-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wmzsv4fhr8NQWUc9g8+mDQtja8pqMgUN70yz3m7SpATaLkNm9QcXmJ9WvXSTIOaZ VLfiXuVXxhy0NSe32RsDng== 0000950123-07-014602.txt : 20071031 0000950123-07-014602.hdr.sgml : 20071030 20071031162316 ACCESSION NUMBER: 0000950123-07-014602 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20071031 DATE AS OF CHANGE: 20071031 EFFECTIVENESS DATE: 20071031 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES CENTRAL INDEX KEY: 0001065240 IRS NUMBER: 000000000 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-58809 FILM NUMBER: 071203140 BUSINESS ADDRESS: STREET 1: METLIFE LIFE AND ANNUITY COMPANY OF CO STREET 2: ONE CITYPLACE, 185 ASYLUM STREET, 3CP CITY: HARTFORD STATE: CT ZIP: 06103-3415 BUSINESS PHONE: 1-800-842-9325 MAIL ADDRESS: STREET 1: METLIFE LIFE AND ANNUITY COMPANY OF CO STREET 2: ONE CITYPLACE, 185 ASYLUM STREET, 3CP CITY: HARTFORD STATE: CT ZIP: 06103-3415 FORMER COMPANY: FORMER CONFORMED NAME: TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES DATE OF NAME CHANGE: 19980701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES CENTRAL INDEX KEY: 0001065240 IRS NUMBER: 000000000 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08869 FILM NUMBER: 071203141 BUSINESS ADDRESS: STREET 1: METLIFE LIFE AND ANNUITY COMPANY OF CO STREET 2: ONE CITYPLACE, 185 ASYLUM STREET, 3CP CITY: HARTFORD STATE: CT ZIP: 06103-3415 BUSINESS PHONE: 1-800-842-9325 MAIL ADDRESS: STREET 1: METLIFE LIFE AND ANNUITY COMPANY OF CO STREET 2: ONE CITYPLACE, 185 ASYLUM STREET, 3CP CITY: HARTFORD STATE: CT ZIP: 06103-3415 FORMER COMPANY: FORMER CONFORMED NAME: TRAVELERS SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES DATE OF NAME CHANGE: 19980701 0001065240 S000005528 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES C000015035 Retirement Account Annuity 485BPOS 1 y39340e485bpos.txt 485BPOS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 2007 REGISTRATION STATEMENT NOS. 333-58809 811-08869 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------- FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POST-EFFECTIVE AMENDMENT NO. 14 AND REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 14 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES (Exact name of Registrant) METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (Name of Depositor) ONE CITYPLACE, HARTFORD, CONNECTICUT 06199 (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number, including area code: (860) 308-1000 JAMES L. LIPSCOMB, ESQ. EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT ONE CITYPLACE, HARTFORD CONNECTICUT (Name and Address of Agent for Service) COPIES TO: DIANE E. AMBLER KIRKPATRICK & LOCKHART PRESTON GATES ELLIS LLP 1601 K STREET, NW WASHINGTON, DC 20006 Approximate Date of Proposed Public Offering: It is proposed that this filing will become effective (check appropriate box): [ ] immediately upon filing pursuant to paragraph (b) of Rule 485. [X] on November 12, 2007 pursuant to paragraph (b) of Rule 485. [ ] days after filing pursuant to paragraph (a)(1) of Rule 485. [ ] on pursuant to paragraph (a)(1) of Rule 485. If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Registered: Allocated and Unallocated Group Variable Annuity Contracts - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FILING NOTE The purpose of this Post-Effective Amendment is to file the attached Supplement to the Prospectus and Supplement to the Statement of Additional Information, each dated November 12, 2007. This Post-Effective Amendment does not supersede any previously filed post-effective amendment. The following documents are incorporated herein by reference: The Prospectus and Statement of Additional Information each dated April 30, 2007, included in Post-Effective Amendment No. 13 to the Registration Statement on Form N-4, File Nos. 333-58809/811-08869 filed April 9, 2007 pursuant to paragraph (b) of Rule 485. The Prospectus dated April 30, 2007 filed with the Securities and Exchange Commission on May 2, 2007 pursuant to Rule 497(e) under the Securities Act of 1933 in connection with Registration Statement No. 333-58809. The Supplement date June 21 ,2007 to the Prospectus dated April 30, 2007, filed with the Securities and Exchange Commission on June 21, 2007 and the Supplement dated June 29,2007 to the Prospectus dated April 30, 2007 filed with the Securities and Exchange Commission on June 29, 2007, each, pursuant to Rule 497 under the Securities Act of 1933 in connection with Registration Statement No. 333-58809. METLIFE INSURANCE COMPANY OF CONNECTICUT AND METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT METLIFE OF CT SEPARATE ACCOUNT FIVE FOR VARIABLE ANNUITIES AND METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES METLIFE RETIREMENT ACCOUNT SUPPLEMENT DATED NOVEMBER 12, 2007 TO THE PROSPECTUS DATED APRIL 30, 2007, AS SUPPLEMENTED This supplements the information contained in the Prospectus for the variable annuity contract listed above. This supplement should be read in its entirety and kept together with the Prospectus for future reference. 1. VARIABLE FUNDING OPTION SUBSTITUTION Effective on or about November 12, 2007, the Replacement Fund in the box below was substituted for the corresponding Prior Fund as a Variable Funding Option under the Contract. For existing Contract Owners the substitution had no effect on the account value in the Variable Funding Option. However, the number of units received in the Replacement Fund may be different from the number of units held in the Prior Fund, due to differences in the unit values. Any elections existing Contract Owners had on file for the Prior Fund for the allocation of account value have been redirected to the corresponding Replacement Fund. References in the Prospectus and Statement of Additional Information to the Prior Fund shall be deemed to refer to the Replacement Fund, including references to the Monitored Portfolios in the "TRANSFERS" section of the Prospectus.
Prior Fund Replacement Fund ---------- ---------------- MetLife Investment International Stock Fund Morgan Stanley EAFE(R) Index Portfolio -- Class A MetLife Investment Small Company Stock Fund Russell 2000(R) Index Portfolio -- Class A1 MetLife Investment Large Company Stock Fund MetLife Stock Index Portfolio -- Class A MetLife Investment Diversified Bond Fund Lehman Brothers(R) Aggregate Bond Index Portfolio -- Class A
2. FEE TABLE a. Replace the "MINIMUM AND MAXIMUM TOTAL ANNUAL UNDERLYING FUND OPERATING EXPENSES" table on page 9 of the Prospectus with the following:
MINIMUM MAXIMUM ------- ------- TOTAL ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Underlying Fund assets, including management fees, distribution and/or service (12b-1) fees, and other expenses) 0.30% 1.72%
b. The following information is added to the table in the "UNDERLYING FUND FEES AND EXPENSES" section beginning on page 9 of the Prospectus and replaces such information for the corresponding Prior Fund:
DISTRIBUTION AND/OR TOTAL CONTRACTUAL FEE NET TOTAL SERVICE ANNUAL WAIVER ANNUAL MANAGEMENT (12B-1) OTHER OPERATING AND/OR EXPENSE OPERATING UNDERLYING FUND: FEE FEES EXPENSES EXPENSES REIMBURSEMENT EXPENSES - ---------------- ---------- ------------ -------- --------- --------------- --------- METROPOLITAN SERIES FUND, INC. Lehman Brothers(R) Aggregate Bond Index Portfolio -- Class A 0.25% -- 0.06% 0.31% 0.01% 0.30%(a) MetLife Stock Index Portfolio -- Class A 0.25% -- 0.05% 0.30% 0.01% 0.29%(a) Morgan Stanley EAFE(R) Index Portfolio -- Class A 0.30% -- 0.13% 0.45% 0.01% 0.44%(a)(b) Russell 2000(R) Index Portfolio -- Class A 0.25% -- 0.09% 0.36% 0.01% 0.35%(a)(b)
- ---------- (a) MetLife Advisers, LLC has contractually agreed, for the period, May 1, 2007 through April 30, 2008, to reduce the Management Fee of the Portfolio as follows: Lehman Brothers(R) Aggregate Bond Index Portfolio to 0.244% MetLife Stock Index Portfolio to 0.243% Morgan Stanley EAFE(R) Index Portfolio to 0.293% Russell 2000(R) Index Portfolio to 0.243% (b) Other Expenses include 0.02% of "Acquired Fund Fees and Expenses," which are fees and expenses attributable to underlying portfolios in which the Portfolio invested during the preceding fiscal year. c. Replace Example 1 on page 13 of the Prospectus with the following: EXAMPLE # 1. MAXIMUM CHARGES (assuming you select the Optional Death Benefit)
IF CONTRACT IS SURRENDERED AT THE IF CONTRACT IS NOT SURRENDERED OR END OF PERIOD SHOWN: ANNUITIZED AT END OF PERIOD SHOWN: ------------------------------------------- ------------------------------------------ FUNDING OPTION 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------- ------ ------- ------- -------- ------ ------- ------- -------- Underlying Fund with Maximum Total Annual Operating Expenses........... $809 $1,186 $1,687 $3,372 $385 $1,169 $1,970 $4,054 Underlying Fund with Minimum Total Annual Operating Expenses........... $664 $750 $959 $1,916 $241 $743 $1,270 $2,713
3. THE ANNUITY CONTRACT The following information is added to the table that appears under the "THE VARIABLE FUNDING OPTIONS" section beginning on page 19 of the Prospectus and replaces such information for the corresponding Prior Fund:
FUNDING INVESTMENT INVESTMENT OPTION OBJECTIVE ADVISER/SUBADVISER - ------------------------------------- ------------------------------------- --------------------------------- METROPOLITAN SERIES FUND, INC. Lehman Brothers(R) Aggregate Seeks to equal the performance of MetLife Advisers, LLC Bond Index Portfolio -- Class A the Lehman Brothers(R) Aggregate Subadviser: MetLife Investment Bond Index. Advisors Company, LLC MetLife Stock Index Portfolio -- Seeks to equal the performance of MetLife Advisers, LLC Class A the Standard & Poor's 500 Composite Subadviser: MetLife Investment Stock Price Index ("S&P 500 Index"). Advisors Company, LLC
Morgan Stanley EAFE(R) Index Seeks to equal the performance of MetLife Advisers, LLC Portfolio -- Class A the MSCI EAFE(R) Index. Subadviser: MetLife Investment Advisors Company, LLC Russell 2000(R) Index Portfolio Seeks to equal the return of the MetLife Advisers, LLC -- Class A Russell 2000(R) Index. Subadviser: MetLife Investment Advisors Company, LLC
4. CHART ASSET ALLOCATION PROGRAM Effective November 12, 2007, the CHART Asset Allocation Program (the "program" or "CHART") was terminated. Program participants no longer receive asset allocation advice from the investment adviser to the program, MetLife Investment Fund Services LLC ("MIFS"), an affiliate of the Company, and no longer pay investment advisory fees to MIFS. If you would like another copy of the prospectus, write to us at 185 Asylum Street, 3 CP, Hartford, CT 06103-3415 or call us at 1-800-842-9406. Book 21 November, 2007 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (THE "COMPANY") METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES (THE "SEPARATE ACCOUNT") SUPPLEMENT DATED NOVEMBER 12, 2007 TO THE STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 2007 This supplements the information contained in the Statements of Additional Information for the variable annuity contracts in the insurance company separate account listed above. FINANCIAL STATEMENTS The attached financial statements of the Company and financial statements of the Separate Account replace, in their entirety, the financial statements of the Company and the financial statements of the Separate Account set forth in the Statement of Additional Information. The financial statements of the Company and the financial statements of the Separate Account should be considered only as bearing upon their ability to meet their obligations under the Contracts. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of MetLife Life and Annuity Company of Connecticut: We have audited the accompanying consolidated balance sheets of MetLife Life and Annuity Company of Connecticut and its subsidiary (the "Company") (formerly known as "The Travelers Life and Annuity Company") as of December 31, 2006 and 2005 (SUCCESSOR), and the related consolidated statements of income, stockholder's equity, and cash flows for the year ended December 31, 2006 (SUCCESSOR) and the six months ended December 31, 2005 (SUCCESSOR) and June 30, 2005 (PREDECESSOR). Our audits also included the financial statement schedules as of December 31, 2006 and 2005 (SUCCESSOR), and for the year ended December 31, 2006 (SUCCESSOR) and the six months ended December 31, 2005 (SUCCESSOR) and June 30, 2005 (PREDECESSOR), listed in the accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedules based on our audits. The consolidated financial statements and financial statement schedules of the Company for the year ended December 31, 2004 (PREDECESSOR) were audited by other auditors whose report, dated March 28, 2005, expressed an unqualified opinion. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of MetLife Life and Annuity Company of Connecticut and its subsidiary as of December 31, 2006 and 2005 (SUCCESSOR), and the results of their operations and their cash flows for the year ended December 31, 2006 (SUCCESSOR) and the six months ended December 31, 2005 (SUCCESSOR), and June 30, 2005 (PREDECESSOR), in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. As described in Note 2 to the consolidated financial statements, the Company was acquired by MetLife, Inc. on July 1, 2005. As required by the U.S. Securities and Exchange Commission Staff Accounting Bulletin Topic 5-J, Push Down Basis of Accounting Required in Certain Limited Circumstances, the purchase method of accounting was applied to the assets and liabilities of the Company, and such assets and liabilities were measured at their fair values as of the acquisition date in conformity with Statement of Financial Accounting Standards No. 141, Business Combinations. The accompanying consolidated financial statements for periods subsequent and prior to the acquisition date are labeled "SUCCESSOR" and "PREDECESSOR," respectively. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP New York, New York March 6, 2007 (October 30, 2007 as to Note 15) F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholder MetLife Life and Annuity Company of Connecticut: We have audited the accompanying statements of income, stockholder's equity, and cash flows of MetLife Life and Annuity Company of Connecticut (formerly, The Travelers Life and Annuity Company) for the year ended December 31, 2004 (PREDECESSOR). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of the operations, stockholder's equity and cash flows of MetLife Life and Annuity Company of Connecticut for the year ended December 31, 2004 in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP KPMG LLP Hartford, Connecticut March 28, 2005 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholder MetLife Life and Annuity Company of Connecticut: Under date of March 28, 2005, we reported on the statements of income, stockholder's equity and cash flows of MetLife Life and Annuity Company of Connecticut (formerly, The Travelers Life and Annuity Company) for the year ended December 31, 2004 (PREDECESSOR) , which are included in the Form 10-K. In connection with our audit of the aforementioned financial statements, we also audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audit. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. /s/ KPMG LLP KPMG LLP Hartford, Connecticut March 28, 2005 F-3 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2006 AND 2005 (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
SUCCESSOR ----------------- 2006 2005 ------- ------- ASSETS Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $5,967 and $6,158, respectively).............................................. $ 5,889 $ 6,055 Equity securities available-for-sale, at estimated fair value (cost: $56 and $4, respectively)........................... 57 4 Mortgage loans on real estate................................. 295 258 Policy loans.................................................. 55 37 Real estate joint ventures held-for-investment................ 2 -- Other limited partnership interests........................... 68 73 Short-term investments........................................ 95 57 Other invested assets......................................... 341 333 ------- ------- Total investments.......................................... 6,802 6,817 Cash and cash equivalents....................................... 230 233 Accrued investment income....................................... 68 69 Premiums and other receivables.................................. 289 201 Deferred policy acquisition costs and value of business acquired...................................................... 1,712 1,777 Current income tax recoverable.................................. 19 20 Deferred income tax assets...................................... 8 90 Goodwill........................................................ 239 243 Other assets.................................................... 25 22 Separate account assets......................................... 12,246 12,179 ------- ------- Total assets............................................... $21,638 $21,651 ======= ======= LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Future policy benefits........................................ $ 1,782 $ 1,740 Policyholder account balances................................. 5,377 5,688 Other policyholder funds...................................... 79 68 Payables for collateral under derivative transactions......... 102 108 Other liabilities............................................. 119 132 Separate account liabilities.................................. 12,246 12,179 ------- ------- Total liabilities.......................................... 19,705 19,915 ------- ------- CONTINGENCIES, COMMITMENTS AND GUARANTEES (NOTE 10) Stockholder's Equity: Common stock, par value $100 per share; 100,000 shares authorized, 30,000 shares issued and outstanding........... 3 3 Additional paid-in capital.................................... 1,730 1,725 Retained earnings............................................. 230 50 Accumulated other comprehensive income (loss)................. (30) (42) ------- ------- Total stockholder's equity................................. 1,933 1,736 ------- ------- Total liabilities and stockholder's equity................. $21,638 $21,651 ======= =======
See accompanying notes to consolidated financial statements. F-4 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2006 AND THE SIX MONTHS ENDED DECEMBER 31, 2005 AND JUNE 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (IN MILLIONS)
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ REVENUES Premiums........................... $ 43 $ 17 $ 20 $ 40 Universal life and investment-type product policy fees.............. 483 233 221 371 Net investment income.............. 361 167 223 389 Other revenues..................... 27 11 12 19 Net investment gains (losses)...... (83) (35) (6) 17 ---- ---- ---- ---- Total revenues................... 831 393 470 836 ---- ---- ---- ---- EXPENSES Policyholder benefits and claims... 117 90 49 85 Interest credited to policyholder account balances................. 154 76 126 241 Other expenses..................... 306 165 184 303 ---- ---- ---- ---- Total expenses................... 577 331 359 629 ---- ---- ---- ---- Income before provision for income tax.............................. 254 62 111 207 Provision for income tax........... 74 12 35 49 ---- ---- ---- ---- Net income......................... $180 $ 50 $ 76 $158 ==== ==== ==== ====
See accompanying notes to consolidated financial statements. F-5 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 2006 AND THE SIX MONTHS ENDED DECEMBER 31, 2005 AND JUNE 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (IN MILLIONS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ----------------- ADDITIONAL NET UNREALIZED COMMON PAID-IN RETAINED INVESTMENT STOCK CAPITAL EARNINGS GAINS (LOSSES) TOTAL ------ ---------- -------- ----------------- ------ BALANCE AT JANUARY 1, 2004 (PREDECESSOR)........................ $3 $ 417 $ 764 $ 215 $1,399 Capital contributed by parent.......... 400 400 Comprehensive income (loss): Net income........................... 158 158 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax...................... (5) (5) Unrealized investment gains (losses), net of related offsets and income tax.................. 9 9 ------ Other comprehensive income (loss).......................... 4 ------ Comprehensive income (loss).......... 162 -- ------ ----- ----- ------ BALANCE AT DECEMBER 31, 2004 (PREDECESSOR)........................ 3 817 922 219 1,961 Comprehensive income (loss): Net income........................... 76 76 Other comprehensive income (loss): Unrealized gains (losses) on derivative instruments, net of income tax...................... (2) (2) Unrealized investment gains (losses), net of related offsets and income tax.................. (5) (5) ------ Other comprehensive income (loss).......................... (7) ------ Comprehensive income (loss).......... 69 Assumption of liabilities by parent.... 4 4 -- ------ ----- ----- ------ BALANCE AT JUNE 30, 2005 (PREDECESSOR)........................ 3 821 998 212 2,034 Effect of push down accounting of MetLife, Inc.'s purchase price on MetLife Life and Annuity Company of Connecticut's net assets acquired (see Note 2)......................... 1,112 (998) (212) (98) -- ------ ----- ----- ------ BALANCE AT JULY 1, 2005 (SUCCESSOR).... 3 1,933 -- -- 1,936 Comprehensive income (loss): Revisions of purchase price pushed down to MetLife Life and Annuity Company of Connecticut's net assets acquired (See Note 2)...... (208) (208) Net income........................... 50 50 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax.................. (42) (42) ------ Other comprehensive income (loss).......................... (42) ------ Comprehensive income (loss).......... 8 -- ------ ----- ----- ------ BALANCE AT DECEMBER 31, 2005 (SUCCESSOR).......................... 3 1,725 50 (42) 1,736 Revisions of purchase price pushed down to MetLife Life and Annuity Company of Connecticut's net assets acquired (See Note 2)......................... 5 5 Comprehensive income (loss): Net income........................... 180 180 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax.................. 12 12 ------ Other comprehensive income (loss).......................... 12 ------ Comprehensive income (loss).......... 192 -- ------ ----- ----- ------ BALANCE AT DECEMBER 31, 2006 (SUCCESSOR).......................... $3 $1,730 $ 230 $ (30) $1,933 == ====== ===== ===== ======
See accompanying notes to consolidated financial statements. F-6 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2006 AND THE SIX MONTHS ENDED DECEMBER 31, 2005 AND JUNE 30, 2005 AND THE YEAR ENDED DECEMBER 31, 2004 (IN MILLIONS)
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income............................. $ 180 $ 50 $ 76 $ 158 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of premiums and accretion of discounts associated with investments, net............................. 1 12 (8) (18) (Gains) losses from sales of investments, net................ 83 35 6 (17) Equity earnings of real estate joint ventures and other limited partnership interests........... (6) -- -- -- Interest credited to policyholder account balances................ 154 76 126 241 Universal life and investment-type product policy fees............. (483) (233) (221) (371) Change in accrued investment income.......................... 1 11 (4) (7) Change in premiums and other receivables..................... (83) (81) 2 -- Change in deferred policy acquisition costs, net.......... 53 (56) (90) (243) Change in insurance-related liabilities..................... 17 49 (15) (49) Change in income tax payable...... 74 (25) (242) 227 Change in other assets............ 191 90 49 72 Change in other liabilities....... (44) 54 (75) (17) Other, net........................ (1) (1) 34 (21) ------- ------- ----- ------- Net cash provided by (used in) operating activities................. 137 (19) (362) (45) ------- ------- ----- ------- CASH FLOWS FROM INVESTING ACTIVITIES Sales, maturities and repayments of: Fixed maturity securities......... 2,935 3,484 521 1,305 Equity securities................. 8 30 8 19 Mortgage loans on real estate..... 44 37 18 59 Real estate and real estate joint ventures........................ 1 -- 17 9 Other limited partnership interests....................... 24 17 18 23 Purchases of: Fixed maturity securities......... (2,863) (3,557) (448) (2,156) Equity securities................. (8) -- (1) (30) Mortgage loans on real estate..... (81) (20) (75) (136) Real estate and real estate joint ventures........................ (2) -- -- -- Other limited partnership interests....................... (17) (11) (41) (89) Net change in policy loans........... (17) (2) (4) (5) Net change in short-term investments....................... (37) 131 135 (225) Net change in other invested assets.. 30 20 16 43 Other, net........................... -- -- 2 (1) ------- ------- ----- ------- Net cash (used in) provided by investing activities................. 17 129 166 (1,184) ------- ------- ----- ------- CASH FLOWS FROM FINANCING ACTIVITIES Policyholder account balances: Deposits.......................... 551 343 476 1,023 Withdrawals....................... (684) (290) (181) (178) Net change in payables for collateral under derivative transactions..... (6) (2) (98) (16) Financing element of certain derivative instruments............ (18) (13) -- -- Capital contribution from parent..... -- -- -- 400 ------- ------- ----- ------- Net cash (used in) provided by financing activities................. (157) 38 197 1,229 ------- ------- ----- ------- Change in cash and cash equivalents.... (3) 148 1 -- Cash and cash equivalents, beginning of period............................... 233 85 1 1 ------- ------- ----- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD............................... $ 230 $ 233 $ 2 $ 1 ======= ======= ===== ======= Supplemental disclosures of cash flow information: Income tax paid (received)........ $ -- $ 37 $ 277 $ (179) ======= ======= ===== ======= Non-cash transactions during the period: Assumption of liabilities by MetLife Insurance Company of Connecticut.. $ -- $ -- $ 4 $ -- ======= ======= ===== ======= Contribution of goodwill from MetLife, Inc. .................... $ (4) $ -- $ -- $ -- ======= ======= ===== ======= See Note 2 for purchase accounting adjustments.
