,643 and $22,664 for
the years ended December 31, 1999, 1998 and 1997, respectively, which
represented 97%, 96% and 93%, respectively, of consolidated revenues.
16. SUBSEQUENT EVENTS
On January 6, 2000, the Company acquired GenAmerica for $1.2 billion. In
connection with this acquisition, the Company incurred $900 of short-term debt.
GenAmerica is a holding company which includes General American Life Insurance
Company, 48.3% of the outstanding shares of Reinsurance Group of America ("RGA")
common stock, a provider of reinsurance, and 61.0% of the outstanding shares of
Conning Corporation common stock, an asset manager. On January 18, 2000, the
Company announced that it had proposed to acquire all of the outstanding shares
of Conning common stock not already owned by it for $10.50 per share in cash, or
approximately $55. At December 31, 1999, the Company owned 9.6% of the
outstanding shares of RGA common stock which were acquired on November 24, 1999
for $125. Subsequent to the GenAmerica acquisition, the Company owned 57.9% of
the outstanding shares of RGA common stock. Total assets, revenues and net loss
of GenAmerica were $23,594, $3,916 and $(174), respectively, at or for the year
ended December 31, 1999.
As part of the acquisition agreement, in September 1999 the Company assumed
$5,752 of General American Life funding agreements and received cash of $1,926
and investment assets with a market value of $3,826. In October 1999, as part of
the assumption arrangement, the holders of General American Life funding
agreements aggregating $5,136 elected to have the Company redeem the funding
agreements for cash. General American Life agreed to pay the Company a fee of
$120 in connection with the assumption of the funding agreements. The fee will
be considered as part of the purchase price to be allocated to the fair value of
assets and liabilities acquired. The Company also agreed to make a capital
contribution of $120 to General American Life after the completion of the
acquisition.
At the date of the acquisition agreement, the Company and GenAmerica were
parties to a number of reinsurance agreements. In addition, as part of the
acquisition, the Company entered into agreements effective as of July 25, 1999,
which coinsured new and certain existing business of General American Life and
some of its affiliates. See Note 11.
5
<PAGE>
APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents fair and
accurate narrative descriptions of graphic and image material omitted from the
EDGAR filing due to ASCII-incompatibility and cross-references this material to
the location of each occurrence in the text.
INTRODUCTION
The prospectus included in the Form N-4 for Metropolitan Life Separate
Account E includes illustrations using various characters from the
PEANUTS(Registered) gang which are copyrighted by United Feature Syndicate,
Inc. There is a list and description of characters followed by a list of
illustrations and their page location in the prospectus.
CHARACTERS
Snoopy -- A Beagle dog
Charlie Brown -- A little boy with zigzag pattern on shirt
Woodstock -- A small bird
Lucy -- A little brunette girl
Linus -- A younger little boy with stripped shirt (Lucy's brother)
Marcie -- A little brunette girl with glasses
Franklin -- A curly haired little boy
Pigpen -- A little boy with dust cloud and smudged face
Peppermint Patty -- An athletic girl with freckles, page boy haircut and sandals
Sally -- A little blond girl with curls on top (Charlie Brown's sister)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. Snoopy as MetLife Representative with briefcase First page
straightening bow tie
2. Charlie Brown on step ladder looking at fold Page 3 Table of Contents
out map
3. Snoopy in suit with pointer Page 4 Important Terms
You Should Know
4. Snoopy as MetLife Representative listening to Page 7 MetLife
crowd of Woodstocks
5. Corporate Snoopy with pointer with graph at Page 8 Settling Your Claim
meeting
6. Snoopy and Woodstock balanced on seesaw Page 9 The Income Annuity
7. Snoopy reading menu at restaurant table Page 10 Your Investment Choices
8. Snoopy as WWI flying ace dispatching Woodstocks Page 11 Allocation of
with checks Purchase Payment
9. Marcie at desk with adding machine reviewing Page 12 AIR
tape of calculations
10. Lucy with magnifying glass studying a piece of Page 14 Charges
paper
11. Woodstock writing out a check Page 15 Purchase Payments
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
12. Charlie Brown receiving letter at mail box Page 15 Receiving Income Payments
and Information
13. "Colonial" Snoopy as town cryer Page 16 Advertising Performance
14. Snoopy as MetLife Representative shaking paw/ Page 18 Who Sells the
wing with Woodstock Income Annuity
15. Lucy sitting down reading Tax Code Page 21 Federal Tax Treatment
16. Snoopy crouching down on his knees, signing Page 22 A defendant may assign
a form its obligation to make
Income Payments to you
17. Lucy in her advice box with "TAXES--The Expert Page 23 Premium Tax Table
is in" printed on it advising Peppermint Patty
and Sally
18. Franklin, Snoopy, Charlie Brown, Lucy, Pigpen, Page 22 Table of Contents
Linus and Peppermint Patty for the SAI
</TABLE>
<PAGE>
PART II
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
The following financial statements are included in Part B of this
Post-Effective Amendment on Form N-4 (to be filed by amendment):
Metropolitan Life Separate Account E
Independent Auditors' Report
Financial Statements for the Years Ended December 31, 1999 and 1998
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Metropolitan Life Insurance Company
Independent Auditors' Report
Financial Statements for the Years Ended December 31, 1999, 1998
and 1997
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flow
Consolidated Statements of Equity
Notes to Consolidated Financial Statements
(B) EXHIBITS
<TABLE>
<S> <C>
(1) -- Resolution of the Board of Directors of Metropolitan Life
establishing Separate Account E.1
(2) -- Not applicable.
(3)(a) -- Not applicable.
(b) -- Form of Selected Broker Agreement.1
(4)(a) -- Form of Income Annuity Contract.4
(b) -- Form of Certificate 4
(6) -- Charter and By-Laws of Metropolitan Life.1, 5
(7) -- Not applicable.
(8) -- Not applicable.
(9) -- Opinion and consent of counsel as to the legality of the
securities being registered.5
(10) -- (a) Form of Settlement Agreement.4
(b) Form of Uniform Qualified Assignment.4
(c) Form of Uniform Qualified Assignment and Release 4
(11) -- Not applicable.
(12) -- Not applicable.
(13)(a) -- Powers of Attorney.1,2,3
</TABLE>
- ------------------
1. Filed with Post-Effective Amendment No. 19 to Registration Statement
No. 2-90380/811-4001 for Metropolitan Life Separate Account E on Form N-4 on
February 27, 1996. As incorporated herein by reference.
(Footnotes continued on next page)
II-1
<PAGE>
(Footnotes continued from previous page)
2. Powers of attorney for Gerald Clark, Burton A. Dole, Jr. and Charles H.
Leighton were filed with Post-Effective Amendment No. 21 to Registration
Statement No. 2-90380/811-4001 for Metropolitan Life Separate Account E on
Form N-4 on February 28, 1997. As incorporated herein by reference.
3. Powers of Attorney for Robert H. Benmosche, Jon F. Danski and Stewart G.
Nagler filed with Post-Effective Amendment No. 23 to Registration Statement
No. 2-90380/811-4001 for Metropolitan Life Separate Account E on Form N-4 on
April 3, 1998. As incorporated herein by reference.
4. Power of Attorney for Virginia M. Wilson filed with Pre-Effective Amendment
No. 2 to Registration Statement 333-80547/811-4001 for Metropolitan Life
Separate Account E on Form N-4 on November 1, 1999. As incorporated herein by
reference.
5. Filed herewith. Exhibit 6 is contingent on the successful completion of the
conversion of Metropolitan Life Insurance Company from a mutual life
insurance company to a stock life insurance company contemplated to take
effect on Friday, April 7, 2000.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION & POSITIONS AND OFFICES
NAME BUSINESS ADDRESS WITH DEPOSITOR
- ------------------------- ---------------------------------------- ---------------------
<S> <C> <C>
Robert H. Benmosche...... Chairman of the Board, President and Chairman, President,
Chief Executive Officer, Chief Executive
Metropolitan Life Insurance Company, Officer and Director
One Madison Avenue,
New York, NY 10010.
Curtis H. Barnette....... Chairman and Chief Executive Officer, Director
Bethlehem Steel Corporation,
1170 Eighth Avenue,
Martin Tower 2118,
Bethlehem, PA 18016-7699.
Gerald Clark............. Vice-Chairman of the Board and Vice-Chairman,
Chief Investment Officer, Chief Investment Officer
Metropolitan Life Insurance Company, and Director
One Madison Avenue,
New York, NY 10010.
Joan Ganz Cooney......... Chairman, Executive Committee, Director
Children's Television Workshop,
One Lincoln Plaza,
New York, NY 10023.
Burton A. Dole, Jr....... Retired Chairman, President and Director
Chief Executive Officer,
Nellcor Puritan Bennett,
2200 Faraday Avenue,
Carlsbad, CA 92008-7208.
James R. Houghton........ Chairman Emeritus of the Board Director
and Director,
Corning Incorporated,
80 East Market Street, 2nd Floor,
Corning, NY 14830.
Harry P. Kamen........... Retired Chairman and Chief Executive Director
Officer,
Metropolitan Life Insurance Company,
One Madison Avenue,
New York, NY 10010.
Helene L. Kaplan......... Of Counsel, Skadden, Arps, Slate, Director
Meagher and Flom,
919 Third Avenue,
New York, NY 10022.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION & POSITIONS AND OFFICES
NAME BUSINESS ADDRESS WITH DEPOSITOR
- ------------------------- ---------------------------------------- ---------------------
<S> <C> <C>
Charles M. Leighton...... Retired Chairman of the Board, Director
CML Group, Inc.,
524 Main Street,
Bolton, MA 01720.
Allen E. Murray.......... Retired Chairman of the Board and Director
Chief Executive Officer,
Mobil Corporation,
375 Park Avenue, Suite 2901,
New York, NY 10152.
Stewart G. Nagler........ Vice-Chairman of the Board and Vice-Chairman, Chief
Chief Financial Officer, Financial Officer
Metropolitan Life Insurance Company, and Director
One Madison Avenue,
New York, NY 10010.
