METLIFE INC | 2013 | FY | 3


The credit quality of agricultural mortgage loans held-for-investment, were as follows at:
 
December 31,
 
2013
 
2012
 
Recorded
Investment
 
% of
Total
 
Recorded
Investment
 
% of
Total
 
(In millions)
 
 
 
(In millions)
 
 
Loan-to-value ratios:
 
 
 
 
 
 
 
Less than 65%
$
11,461

 
92.5
%
 
$
11,908

 
92.7
%
65% to 75%
729

 
5.9

 
590

 
4.6

76% to 80%
84

 
0.7

 
92

 
0.7

Greater than 80%
117

 
0.9

 
253

 
2.0

Total
$
12,391

 
100.0
%
 
$
12,843

 
100.0
%

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The credit quality of residential mortgage loans held-for-investment, were as follows at:
 
December 31,
 
2013
 
2012
 
Recorded
Investment
 
% of
Total
 
Recorded
Investment
 
% of
Total
 
(In millions)
 
 
 
(In millions)
 
 
Performance indicators:
 
 
 
 
 
 
 
Performing
$
2,693

 
97.1
%
 
$
929

 
97.0
%
Nonperforming
79

 
2.9

 
29

 
3.0

Total
$
2,772

 
100.0
%
 
$
958

 
100.0
%

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The credit quality of commercial mortgage loans held-for-investment, were as follows at:
 
Recorded Investment
 
Estimated
Fair
Value
 
% of
Total
 
Debt Service Coverage Ratios
 
Total
 
% of
Total
 
 
> 1.20x
 
1.00x - 1.20x
 
< 1.00x
 
 
(In millions)
 
 
 
(In millions)
 
 
December 31, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan-to-value ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Less than 65%
$
30,552

 
$
614

 
$
841

 
$
32,007

 
78.2
%
 
$
33,519

 
78.9
%
65% to 75%
6,360

 
438

 
149

 
6,947

 
17.0

 
7,039

 
16.6

76% to 80%
525

 
192

 
189

 
906

 
2.2

 
892

 
2.1

Greater than 80%
661

 
242

 
163

 
1,066

 
2.6

 
1,006

 
2.4

Total
$
38,098

 
$
1,486

 
$
1,342

 
$
40,926

 
100.0
%
 
$
42,456

 
100.0
%
December 31, 2012:
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan-to-value ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Less than 65%
$
29,839

 
$
730

 
$
722

 
$
31,291

 
77.3
%
 
$
33,730

 
78.3
%
65% to 75%
5,057

 
672

 
153

 
5,882

 
14.6

 
6,129

 
14.2

76% to 80%
938

 
131

 
316

 
1,385

 
3.4

 
1,436

 
3.3

Greater than 80%
1,085

 
552

 
277

 
1,914

 
4.7

 
1,787

 
4.2

Total
$
36,919

 
$
2,085

 
$
1,468

 
$
40,472

 
100.0
%
 
$
43,082

 
100.0
%

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The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:
 
December 31,
 
2013
 
2012
 
Carrying
Amount
 
Maximum
Exposure
to Loss (1)
 
Carrying
Amount
 
Maximum
Exposure
to Loss (1)
 
(In millions)
Fixed maturity securities AFS:
 
 
 
 
 
 
 
Structured securities (RMBS, CMBS and ABS) (2)
$
67,176

 
$
67,176

 
$
72,605

 
$
72,605

U.S. and foreign corporate
3,966

 
3,966

 
5,287

 
5,287

Other limited partnership interests
5,041

 
6,994

 
4,436

 
5,908

Other invested assets
1,509

 
1,897

 
1,117

 
1,431

FVO and trading securities
619

 
619

 
563

 
563

Mortgage loans
106

 
106

 
351

 
351

Real estate joint ventures
70

 
71

 
150

 
157

Equity securities AFS:
 
 
 
 
 
 
 
Non-redeemable preferred stock
35

 
35

 
32

 
32

Total
$
78,522

 
$
80,864

 
$
84,541

 
$
86,334

______________
(1)
The maximum exposure to loss relating to fixed maturity securities AFS, FVO and trading securities and equity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests, mortgage loans and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments of the Company. For certain of its investments in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $257 million and $318 million at December 31, 2013 and 2012, respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.
(2)
For these variable interests, the Company’s involvement is limited to that of a passive investor.

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The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at December 31, 2013 and 2012. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.
 
December 31,
 
2013
 
2012
 
Total
Assets
 
Total
Liabilities
 
Total
Assets
 
Total
Liabilities
 
(In millions)
MRSC (collateral financing arrangement (primarily securities)) (1)
$
3,440

 
$

 
$
3,439

 
$

Operating joint venture (2)
2,095

 
1,777

 

 

CSEs (assets (primarily loans) and liabilities (primarily debt)) (3)
1,630

 
1,457

 
2,730

 
2,545

Investments:
 
 
 
 
 
 
 
Real estate joint ventures (4)
1,181

 
443

 
11

 
14

Other invested assets
82

 
7

 
85

 

FVO and trading securities
69

 

 
71

 

Other limited partnership interests
61

 

 
356

 
8

Total
$
8,558

 
$
3,684

 
$
6,692

 
$
2,567

______________
(1)
See Note 13 for a description of the MetLife Reinsurance Company of South Carolina (“MRSC”) collateral financing arrangement.
(2)
Assets of the operating joint venture are primarily fixed maturity securities and separate account assets. Liabilities of the operating joint venture are primarily future policy benefits, other policyholder funds and separate account liabilities. The assets and liabilities of the operating joint venture were consolidated in earlier periods; however, as a result of the quarterly reassessment in the first quarter of 2013, it was determined to be a consolidated VIE.
(3)
The Company consolidates entities that are structured as CMBS and as collateralized debt obligations. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its remaining investment in these entities of $154 million and $168 million at estimated fair value at December 31, 2013 and 2012, respectively. The long-term debt bears interest primarily at fixed rates ranging from 2.25% to 5.57%, payable primarily on a monthly basis. Interest expense related to these obligations, included in other expenses, was $122 million, $163 million and $324 million for the years ended December 31, 2013, 2012 and 2011 respectively.
(4)
The Company consolidated an open ended core real estate fund formed in the fourth quarter of 2013, which represented the majority of the balances at December 31, 2013. Assets of the real estate fund are a real estate investment trust which holds primarily traditional core income-producing real estate which has associated liabilities that are primarily non-recourse debt secured by certain real estate assets of the fund. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its investment in the real estate fund of $178 million at carrying value at December 31, 2013. The long-term debt bears interest primarily at fixed rates ranging from 1.39% to 4.45%, payable primarily on a monthly basis. Interest expense related to these obligations, included in other expenses, was less than $1 million for the year ended December 31, 2013.

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