See accompanying notes to consolidated financial statements. F-7 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS "MLAC" or the "Company" refers to MetLife Life and Annuity Company of Connecticut (formerly, The Travelers Life and Annuity Company), a Connecticut corporation incorporated in 1973, and its subsidiary. MLAC is a wholly-owned subsidiary of MetLife Insurance Company of Connecticut ("MICC," formerly The Travelers Insurance Company). MICC is a subsidiary of MetLife, Inc. ("MetLife"). The Company's core offerings include universal and variable life insurance, fixed and variable deferred annuities, structured settlements and payout annuities. On July 1, 2005 ("Acquisition Date"), the Company became a subsidiary of MetLife. The Company and its parent, including substantially all of Citigroup Inc's ("Citigroup") international insurance businesses, excluding Primerica Life Insurance Company and its subsidiaries ("Primerica") (collectively, "Travelers"), were acquired by MetLife from Citigroup (the "Acquisition") for $12.1 billion. See Note 2 for further information on the Acquisition. The Company currently operates as a single segment and, as such, financial results are prepared and reviewed by management as a single operating segment. The Company continually evaluates its operating activities and the method utilized by management to evaluate the performance of such activities and will report on a segment basis when appropriate to do so. On February 14, 2006, a Certificate of Amendment was filed with the State of Connecticut Office of the Secretary of the State changing the name of The Travelers Life and Annuity Company to MetLife Life and Annuity Company of Connecticut, effective May 1, 2006. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of i) the Company and its subsidiary and ii) partnerships and joint ventures in which the Company has control. Assets, liabilities, revenues and expenses of the Company's general account for 2005 and 2004 include amounts related to certain separate accounts previously reported in separate account assets and liabilities. See "Adoption of New Accounting Pronouncements." Intercompany accounts and transactions have been eliminated. The Company uses the equity method of accounting for investments in equity securities in which it has more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint ventures and partnership's operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint ventures and partnership's operations. Certain amounts in the prior year periods' consolidated financial statements have been reclassified to conform with the 2006 presentation. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements. The most critical estimates include those used in determining: (i) the fair value of investments in the absence of quoted market values; (ii) investment impairments; (iii) the recognition of income on certain investments; F-8 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (iv) the application of the consolidation rules to certain investments; (v) fair value of and accounting for derivatives; (vi) the capitalization and amortization of deferred policy acquisition costs ("DAC") and the establishment and amortization of value of business acquired ("VOBA"); (vii) the measurement of goodwill and related impairment, if any; (viii) the liability for future policyholder benefits; (ix) accounting for income taxes and the valuation of deferred income tax assets; (x) accounting for reinsurance transactions; and (xi) the liability for litigation and regulatory matters. A description of such critical estimates is incorporated within the discussion of the related accounting policies which follow. The application of purchase accounting requires the use of estimation techniques in determining the fair value of the assets acquired and liabilities assumed -- the most significant of which relate to the aforementioned critical estimates. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company's businesses and operations. Actual results could differ from these estimates. Investments The Company's principal investments are in fixed maturity and equity securities, policy loans, mortgage loans on real estate, real estate joint ventures and other limited partnership interests, short-term investments and other invested assets. The accounting policies related to each are as follows: Fixed Maturity and Equity Securities. The Company's fixed maturity and equity securities are classified as available-for-sale, and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of other comprehensive income or loss, net of policyholder related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Investment gains and losses on sales of securities are determined on a specific identification basis. Interest income on fixed maturity securities is recorded when earned using an effective yield method giving effect to amortization of premiums and accretion of discounts. Dividends on equity securities are recorded when declared. These dividends and interest income are recorded as part of net investment income. Included within fixed maturity securities are loan-backed securities including mortgage-backed and asset-backed securities. Amortization of the premium or discount from the purchase of these securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for single class and multi-class mortgage-backed and asset-backed securities are obtained from broker-dealer survey values or internal estimates. For credit-sensitive mortgage-backed and asset-backed securities and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. For all other mortgage-backed and asset-backed securities, the effective yield is recalculated on a retrospective basis. The cost of fixed maturity and equity securities is adjusted for impairments in value deemed to be other-than-temporary in the period in which the determination is made. These impairments are included within net investment gains (losses) and the cost basis of the fixed maturity and equity securities is reduced accordingly. The Company does not change the revised cost basis for subsequent recoveries in value. F-9 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in fair value. The Company's review of its fixed maturity and equity securities for impairments includes an analysis of the total gross unrealized losses by three categories of securities: (i) securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%; (ii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for less than six months; and (iii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for six months or greater. Additionally, management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used by the Company in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the market value has been below cost or amortized cost; (ii) the potential for impairments of securities when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; (vi) the Company's ability and intent to hold the security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost or amortized cost (See also Note 3); (vii) unfavorable changes in forecasted cash flows on asset-backed securities; and (viii) other subjective factors, including concentrations and information obtained from regulators and rating agencies. Mortgage Loans on Real Estate. Mortgage loans on real estate are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts, and prepayment fees are reported in net investment income. Loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. Valuation allowances are established for the excess carrying value of the loan over the present value of expected future cash flows discounted at the loan's original effective interest rate, the value of the loan's collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or the loan's market value if the loan is being sold. The Company also establishes allowances for loan losses when a loss contingency exists for pools of loans with similar characteristics, such as mortgage loans based on similar property types or loan to value risk factors. A loss contingency exists when the likelihood that a future event will occur is probable based on past events. Interest income earned on impaired loans is accrued on the principal amount of the loan based on the loan's contractual interest rate. However, interest ceases to be accrued for loans on which interest is generally more than 60 days past due and/or where the collection of interest is not considered probable. Cash receipts on such impaired loans are recorded as a reduction of the recorded investment. Gains and losses from the sale of loans and changes in valuation allowances are reported in net investment gains (losses). Policy Loans. Policy loans are stated at unpaid principal balances. Interest income on such loans is recorded as earned using the contractually agreed upon interest rate. Generally, interest is capitalized on the policy's anniversary date. F-10 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Real Estate Joint Ventures and Other Limited Partnership Interests. The Company uses the equity method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest, or more than a minor influence over the joint ventures and partnership's operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint ventures and the partnership's operations. In addition to the investees performing regular evaluations for the impairment of underlying investments, the Company routinely evaluates its investments in real estate joint ventures and limited partnerships for impairments. For its cost method investments it follows an impairment analysis which is similar to the process followed for its fixed maturity and equity securities as described previously. For equity method investees, the Company considers financial and other information provided by the investee, other known information and inherent risks in the underlying investments, as well as future capital commitments, in determining whether an impairment has occurred. When an other-than- temporary impairment is deemed to have occurred, the Company records a realized capital loss within net investment gains (losses) to record the investment at its fair value. Prior to the Acquisition, the Company used the equity method of accounting for all real estate joint ventures and other limited partnership interests in which it had an ownership interest but did not control, including those in which it had a minor equity investment or virtually no influence over operations. Short-term Investments. Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of acquisition and are stated at amortized cost, which approximates fair value. Other Invested Assets. Other invested assets consist primarily of stand-alone derivatives with positive fair values. Estimates and Uncertainties. The Company's investments are exposed to three primary sources of risk: credit, interest rate and market valuation. The financial statement risks, stemming from such investment risks, are those associated with the recognition of impairments, the recognition of income on certain investments; and the determination of fair values. The determination of the amount of allowances and impairments, as applicable, are described above by investment type. The determination of such allowances and impairments is highly subjective and is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. The recognition of income on certain investments (e.g. loan-backed securities including mortgage-backed and asset-backed securities, certain investment transactions, etc.) is dependent upon market conditions, which could result in prepayments and changes in amounts to be earned. The fair values of publicly held fixed maturity securities and publicly held equity securities are based on quoted market prices or estimates from independent pricing services. However, in cases where quoted market prices are not available, such as for private fixed maturity securities fair values are estimated using present value or valuation techniques. The determination of fair values is based on: (i) valuation methodologies; (ii) securities the Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. Factors considered in estimating fair value include: coupon rate, F-11 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) maturity, estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer, and quoted market prices of comparable securities. The use of different methodologies and assumptions may have a material effect on the estimated fair value amounts. Additionally, when the Company enters into certain real estate joint ventures and other limited partnerships for which the Company may be deemed to be the primary beneficiary under Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46(r), Consolidation of Variable Interest Entities -- An Interpretation of ARB No. 51, it may be required to consolidate such investments. The accounting rules for the determination of the primary beneficiary are complex and require evaluation of the contractual rights and obligations associated with each party involved in the entity, an estimate of the entity's expected losses and expected residual returns and the allocation of such estimates to each party. The use of different methodologies and assumptions as to the timing and amount of impairments, recognition of income and the determination of the fair value of investments may have a material effect on the amounts presented within the consolidated financial statements. Derivative Financial Instruments Derivatives are financial instruments whose values are derived from interest rates, foreign currency exchange rates, or other financial indices. Derivatives may be exchange traded or contracted in the over-the-counter market. The Company uses a variety of derivatives, including swaps, forwards, futures and option contracts, to manage the risk associated with variability in cash flows or changes in fair values related to the Company's financial instruments. To a lesser extent, the Company uses credit derivatives to synthetically replicate investment risks and returns which are not readily available in the cash market. The Company also purchases certain securities, issues certain insurance policies and investment contracts and engages in certain reinsurance contracts that have embedded derivatives. Freestanding derivatives are carried on the Company's consolidated balance sheet either as assets within other invested assets or as liabilities within other liabilities at fair value as determined by quoted market prices or through the use of pricing models. The determination of fair value, when quoted market values are not available, is based on valuation methodologies and assumptions deemed appropriate under the circumstances. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, market volatility, and liquidity. Values can also be affected by changes in estimates and assumptions used in pricing models. Such assumptions include estimates of volatility, interest rates, foreign currency exchange rates, other financial indices and credit ratings. Essential to the analysis of the fair value is a risk of counterparty default. The use of different assumptions may have a material effect on the estimated derivative fair value amounts as well as the amount of reported net income. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting pursuant to Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"), as amended changes in the fair value of the derivative are reported in net investment gains (losses). The fluctuations in fair value of derivatives which have not been designated for hedge accounting can result in significant volatility in net income. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either: (i) a hedge of the fair value of a recognized asset or liability or an unrecognized firm commitment ("fair value hedge"); or (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow hedge"). In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument's F-12 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. Assessments and measurement of hedge effectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income. The accounting for derivatives is complex and interpretations of the primary accounting standards continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under these accounting standards. If it was determined that hedge accounting designations were not appropriately applied, reported net income could be materially affected. Differences in judgment as to the availability and application of hedge accounting designations and the appropriate accounting treatment may result in a differing impact on the consolidated financial statements of the Company from that previously reported. Under a fair value hedge, changes in the fair value of the hedging derivative, including amounts measured as ineffectiveness, and changes in the fair value of the hedged item related to the designated risk being hedged, are reported within net investment gains (losses). The fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of income within interest income or interest expense to match the location of the hedged item. Under a cash flow hedge, changes in the fair value of the hedging derivative measured as effective are reported within other comprehensive income (loss), a separate component of stockholders' equity, and the deferred gains or losses on the derivative are reclassified into the consolidated statement of income when the Company's earnings are affected by the variability in cash flows of the hedged item. Changes in the fair value of the hedging instrument measured as ineffectiveness are reported within net investment gains (losses). The fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of income within interest income or interest expense to match the location of the hedged item. The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; (iv) a hedged firm commitment no longer meets the definition of a firm commitment; or (v) the derivative is de- designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the fair value or cash flows of a hedged item, the derivative continues to be carried on the consolidated balance sheet at its fair value, with changes in fair value recognized currently in net investment gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in fair value of derivatives recorded in other comprehensive income (loss) related to discontinued cash flow hedges are released into the consolidated statement of income when the Company's earnings are affected by the variability in cash flows of the hedged item. When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur by the end of the specified time period or the hedged item no longer meets the definition of a firm commitment, the derivative continues to be carried on the consolidated balance sheet at its fair value, with changes in fair value recognized currently in net investment gains (losses). Any asset or liability associated with a recognized firm commitment is derecognized from the consolidated balance sheet, and recorded currently in net investment gains (losses). Deferred gains and losses of a derivative recorded in other comprehensive income (loss) F-13 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) pursuant to the cash flow hedge of a forecasted transaction are recognized immediately in net investment gains (losses). In all other situations in which hedge accounting is discontinued, the derivative is carried at its fair value on the consolidated balance sheet, with changes in its fair value recognized in the current period as net investment gains (losses). The Company is also a party to financial instruments that contain terms which are deemed to be embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated under SFAS 133. If the instrument would not be accounted for in its entirety at fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried on the consolidated balance sheet at fair value with the host contract and changes in their fair value are reported currently in net investment gains (losses). If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at fair value, with changes in fair value recognized in the current period in net investment gains (losses). Additionally, the Company may elect to carry an entire contract on the balance sheet at fair value, with changes in fair value recognized in the current period in net investment gains (losses) if that contract contains an embedded derivative that requires bifurcation. There is a risk that embedded derivatives requiring bifurcation may not be identified and reported at fair value in the consolidated financial statements and that their related changes in fair value could materially affect reported net income. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Deferred Policy Acquisition Costs and Value of Business Acquired The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that vary with and relate to the production of new business are deferred as DAC. Such costs consist principally of commissions and agency and policy issue expenses. VOBA is an intangible asset that reflects the estimated fair value of in-force contracts in a life insurance company acquisition and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the business in- force at the acquisition date. VOBA is based on actuarially determined projections, by each block of business, of future policy and contract charges, premiums, mortality, separate account performance, surrenders, operating expenses, investment returns and other factors. Actual experience on the purchased business may vary from these projections. The recovery of DAC and VOBA is dependent upon the future profitability of the related business. DAC and VOBA are aggregated in the financial statements for reporting purposes. DAC related to internally replaced contracts are generally expensed at the date of replacement. DAC and VOBA on life insurance or investment-type contracts are amortized in proportion to gross premiums or gross profits, depending on the type of contract as described below. The Company amortizes DAC and VOBA related to non-participating traditional contracts (term insurance and non-participating whole life insurance) over the entire premium paying period in proportion to the present value of actual historic and expected future gross premiums. The present value of expected premiums is based upon the premium requirement of each policy and assumptions for mortality, persistency, and investment returns at policy issuance, or policy acquisition as it relates to VOBA, that include provisions for adverse deviation and are consistent F-14 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) with the assumptions used to calculate future policyholder benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Absent a premium deficiency, variability in amortization after policy issuance or acquisition is caused only by variability in premium volumes. The Company amortizes DAC and VOBA related to fixed and variable universal life contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon returns in excess of the amounts credited to policyholders, mortality, persistency, interest crediting rates, expenses to administer the business, creditworthiness of reinsurance counterparties, the effect of any hedges used, and certain economic variables, such as inflation. Of these factors, the Company anticipates that investment returns, expenses, and persistency are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross profits with the actual gross profits for that period. When the actual gross profits change from previously estimated gross profits, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross profits are below the previously estimated gross profits. Each reporting period, the Company also updates the actual amount of business remaining in-force, which impacts expected future gross profits. Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force account balances on such contracts each reporting period. Returns that are higher than the Company's long-term expectation produce higher account balances, which increases the Company's future fee expectations and decreases future benefit payment expectations on minimum death benefit guarantees, resulting in higher expected future gross profits. The opposite result occurs when returns are lower than the Company's long-term expectation. The Company's practice to determine the impact of gross profits resulting from returns on separate accounts assumes that long- term appreciation in equity markets is not changed by short-term market fluctuations, but is only changed when sustained interim deviations are expected. The Company monitors these changes and only changes the assumption when its long-term expectation changes. The Company also reviews periodically other long-term assumptions underlying the projections of estimated gross profits. These include investment returns, policyholder dividend scales, interest crediting rates, mortality, persistency, and expenses to administer business. Management annually updates assumptions used in the calculation of estimated gross profits which may have significantly changed. If the update of assumptions causes expected future gross profits to increase, DAC and VOBA amortization will decrease, resulting in a current period increase to earnings. The opposite result occurs when the assumption update causes expected future gross profits to decrease. Sales Inducements The Company has two different types of sales inducements which are included in other assets: (i) the policyholder receives a bonus whereby the policyholder's initial account balance is increased by an amount equal to a specified percentage of the customer's deposit; and (ii) the policyholder receives a higher interest rate using a dollar cost averaging method than would have been received based on the normal general account interest rate credited. The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. F-15 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Goodwill Goodwill is the excess of cost over the fair value of net assets acquired. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business climate, indicate that there may be justification for conducting an interim test. Impairment testing is performed using the fair value approach, which requires the use of estimates and judgment, at the "reporting unit" level. A reporting unit is the operating segment or a business one level below the operating segment, if discrete financial information is prepared and regularly reviewed by management at that level. If the carrying value of a reporting unit's goodwill exceeds its fair value, the excess is recognized as an impairment and recorded as a charge against net income. The fair values of the reporting units are determined using a market multiple and discounted cash flow model. The critical estimates necessary in determining fair value are projected earnings, comparative market multiples and the discount rate. Liability for Future Policy Benefits and Policyholder Account Balances The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and traditional annuities. Generally, amounts are payable over an extended period of time and related liabilities are calculated as the present value of future expected benefits to be paid reduced by the present value of future expected premiums. Such liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, policy lapse, renewal, retirement, investment returns, inflation, expenses and other contingent events as appropriate to the respective product type. Utilizing these assumptions, liabilities are established on a block of business basis. Future policy benefit liabilities for non-participating traditional life insurance policies are equal to the aggregate of the present value of future benefit payments and related expenses less the present value of future net premiums. Assumptions as to mortality and persistency are based upon the Company's experience when the basis of the liability is established. The interest rates for future policy benefit liabilities on non-participating traditional life insurance is 4%. Future policy benefit liabilities for individual annuities after annuitization are equal to the present value of expected future payments. Interest rates used in establishing such liabilities range from 3% to 6%. The Company establishes future policy benefit liabilities for minimum death benefit guarantees relating to certain annuity contracts and secondary guarantees relating to certain life policies as follows: - Annuity guaranteed death benefit ("GMDB") liabilities are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in estimating the GMDB liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility are consistent with the historical experience of the Standard & Poor's 500 Index ("S&P"). The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. - Liabilities for universal and variable life secondary guarantees are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balances, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. F-16 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The assumptions used in estimating the secondary and paid up guarantee liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility for variable products are consistent with historical S&P experience. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. The Company establishes policyholder account balances ("PAB") for guaranteed minimum benefit riders relating to certain variable annuity products as follows: - Guaranteed minimum withdrawal benefit riders ("GMWB") guarantee the contractholder a return of their purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that the contractholder's cumulative withdrawals in a contract year do not exceed a certain limit. The initial guaranteed withdrawal amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts). The GMWB is an embedded derivative, which is measured at fair value separately from the host variable annuity product. - Guaranteed minimum accumulation benefit riders ("GMAB") provide the contractholder, after a specified period of time determined at the time of issuance of the variable annuity contract, with a minimum accumulation of their purchase payments even if the account value is reduced to zero. The initial guaranteed accumulation amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts). The GMAB is also an embedded derivative, which is measured at fair value separately from the host variable annuity product. - For both GMWB and GMAB, the initial benefit base is increased by additional purchase payments made within a certain time period and decreases by benefits paid and/or withdrawal amounts. After a specified period of time, the benefit base may also increase as a result of an optional reset as defined in the contract. - The fair values of the GMWB and GMAB riders are calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior. In measuring the fair value of GMWBs and GMABs, the Company attributes a portion of the fees collected from the policyholder equal to the present value of expected future guaranteed minimum withdrawal and accumulation benefits (at inception). The changes in fair value are reported in net investment gains (losses). Any additional fees represent "excess" fees and are reported in universal life and investment-type product policy fees. These riders may be more costly than expected in volatile or declining markets, causing an increase to liabilities for future policy benefits, negatively affecting net income. The Company periodically reviews its estimates of actuarial liabilities for future policy benefits and compares them with actual experience. Differences between actual experience and the assumptions used in pricing these policies, guarantees and riders and in the establishment of the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur. PABs relate to investment-type contracts and universal life-type policies. Investment-type contracts principally include traditional individual fixed annuities in the accumulation phase. PABs are equal to: (i) policy account values, which consist of an accumulation of gross premium payments; (ii) credited interest, ranging from 0.5% to 12% less expenses, mortality charges, and withdrawals; and (iii) fair value purchase accounting adjustments relating to the Acquisition. F-17 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Other Policyholder Funds Other policyholder funds include policy and contract claims and unearned revenue liabilities. The liability for policy and contract claims generally relates to incurred but not reported claims as well as claims which have been reported but not yet settled. The liability for these claims is based on the Company's estimated ultimate cost of settling all claims. The Company derives estimates for the development of incurred but not reported claims principally from actuarial analyses of historical patterns of claims and claims development for each line of business. The methods used to determine these estimates are continually reviewed. Adjustments resulting from this continuous review process and differences between estimates and payments for claims are recognized in policyholder benefits and claims expense in the period in which the estimates are changed or payments are made. The unearned revenue liability relates to universal life-type and investment-type products and represents policy charges for services to be provided in future periods. The charges are deferred as unearned revenue and amortized using the product's estimated gross profits similar to DAC. Such amortization is recorded in universal life and investment-type product policy fees. Recognition of Insurance Revenue and Related Benefits Premiums related to traditional life and annuity policies with life contingencies are recognized as revenues when due from policyholders. Policyholder benefits and expenses are provided against such revenues to recognize profits over the estimated lives of the policies. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into operations in a constant relationship to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Deposits related to universal life-type and investment-type products are credited to PABs. Revenues from such contracts consist of amounts assessed against PABs for mortality, policy administration and surrender charges and are recorded in universal life and investment-type product policy fees in the period in which services are provided. Amounts that are charged to operations include interest credited and benefit claims incurred in excess of related PABs. Premiums, policy fees, policyholder benefits and expenses are presented net of reinsurance. Other Revenues Other revenues include advisory fees, broker-dealer commissions and fees and administrative service fees. Such fees and commissions are recognized in the period in which services are performed. Income Taxes The Company files a consolidated U.S. federal income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The Company's accounting for income taxes represents management's best estimate of various events and transactions. Deferred income tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. For U.S. federal income tax purposes, an election in 2005 under Internal Revenue Code Section 338 was made by the Company's ultimate parent, MetLife. As a result of this election, the tax basis in the acquired assets and F-18 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) liabilities was adjusted as of the acquisition date and the related deferred income tax asset established for the taxable difference from the book basis. The realization of deferred income tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established as well as the amount of such allowances. When making such determination, consideration is given to, among other things, the following: (i) future taxable income exclusive of reversing temporary differences and carryforwards; (ii) future reversals of existing taxable temporary differences; (iii) taxable income in prior carryback years; and (iv) tax planning strategies. The Company may be required to change its provision for income taxes in certain circumstances. Examples of such circumstances include when the ultimate deductibility of certain items is challenged by taxing authorities or when estimates used in determining valuation allowances on deferred income tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, future events such as changes in tax legislation could have an impact on the provision for income tax and the effective tax rate. Any such changes could significantly affect the amounts reported in the consolidated financial statements in the year these changes occur. The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax. Reinsurance The Company enters into reinsurance transactions as a purchaser of reinsurance for its insurance products. For each of its reinsurance contracts, the Company determines if the contract provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. The Company reviews all contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid, and the liabilities ceded related to the underlying contracts is considered the net cost of reinsurance at the inception of the contract. The net cost of reinsurance is recorded as an adjustment to DAC and recognized as a component of other expenses on a basis consistent with the way the acquisition costs on the underlying reinsured contracts would be recognized. Subsequent amounts paid on the reinsurance of in-force blocks, as well as amounts paid related to new business are recorded as ceded premiums and ceded future policy benefit liabilities are established. The assumptions used to account for long-duration reinsurance contracts are consistent with those used for the underlying contracts. Ceded policyholder and contract related liabilities, other than those currently due, are reported gross on the balance sheet. Amounts currently recoverable under reinsurance contracts are included in premiums and other receivables and amounts currently payable are included in other liabilities. Such assets and liabilities relating to reinsurance F-19 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) contracts with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance contract. Premiums, fees and policyholder benefits and claims are net of reinsurance ceded. If the Company determines that a reinsurance contract does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the contract as a deposit, net of related expenses. Deposits received are included in other liabilities and deposits made are included within other assets. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenue or other expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenue or other expenses, as appropriate. Amounts received from reinsurers for policy administration are reported in other revenues. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed previously. Separate Accounts Separate accounts are established in conformity with insurance laws and are generally not chargeable with liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. The Company reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if: (i) such separate accounts are legally recognized; (ii) assets supporting the contract liabilities are legally insulated from the Company's general account liabilities; (iii) investments are directed by the contractholder; and (iv) all investment performance, net of contract fees and assessments, is passed through to the contractholder. The Company reports separate account assets meeting such criteria at their fair value. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to contractholders of such separate accounts are offset within the same line in the consolidated statements of income. The Company's revenues reflect fees charged to the separate accounts, including mortality charges, risk charges, policy administration fees, investment management fees and surrender charges. Separate accounts not meeting the above criteria are combined on a line-by-line basis with the Company's general account assets, liabilities, revenues and expenses. Litigation Contingencies The Company is a party to a number of legal actions and regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on the Company's consolidated financial position. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in the Company's consolidated financial statements. It is possible that an adverse outcome in certain of the Company's litigation and regulatory investigations, or the use of different assumptions in the determination of amounts recorded could have a material effect upon the Company's consolidated net income or cash flows in particular quarterly or annual periods. F-20 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Derivative Financial Instruments The Company has adopted guidance relating to derivative financial instruments as follows: - Effective January 1, 2006, the Company adopted prospectively SFAS No. 155, Accounting for Certain Hybrid Instruments ("SFAS 155"). SFAS 155 amends SFAS 133 and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ("SFAS 140"). SFAS 155 allows financial instruments that have embedded derivatives to be accounted for as a whole, eliminating the need to bifurcate the derivative from its host, if the holder elects to account for the whole instrument on a fair value basis. In addition, among other changes, SFAS 155: (i) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; (ii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (iii) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (iv) amends SFAS 140 to eliminate the prohibition on a qualifying special-purpose entity ("QSPE") from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial interest. The adoption of SFAS 155 did not have a material impact on the Company's consolidated financial statements. - Effective October 1, 2006, the Company adopted SFAS 133 Implementation Issue No. B40, Embedded Derivatives: Application of Paragraph 13(b) to Securitized Interests in Prepayable Financial Assets ("Issue B40"). Issue B40 clarifies that a securitized interest in prepayable financial assets is not subject to the conditions in paragraph 13(b) of SFAS 133, if it meets both of the following criteria: (i) the right to accelerate the settlement if the securitized interest cannot be controlled by the investor; and (ii) the securitized interest itself does not contain an embedded derivative (including an interest rate-related derivative) for which bifurcation would be required other than an embedded derivative that results solely from the embedded call options in the underlying financial assets. The adoption of Issue B40 did not have a material impact on the Company's consolidated financial statements. - Effective January 1, 2006, the Company adopted prospectively SFAS 133 Implementation Issue No. B38, Embedded Derivatives: Evaluation of Net Settlement with Respect to the Settlement of a Debt Instrument through Exercise of an Embedded Put Option or Call Option ("Issue B38") and SFAS 133 Implementation Issue No. B39, Embedded Derivatives: Application of Paragraph 13(b) to Call Options That Are Exercisable Only by the Debtor ("Issue B39"). Issue B38 clarifies that the potential settlement of a debtor's obligation to a creditor occurring upon exercise of a put or call option meets the net settlement criteria of SFAS 133. Issue B39 clarifies that an embedded call option, in which the underlying is an interest rate or interest rate index, that can accelerate the settlement of a debt host financial instrument should not be bifurcated and fair valued if the right to accelerate the settlement can be exercised only by the debtor (issuer/borrower) and the investor will recover substantially all of its initial net investment. The adoption of Issues B38 and B39 did not have a material impact on the Company's consolidated financial statements. F-21 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Other Pronouncements Effective November 15, 2006, the Company adopted U.S. Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108 provides guidance on how prior year misstatements should be considered when quantifying misstatements in current year financial statements for purposes of assessing materiality. SAB 108 requires that registrants quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when relevant quantitative and qualitative factors are considered, is material. SAB 108 permits companies to initially apply its provisions by either restating prior financial statements or recording a cumulative effect adjustment to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment to retained earnings for errors that were previously deemed immaterial but are material under the guidance in SAB 108. The adoption of SAB 108 did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2006, the Company adopted SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3 ("SFAS 154"). SFAS 154 requires retrospective application to prior periods' financial statements for a voluntary change in accounting principle unless it is deemed impracticable. It also requires that a change in the method of depreciation, amortization, or depletion for long-lived, non- financial assets be accounted for as a change in accounting estimate rather than a change in accounting principle. The adoption of SFAS 154 did not have a material impact on the Company's consolidated financial statements. In June 2005, the Emerging Issues Task Force ("EITF") reached consensus on Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights ("EITF 04-5"). EITF 04-5 provides a framework for determining whether a general partner controls and should consolidate a limited partnership or a similar entity in light of certain rights held by the limited partners. The consensus also provides additional guidance on substantive rights. EITF 04-5 was effective after June 29, 2005 for all newly formed partnerships and for any pre-existing limited partnerships that modified their partnership agreements after that date. For all other limited partnerships, EITF 04-5 required adoption by January 1, 2006 through a cumulative effect of a change in accounting principle recorded in opening equity or applied retrospectively by adjusting prior period financial statements. The adoption of the provisions of EITF 04-5 did not have a material impact on the Company's consolidated financial statements. Effective November 9, 2005, the Company prospectively adopted the guidance in FASB Staff Position ("FSP") No. FAS 140-2, Clarification of the Application of Paragraphs 40(b) and 40(c) of FAS 140 ("FSP 140-2"). FSP 140-2 clarified certain criteria relating to derivatives and beneficial interests when considering whether an entity qualifies as a QSPE. Under FSP 140-2, the criteria must only be met at the date the QSPE issues beneficial interests or when a derivative financial instrument needs to be replaced upon the occurrence of a specified event outside the control of the transferor. The adoption of FSP 140-2 did not have a material impact on the Company's consolidated financial statements. Effective July 1, 2005, the Company adopted SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 ("SFAS 153"). SFAS 153 amended prior guidance to eliminate the exception for nonmonetary exchanges of similar productive assets and replaced it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS 153 were required to be applied prospectively for fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 did not have a material impact on the Company's consolidated financial statements. In June 2005, the FASB completed its review of EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments ("EITF 03-1"). EITF 03-1 provides accounting guidance F-22 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) regarding the determination of when an impairment of debt and marketable equity securities and investments accounted for under the cost method should be considered other-than-temporary and recognized in income. EITF 03-1 also requires certain quantitative and qualitative disclosures for debt and marketable equity securities classified as available-for-sale or held-to- maturity under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, that are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. The FASB decided not to provide additional guidance on the meaning of other-than-temporary impairment but has issued FSP FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments ("FSP 115-1"), which nullifies the accounting guidance on the determination of whether an investment is other-than-temporarily impaired as set forth in EITF 03-1. As required by FSP 115-1, the Company adopted this guidance on a prospective basis, which had no material impact on the Company's consolidated financial statements, and has provided the required disclosures. Effective July 1, 2004, the Company adopted EITF Issue No. 03-16, Accounting for Investments in Limited Liability Companies ("EITF 03-16"). EITF 03-16 provides guidance regarding whether a limited liability company should be viewed as similar to a corporation or similar to a partnership for purposes of determining whether a noncontrolling investment should be accounted for using the cost method or the equity method of accounting. EITF 03-16 did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2004, the Company adopted Statement of Position ("SOP") 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts ("SOP 03-1"), as interpreted by a Technical Practice Aid ("TPA") issued by the American Institute of Certified Public Accountants ("AICPA") and FSP No. FAS 97-1, Situations in Which Paragraphs 17(b) and 20 of FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, Permit or Require Accrual of an Unearned Revenue Liability. SOP 03-1 provides guidance on (i) the classification and valuation of long-duration contract liabilities; (ii) the accounting for sales inducements; and (iii) separate account presentation and valuation. FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). SFAS 159 permits all entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to report related unrealized gains and losses in earnings. The fair value option will generally be applied on an instrument-by-instrument basis and is generally an irrevocable election. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is evaluating which eligible financial instruments, if any, it will elect to account for at fair value under SFAS 159 and the related impact on the Company's consolidated financial statements. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements. The pronouncement is effective for fiscal years beginning after November 15, 2007. The guidance in SFAS 157 will be applied prospectively with the exception of: (i) block discounts of financial instruments; and (ii) certain financial and hybrid instruments measured at initial recognition under SFAS 133 which are to be applied retrospectively as of the beginning of initial adoption (a limited form of retrospective application). The Company is currently evaluating the impact of SFAS 157 on the Company's consolidated financial statements. Implementation of SFAS 157 will require additional disclosures in the Company's consolidated financial statements. In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income tax recognized in a company's financial statements. FIN 48 requires companies to determine whether it is "more likely than not" that a F-23 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. FIN 48 will also require significant additional disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006. Based upon the Company's evaluation work completed to date, the Company expects to recognize a reduction to the January 1, 2007 balance of retained earnings of less than $1 million. In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets -- an amendment of FASB Statement No. 140 ("SFAS 156"). Among other requirements, SFAS 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations. SFAS 156 will be applied prospectively and is effective for fiscal years beginning after September 15, 2006. The Company does not expect SFAS 156 to have a material impact on the Company's consolidated financial statements. In September 2005, the AICPA issued SOP 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts ("SOP 05-1"). SOP 05-1 provides guidance on accounting by insurance enterprises for DAC on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long- Duration Contracts and for Realized Gains and Losses from the Sale of Investments. SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. Under SOP 05-1, modifications that result in a substantially unchanged contract will be accounted for as a continuation of the replaced contract. It is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007 related TPAs were issued by the AICPA to provide further clarification of SOP 05-1. The TPAs are effective concurrently with the adoption of the SOP. Based on the Company's interpretation of SOP 05-1 and related TPAs, the adoption of SOP 05-1 is not expected to have a material impact on the Company's financial statements. 2. ACQUISITION OF THE TRAVELERS INSURANCE COMPANY BY METLIFE, INC. FROM CITIGROUP INC. On the Acquisition Date, MetLife Life and Annuity Company of Connecticut, and other affiliated entities, including the Company's parent, MetLife Insurance Company of Connecticut, and substantially all of Citigroup Inc.'s international insurance businesses, excluding Primerica Life Insurance Company and its subsidiaries, were acquired by MetLife from Citigroup for $12.1 billion. The accounting policies of the Company were conformed to those of MetLife upon the Acquisition. The total consideration paid by MetLife for the purchase consisted of $11.0 billion in cash and 22,436,617 shares of MetLife's common stock with a market value of $1.0 billion to Citigroup and $100 million in other transaction costs. In accordance with FASB SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, the Acquisition was accounted for by MetLife using the purchase method of accounting, which requires that the assets and liabilities of the Company be identified and measured at their fair value as of the acquisition date. As required by the SEC SAB Topic 5-J, Push Down Basis of Accounting Required in Certain Limited Circumstances, the purchase method of accounting applied by MetLife to the acquired assets and liabilities associated with the Company has been "pushed down" to the consolidated financial statements of the Company, thereby establishing a new basis of accounting. This new basis of accounting is referred to as the "successor basis," while the historical basis of accounting is referred to as the "predecessor basis." Financial statements included F-24 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) herein for periods prior and subsequent to the Acquisition Date are labeled "predecessor" and "successor," respectively. Final Purchase Price Allocation and Goodwill The purchase price has been allocated to the assets acquired and liabilities assumed using management's best estimate of their fair values as of the acquisition date. The computation of the purchase price and the allocation of the purchase price to the net assets acquired based upon their respective fair values as of July 1, 2005, and the resulting goodwill, as revised, are presented below. Based upon MetLife's method of allocating the purchase price to the entities acquired, the purchase price attributed to the Company increased by $5 million. The increase in purchase price was a result of additional consideration paid in 2006 by MetLife to Citigroup of $115 million and an increase in transaction costs of $3 million, offset by a $4 million reduction in restructuring costs for a total purchase price increase of $114 million. The allocation of purchase price was updated as a result of the additional purchase price attributed to the Company of $5 million, an increase of $11 million in the value of the future policy benefit liabilities resulting from the finalization of the evaluation of the Travelers underwriting criteria, an increase of $6 million in other invested assets, an increase of $3 million in other assets and a decrease of $14 million in other liabilities due to the receipt of additional information, all resulting in a net impact of the aforementioned adjustments decreasing deferred income tax assets by $3 million. Goodwill decreased by $4 million as a consequence of such revisions to the purchase price and the purchase price allocation. F-25 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SUCCESSOR ----------------- AS OF JULY 1, 2005 ----------------- (IN MILLIONS) TOTAL PURCHASE PRICE:.................................... $12,084 Purchase price attributed to other affiliates.......... 10,351 ------- Purchase price attributed to the Company............... 1,733 NET ASSETS ACQUIRED PRIOR TO PURCHASE ACCOUNTING ADJUSTMENTS............................................ $ 2,034 ADJUSTMENTS TO REFLECT ASSETS ACQUIRED AT FAIR VALUE: Fixed maturity securities available-for-sale........... (4) Mortgage loans on real estate.......................... 7 Real estate and real estate joint ventures held-for- investment.......................................... (1) Other limited partnership interests.................... 3 Other invested assets.................................. (4) Premiums and other receivables......................... (47) Elimination of historical deferred policy acquisition costs............................................... (1,622) Value of business acquired............................. 1,676 Value of distribution agreements acquired.............. 8 Net deferred income tax asset.......................... 258 Other assets........................................... 8 ADJUSTMENTS TO REFLECT LIABILITIES ASSUMED AT FAIR VALUE: Future policy benefits................................. (303) Policyholder account balances.......................... (464) Other liabilities...................................... (55) ------- NET FAIR VALUE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED................................................ 1,494 ------- GOODWILL RESULTING FROM THE ACQUISITION.................. $ 239 =======
The entire amount of goodwill is expected to be deductible for income tax purposes. F-26 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONDENSED STATEMENT OF NET ASSETS ACQUIRED The condensed statement of net assets acquired reflects the fair value of the Company's net assets as follows:
SUCCESSOR ------------------ AS OF JULY 1, 2005 ------------------ (IN MILLIONS) ASSETS: Fixed maturity securities available-for-sale............. $ 6,135 Equity securities available-for-sale..................... 35 Mortgage loans on real estate............................ 277 Policy loans............................................. 36 Other limited partnership interests...................... 80 Short-term investments................................... 188 Other invested assets.................................... 338 ------- Total investments..................................... 7,089 Cash and cash equivalents................................ 85 Accrued investment income................................ 80 Premiums and other receivables........................... 175 Value of business acquired............................... 1,676 Goodwill................................................. 239 Other intangible assets.................................. 8 Deferred income tax asset................................ 97 Other assets............................................. 9 Separate account assets.................................. 11,617 ------- Total assets acquired................................. 21,075 ------- LIABILITIES: Future policy benefits................................... 1,739 Policyholder account balances............................ 5,684 Other policyholder funds................................. 15 Current income tax payable............................... 37 Other liabilities........................................ 250 Separate account liabilities............................. 11,617 ------- Total liabilities assumed............................. 19,342 ------- Net assets acquired................................... $ 1,733 =======
Other Intangible Assets VOBA reflects the estimated fair value of in-force contracts acquired and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the life insurance and annuity contracts in-force at the Acquisition Date. VOBA is based on actuarially determined projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, investment returns and other factors. Actual experience on the purchased business F-27 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) may vary from these projections. If estimated gross profits or premiums differ from expectations, the amortization of VOBA is adjusted to reflect actual experience. The value of the other identifiable intangibles reflects the estimated fair value of the Company's distribution agreements acquired at July 1, 2005 and will be amortized in relation to the expected economic benefits of the agreements. If actual experience under the distribution agreements differs from expectations, the amortization of these intangibles will be adjusted to reflect actual experience. The use of discount rates was necessary to establish the fair value of VOBA, as well as the other identifiable intangible assets. In selecting the appropriate discount rates, management considered its weighted average cost of capital, as well as the weighted average cost of capital required by market participants. A discount rate of 11.5% was used to value these intangible assets. The fair values of business acquired and distribution agreements acquired are as follows:
SUCCESSOR ------------- WEIGHTED AVERAGE AS OF JULY 1, AMORTIZATION 2005 PERIOD ------------- ---------------- (IN MILLIONS) (IN YEARS) Value of business acquired........................ $1,676 16 Value of distribution agreements acquired......... 8 16 ------ Total value of intangible assets acquired, excluding goodwill........................... $1,684 16 ======
F-28 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 3. INVESTMENTS FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized gain and loss, and estimated fair value of the Company's fixed maturity and equity securities, the percentage that each sector represents by the total fixed maturity securities holdings and by the total equity securities holdings at:
SUCCESSOR ------------------------------------------------------ DECEMBER 31, 2006 ------------------------------------------------------ GROSS COST OR UNREALIZED AMORTIZED --------------- ESTIMATED % OF COST GAIN LOSS FAIR VALUE TOTAL --------- ---- ---- ---------- ----- (IN MILLIONS) U.S. corporate securities.......... $2,542 $18 $ 62 $2,498 42.4% Foreign corporate securities....... 892 5 21 876 14.9 U.S. Treasury/agency securities.... 801 2 20 783 13.3 Commercial mortgage-backed securities....................... 736 4 6 734 12.5 Residential mortgage-backed securities....................... 734 10 5 739 12.5 Asset-backed securities............ 102 -- 2 100 1.7 State and political subdivision securities....................... 91 1 6 86 1.5 Foreign government securities...... 69 5 1 73 1.2 ------ --- ---- ------ ----- Total fixed maturity securities.. $5,967 $45 $123 $5,889 100.0% ====== === ==== ====== ===== Nonredeemable preferred stock...... $ 55 $ 2 $ 1 $ 56 98.2% Common stock....................... 1 -- -- 1 1.8 ------ --- ---- ------ ----- Total equity securities.......... $ 56 $ 2 $ 1 $ 57 100.0% ====== === ==== ====== =====
SUCCESSOR ------------------------------------------------------ DECEMBER 31, 2005 ------------------------------------------------------ GROSS COST OR UNREALIZED AMORTIZED --------------- ESTIMATED % OF COST GAIN LOSS FAIR VALUE TOTAL --------- ---- ---- ---------- ----- (IN MILLIONS) U.S. corporate securities.......... $2,811 $ 6 $ 70 $2,747 45.4% Foreign corporate securities....... 562 4 16 550 9.1 U.S. Treasury/agency securities.... 793 4 6 791 13.0 Commercial mortgage-backed securities....................... 665 3 9 659 10.9 Residential mortgage-backed securities....................... 1,021 1 17 1,005 16.6 Asset-backed securities............ 147 -- 2 145 2.4 State and political subdivision securities....................... 84 -- 3 81 1.3 Foreign government securities...... 75 3 1 77 1.3 ------ --- ---- ------ ----- Total fixed maturity securities.. $6,158 $21 $124 $6,055 100.0% ====== === ==== ====== ===== Nonredeemable preferred stock...... $ 3 $-- $ -- $ 3 75.0% Common stock....................... 1 1 1 1 25.0 ------ --- ---- ------ ----- Total equity securities.......... $ 4 $ 1 $ 1 $ 4 100.0% ====== === ==== ====== =====
F-29 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company held foreign currency derivatives with notional amounts of $11 million and $10 million to hedge the exchange rate risk associated with foreign denominated fixed maturity securities at December 31, 2006 and 2005, respectively. Excluding investments in U.S. Treasury securities and obligations of U.S. government corporations and agencies, the Company is not exposed to any significant concentration of credit risk in its fixed maturity securities portfolio. The Company held fixed maturity securities at estimated fair values that were below investment grade or not rated by an independent rating agency that totaled $361 million and $395 million at December 31, 2006 and 2005, respectively. These securities had a net unrealized gain (loss) of ($2) million and ($10) million at December 31, 2006 and 2005, respectively. Non-income producing fixed maturity securities were $2 million at both December 31, 2006 and 2005. Unrealized gains (losses) associated with non-income producing fixed maturity securities were $2 million and ($3) million at December 31, 2006 and 2005, respectively. The cost or amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), are shown below:
SUCCESSOR ----------------------------------------------- DECEMBER 31, 2006 DECEMBER 31, 2005 ---------------------- ---------------------- COST OR COST OR AMORTIZED ESTIMATED AMORTIZED ESTIMATED COST FAIR VALUE COST FAIR VALUE --------- ---------- --------- ---------- (IN MILLIONS) Due in one year or less................. $ 362 $ 361 $ 347 $ 346 Due after one year through five years... 948 931 1,192 1,171 Due after five years through ten years.. 1,273 1,242 1,577 1,534 Due after ten years..................... 1,812 1,782 1,209 1,195 ------ ------ ------ ------ Subtotal.............................. 4,395 4,316 4,325 4,246 Mortgage-backed and other asset-backed securities............................ 1,572 1,573 1,833 1,809 ------ ------ ------ ------ Total fixed maturities................ $5,967 $5,889 $6,158 $6,055 ====== ====== ====== ======
Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. Actual maturities may differ from contractual maturities due to the exercise of prepayment options. Sales or disposals of fixed maturity and equity securities classified as available-for-sale are as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Proceeds..................... $2,503 $3,351 $212 $820 Gross investment gains....... $ 5 $ 3 $ 9 $ 25 Gross investment losses...... $ (70) $ (54) $(12) $(25)
F-30 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) UNREALIZED LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following table presents the estimated fair values and gross unrealized loss of the Company's fixed maturity securities (aggregated by sector) and equity securities in an unrealized loss position, aggregated by length of time that the securities have been in a continuous unrealized loss position at:
SUCCESSOR ------------------------------------------------------------------------------------- DECEMBER 31, 2006 ------------------------------------------------------------------------------------- EQUAL TO OR GREATER LESS THAN 12 MONTHS THAN 12 MONTHS TOTAL --------------------------- --------------------------- --------------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR VALUE UNREALIZED LOSS FAIR VALUE UNREALIZED LOSS FAIR VALUE UNREALIZED LOSS ---------- --------------- ---------- --------------- ---------- --------------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) U.S. corporate securities..... $1,330 $40 $500 $22 $1,830 $ 62 Foreign corporate securities.. 462 13 174 8 636 21 U.S. Treasury/agency securities.................. 474 17 51 3 525 20 Commercial mortgage-backed securities.................. 304 2 109 4 413 6 Residential mortgage-backed securities.................. 307 4 59 1 366 5 Asset-backed securities....... 45 -- 22 2 67 2 State and political subdivision securities...... 21 3 54 3 75 6 Foreign government securities.................. 13 1 12 -- 25 1 ------ --- ---- --- ------ ---- Total fixed maturity securities............... $2,956 $80 $981 $43 $3,937 $123 ====== === ==== === ====== ==== Equity securities............. $ 37 $ 1 $ 5 $-- $ 42 $ 1 ====== === ==== === ====== ==== Total number of securities in an unrealized loss position.................... 772 430 1,202 ====== ==== ======
All fixed maturity and equity securities in an unrealized loss position at December 31, 2005 had been in a continuous unrealized loss position for less than twelve months, as a new cost basis was established at the Acquisition Date. The number of securities in an unrealized loss position at December 31, 2005 was 1,504. F-31 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AGING OF GROSS UNREALIZED LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized loss and number of securities for fixed maturity securities and equity securities, where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:
SUCCESSOR ------------------------------------------------------------ DECEMBER 31, 2006 ------------------------------------------------------------ COST OR GROSS NUMBER AMORTIZED COST UNREALIZED LOSS OF SECURITIES ------------------ ------------------ ------------------ LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Less then six months........... $2,763 $ 4 $ 66 $ 2 696 9 Six months or greater but less than nine months............. 16 -- -- -- 24 -- Nine months or greater but less than twelve months........... 291 -- 13 -- 43 -- Twelve months or greater....... 1,029 -- 43 -- 430 -- ------ --- ---- --- ----- -- Total........................ $4,099 $ 4 $122 $ 2 1,193 9 ====== === ==== === ===== ==
SUCCESSOR ------------------------------------------------------------ DECEMBER 31, 2005 ------------------------------------------------------------ COST OR GROSS NUMBER OF AMORTIZED COST UNREALIZED LOSS SECURITIES ------------------ ------------------ ------------------ LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Less than six months........... $4,843 $14 $119 $6 1,480 24 ------ --- ---- -- ----- -- Total........................ $4,843 $14 $119 $6 1,480 24 ====== === ==== == ===== ==
At December 31, 2006, $122 million of unrealized losses related to securities with an unrealized loss position of less than 20% of cost or amortized cost, which represented 3% of the cost or amortized cost of such securities. At December 31, 2005, $119 million of unrealized losses related to securities with an unrealized loss position of less than 20% of cost or amortized cost, which represented 2% of the cost or amortized cost of such securities. At December 31, 2006, $2 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 50% of the cost or amortized cost of such securities. Of such unrealized losses of $2 million, all related to securities that were in an unrealized loss position for a period of less than six months. At December 31, 2005, $6 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 43% of the cost or amortized cost of such securities. Of such unrealized losses of $6 million, all related to securities that were in an unrealized loss position for a period of less than six months. The Company held no fixed maturity securities and equity securities with a gross unrealized loss at December 31, 2006 of greater than $10 million. F-32 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) At December 31, 2006 and 2005, the Company had $124 million and $125 million, respectively, of gross unrealized loss related to its fixed maturity and equity securities. These securities are concentrated, calculated as a percentage of gross unrealized loss, as follows:
SUCCESSOR ------------- DECEMBER 31, ------------- 2006 2005 ---- ---- SECTOR: U.S. corporate securities.................................. 50% 56% Foreign corporate securities............................... 17 13 U.S. Treasury/agency securities............................ 16 5 Commercial mortgage-backed securities...................... 5 7 Residential mortgage-backed securities..................... 4 14 Other...................................................... 8 5 --- --- Total................................................... 100% 100% === === INDUSTRY: Industrial................................................. 26% 21% Finance.................................................... 20 17 Government................................................. 17 5 Utility.................................................... 12 5 Mortgage-backed............................................ 9 21 Consumer................................................... 2 11 Other...................................................... 14 20 --- --- Total................................................... 100% 100% === ===
As described more fully in Note 1, the Company performs a regular evaluation, on a security-by-security basis, of its investment holdings in accordance with its impairment policy in order to evaluate whether such securities are other-than-temporarily impaired. One of the criteria which the Company considers in its other-than-temporary impairment analysis is its intent and ability to hold securities for a period of time sufficient to allow for the recovery of their value to an amount equal to or greater than cost or amortized cost. The Company's intent and ability to hold securities considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company's need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security and that security is not expected to recover prior to the expected time of sale, the security will be deemed other-than- temporarily impaired in the period that the sale decision was made and an other- than-temporary impairment loss will be recognized. Based upon the Company's current evaluation of the securities in accordance with its impairment policy, the cause of the decline being principally attributable to the general rise in rates during the holding period, and the Company's current intent and ability to hold the fixed maturity and equity securities with unrealized losses for a period of time sufficient for them to recover, the Company has concluded that the aforementioned securities are not other-than-temporarily impaired. F-33 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ASSETS ON DEPOSIT The Company had investment assets on deposit with regulatory agencies with a fair market value of $7 million and $5 million at December 31, 2006 and 2005, respectively, consisting primarily of fixed maturity and equity securities. MORTGAGE LOANS ON REAL ESTATE Mortgage loans on real estate are categorized as follows:
SUCCESSOR ----------------------------------- DECEMBER 31, ----------------------------------- 2006 2005 ---------------- ---------------- AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- Commercial mortgage loans..................... $140 47% $123 47% Agricultural mortgage loans................... 155 53 136 53 ---- --- ---- --- Total....................................... 295 100% 259 100% === === Less: Valuation allowances.................... -- 1 ---- ---- Mortgage and consumer loans................... $295 $258 ==== ====