John J. Phelan, Jr....... Retired Chairman and Director
Chief Executive Officer,
New York Stock Exchange,
P.O. Box 312,
Mill Neck, NY 11765.
Hugh B. Price............ President and Chief Executive Officer, Director
National Urban League, Inc.,
120 Wall Street, 7th & 8th Floors,
New York, NY 10005.
Robert G. Schwartz....... Retired Chairman of the Board, Director
President and Chief Executive Officer,
Metropolitan Life Insurance Company,
200 Park Avenue, Suite 5700,
New York, NY 10166.
Ruth J. Simmons, Ph.D.... President, Director
Smith College,
College Hall 20,
Northhampton, MA 01063.
William C. Steere, Jr.... Chairman of the Board and Director
Chief Executive Officer,
Pfizer, Inc.,
235 East 42nd Street,
New York, NY 10016
</TABLE>
Set forth below is a list of the executive officers of Metropolitan Life.
The principal business address of each officer of Metropolitan Life is One
Madison Avenue, New York, New York 10010.
<TABLE>
<CAPTION>
NAME OF OFFICER POSITION WITH METROPOLITAN LIFE
- ------------------------------ -------------------------------------------------
<S> <C>
Robert H. Benmosche........... Chairman, Chief Executive Officer and Director
Gerald Clark.................. Vice-Chairman, Chief Investment Officer and
Director
Stewart G. Nagler............. Vice-Chairman, Chief Financial Officer and
Director
Gary A. Beller................ Senior Executive Vice-President and General
Counsel
James H. Benson............... President, Individual Business; Chairman, Chief
Executive Officer and President, New England
Life Insurance Company
C. Robert Henrikson........... President, Institutional Business
Richard A. Liddy.............. Senior Executive Vice-President
Catherine A. Rein............. Senior Executive Vice-President; President and
Chief Executive Officer of Metropolitan Property
and Casualty Insurance Company
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
NAME OF OFFICER POSITION WITH METROPOLITAN LIFE
- ------------------------------ -------------------------------------------------
<S> <C>
William J. Toppeta............ President, Client Services and Chief
Administrative Officer
John H. Tweedie............... Senior Executive Vice-President
Lisa M. Weber................. Executive Vice-President
Judy E. Weiss................. Executive Vice-President and Chief Actuary
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
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. It is
anticipated that Metropolitan Life Insurance Company will become a wholly-owned
subsidiary of MetLife, Inc. a publicly traded company effective on April 7,
2000. The following outline indicates those persons who are controlled by or
under common control with Metropolitan Life Insurance Company:
<PAGE>
ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF APRIL 3, 2000
The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan"). It is expected that Metropolitan will become a wholly-owned
subsidiary of MetLife, Inc. on or about April 7, 2000. MetLife, Inc. will become
a publicly-traded company at that time. Those entities which are listed at the
left margin (labelled with capital letters) are direct subsidiaries of
Metropolitan. Unless otherwise indicated, each entity which is indented under
another entity is a subsidiary of such indented entity and, therefore, an
indirect subsidiary of Metropolitan. Certain inactive subsidiaries have been
omitted from the Metropolitan 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. Metropolitan Tower Corp. (Delaware)
1. Metropolitan Property and Casualty Insurance Company (Rhode Island)
a. Metropolitan Group Property and Casualty Insurance Company
(Rhode Island)
i. Metropolitan Reinsurance Company (U.K.) Limited (Great
Britain)
b. Metropolitan Casualty Insurance Company (Rhode Island)
c. Metropolitan General Insurance Company (Rhode Island)
d. Metropolitan Direct Property and Casualty Insurance Company
(Georgia)
e. Metropolitan P&C Insurance Services, Inc. (California)
f. Metropolitan Lloyds, Inc. (Texas)
g. Met P&C Managing General Agency, Inc. (Texas)
h. Economy Fire & Casualty Company
i. Economy Preferred Insurance Company
j. Economy Premier Assurance Company
2. Metropolitan Insurance and Annuity Company (Delaware)
a. MetLife Europe I, Inc. (Delaware)
b. MetLife Europe II, Inc. (Delaware)
c. MetLife Europe III, Inc. (Delaware)
d. MetLife Europe IV, Inc. (Delaware)
e. MetLife Europe V, Inc. (Delaware)
3. MetLife General Insurance Agency, Inc. (Delaware)
a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)
c. MetLife General Insurance Agency of Mississippi, Inc.
(Mississippi)
d. MetLife General Insurance Agency of Texas, Inc. (Texas)
e. MetLife General Insurance Agency of North Carolina, Inc. (North
Carolina)
f. MetLife General Insurance Agency of Massachusetts, Inc.
(Massachusetts)
<PAGE>
4. Metropolitan Asset Management Corporation (Delaware)
(a.) MetLife Capital, Limited Partnership (Delaware).
Partnership interests in MetLife Capital, Limited
Partnership are held by Metropolitan (90%) and
Metropolitan Asset Management Corporation (10%).
(i.) MetLife Capital Credit L.P. (Delaware).
Partnership interests in MetLife Capital Credit
L.P. are held by Metropolitan (90%) and
Metropolitan Asset Management Corporation (10%).
(1) MetLife Capital CFLI Holdings, LLC (DE)
(a.) MetLife Capital CFLI Leasing, LLC
(DE)
b. MetLife Financial Acceptance Corporation (Delaware).
MetLife Capital Holdings, Inc. holds 100% of the voting
preferred stock of MetLife Financial Acceptance Corporation.
Metropolitan Property and Casualty Insurance Company holds
100% of the common stock of MetLife Financial Acceptance
Corporation.
c. MetLife Investments Limited (United Kingdom). 23rd Street
Investments, Inc. holds one share of MetLife Investments
Limited.
d. MetLife Investments Asia Limited (Hong Kong). One share of
MetLife Investments Asia Limited is held by W&C Services, Inc.,
a nominee of Metropolitan Asset Management Corporation.
e. MetLife Investment, S.A. 23rd Street Investment, Inc. holds one
share of MetLife Investments Limited and MetLife Investments,
S.A.
5. SSRM Holdings, Inc. (Delaware)
a. State Street Research & Management Company (Delaware). Is a
sub-investment manager for the Growth, Income, Diversified
and Aggressive Growth Portfolios of Metropolitan Series
Fund, Inc.
i. State Street Research Investment Services, Inc.
(Massachusetts)
<PAGE>
b. SSR Realty Advisors, Inc. (Delaware)
i. Metric Management Inc. (Delaware)
ii. Metric Property Management, Inc. (Delaware)
(1) Metric Realty (Delaware). SSR Realty Advisors, Inc.
and Metric Property Management, Inc. each hold 50% of
the common stock of Metric Realty.
(2) Metric Colorado, Inc. (Colorado). Metric Property
Management, Inc. holds 80% of the common stock of
Metric Colorado, Inc.
iii. Metric Capital Corporation (California)
iv. Metric Assignor, Inc. (California)
v. SSR AV, Inc. (Delaware)
6. MetLife Holdings, Inc. (Delaware)
a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)
7. Metropolitan Tower Realty Company, Inc. (Delaware)
8. Security First Group, Inc. (DE)
a. Security First Life Insurance Company (DE)
b. Security First Insurance Agency, Inc. (MA)
c. Security First Insurance Agency, Inc. (NV)
d. Security First Group of Ohio, Inc. (OH)
e. Security First Financial, Inc. (DE)
f. Security First Investment Management Corporation (DE)
g. Security First Financial Agency, Inc. (TX)
9. Natiloportem Holdings, Inc. (Delaware)
a. Services Administrativos Gen, S.A. de CV One Share of Servicos
Administrativos Gen. S.A. de C.V. is held by a nominee of
Natiloportem Holdings, Inc.
B. Metropolitan Tower Life Insurance Company (Delaware)
C. MetLife Security Insurance Company of Louisiana (Louisiana)
<PAGE>
D. MetLife Texas Holdings, Inc. (Delaware)
1. Texas Life Insurance Company (Texas)
a. Texas Life Agency Services, Inc. (Texas)
b. Texas Life Agency Services of Kansas, Inc. (Kansas)
E. MetLife Securities, Inc. (Delaware)
F. 23rd Street Investments, Inc. (Delaware)
G. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.
1. Seguros Genesis, S.A. (Spain)
2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
(Spain)
I. MetLife Saengmyoung Insurance Company Ltd. (Korea).
J. Metropolitan Life Seguros de Vida S.A. (Argentina)
K. Metropolitan Life Seguros de Retiro S.A. (Argentina).
L. Met Life Holdings Luxembourg (Luxembourg)
M. Metropolitan Life Holdings, Netherlands BV (Netherlands)
N. MetLife International Holdings, Inc. (Delaware)
O. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)
P. Metropolitan Marine Way Investments Limited (Canada)
Q. P.T. MetLife Sejahtera (Indonesia) Shares of P.T. MetLife Sejahtera are
held by Metropolitan (80%) and by an entity (20%) unaffiliated with
Metropolitan.
R. Seguros Genesis S.A. (Mexico) Metropolitan holds 85.49%, Metropolitan Tower
Corp. holds 7.31% and Metropolitan Asset Management Corporation holds 7.20%
of the common stock of Seguros Genesis S.A.
S. Metropolitan Life Seguros de Vida S.A. (Uruguay). One share of Metropolitan
Life Seguros de Vida S.A. is held by Alejandro Miller Artola, a nominee of
Metropolitan Life Insurance Company.
T. Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil)
<PAGE>
U. MetLife (India) Ltd.
V. Hyatt Legal Plans, Inc. (Delaware)
1. Hyatt Legal Plans of Florida, Inc. (Fl)
W. One Madison Merchandising L.L.C. (Connecticut) Ownership of membership
interests in One Madison Merchandising L.L.C. is as follows: Metropolitan
owns 99% and Metropolitan Tower Corp. owns 1%.
X. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. CBNJ, Inc. (New Jersey)
Y. MetPark Funding, Inc. (Delaware)
Z. Transmountain Land & Livestock Company (Montana)
AA. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
A.B. MetLife Trust Company, National Association. (United States)
A.C. Benefit Services Corporation (Georgia)
A.D. G.A. Holding Corporation (MA)
A.E. MetLife, Inc.
A.F. CRH., Co, Inc. (MA)
A.G. 334 Madison Euro Investments, Inc.
A.H. Park Twenty Three Investments Company 1% Voting Control of Park Twenty
Three Investment Company is held by St. James Fleet Investments Two
Limited
a. Convent Stution Euro Investments Four Company 1% voting control of
Convert Stution Euro Investments Four Company is held by 334 Madison
Euro Investments, Inc. as nominee for Park Twenty Three Investments
Company.
A.I. L/C Development Corporation (CA)
A.J. One Madison Investments (Cayco) Limited 1% Voting Control of One Madison
Investment (Cayco) Limited is held by Convent Station Euro Investments
Four Company.
A.K. New England Portfolio Advisors, Inc. (MA)
A.L. CRB Co., Inc. (MA) AEW Real Estate Advisors, Inc. holds 49,000 preferred
non-voting shares of CRB Co., Inc. AEW Advisors, Inc. holds 1,000
preferred non-voting shares of CRB Co., Inc.
A.M. New England Life Mortgage Funding Corporation (MA)
A.N. Mercadian Capital L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian Capital
L.P.
A.O. Mercadian Funding L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian
Funding L.P.
A.P. St. James Fleet Investments two Limited.
<PAGE>
A.Q. MetLife New England Holdings, Inc. (DE)
1. Fulcrum Financial Advisors, Inc. (MA)
2. New England Life Insurance Company (MA)
a. New England Life Holdings, Inc. (DE)
i. New England Securities Corporation (MA)
(1) Hereford Insurance Agency, Inc. (MA)
(2) Hereford Insurance Agency of Alabama, Inc. (AL)
(3) Hereford Insurance Agency of Minnesota, Inc. (MN)
(4) Hereford Insurance Agency of Ohio, Inc. (OH)
(5) Hereford Insurance Agency of New Mexico, Inc. (NM)
(6) Hereford Insurance Agency of Wyoming, Inc.
(7) Hereford Insurance Agency of Oklahoma, Inc.
ii. TNE Information Services, Inc. (MA)
(1) First Connect Insurance Network, Inc. (DE)
(2) Interative Financial Solutions, Inc. (MA)
iii. N.L. Holding Corp. (Del)(NY)
(1) Nathan & Lewis Securities, Inc. (NY)
(2) Nathan & Lewis Associates, Inc. (NY)
(a) Nathan and Lewis Insurance Agency of Massachusetts,
Inc. (MA)
(b) Nathan and Lewis Associates of Texas, Inc. (TX)
(3) Nathan & Lewis Associates--Arizona, Inc. (AZ)
(4) Nathan & Lewis of Nevada, Inc. (NV)
(5) Nathan and Lewis Associates Ohio, Incorporated (OH)
iv. New England Securities Corporation
v. New England Investment Management Inc.
b. Exeter Reassurance Company, Ltd. (MA)
c. Omega Reinsurance Corporation (AZ)
d. New England Pension and Annuity Company (DE)
e. Newbury Insurance Company, Limited (Bermuda)
A.R. General American Life
1. General American Life Insurance Company
a. GenAm Benefits Life Insurance Company
b. Paragon Life Insurance Company
c. Security Equity Life Insurance Company
d. Cova Corporation
i. Cova Financial Services Life Insurance Company
(1) Cova Financial Life Insurance Company
(2) First Cova Life Insurance Company
ii. Cova Investment Advisory Corporation
(1) Cova Investment Advisory Corporation
(2) Cova Investment Allocution Corporation
(3) Cova Life Sales Company
(4) Cova Life Administration Services Company
e. General Life Insurance Company
i. General Life Insurance Company of America
f. Equity Intermediary Company
i. Reinsurance Group of America, Incorporated
1. Reinsurance Company of Missouri Incorporated
a. RGA Reinsurance Company
b. Fairfield Management Group, Inc.
i. Reinsurance Partners, Inc.
ii. Great Rivers Reinsurance Management, Inc.
iii. RGA (U.K.) Underwriting Agency Limited
2. Triad Re, Ltd
3. RGA Americas Reinsurance Company, Ltd.
4. RGA Reinsurance Company (Barbados) Ltd.
(a) RGA/Swiss Financial Group, L.L.C.
5. RGA International Ltd.
(a) RGA Financial Products Limited
(b) RGA Canada Management Company, Ltd.
(i) RGA Life Reinsurance Company of Canada
6. Benefit Resource Life Insurance Company (Bermuda) Ltd.
7. RGA Holdings Limited
(a) RGA Managing Agency Limited
(b) RGA Capital Limited
8. RGA South African Holdings (Pty) Ltd.
(a) RGA Reinsurance Company of South Africa Limited
9. RGA Australian Holdings Pty Limited
(a) RGA Reinsurance Company of Australia Limited
10. General American Argentina Seguros
11. RGA Argentina, S.A.
12. RGA Sudamerica, S.A.
(a) RGA Reinsurance
(b) BHIF American Seguros de Vida, S.A.
g. GenAm Holding Company
i. NaviSys Incorporated
ii. NaviSys Illustration Solutions, Inc.
iii. NaviSys Asia Pacifica Limited
iv. NaviSys de Mexico S.A. de C.V.
99% of the shares of NaviSys de Mexico S.A. de C.V. are held
by NaviSys Incorporated and 1% is held by General American
Life Insurance Company.
v. NaviSys Enterprise Solutions, Inc.
vi. Red Oak Realty Company
vii. White Oak Royalty Company
viii. GenMark Incorporated
(a) Stan Mintz Associates, Inc.
(b) GenMark Insurance Agency of Alabama, Inc.
(c) GenMark Insurance Agency of Massachusetts, Inc.
(d) GenMark Insurance Agency of Ohio, Inc.
(e) GenMark Insurance Agency of Texas, Inc.
ix. Conning Corporation
(a) Conning, Inc.
(i) Conning & Company
(1) Conning Asset Management Company
2. Collaborative Strategies, Inc.
3. Virtual Finances.Com, Inc.
4. Missouri Reinsurance (Barbados) Inc.
5. GenAmerican Capital I
6. GenAmerican Management
7. Walnut Street Securities, Inc.
a. WSS Insurance Agency of Alabama, Inc.
b. WSS Insurance Agency of Massachusetts, Inc.
c. WSS Insurance Agency of Ohio, Inc.
d. WSS Insurance Agency of Texas, Inc.
e. Walnut Street Advisers, Inc.
3. Nvest Corporation (MA)
a. Nvest, L.P. (DE) Nvest Corporation holds a 1.69% general partnership
interest and MetLife New England Holdings, Inc. 3.19% general
partnership interest in Nvest, L.P.
b. Nvest Companies, L.P. (DE) Nvest Corporation holds a 0.0002% general
partnerhship interest in Nvest Companies, L.P. Nvest, L.P. holds a
14.64% general partnership interest in Nvest Companies, L.P.
Metropolitan holds a 46.23% limited partnership interest in Nvest
Companies, L.P.
i. Nvest Holdings, Inc. (DE)
(1) Back Bay Advisors, Inc. (MA)
(a) Back Bay Advisors, L.P. (DE)
Back Bay Advisors, Inc.
holds a 1% general partner
interest and NEIC
Holdings, Inc. holds a 99%
limited partner interest
in Back Bay Advisors, L.P.
(2) R & T Asset Management, Inc. (MA)
(a) Reich & Tang Distributors, Inc. (DE)
(b) Reich & Tang Asset Management
R & T Asset Management, Inc.
holds a 0.5% general partner interest and
NEIC Holdings, Inc. hold a 99.5% limited
partner interest in &
Asset Management, L.P.
(c) Reich & Tang Services, Inc. (DE)
<PAGE>
(3) Loomis, Sayles & Company, Inc. (MA)
(a) Loomis Sayles & Company, L.P. (DE)
Loomis Sayles & Company, Inc.
holds a 1% general partner interest and
R & T Asset Management, Inc. holds a 99%
limited partner interest in Loomis Sayles &
Company, L.P.
(4) Westpeak Investment Advisors, Inc. (MA)
(a) Westpeak Investment Advisors, L.P. (DE)
Westpeak Investment Advisors, Inc.
holds a 1% general partner interest and
Reich & Tang holds a 99% limited
partner interest in Westpeak Investment
Advisors, L.P.
(i) Westpeak Investment Advisors Australia
Limited Pty.
(5) Vaughan, Nelson Scarborough & McCullough (DE)
(a) Vaughan, Nelson Scarborough & McCullough, L.P. (DE)
VNSM, Inc. holds a 1% general partner interest and
Reich & Tang Asset Management, Inc. holds a 99%
limited partner interest in Vaughan, Nelson
Scarborough & McCullough, L.P.
(i) VNSM Trust Company
(6) MC Management, Inc. (MA)
(a) MC Management, L.P. (DE)
MC Management, Inc. holds a 1% general partner
interest and R & T Asset Management, Inc.
holds a 99% limited partner interest in MC
Management, L.P.
(7) Harris Associates, Inc. (DE)
(a) Harris Associates Securities L.P. (DE)
Harris Associates, Inc. holds a 1% general partner
interest and Harris Associates L.P. holds a
99% limited partner interest in Harris Associates
Securities, L.P.
(b) Harris Associates L.P. (DE)
Harris Associates, Inc. holds a 0.33% general
partner interest and NEIC Operating Partnership,
L.P. holds a 99.67% limited partner interest in
Harris Associates L.P.
(i) Harris Partners, Inc. (DE)
(ii) Harris Partners L.L.C. (DE)
Harris Partners, Inc. holds a 1%
membership interest and
Harris Associates L.P. holds a 99%
membership interest in Harris Partners L.L.C.