Mortgage loans are collateralized by properties located in the United States. At December 31, 2006, 19%, 18% and 8% of the value of the Company's mortgage loans on real estate were located in California, New York and Maryland, respectively. Generally, the Company, as the lender, only loans up to 75% of the purchase price of the underlying real estate. REAL ESTATE JOINT VENTURES The Company held $2 million in real estate joint ventures held-for- investment at December 31, 2006. The Company did not hold any interest in real estate joint ventures at December 31, 2005. Both accumulated depreciation on real estate joint ventures and the related depreciation expense were less than $1 million at December 31, 2006. At December 31, 2006, 100% of the Company's real estate joint ventures were located in New York. F-34 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NET INVESTMENT INCOME The components of net investment income are as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Fixed maturity securities...... $314 $155 $185 $341 Equity securities.............. 1 -- -- 2 Mortgage loans on real estate.. 16 8 9 18 Policy loans................... 3 -- 1 1 Real estate joint ventures..... 1 -- -- -- Other limited partnership interests.................... 23 2 27 28 Cash, cash equivalents and short-term investments....... 14 5 4 5 ---- ---- ---- ---- Total investment income...... 372 170 226 395 Less: Investment expenses...... 11 3 3 6 ---- ---- ---- ---- Net investment income........ $361 $167 $223 $389 ==== ==== ==== ====
NET INVESTMENT GAINS (LOSSES) The components of net investment gains (losses) are as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Fixed maturity securities...... $(69) $(51) $(5) $(6) Equity securities.............. -- -- 2 (1) Mortgage loans on real estate.. 1 (1) -- -- Real estate and real estate joint ventures............... (3) -- -- -- Derivatives.................... (12) 20 (3) 21 Other.......................... -- (3) -- 3 ---- ---- --- --- Net investment gains (losses).................. $(83) $(35) $(6) $17 ==== ==== === ===
The Company periodically disposes of fixed maturity and equity securities at a loss. Generally, such losses are insignificant in amount or in relation to the cost basis of the investment, are attributable to declines in fair value occurring in the period of the disposition or are as a result of management's decision to sell securities based on current conditions or the Company's need to shift the portfolio to maintain its portfolio management objectives. Losses from fixed maturity and equity securities deemed other-than- temporarily impaired, included within net investment gains (losses), were $4 million, $0, $0 and $7 million for the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004, respectively. F-35 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NET UNREALIZED INVESTMENT GAINS (LOSSES) The components of net unrealized investment gains (losses), included in accumulated other comprehensive income (loss), are as follows:
SUCCESSOR PREDECESSOR ------------------------------ ------------------------------ YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Fixed maturity securities.......... $(78) $(103) $ 319 $ 332 Equity securities.................. 1 -- 3 3 Derivatives........................ -- -- -- 2 Other.............................. (2) (6) 4 -- ---- ----- ----- ----- Subtotal......................... (79) (109) 326 337 Allocated amounts: DAC and VOBA..................... 33 45 -- -- Deferred income tax................ 16 22 (114) (118) ---- ----- ----- ----- Net unrealized investment gains (losses).............. $(30) $ (42) $ 212 $ 219 ==== ===== ===== =====
The changes in net unrealized investment gains (losses) are as follows:
SUCCESSOR PREDECESSOR ------------------------------ ------------------------------ YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Balance at end of previous of period............................ $(42) $ 212 $219 $215 Effect of purchase accounting push down (See Note 2)................. -- (212) -- -- ---- ----- ---- ---- Balance at beginning of period...... (42) -- 219 215 ---- ----- ---- ---- Unrealized investment gains (losses) during the period................. 30 (109) (10) 6 Unrealized investment gains (losses) relating to: DAC and VOBA...................... (12) 45 -- -- Deferred income tax............... (6) 22 3 (2) ---- ----- ---- ---- Balance at end of period............ $(30) $ (42) $212 $219 ==== ===== ==== ==== Net change in unrealized investment gains (losses).................... $ 12 $ (42) $ (7) $ 4 ==== ===== ==== ====
F-36 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) VARIABLE INTEREST ENTITIES The following table presents the total assets of and maximum exposure to loss relating to variable interest entities for which the Company has concluded that it holds significant variable interests but it is not the primary beneficiary and which have not been consolidated:
SUCCESSOR (REVISED) ------------------------ DECEMBER 31, 2005 ------------------------ NOT PRIMARY BENEFICIARY ------------------------ MAXIMUM TOTAL EXPOSURE TO ASSETS(1) LOSS(2) --------- ----------- (IN MILLIONS) Other investments(3)................................... $3,450 $25 ------ --- Total................................................ $3,450 $25 ====== ===
- -------- (1) The assets of the other limited partnerships are reflected at the carrying amounts at which such assets would have been reflected on the Company's consolidated balance sheet had the Company consolidated the VIE from the date of its initial investment in the entity. (2) The maximum exposure to loss of the other limited partnerships is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by other partners. (3) Other investments include investments in public and private debt and equity securities that are not asset-backed securitizations or collateralized debt obligations. 4. DERIVATIVE FINANCIAL INSTRUMENTS TYPES OF DERIVATIVE FINANCIAL INSTRUMENTS At the Acquisition Date, the Company's derivative positions which previously qualified for hedge accounting were dedesignated in accordance with SFAS 133. Such derivative positions were not redesignated in hedging relationships. Accordingly, all changes in such derivative fair values for the year ended December 31, 2006 and the six months ended December 31, 2005 are recorded in net investment gains (losses). The following table presents the notional amounts and current market or fair value of derivative financial instruments held at:
SUCCESSOR ----------------------------------------------------------------- DECEMBER 31, 2006 DECEMBER 31, 2005 ------------------------------- ------------------------------- CURRENT MARKET CURRENT MARKET OR FAIR VALUE OR FAIR VALUE NOTIONAL -------------------- NOTIONAL -------------------- AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Interest rate swaps............. $911 $266 $32 $1,069 $202 $ 2 Financial futures............... 26 -- -- 64 1 1 Foreign currency swaps.......... 32 1 9 31 -- 7 Foreign currency forwards....... 4 -- -- 8 -- -- Options......................... -- 53 5 -- 115 3 Financial forwards.............. -- -- 1 -- -- 2 Credit default swaps............ 4 -- -- 4 -- -- ---- ---- --- ------ ---- --- Total......................... $977 $320 $47 $1,176 $318 $15 ==== ==== === ====== ==== ===
F-37 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The above table does not include notional values for equity futures, equity financial forwards and equity options. At December 31, 2006 and 2005, the Company owned 156 and 413 equity futures contracts, respectively. Market values of equity futures are included in financial futures in the preceding table. At December 31, 2006 and 2005, the Company owned 18,000 and 36,500 equity financial forwards, respectively. Market values of equity financial forwards are included in financial forwards in the preceding table. At December 31, 2006 and 2005, the Company owned 742,550 and 1,058,300 equity options, respectively. Market values of equity options are included in options in the preceding table. The following table presents the notional amounts of derivative financial instruments by maturity at December 31, 2006:
SUCCESSOR ----------------------------------------------------------------------------------- REMAINING LIFE ----------------------------------------------------------------------------------- AFTER ONE YEAR AFTER FIVE YEARS ONE YEAR OR LESS THROUGH FIVE YEARS THROUGH TEN YEARS AFTER TEN YEARS TOTAL ---------------- ------------------ ----------------- --------------- ----- (IN MILLIONS) Interest rate swaps......... $167 $352 $392 $-- $911 Financial futures........... 26 -- -- -- 26 Foreign currency swaps...... -- 8 24 -- 32 Foreign currency forwards... 4 -- -- -- 4 Credit default swaps........ -- 1 3 -- 4 ---- ---- ---- --- ---- Total..................... $197 $361 $419 $-- $977 ==== ==== ==== === ====
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. In exchange-traded interest rate (Treasury and swap) and equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate and equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, and to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance. The value of interest rate futures is substantially impacted by changes in interest rates and they can be used to modify or hedge existing interest rate risk. Exchange-traded equity futures are used primarily to hedge liabilities embedded in certain variable annuity products offered by the Company. Foreign currency derivatives, including foreign currency swaps and foreign currency forwards are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. F-38 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a forward exchange rate calculated by reference to an agreed upon principal amount. The principal amount of each currency is exchanged at the inception and termination of the currency swap by each party. In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made in a different currency at the specified future date. Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Equity index options are included in options in the preceding table. The Company enters into financial forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. Equity variance swaps are included in financial forwards in the preceding table. Certain credit default swaps are used by the Company to hedge against credit-related changes in the value of its investments and to diversify its credit risk exposure in certain portfolios. In a credit default swap transaction, the Company agrees with another party, at specified intervals, to pay a premium to insure credit risk. If a credit event, as defined by the contract, occurs, generally the contract will require the swap to be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit default swaps are also used to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and usually a U.S. Treasury or Agency security. HEDGING The following table presents the notional amounts and fair value of derivatives by type of hedge designation at:
SUCCESSOR ----------------------------------------------------------------- DECEMBER 31, 2006 DECEMBER 31, 2005 ------------------------------- ------------------------------- FAIR VALUE FAIR VALUE NOTIONAL -------------------- NOTIONAL -------------------- AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Non-qualifying.................. $977 $320 $47 $1,176 $318 $15 ---- ---- --- ------ ---- --- Total......................... $977 $320 $47 $1,176 $318 $15 ==== ==== === ====== ==== ===
For the year ended December 31, 2006, the Company had $10 million in settlement payments related to non-qualifying derivatives included within net investment gains (losses). F-39 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) FAIR VALUE HEDGES The Company designates and accounts for the following as fair value hedges when they have met the requirements of SFAS 133: (i) interest rate swaps to convert fixed rate investments to floating rate investments; (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign- currency-denominated investments and liabilities; and (iii) interest rate futures to hedge against changes in value of fixed rate securities. The Company did not recognize any net investment gains (losses) representing the ineffective portion of all fair value hedges for the year ended December 31, 2006 and the six months ended December 31, 2005. The Company recognized net investment gains (losses) representing the ineffective portion of all fair value hedges as follows:
PREDECESSOR ------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, ---------------- ------------ 2005 2004 ---------------- ------------ (IN MILLIONS) Changes in the fair value of derivatives.......... $-- $(3) Changes in the fair value of the items hedged..... (1) (1) --- --- Net ineffectiveness of fair value hedging activities...................................... $(1) $(4) === ===
All components of each derivative's gain or loss were included in the assessment of hedge ineffectiveness, except for financial futures where the time value component of the derivative was excluded from the assessment of ineffectiveness. For the year ended December 31, 2006 and the six months ended December 31, 2005, there was no cost of carry for financial futures. For the six months ended June 30, 2005 and the year ended December 31, 2004, the cost of carry for financial futures was ($1) million and ($4) million, respectively. There were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge. CASH FLOW HEDGES The Company designates and accounts for the following as cash flow hedges, when they have met the requirements of SFAS 133: (i) interest rate swaps to convert floating rate investments to fixed rate investments; and (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments and liabilities. For the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004, the Company recognized no net investment gains (losses) as the ineffective portion of all cash flow hedges. All components of each derivative's gain or loss were included in the assessment of hedge ineffectiveness. In certain instances, the Company may discontinue cash flow hedge accounting because the forecasted transactions did not occur on the anticipated date or in the additional time period permitted by SFAS 133. For the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004, there were no instances in which the Company discontinued cash flow hedges. There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments for the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004. F-40 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the components of other comprehensive income (loss), before income tax, related to cash flow hedges:
PREDECESSOR ------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, ---------------- ------------ 2005 2004 ---------------- ------------ (IN MILLIONS) Other comprehensive income balance at the beginning of the period.................................... $ 2 $ 10 Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges...................................... (3) (14) Amounts reclassified to net investment income...... 1 6 --- ---- Other comprehensive income balance at the end of the period....................................... $-- $ 2 === ====
The Company has not entered into any cash flow hedges since June 30, 2005. NON-QUALIFYING DERIVATIVES AND DERIVATIVES FOR PURPOSES OTHER THAN HEDGING The Company enters into the following derivatives that do not qualify for hedge accounting under SFAS 133 or for purposes other than hedging: (i) interest rate swaps and interest rate futures to economically hedge its exposure to interest rate volatility; (ii) foreign currency forwards and swaps to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to minimize its exposure to adverse movements in credit; (iv) equity futures, equity index options, and equity variance swaps to economically hedge liabilities embedded in certain variable annuity products; (v) credit default swaps used to synthetically create investments; and (vi) financial forwards to buy and sell securities. Effective at the Acquisition Date, the Company's derivative positions which previously qualified for hedge accounting were dedesignated in accordance with SFAS 133. Such derivative positions were not redesignated and were included with the Company's other non-qualifying derivative positions from the Acquisition Date through December 31, 2006. For the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004, the Company recognized as net investment gains (losses), excluding embedded derivatives, changes in fair value of ($72) million, ($14) million, $11 million and ($39) million, respectively, related to derivatives that do not qualify for hedge accounting. EMBEDDED DERIVATIVES The Company has certain embedded derivatives which are required to be separated from their host contracts and accounted for as derivatives. These host contracts include guaranteed minimum withdrawal contracts and guaranteed minimum accumulation contracts. The fair value of the Company's embedded derivative assets was $25 million and $0 at December 31, 2006 and 2005, respectively. The fair value of the Company's embedded derivative liabilities was $0 and $22 million at December 31, 2006 and 2005, respectively. The amounts recorded and included in net investment gains (losses) for the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005, and during the year ended December 31, 2004 were gains (losses) of $46 million, $23 million, ($2) million, and $19 million, respectively. CREDIT RISK The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. Generally, the current credit exposure of the Company's derivative contracts is F-41 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) limited to the fair value at the reporting date. The credit exposure of the Company's derivative transactions is represented by the fair value of contracts with a net positive fair value at the reporting date. The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because exchange traded futures are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit related losses in the event of nonperformance by counterparties to such derivative instruments. The Company enters into various collateral arrangements, which require both the pledging and accepting of collateral in connection with its derivative instruments. As of December 31, 2006 and 2005, the Company was obligated to return cash collateral under its control of $102 million and $108 million, respectively. This unrestricted cash collateral is included in cash and cash equivalents and the obligation to return it is included in payables for collateral under derivative transactions in the consolidated balance sheets. As of December 31, 2006 and 2005, the Company had also accepted collateral consisting of various securities with a fair market value of $6 million and $22 million, respectively, which are held in separate custodial accounts. In addition, the Company has exchange traded futures, which require the pledging of collateral. As of both December 31, 2006 and 2005, the Company pledged collateral of $14 million, which is included in fixed maturity securities. The Company is permitted by contract to sell or repledge this collateral, but as of December 31, 2006 and 2005, none of the collateral had been sold or repledged. F-42 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED Information regarding DAC and VOBA is as follows:
DAC VOBA TOTAL ------- ------ ------ (IN MILLIONS) Balance at January 1, 2004 (PREDECESSOR)........... $ 1,279 $ 12 $1,291 Capitalizations.................................. 469 -- 469 Less: Amortization............................... 226 1 227 ------- ------ ------ Balance at December 31, 2004 (PREDECESSOR)......... 1,522 11 1,533 Capitalizations.................................. 222 -- 222 Less: Amortization............................... 132 1 133 ------- ------ ------ Balance at June 30, 2005 (PREDECESSOR)............. 1,612 10 1,622 ------- ------ ------ Effect of purchase accounting push down (See Note 2)............................................... (1,612) 1,666 54 ------- ------ ------ Balance at July 1, 2005 (SUCCESSOR)................ -- 1,676 1,676 ------- ------ ------ Capitalizations.................................. 164 -- 164 ------- ------ ------ Less: Amortization related to: Net investment gains (losses)................. (3) (7) (10) Unrealized investment gains (losses).......... (17) (28) (45) Other expenses................................ 12 106 118 ------- ------ ------ Total amortization.......................... (8) 71 63 ------- ------ ------ Balance at December 31, 2005 (SUCCESSOR)........... 172 1,605 1,777 ------- ------ ------ Capitalizations.................................. 135 -- 135 Less: Amortization related to: Net investment gains (losses)................. (3) (33) (36) Unrealized investment gains (losses).......... 1 11 12 Other expenses................................ 53 171 224 ------- ------ ------ Total amortization.......................... 51 149 200 ------- ------ ------ Balance at December 31, 2006 (SUCCESSOR)........... $ 256 $1,456 $1,712 ======= ====== ======
The estimated future amortization expense allocated to other expenses for the next five years for VOBA is $188 million in 2007, $169 million in 2008, $156 million in 2009, $139 million in 2010 and $120 million in 2011. F-43 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 6. GOODWILL Goodwill is the excess of cost over the fair value of net assets acquired. Information regarding goodwill is as follows:
SUCCESSOR ----------- DECEMBER 31, ----------- 2006 2005 ---- ---- (IN MILLIONS) Balance at January 1,....................................... $243 $ -- Effect of purchase accounting push down (See Note 2)........ (4) 243 ---- ---- Balance at December 31,..................................... $239 $243 ==== ====
7. INSURANCE VALUE OF DISTRIBUTION AGREEMENTS Information regarding the value of distribution agreements ("VODA"), which is reported in other assets, is as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Balance at beginning of period....................... $ 8 $-- $-- $-- Effect of purchase accounting push down (See Note 2)....... -- 8 -- -- Amortization................... (1) -- -- -- --- --- --- --- Balance at end of period....... $ 7 $ 8 $-- $-- === === === ===
The estimated future amortization expense allocated to other expenses for VODA is $1 million per year for each of the years from 2007 to 2011. SALES INDUCEMENTS Information regarding deferred sales inducements, which are reported in other assets, is as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Balance at end of previous period....................... $ 8 $ 36 $25 $-- Effect of purchase accounting push down (See Note 2)....... -- (36) -- -- --- ---- --- --- Balance at beginning of period....................... 8 -- 25 -- Capitalization................. 9 8 12 25 Amortization................... (1) -- (1) -- --- ---- --- --- Balance at end of period....... $16 $ 8 $36 $25 === ==== === ===
F-44 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPARATE ACCOUNTS Separate account assets and liabilities include pass-through separate accounts totaling $12.2 billion at both December 31, 2006 and 2005 for which the policyholder assumes all investment risk. 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 $246 million, $124 million, $95 million and $200 million for the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005, and the year ended December 31, 2004, respectively. For the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004, there were no investment gains (losses) on transfers of assets from the general account to the separate accounts. GUARANTEES The Company issues annuity contracts which may include contractual guarantees to the contractholder for the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary, or total deposits made to the contract less any partial withdrawals plus a minimum return ("anniversary contract value" or "minimum return"). The Company also issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee. Information regarding the types of guarantees relating to annuity contracts and universal and variable life contracts is as follows:
SUCCESSOR --------------------- DECEMBER 31, --------------------- 2006 2005 --------- --------- IN THE EVENT OF DEATH --------------------- (IN MILLIONS) ANNUITY CONTRACTS(1) ANNIVERSARY CONTRACT VALUE OR MINIMUM RETURN Separate account value................................ $ 14,156 $ 14,507 Net amount at risk(2)................................. $ 440(3)$ 569(3) Average attained age of contractholders............... 64 years 63 years SUCCESSOR --------------------- DECEMBER 31, --------------------- 2006 2005 --------- --------- SECONDARY GUARANTEES --------------------- (IN MILLIONS) UNIVERSAL AND VARIABLE LIFE CONTRACTS(1) Account value (General and Separate account).......... $ 1,807 $ 1,694 Net amount at risk(2)................................. $ 21,459(3)$ 21,719(3) Average attained age of policyholders................. 59 years 57 years
- -------- (1) The Company's annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2) The net amount at risk is based on the direct amount at risk (excluding reinsurance). F-45 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (3) The net amount at risk for guarantees of amounts in the event of death is defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. Liabilities incurred, relating to annuity contracts, for guaranteed death benefits were $1 million for the six months ended December 31, 2005. There were no guaranteed death benefits incurred for the six months ended June 30, 2005 or the year ended December 31, 2004. Liabilities incurred, relating to universal and variable life contracts, for secondary guarantees were $13 million for the year ended December 31, 2006, $4 million for each of the six months ended December 31, 2005 and June 30, 2005 and $1 million for the year ended December 31, 2004. Account balances of contracts with insurance guarantees are invested in separate account asset classes as follows:
SUCCESSOR ----------------- DECEMBER 31, ----------------- 2006 2005 ------- ------- (IN MILLIONS) Mutual Fund Groupings Equity................................................ $ 9,336 $ 9,055 Bond.................................................. 940 1,055 Balanced.............................................. 1,070 1,261 Money Market.......................................... 282 286 Specialty............................................. 152 218 ------- ------- Total.............................................. $11,780 $11,875 ======= =======
8. REINSURANCE The Company's life insurance operations participate in reinsurance activities in order to limit losses, minimize exposure to large risks, and provide additional capacity for future growth. The Company has historically reinsured the mortality risk on new individual life insurance policies primarily on an excess of retention basis or a quota share basis. The Company has reinsured up to 90% of the mortality risk for all new individual life insurance policies. This practice was initiated by the Company for different products starting at various points in time between 1997 and 2002. On a case by case basis, the Company may retain up to $5 million per life on single life individual policies and reinsure 100% of amounts in excess of the Company's retention limits. The Company evaluates its reinsurance programs routinely and may increase or decrease its retention at any time. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specific characteristics. In addition to reinsuring mortality risk, as described above, the Company reinsures other mortality and non-mortality risks, and specific coverages. The Company routinely reinsures certain classes of risks in order to limit its exposure to particular travel, avocation and lifestyle hazards. The Company has exposure to catastrophes, which could contribute to significant fluctuations in the Company's results of operations. The Company uses excess of retention and quota share reinsurance arrangements to provide greater diversification of risk and minimize exposure to larger risks. The Company reinsures its business through a diversified group of reinsurers. No single unaffiliated reinsurer has a material obligation to the Company nor is the Company's business substantially dependent upon any reinsurance contracts. The Company is contingently liable with respect to ceded reinsurance should any reinsurer be unable to meet its obligations under these agreements. F-46 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company reinsures the riders containing benefit guarantees related to variable annuities to affiliated and non-affiliated reinsurers. The Company reinsures its risk associated with the secondary death benefit guarantee rider on certain universal life contracts to an affiliate. See Note 14. The amounts in the consolidated statements of income are presented net of reinsurance ceded. Information regarding the effect of reinsurance is as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Direct premiums.............. $ 79 $ 41 $ 39 $ 74 Reinsurance ceded............ (36) (24) (19) (34) ---- ---- ---- ---- Net premiums earned.......... $ 43 $ 17 $ 20 $ 40 ==== ==== ==== ==== Reinsurance recoverables netted against policyholder benefits and claims........ $169 $ 42 $ 61 $ 95 ==== ==== ==== ====
Reinsurance recoverables, included in premiums and other receivables, were $139 million and $77 million at December 31, 2006 and 2005, respectively. Reinsurance and ceded commissions payables, included in other liabilities, were $16 million and $12 million at December 31, 2006 and 2005, respectively. For the year ended December 31, 2006 and the six months ended December 31, 2005 and June 30, 2005, reinsurance ceded include affiliated transactions of $5 million, $2 million and $3 million, respectively. For the year ended December 31, 2004 there were no affiliated reinsurance transactions. 9. INCOME TAX The provision for income tax from continuing operations is as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Current Federal.............. $-- $(20) $ 50 $ 96 Deferred Federal............. 74 32 (15) (47) --- ---- ---- ---- Provision for income tax..... $74 $ 12 $ 35 $ 49 === ==== ==== ====
F-47 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for continuing operations is as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Tax provision at U.S. statutory rate............. $ 89 $ 22 $39 $ 72 Tax effect of: Tax exempt investment income.................. (15) (10) (4) (15) Tax reserve release........ -- -- -- (8) ---- ---- --- ---- Provision for income tax..... $ 74 $ 12 $35 $ 49 ==== ==== === ====
Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following:
SUCCESSOR --------------------- DECEMBER 31, --------------------- 2006 2005 ---------- -------- (IN MILLIONS) Deferred income tax assets: Benefit, reinsurance and other reserves......... $ 487 $ 580 Capital loss carryforwards...................... 20 17 Net unrealized investment losses................ 16 22 Other........................................... 8 8 ----- ----- 531 627 ----- ----- Deferred income tax liabilities: DAC and VOBA.................................... (518) (525) Investments..................................... (5) (12) ----- ----- (523) (537) ----- ----- Net deferred income tax asset..................... $ 8 $ 90 ===== =====
At December 31, 2006, the Company has a net deferred income tax asset. If the Company determines that any of its deferred income tax assets will not result in future tax benefits, a valuation allowance must be established for the portion of these assets that are not expected to be realized. Based predominantly upon a review of the Company's anticipated future taxable income, but also including all other available evidence, both positive and negative, the Company's management concluded that it is "more likely than not" that the net deferred income tax assets will be realized. Capital loss carryforwards amount to $59 million at December 31, 2006 and will expire beginning in 2010. The Company files a consolidated tax return with its parent, MICC. Under the Tax Allocation Agreement, the federal income tax will be allocated between the companies on a separate return basis and adjusted for credits and other amounts required by the Tax Allocation Agreement. F-48 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. CONTINGENCIES, COMMITMENTS AND GUARANTEES CONTINGENCIES LITIGATION The Company is a defendant in a number of litigation matters. In some of the matters, large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the United States permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrate to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value. Thus, unless stated below, the specific monetary relief sought is not noted. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be inherently impossible to ascertain with any degree of certainty. Inherent uncertainties can include how fact finders will view individually and in their totality documentary evidence, the credibility and effectiveness of witnesses' testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law. The Company is a party to a number of legal actions and is and/or has been involved in regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on the Company's consolidated financial position. On a quarterly and yearly basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in the Company's consolidated financial statements. Unless stated below, estimates of possible additional losses or ranges of loss for particular matters cannot in the ordinary course be made with a reasonable degree of certainty. The limitations of available data and uncertainty regarding numerous variables make it difficult to estimate liabilities. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is possible that some of the matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as of December 31, 2006. Furthermore, it is possible that an adverse outcome in certain of the Company's litigation and regulatory investigations, or the use of different assumptions in the determination of amounts recorded, could have a material effect upon the Company's consolidated net income or cash flows in particular quarterly or annual periods. Macomber, et al. v. Travelers Property Casualty Corp., et al. (Conn. Super. Ct., Hartford, filed April 7, 1999). An amended putative class action complaint was filed against the Company, Travelers Equity Sales, Inc. and certain former affiliates. The amended complaint alleges Travelers Property Casualty Corporation, a former MLAC affiliate, purchased structured settlement annuities from the Company and spent less on the purchase of those structured settlement annuities than agreed with claimants, and that commissions paid to brokers for the structured settlement annuities, including an affiliate of MLAC, were paid in part to Travelers Property Casualty Corporation. On May 26, 2004, the Connecticut Superior Court certified a nationwide class action involving the following claims against the Company: violation of the Connecticut Unfair Trade Practice Statute, unjust enrichment, and civil conspiracy. On June 15, 2004, the defendants appealed the class certification order. In March 2006, the Connecticut Supreme Court reversed the trial court's certification of a class. Plaintiff may seek to file another motion for class F-49 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) certification. Defendants have moved for summary judgment. The Company is continuing to vigorously defend against the claims in this matter. Regulatory bodies have contacted the Company and have requested information relating to various regulatory issues regarding mutual funds and variable insurance products, including the marketing of such products. The Company believes that many of these inquiries are similar to those made to many financial services companies as part of industry-wide investigations by various regulatory agencies. The Company is fully cooperating with regard to these information requests and investigations. The Company at the present time is not aware of any systemic problems with respect to such matters that may have a material adverse effect on the Company's consolidated financial position. In addition, the Company is a defendant or co-defendant in various other litigation matters in the normal course of business. These may include civil actions, arbitration proceedings and other matters arising in the normal course of business out of activities as an insurance company or otherwise. Further, state insurance regulatory authorities and other federal and state authorities may make inquiries and conduct investigations concerning the Company's compliance with applicable insurance and other laws and regulations. In the opinion of the Company's management, the ultimate resolution of these legal and regulatory proceedings would not be likely to have a material adverse effect on the Company's consolidated financial position or liquidity, but, if involving monetary liability, may be material to the Company's operating results for any particular period. INSOLVENCY ASSESSMENTS Most of the jurisdictions in which the Company is admitted to transact business require life insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed life insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. Assets and liabilities held for insolvency assessments are as follows:
SUCCESSOR ------------- DECEMBER 31, ------------- 2006 2005 ---- ---- (IN MILLIONS) Other Assets: Premium tax offset for future undiscounted assessments..... $ 1 $1 Premium tax offsets currently available for paid assessments............................................. -- 1 --- -- $ 1 $2 === == Liability: Insolvency assessments..................................... $ 1 $1 === ==
Assessments levied against the Company were less than $1 million for the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004. F-50 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) COMMITMENTS COMMITMENTS TO FUND PARTNERSHIP INVESTMENTS The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded commitments were $46 million and $15 million at December 31, 2006 and 2005, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years. MORTGAGE LOAN COMMITMENTS The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $60 million and $20 million at December 31, 2006 and 2005, respectively. COMMITMENTS TO FUND BANK CREDIT FACILITIES The Company commits to lend funds under bank credit facilities. The amount of these unfunded commitments was $24 million at December 31, 2006. The Company did not have any unfunded commitments related to bank credit facilities at December 31, 2005. GUARANTEES In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities, and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company's interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future. The Company's recorded liability at December 31, 2006 and 2005 for indemnities, guarantees and commitments is insignificant. 11. EQUITY DIVIDEND RESTRICTIONS Under Connecticut State Insurance Law, the Company is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to its parent as long as the amount of such dividends, when aggregated with all other dividends in the preceding 12 months, does not exceed the greater of (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the F-51 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) immediately preceding calendar year. The Company will be permitted to pay a cash dividend in excess of the greater of such two amounts only if it files notice of its declaration of such a dividend and the amount thereof with the Connecticut Commissioner of Insurance (the "Commissioner") and the Commissioner does not disapprove the payment within 30 days after notice. In addition, any dividend that exceeds earned surplus (unassigned funds, reduced by 25% of unrealized appreciation in value or revaluation of assets or unrealized profits on investments) as of the last filed annual statutory statement requires insurance regulatory approval. Under Connecticut State Insurance Law, the Commissioner has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders. The Connecticut State Insurance Law requires prior approval for any dividends for a period of two years following a change in control. As a result of the acquisition on July 1, 2005, under Connecticut State Insurance Law all dividend payments by the Company through June 30, 2007 require prior approval of the Commissioner. The Company did not pay any dividends in 2006. However, since the Company's statutory unassigned funds surplus is negative, the Company cannot pay any dividends without prior approval of the Commissioner. CAPITAL CONTRIBUTIONS In 2005, the Company had an increase of $4 million in paid-in capital due to an assumption of all tax liabilities for potential audit liabilities for federal and state income taxes and other taxes with respect to pre-Acquisition tax periods. The Acquisition Agreement between MetLife and Citigroup, dated as of January 31, 2005, provides for an indemnification by Citigroup to MetLife for specified tax liabilities incurred prior to the Acquisition Date. During 2004, the Company received a capital contribution of $400 million from its parent, MICC. STATUTORY EQUITY AND INCOME The Connecticut Insurance Department (the "Department") imposes minimum risk-based capital ("RBC") requirements that were developed by the National Association of Insurance Commissioners ("NAIC"). The formulas for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital, as defined by the NAIC, to authorized control level RBC, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. MetLife Annuity exceeded the minimum RBC requirements for all periods presented herein. The NAIC adopted the Codification of Statutory Accounting Principles ("Codification") in 2001. Codification was intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted practices. The Department has adopted Codification, with certain modifications, for the preparation of statutory financial statements of insurance companies domiciled in Connecticut. Modifications by the Department may impact the effect of Codification on statutory capital and surplus of the Company. Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The most significant asset not admitted by the Company is the net deferred tax assets resulting from temporary differences between statutory accounting principles basis and tax basis not expected to reverse and become recoverable within a year. Further, statutory accounting principles do not give recognition to amounts "pushed down" as a result of the Acquisition. F-52 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Statutory net income (loss) of MLAC, a Connecticut domiciled insurer, was $107 million, ($97) million and ($211) million for the years ended December 31, 2006, 2005 and 2004, respectively. Statutory capital and surplus, as filed with the Department, was $740 million and $765 million at December 31, 2006 and 2005, respectively. OTHER COMPREHENSIVE INCOME (LOSS) The following table sets forth the reclassification adjustments required for the year ended December 31, 2006, the six months ended December 31, 2005 and June 30, 2005 and the year ended December 31, 2004, in other comprehensive income (loss) that are included as part of net income for the current year that have been reported as a part of other comprehensive income (loss) in the current or prior period:
SUCCESSOR PREDECESSOR ------------------------------ ------------------------------ YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Holding gains (losses) on investments arising during the period.................... $ 98 $(75) $(5) $ 18 Income tax effect of holding gains (losses)............................. (34) 26 1 (6) Reclassification adjustments: Recognized holding gains (losses) included in current period income............................ (68) (46) 3 6 Amortization of premiums and accretion of discounts associated with investments....................... -- 12 (8) (18) Income tax effect of reclassification adjustments....................... 24 12 2 4 Allocation of holding gains (losses) on investments relating to other policyholder amounts................. (12) 45 -- -- Income tax effect of allocation of holding gains (losses) to other policyholder amounts.............................. 4 (16) -- -- ---- ---- --- ---- Other comprehensive income (loss).......................... $ 12 $(42) $(7) $ 4 ==== ==== === ====
12. OTHER EXPENSES Information on other expenses is as follows:
SUCCESSOR PREDECESSOR ------------------------------- ------------------------------- YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, ------------ ---------------- ---------------- ------------ 2006 2005 2005 2004 ------------ ---------------- ---------------- ------------ (IN MILLIONS) Compensation......................... $ 47 $ 27 $ 19 $ 45 Commissions.......................... 159 156 180 373 Amortization of DAC and VOBA......... 188 108 133 227 Capitalization of DAC................ (135) (164) (222) (469) Rent, net of sublease income......... 2 2 1 4 Other................................ 45 36 73 123 ----- ----- ----- ----- Total other expenses............... $ 306 $ 165 $ 184 $ 303 ===== ===== ===== =====
F-53 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 13. FAIR VALUE INFORMATION The estimated fair value of financial instruments have been determined by using available market information and the valuation methodologies described below. Considerable judgment is often required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein may not necessarily be indicative of amounts that could be realized in a current market exchange. The use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. Amounts related to the Company's financial instruments are as follows:
SUCCESSOR ---------------------------------- NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE -------- -------- ---------- (IN MILLIONS) DECEMBER 31, 2006 Assets: Fixed maturity securities............................ $5,889 $5,889 Equity securities.................................... $ 57 $ 57 Mortgage loans on real estate........................ $ 295 $ 289 Policy loans......................................... $ 55 $ 55 Short-term investments............................... $ 95 $ 95 Cash and cash equivalents............................ $ 230 $ 230 Accrued investment income............................ $ 68 $ 68 Mortgage loan commitments............................ $60 $ -- $ -- Commitments to fund bank credit facilities........... $24 $ -- $ -- Liabilities: Policyholder account balances........................ $2,740 $2,457 Payables for collateral under derivative transactions...................................... $ 102 $ 102
SUCCESSOR ---------------------------------- NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE -------- -------- ---------- (IN MILLIONS) DECEMBER 31, 2005 Assets: Fixed maturity securities............................ $6,055 $6,055 Equity securities.................................... $ 4 $ 4 Mortgage loans on real estate........................ $ 258 $ 258 Policy loans......................................... $ 37 $ 37 Short-term investments............................... $ 57 $ 57 Cash and cash equivalents............................ $ 233 $ 233 Accrued investment income............................ $ 69 $ 69 Mortgage loan commitments............................ $20 $ -- $ -- Liabilities: Policyholder account balances........................ $3,185 $2,972 Payables for collateral under derivative transactions...................................... $ 108 $ 108
F-54 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: FIXED MATURITY SECURITIES AND EQUITY SECURITIES The fair values of publicly held fixed maturity securities and publicly held equity securities are based on quoted market prices or estimates from independent pricing services. However, in cases where quoted market prices are not available, such as for private fixed maturity securities, fair values are estimated using present value or valuation techniques. The determination of fair values is based on: (i) valuation methodologies; (ii) securities the Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The fair value estimates are based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. Factors considered in estimating fair value include; coupon rate, maturity, estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer, and quoted market prices of comparable securities. MORTGAGE LOANS ON REAL ESTATE, MORTGAGE LOAN COMMITMENTS AND COMMITMENTS TO FUND BANK CREDIT FACILITIES 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 and commitments to fund bank credit facilities, the estimated fair value is the net premium or discount of the commitments. POLICY LOANS The carrying values for policy loans approximate fair value. CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS The carrying values for cash and cash equivalents and short-term investments approximated fair values due to the short-term maturities of these instruments. ACCRUED INVESTMENT INCOME The carrying value for accrued investment income approximates fair value. POLICYHOLDER ACCOUNT BALANCES The fair value of PABs which have final contractual maturities are estimated by discounting expected future cash flows based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the agreements being valued. The fair value of PABs without final contractual maturities are assumed to equal their current net surrender value. PAYABLES FOR COLLATERAL UNDER DERIVATIVE TRANSACTIONS The carrying value for payables for collateral under derivative transactions approximate fair value. DERIVATIVE FINANCIAL INSTRUMENTS The fair value of derivative financial instruments, including financial futures, financial forwards, interest rate, credit default and foreign currency swaps, foreign currency forwards, and options are based upon quotations obtained from dealers or other reliable sources. See Note 4 for derivative fair value disclosures. 14. RELATED PARTY TRANSACTIONS In 2006, the Company entered into a Master Service Agreement with Metropolitan Life Insurance Company ("Metropolitan Life"), a wholly-owned subsidiary of MetLife, who provides administrative, accounting, legal and F-55 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) similar services to the Company. Metropolitan Life charged the Company $5 million, included in other expenses, for services performed under the Master Service Agreement for the year ended December 31, 2006. The Company entered into a Service Agreement with MetLife Group, Inc. ("MetLife Group"), a wholly-owned subsidiary of MetLife under which MetLife Group provides personnel services, as needed, to support the activities of the Company. MetLife Group charged the Company $28 million, included in other expenses, for services performed under the Service Agreement for the year ended December 31, 2006. There were no charges for the six months ended December 31, 2005. At December 31, 2006 and 2005, the Company had receivables from MICC of $13 million and $20 million, respectively. The Company had receivables from other affiliates of $4 million and payables to other affiliates of $2 million at December 31, 2006 and 2005, respectively, excluding affiliated reinsurance balances discussed below. Since the Company is a member of a controlled group of affiliate companies, its results may not be indicative of those of a stand-alone entity. As of December 31, 2006 and 2005, the Company held $89 million and $16 million, respectively, of its total invested assets in the MetLife Money Market Pool which is an affiliated partnership. These amounts are included in short- term investments. In the normal course of business, the Company transfers fixed maturity securities to affiliates and receives other fixed maturity securities from affiliates. The Company transferred invested assets to affiliates with both an amortized cost and fair market value of $15 million for the year ended December 31, 2006. The Company did not transfer assets to affiliates for the six months ended December 31, 2005. The realized capital losses recognized on these transfers were less than $1 million for the year ended December 31, 2006. The Company received invested assets from affiliates with a fair market value of $13 million for the year ended December 31, 2006. The Company did not receive transfers of assets from affiliates for the six months ended December 31, 2005. The Company also has reinsurance agreements with MetLife and certain of its subsidiaries, including Reinsurance Group of America, Incorporated ("RGA"), MetLife Reinsurance Company of South Carolina ("MRSC"), and Exeter Reassurance Company, Ltd. ("Exeter"). As of December 31, 2006, the Company had reinsurance related assets and liabilities from these agreements totaling $108 million and $12 million, respectively. Prior-year comparable assets and liabilities were $78 million and $47 million, respectively. The following tables reflect related party reinsurance information:
SUCCESSOR ------------------------------- YEAR ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------ ---------------- 2006 2005 ------------ ---------------- (IN MILLIONS) Ceded premiums.................................... $ 5 $ 2 Ceded fees, included in universal life and investment-type product policy fees............. 22 19 Ceded benefits, included in policyholder benefits and claims...................................... 38 39 Ceded fees, included in other expenses............ 37 12 ---- --- Total ceded..................................... $102 $72 ==== ===
SUCCESSOR ----------- DECEMBER 31, ----------- 2006 2005 ---- ---- (IN MILLIONS) Reinsurance recoverables, included in premiums and other receivables................................................ $108 $78 Ceded balances payable, included in other liabilities........ $ 12 $47
F-56 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Prior to the Acquisition, the Company had related party transactions with its parent and/or affiliates. These transactions are described as follows: In December 2004, MLAC entered into a reinsurance agreement with MRSC related to guarantee features included in certain of their universal life and variable universal life products. All information subsequent to the Acquisition is included in the tables above. Fees associated with this agreement, included within other expenses, were $22 million for the six months ended June 30, 2005. In addition, MLAC's individual insurance mortality risk is reinsured, in part, to RGA, an affiliate subsequent to the Acquisition Date. All information subsequent to the Acquisition is included in the tables above. Ceded premiums were $3 million for the six months ended June 30, 2005. Ceded fees, included within universal life and investment-type product policy fees, were $7 million for the six months ended June 30, 2005. Ceded benefits, included within policyholder benefits and claims, were $5 million for the six months ended June 30, 2005. At June 30, 2005, MLAC had investments in Tribeca Citigroup Investments Ltd. ("Tribeca"), an affiliate of the Company, in the amount of $10 million. Income (loss) of ($1) million and $1 million was recognized on these investments in the six months ended June 30, 2005 and the year ended December 31, 2004, respectively. In July 2005, MLAC sold its investment in Tribeca. Citigroup and certain of its subsidiaries provided investment management and accounting services, payroll, internal auditing, benefit management and administration, property management and investment technology services to the Company. The Company paid MICC an insignificant amount for both the six months ended June 30, 2005 and the year ended December 31, 2004 for these services. In the ordinary course of business, the Company distributed fixed and variable annuity products through its former affiliate Smith Barney. Premiums and deposits related to these products were $506 million in 2004. The Company also marketed term and universal life products through Smith Barney. Premiums related to such products were $108 million in 2004. Commissions and fees paid to Smith Barney were $50 million in 2004. The Company also distributed deferred annuity products through its former affiliates, Primerica Financial Services, Inc. ("PFS"), CitiStreet Retirement Services, a division of CitiStreet LLC, (together with its subsidiaries, "CitiStreet") and Citibank, N.A. ("Citibank"). Deposits received from PFS were $636 million and commissions and fees paid to PFS were $48 million for the year ended December 31, 2004. Deposits received from CitiStreet were $116 million and related commissions and fees paid to CitiStreet were $3 million for the year ended December 31, 2004. Deposits received from Citibank were $112 million and commissions and fees paid to Citibank were $13 million for the year ended December 31, 2004. The leasing functions for the Company were administered by a Citigroup subsidiary. Rent expense related to leases was shared by the companies on a cost allocation method based generally on estimated usage by department. The Company's rent expense was insignificant in 2004. 15. SUBSEQUENT EVENT On June 29, 2007, MICC and MetLife Life and Annuity Company of Connecticut ("MetLife Annuity") entered into an Agreement and Plan of Merger, pursuant to which MetLife Annuity will be merged into MICC, with MICC being the surviving corporation. The merger is subject to certain regulatory approvals and favorable tax rulings. Upon the effective date of the merger, expected to occur on or about December 7, 2007, the separate existence of MetLife Annuity will cease, all rights and interests of MetLife Annuity in all property will be deemed transferred and vested in MICC, and all liabilities of MetLife Annuity will be vested in MICC. F-57 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) SCHEDULE I CONSOLIDATED SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN RELATED PARTIES DECEMBER 31, 2006 (IN MILLIONS)
SUCCESSOR ----------------------------------------- COST OR AMOUNT AT AMORTIZED ESTIMATED WHICH SHOWN ON COST(1) FAIR VALUE BALANCE SHEET --------- ---------- -------------- TYPE OF INVESTMENTS Fixed maturity securities: Bonds: U.S. Treasury/agency securities.............. $ 801 $ 783 $ 783 State and political subdivision securities... 91 86 86 Foreign government securities................ 69 73 73 Public utilities............................. 276 271 271 All other corporate bonds.................... 2,959 2,907 2,907 Mortgage-backed and asset-backed securities..... 1,572 1,573 1,573 Redeemable preferred stock...................... 199 196 196 ------ ------ ------ Total fixed maturity securities.............. 5,967 5,889 5,889 ------ ------ ------ Equity securities: Common stock: Industrial, miscellaneous and all other...... 1 1 1 Non-redeemable preferred stock.................. 55 56 56 ------ ------ ------ Total equity securities...................... 56 57 57 ------ ------ ------ Mortgage loans on real estate..................... 295 295 Policy loans...................................... 55 55 Real estate joint ventures........................ 2 2 Other limited partnership interests............... 68 68 Short-term investments............................ 95 95 Other invested assets............................. 341 341 ------ ------ Total investments............................... $6,879 $6,802 ====== ======
- -------- (1) Cost for fixed maturity securities and mortgage loans on real estate represents original cost reduced by repayments, net valuation allowances and writedowns from other-than-temporary declines in value and adjusted for amortization of premiums or accretion of discount; for equity securities, cost represents original cost reduced by writedowns from other-than-temporary declines in value; cost for real estate joint ventures and other limited partnership interests represents original cost reduced for other-than-temporary impairments or original cost adjusted for equity in earnings and distributions. F-58 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) SCHEDULE III CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION AS OF DECEMBER 31, 2006 AND 2005 (IN MILLIONS)
DAC FUTURE POLICY POLICYHOLDER AND BENEFITS AND OTHER ACCOUNT UNEARNED VOBA POLICYHOLDER FUNDS BALANCES REVENUE(1) ------ ------------------ ------------ ---------- 2006 (SUCCESSOR).......................... $1,712 $1,861 $5,377 $45 ====== ====== ====== === 2005 (SUCCESSOR).......................... $1,777 $1,808 $5,688 $18 ====== ====== ====== ===
- -------- (1) Amounts are included within the future policy benefits and other policyholder funds column. F-59 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) SCHEDULE III CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2006 AND FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 AND JUNE 30, 2005 AND FOR THE YEAR ENDED DECEMBER 31, 2004 (IN MILLIONS)
PREMIUM POLICYHOLDER AMORTIZATION OF REVENUE NET BENEFITS DAC AND VOBA OTHER PREMIUMS AND POLICY INVESTMENT AND INTEREST CHARGED TO OPERATING WRITTEN CHARGES INCOME CREDITED OTHER EXPENSES EXPENSES(1) (EXCLUDING LIFE) ---------- ---------- ------------ --------------- ----------- ---------------- For the Year Ended December 31, 2006 (SUCCESSOR)..... $526 $361 $271 $188 $118 $-- ==== ==== ==== ==== ==== === For the Six Months Ended December 31, 2005 (SUCCESSOR).............. $250 $167 $166 $108 $ 57 $-- ==== ==== ==== ==== ==== === For the Six Months Ended June 30, 2005 (PREDECESSOR)............ $241 $223 $175 $133 $ 51 $ 4 ==== ==== ==== ==== ==== === For the Year Ended December 31, 2004 (PREDECESSOR)... $411 $389 $326 $227 $ 76 $ 6 ==== ==== ==== ==== ==== ===
- -------- (1) Includes other expenses excluding amortization of DAC and VOBA charged to other expenses. F-60 METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut) SCHEDULE IV CONSOLIDATED REINSURANCE AS OF DECEMBER 31, 2006 AND 2005 AND FOR THE YEAR ENDED DECEMBER 31, 2006 AND FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 AND JUNE 30, 2005 AND FOR THE YEAR ENDED DECEMBER 31, 2004 (IN MILLIONS)
% AMOUNT GROSS NET ASSUMED AMOUNT CEDED ASSUMED AMOUNT TO NET ------- ------- ------- ------- -------- AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2006 (SUCCESSOR) Life insurance in-force..................... $63,138 $47,897 $-- $15,241 --% ======= ======= === ======= Insurance premium........................... $ 79 $ 36 $-- $ 43 --% ======= ======= === ======= AS OF AND FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 (SUCCESSOR) Life insurance in-force..................... $63,023 $48,618 $-- $14,405 --% ======= ======= === ======= Insurance premium........................... $ 41 $ 24 $-- $ 17 --% ======= ======= === ======= FOR THE SIX MONTHS ENDED JUNE 30, 2005 (PREDECESSOR) Insurance premium........................... $ 39 $ 19 $-- $ 20 --% ======= ======= === ======= AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2004 (PREDECESSOR) Life insurance in-force..................... $54,886 $44,286 $-- $10,600 --% ======= ======= === ======= Insurance premium........................... $ 74 $ 34 $-- $ 40 --% ======= ======= === =======
For the year ended December 31, 2006, and the six months ended December 31, 2005 and June 30, 2005, reinsurance ceded include affiliated transactions of $5 million, $2 million and $3 million, respectively. For the year ended December 31, 2004, there were no affiliated reinsurance transactions. F-61 ANNUAL REPORT December 31, 2006 MetLife of CT Separate Account Six for Variable Annuities of MetLife Life and Annuity Company of Connecticut REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Policyholders of MetLife of CT Separate Account Six for Variable Annuities and the Board of Directors of MetLife Life and Annuity Company of Connecticut: We have audited the accompanying statement of assets and liabilities of the Subaccounts (as disclosed in Appendix A) comprising MetLife of CT Separate Account Six for Variable Annuities (formerly, The Travelers Separate Account Six for Variable Annuities) (the "Separate Account") of MetLife Life and Annuity Company of Connecticut (formerly, The Travelers Life and Annuity Company) ("MLAC") as of December 31, 2006, the related statement of operations for the period in the year then ended, and the statements of changes in net assets for each of the periods in the two years then ended. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial highlights of the Separate Account included in footnote 5 for the periods in the three years ended December 31, 2004, were audited by other auditors whose report, dated March 21, 2005, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2006, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the Subaccounts comprising the Separate Account of MLAC as of December 31, 2006, the results of their operations for the period in the year then ended, and the changes in their net assets for each of the periods in the two years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Tampa, Florida March 19, 2007 (October 30, 2007 as to Note 7) APPENDIX A AIM V.I. Core Equity Subaccount (Series I) AIM V.I. Premier Equity Subaccount (Series I) American Funds Global Growth Subaccount (Class 2) American Funds Growth Subaccount (Class 2) American Funds Growth-Income Subaccount (Class 2) Capital Appreciation Subaccount Credit Suisse Trust Emerging Markets Subaccount Delaware VIP REIT Subaccount (Standard Class) Delaware VIP Small Cap Value Subaccount (Standard Class) Dreyfus VIF Appreciation Subaccount (Initial Shares) Dreyfus VIF Developing Leaders Subaccount (Initial Shares) FTVIPT Mutual Shares Securities Subaccount (Class 2) FTVIPT Templeton Developing Markets Securities Subaccount (Class 2) FTVIPT Templeton Foreign Securities Subaccount (Class 2) FTVIPT Templeton Growth Securities Subaccount (Class 2) High Yield Bond Subaccount Janus Aspen Balanced Subaccount (Service Shares) Janus Aspen Mid Cap Growth Subaccount (Service Shares) Janus Aspen Worldwide Growth Subaccount (Service Shares) Lazard Retirement Small Cap Subaccount LMPIS Dividend Strategy Subaccount LMPIS Premier Selections All Cap Growth Subaccount LMPVPI All Cap Subaccount (Class I) LMPVPI Investors Subaccount (Class I) LMPVPI Small Cap Growth Subaccount (Class I) LMPVPI Total Return Subaccount (Class I) LMPVPII Appreciation Subaccount LMPVPII Equity Index Subaccount (Class II) LMPVPII Fundamental Value Subaccount LMPVPIII Adjustable Rate Income Subaccount LMPVPIII Aggressive Growth Subaccount LMPVPIII High Income Subaccount LMPVPIII International All Cap Growth Subaccount LMPVPIII Large Cap Growth Subaccount LMPVPIII Social Awareness Stock Subaccount LMPVPV Small Cap Growth Opportunities Subaccount Lord Abbett Growth and Income Subaccount (Class VC) Lord Abbett Mid-Cap Value Subaccount (Class VC) Managed Assets Subaccount MetLife Investment Diversified Bond Subaccount (Class I) MetLife Investment International Stock Subaccount (Class I) MetLife Investment Large Company Stock Subaccount (Class I) MetLife Investment Small Company Stock Subaccount (Class I) MIST Batterymarch Mid-Cap Stock Subaccount (Class A) MIST BlackRock Large-Cap Core Subaccount (Class A) MIST Dreman Small-Cap Value Subaccount (Class A) MIST Harris Oakmark International Subaccount (Class A) MIST Janus Capital Appreciation Subaccount (Class A) MIST Legg Mason Partners Managed Assets Subaccount (Class A) MIST Lord Abbett Bond Debenture Subaccount (Class A) MIST Lord Abbett Growth and Income Subaccount (Class B) MIST Met/AIM Capital Appreciation Subaccount (Class A) MIST Met/AIM Small Cap Growth Subaccount (Class A) MIST MFS(R) Value Subaccount (Class A) MIST Neuberger Berman Real Estate Subaccount (Class A) MIST Pioneer Fund Subaccount (Class A) MIST Pioneer Mid-Cap Value Subaccount (Class A) MIST Pioneer Strategic Income Subaccount (Class A) MIST Third Avenue Small Cap Value Subaccount (Class B) Money Market Subaccount MSF BlackRock Aggressive Growth Subaccount (Class D) MSF BlackRock Bond Income Subaccount (Class A) MSF BlackRock Money Market Subaccount (Class A) MSF FI Large Cap Subaccount (Class A) MSF FI Value Leaders Subaccount (Class D) MSF MetLife Aggressive Allocation Subaccount (Class B) MSF MetLife Conservative to Moderate Allocation Subaccount (Class B) MSF MetLife Moderate Allocation Subaccount (Class B) MSF MetLife Moderate to Aggressive Allocation Subaccount (Class B) MSF MFS(R) Total Return Subaccount (Class F) MSF Oppenheimer Global Equity Subaccount (Class B) MSF Western Asset Management High Yield Bond Subaccount (Class A) MSF Western Asset Management U.S. Government Subaccount (Class A) Oppenheimer Main Street/VA Subaccount ( Service Shares) PIMCO VIT Real Return Subaccount (Administrative Class) PIMCO VIT Total Return Subaccount (Administrative Class) Putnam VT Discovery Growth Subaccount (Class IB) Putnam VT International Equity Subaccount (Class IB) Putnam VT Small Cap Value Subaccount (Class IB) Travelers AIM Capital Appreciation Subaccount Travelers Convertible Securities Subaccount Travelers Disciplined Mid Cap Stock Subaccount Travelers Equity Income Subaccount Travelers Federated Stock Subaccount Travelers Large Cap Subaccount Travelers Mercury Large Cap Core Subaccount Travelers MFS(R) Mid Cap Growth Subaccount Travelers MFS(R) Total Return Subaccount Travelers MFS(R) Value Subaccount Travelers Mondrian International Stock Subaccount Travelers Pioneer Fund Subaccount Travelers Pioneer Mid Cap Value Subaccount Travelers Pioneer Strategic Income Subaccount Travelers Quality Bond Subaccount Travelers Strategic Equity Subaccount Travelers Style Focus Series: Small Cap Growth Subaccount Travelers U.S. Government Securities Subaccount Van Kampen LIT Comstock Subaccount (Class II) Van Kampen LIT Enterprise Subaccount (Class II) Van Kampen LIT Strategic Growth Subaccount (Class II) VIP Asset Manager Subaccount (Service Class 2) VIP Contrafund(R) Subaccount (Service Class 2) VIP Dynamic Capital Appreciation Subaccount (Service Class 2) VIP Mid Cap Subaccount (Service Class 2) Wells Fargo VT Advantage Small/Mid Cap Value Subaccount METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES December 31, 2006
AIM V.I. American Funds American Funds American Funds Core Equity Global Growth Growth Growth-Income Subaccount Subaccount Subaccount Subaccount (Series I) (Class 2) (Class 2) (Class 2) ----------- -------------- -------------- -------------- Assets: Investments at market value .... $147,684 $1,685,494 $3,184,051 $3,445,865 -------- ---------- ---------- ---------- Total Assets ............... 147,684 1,685,494 3,184,051 3,445,865 -------- ---------- ---------- ---------- Liabilities: Payables: Insurance charges ............ 10 108 211 218 Due to MetLife Life and Annuity Company of Connecticut ....... -- -- -- -- -------- ---------- ---------- ---------- Total Liabilities .......... 10 108 211 218 -------- ---------- ---------- ---------- Net Assets: ...................... $147,674 $1,685,386 $3,183,840 $3,445,647 ======== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 1 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
Credit Suisse Delaware VIP Dreyfus VIF Dreyfus VIF Trust Emerging Small Cap Value Appreciation Developing Leaders Markets Subaccount Subaccount Subaccount Subaccount (Standard Class) (Initial Shares) (Initial Shares) -------------- ---------------- ---------------- ------------------ Assets: Investments at market value .... $2,012,526 $6,098,862 $3,917,277 $8,490,556 ---------- ---------- ---------- ---------- Total Assets ............... 2,012,526 6,098,862 3,917,277 8,490,556 ---------- ---------- ---------- ---------- Liabilities: Payables: Insurance charges ............ 136 403 260 565 Due to MetLife Life and Annuity Company of Connecticut ....... -- -- -- -- ---------- ---------- ---------- ---------- Total Liabilities .......... 136 403 260 565 ---------- ---------- ---------- ---------- Net Assets: ...................... $2,012,390 $6,098,459 $3,917,017 $8,489,991 ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 2 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
FTVIPT Templeton Developing FTVIPT Templeton Janus Aspen Janus Aspen LMPIS Premier Markets Securities Foreign Securities Mid Cap Growth Worldwide Growth LMPIS Dividend Selections Subaccount Subaccount Subaccount Subaccount Strategy All Cap Growth (Class 2) (Class 2) (Service Shares) (Service Shares) Subaccount Subaccount - ------------------ ------------------ ---------------- ---------------- -------------- -------------- $1,405,131 $1,706,542 $513,781 $4,370,185 $210,106 $57,722 ---------- ---------- -------- ---------- -------- ------- 1,405,131 1,706,542 513,781 4,370,185 210,106 57,722 ---------- ---------- -------- ---------- -------- ------- 91 107 35 297 14 4 -- -- -- -- -- -- ---------- ---------- -------- ---------- -------- ------- 91 107 35 297 14 4 ---------- ---------- -------- ---------- -------- ------- $1,405,040 $1,706,435 $513,746 $4,369,888 $210,092 $57,718 ========== ========== ======== ========== ======== =======
The accompanying notes are an integral part of these financial statements. 3 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
LMPVPV LMPVPI LMPVPI LMPVPI Small Cap Growth All Cap Investors Small Cap Growth Opportunities Subaccount Subaccount Subaccount Subaccount (Class I) (Class I) (Class I) ---------------- ----------- ---------- ---------------- Assets: Investments at market value .... $319,817 $11,693,762 $4,012,169 $571,095 -------- ----------- ---------- -------- Total Assets ............... 319,817 11,693,762 4,012,169 571,095 -------- ----------- ---------- -------- Liabilities: Payables: Insurance charges ............ 21 791 271 39 Due to MetLife Life and Annuity Company of Connecticut ....... -- -- -- -- -------- ----------- ---------- -------- Total Liabilities .......... 21 791 271 39 -------- ----------- ---------- -------- Net Assets: ...................... $319,796 $11,692,971 $4,011,898 $571,056 ======== =========== ========== ========
The accompanying notes are an integral part of these financial statements. 4 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
LMPVPI LMPVPII LMPVPII LMPVPIII LMPVPIII Total Return LMPVPII Equity Index Fundamental Adjustable Rate Aggressive Subaccount Appreciation Subaccount Value Income Growth (Class I) Subaccount (Class II) Subaccount Subaccount Subaccount - ------------ ------------ ------------ ----------- --------------- ----------- $624,908 $3,417,989 $17,722,602 $8,943,590 $319,089 $10,706,242 -------- ---------- ----------- ---------- -------- ----------- 624,908 3,417,989 17,722,602 8,943,590 319,089 10,706,242 -------- ---------- ----------- ---------- -------- ----------- 42 228 1,168 596 19 713 -- -- 3 -- -- -- -------- ---------- ----------- ---------- -------- ----------- 42 228 1,171 596 19 713 -------- ---------- ----------- ---------- -------- ----------- $624,866 $3,417,761 $17,721,431 $8,942,994 $319,070 $10,705,529 ======== ========== =========== ========== ======== ===========
The accompanying notes are an integral part of these financial statements. 5 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
LMPVPIII LMPVPIII LMPVPIII LMPVPIII International Large Cap Social Awareness High Income All Cap Growth Growth Stock Subaccount Subaccount Subaccount Subaccount ----------- -------------- ---------- ---------------- Assets: Investments at market value .... $970,613 $1,915,318 $5,172,200 $2,559,398 -------- ---------- ---------- ---------- Total Assets ................. 970,613 1,915,318 5,172,200 2,559,398 -------- ---------- ---------- ---------- Liabilities: Payables: Insurance charges ............ 65 128 348 172 Due to MetLife Life and Annuity Company of Connecticut ....... -- -- -- -- -------- ---------- ---------- ---------- Total Liabilities .......... 65 128 348 172 -------- ---------- ---------- ---------- Net Assets: ...................... $970,548 $1,915,190 $5,171,852 $2,559,226 ======== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 6 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