(1) Aurora Limited Partnership (DE)
Harris Partners L.L.C. holds a 1% general
partner interest
<PAGE>
(2) Perseus Partners L.P. (DE) Harris Partners
L.L.C. holds a 1% general partner interest
(3) Pleiades Partners L.P. (DE) Harris
Partners L.L.C. holds a 1% general partner
interest
(4) Stellar Partners L.P. (DE)
Harris Partners L.L.C. holds a 1% general
partner interest
(5) SPA Partners L.P. (DE) Harris Partners
L.L.C. holds a 1% general partner interest
(8) Graystone Partners, Inc. (MA)
(a) Graystone Partners, L.P. (DE)
Graystone Partners, Inc. holds a 1%
general partner interest and New England
NEIC Operating Partnership, L.P.
holds a 99% limited partner interest in
Graystone Partners, L.P.
(9) NEF Corporation (MA)
(a) New England Funds, L.P. (DE) NEF Corporation holds a
1% general partner interest and NEIC Operating
Partnership, L.P. holds a 99% limited
partner interest in New England Funds, L.P.
(b) New England Funds Management, L.P. (DE) NEF
Corporation holds a 1% general partner interest and
NEIC Operating Partnership, L.P. holds a 99%
limited partner interest in New England Funds
Management, L.P.
(10) New England Funds Service Corporation
(11) AEW Capital Management, Inc. (DE)
(a) AEW Securities, L.P. (DE) AEW Capital Management, Inc. holds
a 1% general partnership and AEW Capital Management, L.P.
holds a 99% limited partnership interest in AEW Securities,
L.P.
ii. Nvest Associates, Inc.
iii. Snyder Capital Management, Inc.
(1) Snyder Capital Management, L.P. NEIC Operating
Partnership holds a 99.5% limited partnership
interest and Snyder Capital Management Inc. holds a
0.5% general partnership interest.
iv. Jurika & Voyles, Inc.
(1) Jurika & Voyles, L.P NEIC Operating Partnership,
L.P. holds a 99% limited partnership interest and
Jurika & Voyles, Inc. holds a 1% general partnership
interest.
v. Capital Growth Management, L.P. (DE)
NEIC Operating Partnership, L.P. holds a 50% limited partner
interest in Capital Growth Management, L.P.
vi. Nvest Partnerships, LLC ( )
<PAGE>
vii. AEW Capital Management L.P. (DE)
New England Investment Companies, L.P. holds a 99% limited partner
interest and AEW Capital Management, Inc. holds a 1% general
partner interest in AEW Capital Management, L.P.
(1) AEW II Corporation ( )
(2) AEW Partners III, Inc. ( )
(3) AEW TSF, Inc. ( )
(4) AEW Exchange Management, LLC
(5) AEWPN, LLC ( )
(6) AEW Investment Group, Inc. (MA)
(a) Copley Public Partnership Holding, L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75%
limited partnership interest in Copley Public Partnership
Holding, L.P.
(b) AEW Management and Advisors L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75% limited
partnership interest in AEW Management and Advisors L.P.
ii. AEW Real Estate Advisors, Inc. (MA)
1. AEW Advisors, Inc. (MA)
2. Copley Properties Company, Inc. (MA)
3. Copley Properties Company II, Inc. (MA)
4. Copley Properties Company III, Inc. (MA)
5. Fourth Copley Corp. (MA)
6. Fifth Copley Corp. (MA)
7. Sixth Copley Corp. (MA)
8. Seventh Copley Corp. (MA).
9. Eighth Copley Corp. (MA).
10. First Income Corp. (MA).
11. Second Income Corp. (MA).
12. Third Income Corp. (MA).
13. Fourth Income Corp. (MA).
14. Third Singleton Corp. (MA).
15. Fourth Singleton Corp. (MA)
16. Fifth Singleton Corp. (MA)
17. Sixth Singleton Corp. (MA).
18. BCOP Associates L.P. (MA)
AEW Real Estate Advisors, Inc. holds a 1% general
partner interest in BCOP Associates L.P.
ii. CREA Western Investors I, Inc. (MA)
1. CREA Western Investors I, L.P. (DE)
CREA Western Investors I, Inc. holds a 24.28% general
partnership interest and Copley Public Partnership Holding,
L.P. holds a 57.62% limited partnership interest in CREA
Western Investors I, L.P.
iii. CREA Investors Santa Fe Springs, Inc. (MA)
(7) Copley Public Partnership Holding, L.P. (DE)
AEW Capital Management, L.P. holds a 75% limited partner interest and
AEW Investment Group, Inc. holds a 25% general partner interest and
CREA Western Investors I, L.P holds a 57.62% Limited Partnership
interest.
<PAGE>
(8) AEW Real Estate Advisors, Limited Partnership (MA)
AEW Real Estate Advisors, Inc. holds a 25% general partnership interest
and AEW Capital Management, L.P. holds a 75% limited partnership
interest in AEW Real Estate Advisors, Limited Partnership.
(9) AEW Hotel Investment Corporation (MA)
(a.) AEW Hotel Investment, Limited Partnership (MA)
AEW Hotel Investment Corporation holds a 1% general
partnership interest and AEW Capital Management, L.P. holds a
99% limited partnership interest in AEW Hotel Investment,
Limited Partnership.
(10) Aldrich Eastman Global Investment Strategies, LLC (DE)
AEW Capital Management, L.P. holds a 25% membership interest and an
unaffiliated third party holds a 75% membership interest in Aldrich
Eastman Global Investment Strategies, LLC.
A.R. General American Life
1. General American Life Insurance Company
a. GenAm Benefits Life Insurance Company
b. Paragon Life Insurance Company
c. Security Equity Life Insurance Company
d. Cova Corporation
i. Cova Financial Services Life Insurance Company
(1) Cova Financial Life Insurance Company
(2) First Cova Life Insurance Company
ii. Cova Investment Advisory Corporation
(1) Cova Investment Advisory Corporation
(2) Cova Investment Allocution Corporation
(3) Cova Life Sales Company
(4) Cova Life Administration Services Company
e. General Life Insurance Company
i. General Life Insurance Company of America
f. Equity Intermediary Company
i. Reinsurance Group of America, Incorporated
1. Reinsurance Company of Missouri Incorporated
a. RGA Reinsurance Company
b. Fairfield Management Group, Inc.
i. Reinsurance Partners, Inc.
ii. Great Rivers Reinsurance Management, Inc.
iii. RGA (U.K.) Underwriting Agency Limited
2. Triad Re, Ltd
3. RGA Americas Reinsurance Company, Ltd.
4. RGA Reinsurance Company (Barbados) Ltd.
(a) RGA/Swiss Financial Group, L.L.C.
5. RGA International Ltd.
(a) RGA Financial Products Limited
(b) RGA Canada Management Company, Ltd.
(i) RGA Life Reinsurance Company of Canada
6. Benefit Resource Life Insurance Company (Bermuda) Ltd.
7. RGA Holdings Limited
(a) RGA Managing Agency Limited
(b) RGA Capital Limited
8. RGA South African Holdings (Pty) Ltd.
(a) RGA Reinsurance Company of South Africa Limited
9. RGA Australian Holdings Pty Limited
(a) RGA Reinsurance Company of Australia Limited
10. General American Argentina Seguros
11. RGA Argentina, S.A.
12. RGA Sudamerica, S.A.
(a) RGA Reinsurance
(b) BHIF American Seguros de Vida, S.A.
g. GenAm Holding Company
i. NaviSys Incorporated
ii. NaviSys Illustration Solutions, Inc.
iii. NaviSys Asia Pacifica Limited
iv. NaviSys de Mexico S.A. de C.V.
99% of the shares of NaviSys de Mexico S.A. de C.V. are held
by NaviSys Incorporated and 1% is held by General American
Life Insurance Company.
v. NaviSys Enterprise Solutions, Inc.
vi. Red Oak Realty Company
vii. White Oak Royalty Company
viii. GenMark Incorporated
(a) Stan Mintz Associates, Inc.
(b) GenMark Insurance Agency of Alabama, Inc.
(c) GenMark Insurance Agency of Massachusetts, Inc.
(d) GenMark Insurance Agency of Ohio, Inc.
(e) GenMark Insurance Agency of Texas, Inc.
ix. Conning Corporation
(a) Conning, Inc.
(i) Conning & Company
(1) Conning Asset Management Company
2. Collaborative Strategies, Inc.
3. Virtual Finances.Com, Inc.
4. Missouri Reinsurance (Barbados) Inc.
5. GenAmerican Capital I
6. GenAmerican Management
7. Walnut Street Securities, Inc.
a. WSS Insurance Agency of Alabama, Inc.
b. WSS Insurance Agency of Massachusetts, Inc.
c. WSS Insurance Agency of Ohio, Inc.
d. WSS Insurance Agency of Texas, Inc.
e. Walnut Street Advisers, Inc.
In addition to the entities listed above, Metropolitan (or where indicated an
affiliate) also owns an interest in the following entities, among others:
1) CP&S Communications, Inc., a New York corporation, holds federal radio
communications licenses for equipment used in Metropolitan owned facilities and
airplanes. It is not engaged in any business.
2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of
real property subject to a 999 year prepaid lease. It is wholly owned by
Metropolitan, having been acquired by a wholly owned subsidiary of Metropolitan
in 1973 in connection with a real estate investment and transferred to
Metropolitan in 1988.
3) Met Life International Real Estate Equity Shares, Inc., a Delaware
corporation, is a real estate investment trust. Metropolitan owns approximately
18.4% of the outstanding common stock of this company and has the right to
designate 2 of the 5 members of its Board of Directors.
4) Metropolitan Structures is a general partnership in which Metropolitan owns
a 50% interest.
5) Metropolitan owns, via its subsidiary, AFORE Genesis Metropolitan S.A. de
C.V., approximately 61.7% of SIEFORE Genesis S.A. de C.V., a mutual fund.
6) Metropolitan owns varying interests in certain mutual funds distributed by
its affiliates. These ownership interests are generally expected to decrease as
shares of the funds are purchased by unaffiliated investors.
7) Metropolitan Lloyds Insurance Company of Texas, an affiliated association,
provides 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 ("MET
P&C"), serves as the attorney-in-fact and manages the association.
8) Metropolitan directly owns 100% of the non-voting preferred stock of Nathan
and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting
common stock of this company is held by an individual who has agreed to vote
such shares at the direction of N.L. Holding Corp. (DEL), an indirect wholly
owned subsidiary of Metropolitan.
<PAGE>
9) 100% of the capital stock of Hereford Insurance Agency of Oklahoma, Inc.
(OK) is owned by an officer. New England Life Insurance Company controls the
issuance of additional stock and has certain rights to purchase such officer's
shares.
10) 100% of the capital stock of Fairfield Insurance Agency of Texas, Inc. (TX)
is owned by an officer. New England Life Insurance Company controls the
issuance of additional stock and has certain rights to purchase such officer's
shares.
11) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
partnerships, are investment vehicles through which investments in certain
entities are held. A wholly owned subsidiary of Metropolitan serves as the
general partner of the limited partnerships and Metropolitan directly owns a 99%
limited partnership interest in each MILP. The MILPs have various's ownership
interests in certain companies. The various MILPs own, directly or indirectly,
100% of the voting stock of the following company: Coating Technologies
International, Inc.
NOTE: THE METROPOLITAN LIFE ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE
JOINT VENTURES AND PARTNERSHIPS OF WHICH METROPOLITAN LIFE AND/OR ITS
SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE
SUBSIDIARIES HAVE ALSO BEEN OMITTED.
II-4
<PAGE>
ITEM 27. NUMBER OF CONTRACTOWNERS.
N/A
ITEM 28. INDEMNIFICATION
UNDERTAKING PURSUANT TO RULE 484(B)(1) UNDER THE SECURITIES ACT OF 1933
Metropolitan Life Insurance Company has secured a Financial Institutions
Bond in the amount of $50,000,000, subject to a $5,000,000 deductible.
Metropolitan Life Insurance Company maintains a directors' and officers'
liability policy with a maximum coverage of $300 million. A provision in
Metropolitan Life Insurance Company's by-laws provides for the indemnification
(under certain circumstances) of individuals serving as directors or officers of
Metropolitan Life Insurance Company.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Metropolitan Life Insurance Company pursuant to the foregoing provisions, or
otherwise, Metropolitan has been advised that in the opinion of the Securities
and Exchange Commission such indemnification may be against public policy as
expressed in the Act and may be, 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 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 Life will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) The principal underwriter of the registrant is Metropolitan Life
Insurance Company. Metropolitan Life Insurance Company acts in the following
capacities with respect to the following investment companies:
Metropolitan Tower Life Separate Account One (principal underwriter)
Metropolitan Tower Life Separate Account Two (principal underwriter)
Metropolitan Life Separate Account UL (principal underwriter)
Metropolitan Series Fund, Inc. (principal underwriter and investment adviser)
The New England Variable Annuity (depositor)
New England Variable Annuity Fund I (depositor)
(b) See response to Item 25 above.
(c)
<TABLE>
<S> <C>
(1) (2)
NAME OF PRINCIPAL UNDERWRITER NET UNDERWRITING DISCOUNTS AND
COMMISSIONS
Metropolitan Life Insurance Company N/A
(3) (4)
COMPENSATION ON REDEMPTION OR BROKERAGE COMMISSIONS
ANNUITIZATION
N/A 0
(5)
COMPENSATION
0
</TABLE>
- ------------------
* As regards this new contract, as of the date of this filing the Registrant has
issued no contracts.
II-5
<PAGE>
ITEM 30. LOCATION OF ACCOUNT AND RECORDS.
Metropolitan Life Insurance Company
One Madison Avenue
New York, N.Y. 10010
ITEM 31. MANAGEMENT SERVICES.
Not Applicable
ITEM 32. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes to file a post-effective
amendment to this registration statement as frequently as is necessary to ensure
that the financial statements in this registration statement are not more than
16 months old for as long as payments under these variable annuity contracts may
be accepted.
(b) The undersigned registrant hereby undertakes to include a post card or
similar written communication affixed to or included in the prospectus that the
applicant can remove to send for a Statement of Additional Information.
(c) The undersigned registrant hereby undertakes to deliver any Statement
of Additional Information and any financial statements required to be made
available under this form promptly upon written or oral request.
(d) The undersigned registrant represents that it is relying on the
exemptions from certain provisions of Sections 22(e) and 27 of the Investment
Company Act of 1940 provided by Rule 6c-7 under the Act. The registrant further
represents that the provisions of paragraph (a)-(d) of Rule 6c-7 have been
complied with.
(e) Metropolitan Life Insurance Company represents that the fees and
charges deducted under the Income Annuity described in this 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 Insurance Company under the Income Annuity.
II-6
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, THE REGISTRANT CERTIFIES THAT IT MEETS THE REQUIREMENTS OF SECURITIES ACT
RULE 485(b) FOR EFFECTIVENESS OF THIS REGISTRATION STATEMENT AND HAS CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF, IN THE CITY OF NEW YORK, AND
STATE OF NEW YORK ON THIS 7 DAY OF APRIL, 2000
METROPOLITAN LIFE SEPARATE ACCOUNT E
(Registrant)
by: METROPOLITAN LIFE INSURANCE COMPANY
(Depositor)
by: /s/ GARY A. BELLER
--------------------------------------
(Gary A. Beller)
Senior Executive Vice-President
and General Counsel
METROPOLITAN LIFE INSURANCE COMPANY
(Depositor)
by: /s/ GARY A. BELLER
--------------------------------------
(Gary A. Beller)
Senior Executive Vice-President
and General Counsel
II-7
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------- -------------
<S> <C> <C>
* Chairman, President, Chief
- ------------------------------- Executive Officer and
Robert H. Benmosche Director
* Vice Chairman, Chief
- ------------------------------- Investment Officer and
Gerald Clark Director
* Vice Chairman, Chief
- ------------------------------- Financial Officer (Principal
Stewart G. Nagler Financial Officer) and
Director
* Senior Vice-President and
- ------------------------------- Controller
Virginia M. Wilson
* Director
- -------------------------------
Curtis H. Barnette
* Director
- -------------------------------
Joan Ganz Cooney
* Director
- -------------------------------
Burton A. Dole, Jr.
* Director
- -------------------------------
James R. Houghton
* Director
- -------------------------------
Harry P. Kamen
* Director
- -------------------------------
Helene L. Kaplan
By: /s/ RICHARD G. MANDEL, ESQ.
----------------------------
Richard G. Mandel, Esq. April 7, 2000
Attorney-in-Fact
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------- ---------------------------- -------------
<S> <C> <C>
* Director
- -------------------------------
Charles M. Leighton
* Director
- -------------------------------
Allen E. Murray
* Director
- -------------------------------
John J. Phelan, Jr.
* Director
- -------------------------------
Hugh B. Price
* Director
- -------------------------------
Robert G. Schwartz
* Director
- -------------------------------
Ruth J. Simmons, Ph.D.
Director
- -------------------------------
William C. Steere, Jr.
By: /s/ RICHARD G. MANDEL, ESQ.
----------------------------
Richard G. Mandel, Esq.
Attorney-in-Fact April 7, 2000
</TABLE>
II-9
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Contractholders of Metropolitan Life Separate Account E:
We consent to the use in this Post-Effective Amendment No. 1 to
Registration Statement No. 333-80547/811-4001 of our opinion dated March 3,
2000, relating to Metropolitan Life Separate Account E, our opinion dated
February 7, 2000, relating to Metropolitan Life Insurance Company, to the
reference to us under the heading "Independent Auditors", appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the heading "Financial Statements"
appearing in the Prospectuses, which are also a part of such Registration
Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 3, 2000
1
<PAGE>
Exhibit 6
AMENDED AND RESTATED CHARTER OF
METROPOLITAN LIFE INSURANCE COMPANY
Under
Sections 1206 and 7312 of the Insurance Law
and Section 807 of the Business Corporation Law
The undersigned, being the Chairman of the Board, President and Chief
Executive Officer and the Secretary of Metropolitan Life Insurance Company,
respectively, hereby certify that:
1. The name of the corporation is Metropolitan Life Insurance
Company.
2. The corporation was incorporated on May 4, 1866 under the name
"National Travelers Insurance Company." The name of the corporation was changed
to "Metropolitan Life Insurance Company" on March 24, 1868.
3. The Charter of the corporation is hereby amended, as authorized by
Sections 1206 and 7312 of the Insurance Law of New York (the "Insurance Law")
and Section 801 of the Business Corporation Law of New York, in connection with
the reorganization of the corporation from a mutual life insurance company to a
stock life insurance company pursuant to Section 7312 of the Insurance Law (a)
to establish the capital of the corporation in the amount of $10,000,000 and to
authorize shares of Common Stock, par value $.01 per share, as the shares of the
corporation, (b) to change references in the Charter from "mutual" to "stock"
and from "policyholders" to "shareholders", and (c) to eliminate classes of
directors and to provide that each director will be elected for a one-year term.
4. The amendment and restatement of the Charter was authorized by the
affirmative vote of at least two-thirds of all votes cast on ________, 1999 by
policyholders entitled to vote on the plan of reorganization of the corporation
pursuant to Section 7312 of the Insurance Law.
5. The text of the Charter, as amended by the filing of this Amended
and Restated Charter, is hereby restated to read in full as follows:
<PAGE>
ARTICLE I
CORPORATE NAME
The name of the corporation shall continue to be "Metropolitan Life
Insurance Company." The corporation may use, in the transaction of any or all of
its business and affairs in Canada, including the exercise of any or all of its
rights, such name or such name expressed in the French language. Such name when
so expressed shall be "La Metropolitaine, compagnie d'assurance vie."
ARTICLE II
PLACE OF BUSINESS
The corporation shall be located and have its principal place of
business in the Borough of Manhattan, City of New York, County of New York, and
State of New York.
ARTICLE III
ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of the shareholders of the corporation for the
election of directors and for the transaction of such other business as properly
may come before such meeting shall be held on the fourth Tuesday of April, or
otherwise, within 60 days thereafter, as the Board may determine, provided that
the Superintendent of Insurance of the State of New York (or any governmental
officer, body or authority that succeeds the Superintendent as the primary
regulator of the corporation's insurance business under applicable law) is given
notice of the date determined by the Board prior to such date, at such place,
either within or without the State of New York, as may be fixed from time to
time by resolution of the Board and set forth in the notice or waiver of notice
of the meeting.
2
<PAGE>
ARTICLE IV
BUSINESS OF THE CORPORATION
The business of the corporation and the kinds of insurance to be
undertaken by it are:
(1) "life insurance," meaning every insurance upon the lives
of human beings, and every insurance appertaining thereto,
including the granting of endowment benefits, additional
benefits in the event of death by accident, additional
benefits to safeguard the contract from lapse, accelerated
payments of part or all of the death benefit or a special
surrender value upon diagnosis (A) of terminal illness
defined as a life expectancy of twelve months or less, or
(B) of a medical condition requiring extraordinary medical
care or treatment regardless of life expectancy, or upon
(C) certification by a licensed health care practitioner
of any condition which requires continuous care for the
remainder of the insured's life in an eligible facility or
at home when the insured is chronically ill as defined by
Section 7702(B) of the Internal Revenue Code and
regulations thereunder, provided the accelerated payments
qualify under Section 101(g)(3) of the Internal Revenue
Code and all other applicable sections of federal law in
order to maintain favorable tax treatment or provide a
special surrender value, upon total and permanent
disability of the insured, and optional modes of
settlement of proceeds. "Life insurance" also includes
additional benefits to safeguard the contract against
lapse in the event of unemployment of the insured. Amounts
paid the insurer for life insurance and proceeds applied
under optional modes of settlement or under dividend
options may be allocated by the insurer to one or more
separate accounts pursuant to Section 4240 of the
Insurance Law;
(2) "annuities," meaning all agreements to make periodical
payments for a period certain or where the making or
continuance of all or some of a series of such payments,
or the amount of any such payment, depends upon the
continuance of human life, except payments made under the
authority of paragraph one hereof. Amounts paid the
insurer to provide annuities and proceeds applied under
optional modes of settlement or under dividend options may
be allocated by the insurer to one or more separate
accounts pursuant to Section 4240 of the Insurance Law;
and
3
<PAGE>
(3) "accident and health insurance," meaning (i) insurance
against death or personal injury by accident or by any
specified kind or kinds of accident and insurance against
sickness, ailment or bodily injury, including insurance
providing disability benefits pursuant to article nine of
the workers' compensation law, except as specified in item
(ii) hereof; and (ii) non-cancellable disability
insurance, meaning insurance against disability resulting
from sickness, ailment or bodily injury (but excluding
insurance solely against accidental injury) under any
contract which does not give the insurer the option to
cancel or otherwise terminate the contract at or after one
year from its effective date or renewal date.
as heretofore authorized by and under this Charter and paragraphs 1, 2 and 3 of
Section 1113(a) of the Insurance Law; together with such reinsurance business
(in addition to reinsurance of the kinds of insurance business hereinabove
stated) as may be permitted to the corporation by Section 1114 of said Law;
together with such business in which the corporation may be authorized to engage
pursuant to any amendment to paragraphs 1, 2 and 3 of Section 1113(a) or Section
1114 of said Law which may be hereafter adopted; and together with any other
kind or kinds of business to the extent reasonably ancillary or necessarily or
properly incidental to the kinds of insurance business which the corporation is
so authorized to do.
The corporation shall also have the general rights, powers and
privileges now or hereafter granted by the Insurance Law or any other law to
stock life insurance companies having power to do the kinds of business
hereinabove referred to and any and all other rights, powers and privileges of a
corporation, as the same may now or hereafter be declared by applicable law.
ARTICLE V
CORPORATE POWERS
Section 1. The business of the corporation shall be managed under the
direction of its Board, by committees thereof and by such officers and agents as
the Board or such committees may empower.
4
<PAGE>
Section 2. The Board shall consist of not less than thirteen
directors (except for vacancies temporarily unfilled) nor more than thirty
directors, as may be determined by the Board by resolution adopted by a majority
of the authorized number of directors immediately prior to such determination.
Not less than one- third of the directors shall be persons who are not officers
or employees of the corporation or of any entity controlling, controlled by, or
under common control with the corporation, and who are not beneficial owners of
a controlling interest in the voting stock of the corporation or any such entity
("Outside Directors").
Section 3. The Board shall have power to make and prescribe such
ByLaws, rules and regulations for the transaction of the business of the
corporation and the conduct of its affairs, not inconsistent with the laws of
the State of New York and this Charter as may be deemed expedient, and to amend
or repeal such By-Laws, rules and regulations, except as otherwise provided in
such By-Laws.
Section 4. The Board shall have the power to declare by by-law what
number of directors shall constitute a quorum for the transaction of business;
provided, however, that such number shall be no less than a majority of the
authorized number of directors, at least one of whom shall be an Outside
Director.
Section 5. The Board shall elect or appoint a Chairman, a Chief
Executive Officer, a President, one or more Vice-Presidents, a Chief Financial
Officer, a Secretary, a Treasurer, a Controller and a General Counsel and such
other officers as it may deem appropriate, except that officers of the rank of
Vice-President and below may be elected or appointed by the Compensation
Committee of the Board. Officers shall have such powers and perform such duties
as may be authorized by the By-Laws or by or pursuant to authorization of the
Board or the Chief Executive Officer.
5
<PAGE>
ARTICLE VI
ELECTION OF DIRECTORS AND OFFICERS
Section 1. The directors of the corporation shall be elected by the
shareholders as prescribed by law and the By-Laws of the corporation. The
officers of the corporation shall be elected or appointed as provided in the
By-Laws of the corporation. Each director shall be at least 18 years old, at all
times a majority of the directors shall be citizens and residents of the United
States and not less than three shall be residents of the State of New York.
Section 2. Vacancies in the Board, including vacancies resulting
from any increase in the authorized number of directors or the removal of any
director, except a removal of a director without cause, shall be filled by a
vote of the Board until the next annual meeting of shareholders of the
corporation, except that if the number of directors then in office is less than
a quorum, such vacancies may be filled by a vote of a majority of directors then
in office.
ARTICLE VII
LIABILITY OF DIRECTORS
No director shall be personally liable to the corporation or any of
its shareholders or any of its policyholders for damages for any breach of duty
as a director; provided, however, that the foregoing provision shall not
eliminate or limit:
(i) the liability of a director if a judgment or other final
adjudication adverse to the director establishes that the
director personally gained in fact a financial profit or
other advantage to which he or she was not legally
entitled or establishes that the director's acts or
omissions were in bad faith or involved intentional
misconduct or were acts or omissions (a) which the
director knew or reasonably should have known violated the
Insurance Law or (b) which violated a specific
6
<PAGE>
standard of care imposed on directors directly, and not by
reference, by a provision of the Insurance Law (or any
regulations promulgated thereunder), or (c) which
constituted a knowing violation of any other law; or
(11) the liability of a director for any act or omission prior
to April 26, 1990.
ARTICLE VIII
STOCK
The amount of capital of the corporation shall be $10,000,000 and
shall consist of 1,000,000,000 authorized shares of Common Stock, par value $.01
per share.
ARTICLE IX
DURATION
The duration of the corporation shall be perpetual.
7
<PAGE>
AMENDED AND RESTATED
BY-LAWS OF METROPOLITAN LIFE INSURANCE COMPANY
ARTICLE I
SHAREHOLDERS
Section 1.1 Annual Meetings. The annual meeting of the shareholders
of the corporation for the election of directors and for the transaction of such
other business as properly may come before such meeting shall be held on the
fourth Tuesday of April, or otherwise, within 60 days thereafter, as the Board
may determine, provided that the Superintendent of Insurance of the State of New
York (or any governmental officer, body or authority that succeeds the
Superintendent as the primary regulator of the corporation's insurance business
under applicable law) is given notice of the date determined by the Board prior
to such date, at such place, either within or without the State of New York, as
may be fixed from time to time by resolution of the Board and set forth in the
notice or waiver of notice of the meeting.
Section 1.2 Special Meetings. Special meetings of the shareholders
may be called at any time by the Chief Executive Officer (or, in the event of
such Chief Executive Officer's absence or disability, by the President), or by
the Board. A special meeting shall be called by the Chief Executive Officer (or,
in the event of such Chief Executive Officer's absence or disability, by the
President), or by the Secretary, immediately upon receipt of a written request
therefor by shareholders holding in the aggregate not less than 25% of the
outstanding shares of the corporation at the time entitled to vote at any
meeting of the shareholders, which request shall state the purpose or purposes
of such meeting. If such officers shall fail to call such meeting within 20 days
after receipt of such request, any shareholder executing such request may call
such meeting. Such special meetings of the shareholders shall be held at such
places, within or without the State of New York, as shall be specified in the
respective notices or waivers of notice thereof.
Section 1.3 Notice of Meetings. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each meeting
of the shareholders, and, in the case of a special meeting, the purpose or
purposes for which such meeting is called and by or at whose direction such
notice is being issued, to be given personally or by first class mail, not fewer
than ten nor more than sixty days before the date of the meeting.
1
Amended and Restated By-Laws
Metropolitan Life Insurance Company
<PAGE>
No notice of any meeting of shareholders need be given to any
shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the shareholders need be
specified in a written waiver of notice. The attendance of any shareholder, in
person or by proxy, at a meeting of shareholders shall constitute a waiver of
notice of such meeting, except when the shareholder attends a meeting for the
express purpose of objecting, prior to the conclusion of the meeting, to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 1.4 Quorum. Except as otherwise required by law or by the
Charter, the presence in person or by proxy of the holders of record of a
majority of the votes of shares entitled to vote at any meeting of shareholders
shall constitute a quorum for the transaction of business at such meeting. When
a quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any shareholders.
Section 1.5 Voting. Every holder of record of shares entitled to vote
at a meeting of shareholders shall be entitled to one vote for each share
standing in such shareholder's name on the books of the corporation on the
record date set therefor. Except as otherwise required by law or by the Charter
or by Section 1.7 hereof (regarding the election of directors), any corporate
action shall be authorized by a majority of the votes cast in favor of or
against such action by the holder of record of shares represented at any meeting
at which a quorum is present. An abstention shall not constitute a vote cast.
Section 1.6 Proxies. Every shareholder entitled to vote at any
meeting of the shareholders or to express consent to or dissent from corporate
action without a meeting may, in any legally valid manner, authorize another
person or persons to vote at any such meeting and express such consent or
dissent for such shareholder by proxy. No such proxy shall be voted or acted
upon after the expiration of eleven months from the date of such proxy, unless
such proxy provides for a longer period. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except in those cases where applicable
law provides that a proxy shall be irrevocable.
Section 1.7 Election and Term of Directors. The directors shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting of shareholders. Each director shall hold office until the
expiration of the term for which he or she is elected and until such director's
successor has been duly elected and qualified, or until his or her earlier
death, resignation or removal. At each annual meeting of the share holders of
the corporation, at which a quorum is present, the directors shall be elected by
a plurality of the votes cast by the holders of shares entitled to vote in such
election.
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Section 1.8 Organization; Procedure. The Board shall determine whom
from among the officer directors shall preside at the meeting of shareholders.
The order of business and all other matters of procedure at every meeting of
shareholders may be determined by such presiding officer. The Secretary, or in
the event of the Secretary's absence or disability, an Assistant Secretary or,
in the Assistant Secretary's absence, an appointee of the presiding officer,
shall act as Secretary of the meeting.
Section 1.9 Consent of Shareholders in Lieu of Meeting. Whenever the
vote of shareholders at a meeting thereof is required or permitted to be taken
for or in connection with any corporate action, by law, by the Charter or by
these By-Laws, the meeting and vote of shareholders may be dispensed with, if
all of the shareholders who would have been entitled to vote upon the action if
such meeting were held shall consent in writing to such corporate action being
taken.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Regular Board Meetings. Regular meetings of the Board for
the transaction of any business shall be held at such times and places, either
within or without the State of New York, as may be fixed from time to time by
resolution of the Board; provided, however, that at least one regular meeting of
the Board shall be held in each calendar year. One regular meeting of the Board
in each calendar year shall be designated as the Annual Organization Meeting.
Except as otherwise required by law or these ByLaws, notice of regular meetings
need not be given.
Section 2.2 Special Board Meetings, Waiver of Notice. Special
meetings of the Board shall be held whenever called by the chief executive
officer or by any three directors. Notice of each such special meeting shall be
mailed to each director at such director's residence or usual place of business
or other address filed with the Secretary for such purpose, or shall be sent to
such director by any form of telecommunication, or be delivered or given to such
director personally or by telephone, not later than the second day preceding the
day on which such meeting is to be held. Notice of any meeting of the Board need
not, however, be given to any director who submits a signed waiver of notice,
whether before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice. Every such
notice shall state the time, place and purpose of the meeting.
Section 2.3 Participation by Telephone. Any one or more members of
the Board or any committee thereof may participate in any meeting of the Board
or such committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time.
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Participation by such means shall constitute presence in person at a meeting of
the Board or such committee for quorum and voting purposes.
Section 2.4 Action Without a Meeting. Any action which is required or
permitted to be taken by the Board or any committee thereof may be taken without
a meeting if all members of the Board or such committee consent in writing to
the adoption of a resolution authorizing the action; provided, however, that the
Annual Organization Meeting of the Board may not be conducted by such unanimous
written consent. The resolution and the written consents thereto by the members
of the Board or such committee shall be filed with the minutes of the
proceedings of the Board or committee.
Section 2.5 Number, Quorum and Adjournments. The Board shall consist
of not less than thirteen directors (except for vacancies temporarily unfilled)
nor more than thirty directors, as may be determined by the Board by resolution
adopted by a majority of the authorized number of directors immediately prior to
any such determination. The authorized number of directors of the corporation
may be increased or decreased at any time by a vote of the majority of the
authorized number of directors immediately prior to such vote; provided,
however, that no such decrease in the authorized number of directors shall
shorten the term of any incumbent director. Not less than one-third of the
directors shall be persons who are not officers or employees of the corporation
or of any entity controlling, controlled by, or under common control with the
corporation and who are not beneficial owners of a controlling interest in the
voting stock of the corporation or any such entity ("Outside Directors"). At any
meeting of the Board, the presence of at least a majority of the authorized
number of directors, at least one of whom shall be an Outside Director, shall
constitute a quorum for the transaction of business. Except as otherwise
provided by law or these By-Laws, the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the Board. A majority of the directors present, whether or not a
quorum shall be present, may adjourn any meeting. Notice of the time and place
of an adjourned meeting of the Board shall be given if and as determined by a
majority of the directors present at the time of the adjournment.
Section 2.6 Presiding Officer. The Board shall determine whom from
among the officer directors shall preside at meetings of the Board. In the event
of the absence or disability of all such officer directors, the Board shall
select one of its members present to preside.
Section 2.7 Board Vacancies. Any vacancy in the Board, including any
vacancy resulting from any increase in the authorized number of directors or the
removal of any director, except a removal of a director without cause, shall be
filled by a vote of the Board until the next annual meeting of shareholders of
the corporation and until such director's successor shall have been elected and
qualified; provided, however, that if the
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number of directors then in office is less than a quorum, any vacancy may be
filled by a vote of a majority of directors then in office.
ARTICLE III
COMMITTEES
Section 3.1 Standing Committees. The Board shall have the following
standing committees, each consisting of not less than five directors, as shall
be determined by the Board:
Executive Committee
Investment Committee
Compensation Committee
Audit Committee
Nominating and Corporate Governance Committee
Section 3.2 Designation of Members and Chairmen of Standing
Committees. At its first meeting following the annual meeting of shareholders of
the corporation, the Board shall, by resolution adopted by a majority of the
then authorized number of directors, designate from among the directors the
members of the standing committees and from among the members of each such
committee a chairman thereof, which members shall serve as such, at the pleasure
of the Board, so long as they shall continue in office as directors, until the
meeting following the next annual meeting of shareholders of the corporation and
thereafter until the appointment of their successors. Each member of the Audit
Committee, the Compensation Committee and the Nominating and Corporate
Governance Committee shall be an Outside Director, and not less than one-third
of the members of each other committee shall be Outside Directors. The Board may
by similar resolution designate one or more directors as alternate members of
such committees, who may replace any absent member or members at any meeting of
such committees; provided, however, that the membership of the committee shall
satisfy the preceding sentence following such designation. Vacancies in the
membership or chairmanship of any standing committee may be filled in the same
manner as original designations at any regular or special meeting of the Board,
and the chief executive officer may designate from among the remaining members
of any standing committee whose chairmanship is vacant a chairman who shall
serve until a successor is designated by the Board.
Section 3.3 Notices of Times of Meetings of Standing Committees and
Presiding Officers. Meetings of each standing committee shall be held upon call
of the chief executive officer, or upon call of the chairman of such standing
committee or two members of such standing committee. Meetings of each standing
committee may also be held at such other times as it may determine. Meetings of
a standing committee shall be
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held at such places and upon such notice as it shall determine or as shall be
specified in the calls of such meetings. Any such chairman, if present, or such
member or members of each committee as may be designated by the chief executive
officer, shall preside at meetings thereof or, in the event of the absence or
disability of any thereof or failing such designation, the committee shall
select from among its members present a presiding officer.
Section 3.4 Quorum. At each meeting of any standing committee there
shall be present to constitute a quorum for the transaction of business at least
a majority of the members but in no event less than three members, at least one
of whom shall be an Outside Director. Subject to the preceding sentence, any
alternate member who is replacing an absent member shall be counted in
determining whether a quorum is present. The vote of a majority of the members
present at a meeting of any standing committee at the time of the vote, if a
quorum is present at such time, shall be the act of such committee.
Section 3.5 Standing Committee Minutes. Each of the standing
committees shall keep minutes of its meetings which shall be reported to the
Board at its regular meetings and, if called for by the Board, at any special
meeting.
Section 3.6 Executive Committee. The Executive Committee shall make
recommendations to the Board with respect to the policyholder dividend and
surplus policies and practices of the corporation and, during the intervals
between meetings of the Board, except as otherwise provided in Section 3.12,
shall have and may exercise the authority of the Board in the management of the
property, business and affairs of the corporation, including the authority to
declare dividends in respect of the corporation's stock.
Section 3.7 Investment Committee. The Investment Committee, subject
to and as may be provided in any resolution of the Board, shall have and may
exercise the authority of the Board with respect to the management of the assets
of the corporation, including purchases and sales thereof, the manner of
designating depositaries for all monies received by the corporation, which shall
be deposited in the name of the corporation, and the manner of disposition of
the funds of the corporation so deposited.
Section 3.8 Compensation Committee. The Compensation Committee shall
recommend to the Board the selection of all principal officers (as determined by
the Committee) and such other officers as the Committee may determine to elect
or appoint as officers, shall evaluate the performance and recommend to the
Board the compensation of such principal officers and such other officers as the
Committee may determine, and shall recommend to the Board any plan to issue
options for the purchase of shares of the corporation's stock to its officers or
employees. Except as otherwise provided in any resolution of the Board, the
Committee shall have and may exercise all the authority of the Board with
respect to compensation, benefits and personnel administration of the
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employees of the corporation and may elect or appoint officers as provided in
Section 4.2 of these By-Laws.
Section 3.9 Audit Committee. The Audit Committee shall have and may
exercise the authority of the Board: to recommend to the Board the selection of
the corporation's independent certified public accountants; to review the scope,
plans and results relating to the internal and external audits of the
corporation and its financial statements; and to review the financial condition
of the corporation. Except as otherwise provided in any resolution of the Board,
the Committee shall have and may exercise the authority of the Board: to monitor
and evaluate the integrity of the corporation's financial reporting processes
and procedures; to assess the significant business and financial risks and
exposures of the corporation and to evaluate the adequacy of the corporation's
internal controls in connection with such risks and exposures, including, but
not limited to, accounting and audit controls over cash, securities, receipts,
disbursements and other financial transactions; and to review the corporation's
policies on ethical business conduct and monitor compliance therewith.
Section 3.10 Nominating and Corporate Governance Committee. The
Nominating and Corporate Governance Committee shall nominate candidates for
Director for election by shareholders and for filling vacancies on the Board,
and may recommend to the Board any plan to issue options for the purchase of
shares of the corporation's stock to its non-employee directors. Except as
otherwise provided in any resolution of the Board, the Committee shall review
and make recommendations to the Board with respect to the organization,
structure, size, composition and operation of the Board and its Committees,
including, but not limited to, the compensation for non-employee directors and
shall review and make recommendations with respect to other corporate governance
matters and matters that relate to the corporation's status as a member of a
publicly-traded group of companies.
Section 3.11 Special Committees. The Board may, by resolution adopted
by a majority of the then authorized number of directors, designate special
committees, each consisting of three or more directors of the corporation, which
committees, except as otherwise prescribed by law or by Section 3.12, shall have
and may exercise the authority of the Board to the extent provided in the
resolutions designating such committees. Nothing herein shall be deemed to
prevent the chief executive officer from appointing one or more special
committees of directors for the purpose of advising the chief executive officer;
provided, however, that no such committee shall have or may exercise any
authority of the Board.
Section 3.12 Limitations of the Authority of Committees.
Notwithstanding any other provisions of these By-Laws, no committee shall have
authority as to the following matters:
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(1) the submission to shareholders of any action that needs
shareholder approval under applicable law;
(2) the filling of vacancies in the Board or in any committee;
(3) the fixing of compensation of the directors for serving on the
Board or on any committee;
(4) the amendment or repeal of these By-Laws or adoption of new
By-Laws; and
(5) the amendment or repeal of any resolution of the Board which by
its terms shall not be so amendable or repealable.
ARTICLE IV
OFFICERS
Section 4.1 Chief Executive Officer. The Board shall determine whom
from among the officer directors shall act as Chief Executive Officer.
Subject to the control of the Board and to the extent not otherwise
prescribed by these By-Laws, the Chief Executive Officer shall supervise the
carrying out of the policies adopted or approved by the Board, shall manage the
business of the Company and shall possess such other powers and perform such
other duties as may be incident to the office of chief executive officer.
Section 4.2 Other Officers. In addition to the Chief Executive
Officer, the Board shall elect or appoint a Chairman, a President, one or more
Vice-Presidents, a Chief Financial Officer, a Secretary, a Treasurer, a
Controller and a General Counsel, and such other officers as it may deem
appropriate, except that officers of the rank of Vice-President and below may be
elected or appointed by the Compensation Committee of the Board. Officers other
than the Chief Executive Officer shall have such powers and perform such duties
as may be authorized by these By-Laws or by or pursuant to authorization of the
Board or the Chief Executive Officer.
All officers shall hold office at the pleasure of the Board.
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ARTICLE V
EXECUTION OF PAPERS
Section 5.1 Instruments. Any officer, or any employee or agent
designated for the purpose by the Chief Executive Officer, or a designee of the
Chief Executive Officer, shall have power to execute all instruments in writing
necessary or desirable for the corporation to execute in the transaction and
management of its business and affairs (including, without limitation, contracts
and agreements, transfers of bonds, stocks, notes and other securities, proxies,
powers of attorney, deeds, leases, releases, satisfactions and instruments
entitled to be recorded in any jurisdiction, but excluding, to the extent
otherwise provided for in these By-Laws, authorizations for the disposition of
the funds of the corporation deposited in its name and policies, contracts,
agreements, amendments and endorsements of, for or in connection with insurance
or annuities) and to affix the corporate seal.
Section 5.2 Disposition of Funds. All funds of the corporation
deposited in its name shall be subject to disposition by check or other means,
in such manner as the Investment Committee may determine.
Section 5.3 Policies. All policies, contracts, agreements, amendments
and endorsements, executed by the corporation as insurer, of, for or in
connection with insurance or annuities shall bear such signature or signatures
of such officer or officers as may be designated for the purpose by the Board.
Section 5.4 Facsimile Signatures. All instruments necessary or
desirable for the corporation to execute in the transaction and management of
its business and affairs, including those set forth in Sections 5.2 and 5.3 of
these By-Laws, may be executed by use of or bear facsimile signatures as and to
the extent authorized by the Board or a committee thereof or the chief executive
officer. If any officer or employee whose facsimile signature has been placed
upon any form of instrument shall have ceased to be such officer or employee
before an instrument in such form is issued, such instrument may be issued with
the same effect as if such person had been such officer or employee at the time
of its issue.
ARTICLE VI
CAPITAL STOCK
Section 6.1 Certificates of Shares. Every holder of shares in the
corporation shall be entitled to have a certificate (unless such shares shall be
uncertificated shares) signed by, or in the name of the corporation by (i) the
Chairman of the Board, the President or a Vice-President, and (ii) by the
Treasurer or an Assistant Treasurer, or the
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Secretary or an Assistant Secretary, certifying the number of shares owned by
him or her in the corporation. Such certificate shall be in such form as the
Board may determine, to the extent consistent with applicable provisions of law,
the Charter and these By-Laws. Within a reasonable time after the issuance of
uncertificated shares, the corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth or
stated on certificates.
Section 6.2 Lost, Stolen or Destroyed Certificates. The Board may
direct that a new certificate be issued in place of any certificate previously
issued by the corporation alleged to have been lost, stolen or destroyed, upon
delivery to the Board of an affidavit of the owner or owners of such
certificate, setting forth such allegation. The Board may require the owner of
such lost, stolen or destroyed certificate, or such owner's legal
representative, to give the corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of any such new
certificate.
Section 6.3 Transfers of Stock; Registered Shareholders. Shares of
stock of the corporation shall be transferable only upon the books of the
corporation kept for such purpose upon surrender to the corporation or its
transfer agent or agents of a certificate (unless such shares shall be
uncertificated shares) representing shares, duly endorsed or accompanied by
appropriate evidence of succession, assignment or authority to transfer. Within
a reasonable time after the transfer of uncertificated shares, the corporation
shall send to the registered owner thereof a written notice containing the
information required to be set forth or stated on certificates.
The Board, subject to these By-laws, may make such rules, regulations
and conditions as it may deem expedient concerning the subscription for, issue,
transfer and registration of, shares of stock. Except as otherwise provided by
law, the corporation, prior to due presentment for registration of transfer, may
treat the registered owner of shares as the person exclusively entitled to vote,
to receive notifications, and otherwise to exercise all the rights and powers of
an owner.
Section 6.4 Record Date. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or dissent from any proposal
or corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of shares
or for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than fifty days prior to any other
action.
Section 6.5 Transfer Agent and Registrar. The Board may appoint one
or more transfer agents and one or more registrars, and may require all
certificates representing
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shares to bear the signature of any such transfer agents or registrar. The same
person may act as transfer agent and registrar for the corporation.
Section 6.6 Dividends. Subject to any applicable provisions of law
and the Charter, dividends or other distributions upon the outstanding shares of
the corporation may be declared by the Board at any regular or special meeting
of the Board, or by the Executive Committee as provided in Section 3.6, and any
such dividend or distribution may be paid in cash, property, bonds or shares of
the corporation, including the bonds or shares of other corporations, except as
limited by applicable law.
ARTICLE VII
GENERAL
Section 7.1 Indemnification of Directors and Officers. To the full
extent permitted by the laws of the State of New York, the corporation shall
indemnify any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that such person,
or such person's testator or intestate,
(1) is or was a director or officer of the corporation, or
(2) serves or served another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any
capacity at the request of the corporation, and also is or was a
director or officer of the corporation, against judgments,
fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred
in connection with or as a result of such action or
proceeding, or any appeal therein.
ARTICLE VIII
AMENDMENT OF BY-LAWS
Section 8.1 Amendments. These By-Laws or any of them may be amended,
altered or repealed by the Board at any regular or special meeting if written
notice setting forth the proposed amendment, alteration or repeal shall have
been mailed to all directors at least five days before the meeting or upon the
affirmative vote by the holders of a majority of the outstanding shares;
provided, however, that Section 7.1 of these By-Laws may not be amended, altered
or repealed by the Board or the shareholders so as to affect adversely any then
existing rights of any director or officer.
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Exhibit 9
Metropolitan Life Insurance Company
One Madison Avenue, New York, NY 10010-3690
212 578-2211
Myra Saul
Assistant General Counsel
Legal Department
Tel 212 578-4487 Fax 212 578-3916
October 29, 1999
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Dear Sirs:
This option is furnished in connection with the proposed offering of certain
variable annuity contracts ("Contracts") issued by Metropolitan Life Insurance
Company ("Metropolitan") under Registration Statement No. 333-80547/811-04001,
as amended ("Registration Statement") and described therein, filed by
Metropolitan Life Separate Account E ("Account") under the Securities Act of
1933, as amended.
I have made such examination of law and examined such records of Metropolitan
(including the Account) and other documents as in my judgement are necessary or
appropriate to render the opinion expressed below. In my opinion:
1. Metropolitan is a corporation duly organized and validly existing under the
laws of the State of New York.
2. The Account is a separate account duly established pursuant to Section 4240
of the New York Insurance Law, and the income, gains and losses, whether or not
realized from assets allocated to the Account, in accordance with the Contracts,
must be credited to or charged against the Account without regard to other
income, gains or losses of Metropolitan.
3. The offer and sale by Metropolitan of the Contracts have been duly authorized
and each Contract, when delivered and when the first purchase payment thereunder
is made, all in accordance with the prospectus ("Prospectus") included in the
Registration Statement and in compliance with the applicable local law, will be
a legal and binding obligation of Metropolitan in acordance with its terms.
Owners of Contracts, as such, will not be subject to any deductions and charges
by Metropolitan other than those described or referred to in the Prospectus.
I hereby consent to the use of this opinion as Exhibit 9 to the Registration
Statement.
Very truly yours,
/s/ Myra Saul
Myra Saul
Assistant General Counsel