MIST MIST Lord Abbett Lord Abbett Batterymarch MIST BlackRock MIST Dreman Harris Oakmark Growth and Income Mid-Cap Value Mid-Cap Stock Large-Cap Core Small-Cap Value International Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount (Class VC) (Class VC) (Class A) (Class A) (Class A) (Class A) - ----------------- ------------- ------------- -------------- --------------- -------------- $896,667 $650,914 $5,862,360 $1,046,479 $90,585 $1,923,602 -------- -------- ---------- ---------- ------- ---------- 896,667 650,914 5,862,360 1,046,479 90,585 1,923,602 -------- -------- ---------- ---------- ------- ---------- 58 42 390 70 7 125 -- -- -- -- -- -- -------- -------- ---------- ---------- ------- ---------- 58 42 390 70 7 125 -------- -------- ---------- ---------- ------- ---------- $896,609 $650,872 $5,861,970 $1,046,409 $90,578 $1,923,477 ======== ======== ========== ========== ======= ==========
The accompanying notes are an integral part of these financial statements. 7 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
MIST Janus MIST Legg Mason MIST Lord Abbett MIST Lord Abbett Capital Appreciation Partners Managed Bond Debenture Growth and Income Subaccount Assets Subaccount Subaccount Subaccount (Class A) (Class A) (Class A) (Class B) -------------------- ---------------- ---------------- ----------------- Assets: Investments at market value .... $11,343,903 $18,717,432 $474,113 $1,781,479 ----------- ----------- -------- ---------- Total Assets ................. 11,343,903 18,717,432 474,113 1,781,479 ----------- ----------- -------- ---------- Liabilities: Payables: Insurance charges ............ 747 1,252 33 91 Due to MetLife Life and Annuity Company of Connecticut ....... -- -- -- -- ----------- ----------- -------- ---------- Total Liabilities .......... 747 1,252 33 91 ----------- ----------- -------- ---------- Net Assets: ...................... $11,343,156 $18,716,180 $474,080 $1,781,388 =========== =========== ======== ==========
The accompanying notes are an integral part of these financial statements. 8 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
MIST Neuberger MIST Met/AIM MIST Met/AIM Berman MIST Pioneer Capital Appreciation Small Cap Growth MIST MFS(R) Real Estate MIST Pioneer Mid-Cap Value Subaccount Subaccount Value Subaccount Subaccount Fund Subaccount Subaccount (Class A) (Class A) (Class A) (Class A) (Class A) (Class A) - -------------------- ---------------- ---------------- -------------- --------------- ------------- $431,114 $14,637 $1,043,918 $7,739,014 $1,596,264 $60,493 -------- ------- ---------- ---------- ---------- ------- 431,114 14,637 1,043,918 7,739,014 1,596,264 60,493 -------- ------- ---------- ---------- ---------- ------- 29 1 71 506 108 4 -- -- -- -- -- -- -------- ------- ---------- ---------- ---------- ------- 29 1 71 506 108 4 -------- ------- ---------- ---------- ---------- ------- $431,085 $14,636 $1,043,847 $7,738,508 $1,596,156 $60,489 ======== ======= ========== ========== ========== =======
The accompanying notes are an integral part of these financial statements. 9 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
MIST Pioneer MIST Third MetLife Investment MetLife Investment Strategic Income Avenue Small Cap Diversified Bond International Stock Subaccount Value Subaccount Subaccount Subaccount (Class A) (Class B) (Class I) (Class I) ---------------- ---------------- ------------------ ------------------- Assets: Investments at market value .... $1,929,642 $344,250 $82,365,946 $41,196,744 ---------- -------- ----------- ----------- Total Assets ............... 1,929,642 344,250 82,365,946 41,196,744 ---------- -------- ----------- ----------- Liabilities: Payables: Insurance charges ............ 126 23 5,495 2,754 Due to MetLife Life and Annuity Company of Connecticut ....... -- -- -- -- ---------- -------- ----------- ----------- Total Liabilities .......... 126 23 5,495 2,754 ---------- -------- ----------- ----------- Net Assets: ...................... $1,929,516 $344,227 $82,360,451 $41,193,990 ========== ======== =========== ===========
The accompanying notes are an integral part of these financial statements. 10 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
MetLife Investment MetLife Investment MSF BlackRock MSF BlackRock MSF BlackRock MSF FI Large Company Small Company Aggressive Growth Bond Income Money Market Large Cap Stock Subaccount Stock Subaccount Subaccount Subaccount Subaccount Subaccount (Class I) (Class I) (Class D) (Class A) (Class A) (Class A) - ------------------ ------------------ ----------------- ------------- ------------- ----------- $59,523,146 $29,948,524 $2,943,093 $6,555,301 $11,446,080 $12,073,446 ----------- ----------- ---------- ---------- ----------- ----------- 59,523,146 29,948,524 2,943,093 6,555,301 11,446,080 12,073,446 ----------- ----------- ---------- ---------- ----------- ----------- 3,986 2,003 197 435 768 806 -- -- -- -- -- -- ----------- ----------- ---------- ---------- ----------- ----------- 3,986 2,003 197 435 768 806 ----------- ----------- ---------- ---------- ----------- ----------- $59,519,160 $29,946,521 $2,942,896 $6,554,866 $11,445,312 $12,072,640 =========== =========== ========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements. 11 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
MSF MetLife MSF MetLife MSF FI Value Aggressive Conservative to MSF MetLife Leaders Allocation Moderate Allocation Moderate Allocation Subaccount Subaccount Subaccount Subaccount (Class D) (Class B) (Class B) (Class B) ------------ ----------- ------------------- ------------------- Assets: Investments at market value .... $12,630,533 $74,686 $75,680 $357,030 ----------- ------- ------- -------- Total Assets ............... 12,630,533 74,686 75,680 357,030 ----------- ------- ------- -------- Liabilities: Payables: Insurance charges ............ 825 5 5 25 Due to MetLife Life and Annuity Company of Connecticut ....... -- -- -- -- ----------- ------- ------- -------- Total Liabilities .......... 825 5 5 25 ----------- ------- ------- -------- Net Assets: ...................... $12,629,708 $74,681 $75,675 $357,005 =========== ======= ======= ========
The accompanying notes are an integral part of these financial statements. 12 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
MSF MetLife MSF Western MSF Western PIMCO VIT Moderate to MSF MFS(R) MSF Oppenheimer Asset Management Asset Management Real Return Aggressive Allocation Total Return Global Equity High Yield Bond U.S. Government Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount (Administrative (Class B) (Class F) (Class B) (Class A) (Class A) Class) - ---------------------- ------------ --------------- ---------------- ---------------- --------------- $438,830 $24,863,112 $3,320,828 $6,914,533 $11,104,700 $235,570 -------- ----------- ---------- ---------- ----------- -------- 438,830 24,863,112 3,320,828 6,914,533 11,104,700 235,570 -------- ----------- ---------- ---------- ----------- -------- 30 1,647 219 462 649 14 -- -- -- -- -- -- -------- ----------- ---------- ---------- ----------- -------- 30 1,647 219 462 649 14 -------- ----------- ---------- ---------- ----------- -------- $438,800 $24,861,465 $3,320,609 $6,914,071 $11,104,051 $235,556 ======== =========== ========== ========== =========== ========
The accompanying notes are an integral part of these financial statements. 13 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
PIMCO VIT Total Return Putnam VT Putnam VT Putnam VT Subaccount Discovery Growth International Small Cap Value (Administrative Subaccount Equity Subaccount Subaccount Class) (Class IB) (Class IB) (Class IB) --------------- ---------------- ----------------- --------------- Assets: Investments at market value ... $6,785,708 $101,498 $1,388,992 $5,859,997 ---------- -------- ---------- ---------- Total Assets .............. 6,785,708 101,498 1,388,992 5,859,997 ---------- -------- ---------- ---------- Liabilities: Payables: Insurance charges ........... 447 7 92 387 Due to MetLife Life and Annuity Company of Connecticut ...... -- -- -- -- ---------- -------- ---------- ---------- Total Liabilities ......... 447 7 92 387 ---------- -------- ---------- ---------- Net Assets: ..................... $6,785,261 $101,491 $1,388,900 $5,859,610 ========== ======== ========== ==========
The accompanying notes are an integral part of these financial statements. 14 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Continued) December 31, 2006
Van Kampen LIT Van Kampen LIT Van Kampen LIT VIP Dynamic Comstock Enterprise Strategic Growth VIP Contrafund(R) Capital Appreciation VIP Mid Cap Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount (Class II) (Class II) (Class II) (Service Class 2) (Service Class 2) (Service Class 2) - -------------- -------------- ---------------- ------------------ -------------------- ----------------- $1,014,038 $61,768 $159,809 $6,891,242 $345,690 $7,336,337 ---------- ------- -------- ---------- -------- ---------- 1,014,038 61,768 159,809 6,891,242 345,690 7,336,337 ---------- ------- -------- ---------- -------- ---------- 69 4 11 457 23 483 -- -- -- -- -- -- ---------- ------- -------- ---------- -------- ---------- 69 4 11 457 23 483 ---------- ------- -------- ---------- -------- ---------- $1,013,969 $61,764 $159,798 $6,890,785 $345,667 $7,335,854 ========== ======= ======== ========== ======== ==========
The accompanying notes are an integral part of these financial statements. 15 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF ASSETS AND LIABILITIES -- (Concluded) December 31, 2006 Wells Fargo VT Advantage Small/Mid Cap Value Subaccount ------------ Assets: Investments at market value ... $790,786 -------- Total Assets ............... 790,786 -------- Liabilities: Payables: Insurance charges .......... 54 Due to MetLife Life and Annuity Company of Connecticut ..... -- -------- Total Liabilities .......... 54 -------- Net Assets: ...................... $790,732 ======== The accompanying notes are an integral part of these financial statements. 16 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS For the year ended December 31, 2006
AIM V.I. AIM V.I. American Funds American Funds Core Equity Premier Equity Global Growth Growth Subaccount Subaccount Subaccount Subaccount (Series I) (Series I) (Class 2) (Class 2) ----------- -------------- -------------- -------------- Investment Income: Dividends ............................ $ 836 $ 1,546 $ 10,431 $ 23,893 ------- -------- -------- -------- Expenses: Insurance charges .................... 1,264 614 14,766 33,534 ------- -------- -------- -------- Net investment income (loss) ..... (428) 932 (4,335) (9,641) ------- -------- -------- -------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ......... -- -- -- 16,566 Realized gain (loss) on sale of investments ...................... (1,132) 26,043 24,353 57,182 ------- -------- -------- -------- Realized gain (loss) ........... (1,132) 26,043 24,353 73,748 ------- -------- -------- -------- Change in unrealized gain (loss) on investments ................. 11,878 (19,487) 210,538 166,818 ------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations ......... $10,318 $ 7,488 $230,556 $230,925 ======= ======== ======== ========
The accompanying notes are an integral part of these financial statements. 17 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
American Funds Credit Suisse Growth-Income Capital Trust Emerging Delaware VIP Subaccount Appreciation Markets REIT Subaccount (Class 2) Subaccount Subaccount (Standard Class) -------------- ------------ -------------- ---------------- Investment Income: Dividends ............................ $ 48,836 $ -- $ 10,746 $ 132,547 -------- --------- -------- ----------- Expenses: Insurance charges .................... 31,901 56,502 25,478 26,446 -------- --------- -------- ----------- Net investment income (loss) ....... 16,935 (56,502) (14,732) 106,101 -------- --------- -------- ----------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ......... 64,034 513,103 26,394 441,936 Realized gain (loss) on sale of investments ...................... 26,091 (607,441) 337,295 1,518,123 -------- --------- -------- ----------- Realized gain (loss) ............. 90,125 (94,338) 363,689 1,960,059 -------- --------- -------- ----------- Change in unrealized gain (loss) on investments ................... 265,288 31,217 189,961 (1,532,801) -------- --------- -------- ----------- Net increase (decrease) in net assets resulting from operations .......... $372,348 $(119,623) $538,918 $ 533,359 ======== ========= ======== ===========
The accompanying notes are an integral part of these financial statements. 18 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
FTVIPT Templeton Delaware VIP Dreyfus VIF Dreyfus VIF FTVIPT Mutual Developing Markets FTVIPT Templeton Small Cap Value Appreciation Developing Leaders Shares Securities Securities Foreign Securities Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount (Standard Class) (Initial Shares) (Initial Shares) (Class 2) (Class 2) (Class 2) - ---------------- ---------------- ------------------ ----------------- ------------------ ------------------ $ 16,115 $ 60,866 $ 40,365 $ -- $ 12,455 $ 17,434 -------- -------- --------- -------- -------- -------- 78,221 46,623 117,666 1,295 14,915 16,214 -------- -------- --------- -------- -------- -------- (62,106) 14,243 (77,301) (1,295) (2,460) 1,220 -------- -------- --------- -------- -------- -------- 427,821 -- 834,743 -- -- -- 416,259 34,331 (199,772) 62,966 110,832 33,771 -------- -------- --------- -------- -------- -------- 844,080 34,331 634,971 62,966 110,832 33,771 -------- -------- --------- -------- -------- -------- 89,936 493,194 (342,051) (36,781) 196,339 225,822 -------- -------- --------- -------- -------- -------- $871,910 $541,768 $ 215,619 $ 24,890 $304,711 $260,813 ======== ======== ========= ======== ======== ========
The accompanying notes are an integral part of these financial statements. 19 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
FTVIPT Templeton Janus Aspen Janus Aspen Growth Securities Balanced Mid Cap Growth Subaccount High Yield Bond Subaccount Subaccount (Class 2) Subaccount (Service Shares) (Service Shares) ----------------- --------------- ---------------- ---------------- Investment Income: Dividends ............................ $ -- $ 478,973 $ -- $ -- --------- --------- --------- ------- Expenses: Insurance charges .................... 11,377 29,963 7,559 4,212 --------- --------- --------- ------- Net investment income (loss) ..... (11,377) 449,010 (7,559) (4,212) --------- --------- --------- ------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ......... -- 38,195 -- -- Realized gain (loss) on sale of investments ...................... 463,920 219,986 305,891 19,619 --------- --------- --------- ------- Realized gain (loss) ............... 463,920 258,181 305,891 19,619 --------- --------- --------- ------- Change in unrealized gain (loss) on investments ................... (204,432) (527,470) (236,939) 17,127 --------- --------- --------- ------- Net increase (decrease) in net assets resulting from operations .......... $ 248,111 $ 179,721 $ 61,393 $32,534 ========= ========= ========= =======
The accompanying notes are an integral part of these financial statements. 20 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
Janus Aspen Lazard LMPIS Premier LMPVPV LMPVPI Worldwide Growth Retirement LMPIS Dividend Selections Small Cap Growth All Cap Subaccount Small Cap Strategy All Cap Growth Opportunities Subaccount (Service Shares) Subaccount Subaccount Subaccount Subaccount (Class I) - ---------------- ---------- -------------- -------------- ---------------- ---------- $ 69,980 $ -- $ 4,293 $ -- $ -- $ 151,532 --------- -------- ------- ------ ------- ---------- 54,507 3,965 2,453 325 4,077 152,869 --------- -------- ------- ------ ------- ---------- 15,473 (3,965) 1,840 (325) (4,077) (1,337) --------- -------- ------- ------ ------- ---------- -- 32,750 -- 1,870 21,241 411,791 (325,686) 19,300 3,261 479 8,830 748,286 --------- -------- ------- ------ ------- ---------- (325,686) 52,050 3,261 2,349 30,071 1,160,077 --------- -------- ------- ------ ------- ---------- 974,465 (10,600) 25,410 (313) (954) 739,950 --------- -------- ------- ------ ------- ---------- $ 664,252 $ 37,485 $30,511 $1,711 $25,040 $1,898,690 ========= ======== ======= ====== ======= ==========
The accompanying notes are an integral part of these financial statements. 21 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
LMPVPI LMPVPI LMPVPI Investors Small Cap Growth Total Return LMPVPII Subaccount Subaccount Subaccount Appreciation (Class I) (Class I) (Class I) Subaccount ---------- ---------------- ------------ ------------ Investment Income: Dividends ........................... $ 63,211 $ -- $12,724 $ 36,275 -------- -------- ------- --------- Expenses: Insurance charges ................... 49,259 7,705 7,312 41,875 -------- -------- ------- --------- Net investment income (loss) .... 13,952 (7,705) 5,412 (5,600) -------- -------- ------- --------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ........ 90,508 26,995 11,103 95,355 Realized gain (loss) on sale of investments ..................... 155,347 32,159 5,772 130,370 -------- -------- ------- --------- Realized gain (loss) ............ 245,855 59,154 16,875 225,725 -------- -------- ------- --------- Change in unrealized gain (loss) on investments .................. 361,598 16,294 41,983 214,359 -------- -------- ------- --------- Net increase (decrease) in net assets resulting from operations ......... $621,405 $ 67,743 $64,270 $ 434,484 ======== ======== ======= =========
The accompanying notes are an integral part of these financial statements. 22 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
LMPVPII LMPVPII LMPVPIII LMPVPIII LMPVPIII Equity Index Fundamental Adjustable Aggressive LMPVPIII International Subaccount Value Rate Income Growth High Income All Cap Growth (Class II) Subaccount Subaccount Subaccount Subaccount Subaccount - ------------ ----------- ----------- ---------- ----------- -------------- $ 230,563 $ 137,782 $ 14,426 $ -- $ 73,940 $ 37,914 ---------- ---------- -------- --------- -------- -------- 228,099 109,349 3,976 138,459 11,457 24,034 ---------- ---------- -------- --------- -------- -------- 2,464 28,433 10,450 (138,459) 62,483 13,880 ---------- ---------- -------- --------- -------- -------- 216,964 350,022 -- 11,470 -- 38,751 310,534 279,768 571 541,282 (4,894) 111,231 ---------- ---------- -------- --------- -------- -------- 527,498 629,790 571 552,752 (4,894) 149,982 ---------- ---------- -------- --------- -------- -------- 1,837,070 624,007 (1,203) 386,007 31,668 260,197 ---------- ---------- -------- --------- -------- -------- $2,367,032 $1,282,230 $ 9,818 $ 800,300 $ 89,257 $424,059 ========== ========== ======== ========= ======== ========
The accompanying notes are an integral part of these financial statements. 23 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
LMPVPIII Lord Abbett Lord Abbett LMPVPIII Social Awareness Growth and Income Mid-Cap Value Large Cap Growth Stock Subaccount Subaccount Subaccount Subaccount (Class VC) (Class VC) ---------------- ---------------- ----------------- ------------- Investment Income: Dividends ........................... $ 7,898 $ 13,455 $ 10,626 $ 3,134 -------- -------- -------- ------- Expenses: Insurance charges.................... 70,748 34,364 10,338 7,141 -------- -------- -------- ------- Net investment income (loss) .... (62,850) (20,909) 288 (4,007) -------- -------- -------- ------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution......... -- -- 28,475 48,827 Realized gain (loss) on sale of investments...................... 104,178 (11,933) 14,955 7,832 -------- -------- -------- ------- Realized gain (loss) ............ 104,178 (11,933) 43,430 56,659 -------- -------- -------- ------- Change in unrealized gain (loss) on investments................... 105,283 187,628 82,505 15,020 -------- -------- -------- ------- Net increase (decrease) in net assets resulting from operations.......... $146,611 $154,786 $126,223 $67,672 ======== ======== ======== =======
The accompanying notes are an integral part of these financial statements. 24 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
MIST Harris MIST MIST Batterymarch MIST BlackRock MIST Dreman Oakmark Janus Capital Mid-Cap Stock Large-Cap Core Small-Cap Value International Appreciation Managed Assets Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount (Class A) (Class A) (Class A) (Class A) (Class A) - -------------- ----------------- -------------- --------------- ------------- ------------- $ 473,536 $ -- $ -- $ 333 $ -- $ -- --------- --------- ------- ------ -------- --------- 87,678 54,413 8,325 292 13,227 95,488 --------- --------- ------- ------ -------- --------- 385,858 (54,413) (8,325) 41 (13,227) (95,488) --------- --------- ------- ------ -------- --------- 642,377 -- -- 193 -- -- (618,516) (95,781) (1,240) 439 17,481 (104,182) --------- --------- ------- ------ -------- --------- 23,861 (95,781) (1,240) 632 17,481 (104,182) --------- --------- ------- ------ -------- --------- 320,169 (227,198) 68,384 6,617 184,399 400,254 --------- --------- ------- ------ -------- --------- $ 729,888 $(377,392) $58,819 $7,290 $188,653 $ 200,584 ========= ========= ======= ====== ======== =========
The accompanying notes are an integral part of these financial statements. 25 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
MIST Legg Mason MIST Partners MIST Lord Abbett MIST Lord Abbett Met/AIM Capital Managed Assets Bond Debenture Growth and Income Appreciation Subaccount Subaccount Subaccount Subaccount (Class A) (Class A) (Class B) (Class A) --------------- ---------------- ----------------- --------------- Investment Income: Dividends ............................ $ -- $ -- $ -- $ 774 ---------- ------- -------- -------- Expenses: Insurance charges .................... 164,055 2,104 11,101 3,893 ---------- ------- -------- -------- Net investment income (loss) ..... (164,055) (2,104) (11,101) (3,119) ---------- ------- -------- -------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ......... -- -- -- 53,864 Realized gain (loss) on sale of investments ...................... 63,661 (188) 2,526 (7,357) ---------- ------- -------- -------- Realized gain (loss) ............. 63,661 (188) 2,526 46,507 ---------- ------- -------- -------- Change in unrealized gain (loss) on investments ................... 1,198,756 18,366 139,597 (53,648) ---------- ------- -------- -------- Net increase (decrease) in net assets resulting from operations .......... $1,098,362 $16,074 $131,022 $(10,260) ========== ======= ======== ========
The accompanying notes are an integral part of these financial statements. 26 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
MIST MIST Met/AIM Neuberger Berman MIST MIST Pioneer MIST Pioneer Small Cap Growth MIST MFS(R) Real Estate Pioneer Fund Mid-Cap Value Strategic Income Subaccount Value Subaccount Subaccount Subaccount Subaccount Subaccount (Class A) (Class A) (Class A) (Class A) (Class A) (Class A) - ---------------- ---------------- ---------------- ------------ ------------- ---------------- $ -- $12,186 $ -- $ -- $ 135 $89,163 ------- ------- ---------- -------- ------ ------- 140 7,299 57,777 12,893 274 15,877 ------- ------- ---------- -------- ------ ------- (140) 4,887 (57,777) (12,893) (139) 73,286 ------- ------- ---------- -------- ------ ------- 156 40,988 -- -- 837 -- (7,693) 2,046 87,964 2,845 2 4,425 ------- ------- ---------- -------- ------ ------- (7,537) 43,034 87,964 2,845 839 4,425 ------- ------- ---------- -------- ------ ------- (154) 49,287 1,407,834 124,558 1,718 (3,737) ------- ------- ---------- -------- ------ ------- $(7,831) $97,208 $1,438,021 $114,510 $2,418 $73,974 ======= ======= ========== ======== ====== =======
The accompanying notes are an integral part of these financial statements. 27 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
MIST Third Avenue MetLife Investment MetLife Investment MetLife Investment Small Cap Value Diversified Bond International Stock Large Company Subaccount Subaccount Subaccount Stock Subaccount (Class B) (Class I) (Class I) (Class I) ----------------- ------------------ ------------------- ------------------ Investment Income: Dividends ............................ $ -- $3,485,933 $ 759,482 $ 573,743 ------ ---------- ---------- ---------- Expenses: Insurance charges .................... 590 1,078,297 526,245 756,610 ------ ---------- ---------- ---------- Net investment income (loss) ..... (590) 2,407,636 233,237 (182,867) ------ ---------- ---------- ---------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ......... -- -- -- -- Realized gain (loss) on sale of investments ...................... 656 718,992 3,342,574 1,233,692 ------ ---------- ---------- ---------- Realized gain (loss) ............. 656 718,992 3,342,574 1,233,692 ------ ---------- ---------- ---------- Change in unrealized gain (loss) on investments ................... 7,391 (598,957) 5,937,028 5,401,482 ------ ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations .......... $7,457 $2,527,671 $9,512,839 $6,452,307 ====== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 28 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
MetLife Investment MSF BlackRock MSF BlackRock MSF BlackRock MSF FI MSF FI Small Company Aggressive Growth Bond Income Money Market Large Cap Value Leaders Stock Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount (Class I) (Class D) (Class A) (Class A) (Class A) (Class D) - ------------------ ----------------- ------------- ------------- ---------- ------------- $ 39,474 $ -- $ -- $388,275 $ -- $ -- ---------- --------- -------- -------- --------- --------- 397,690 26,410 58,320 97,802 104,747 107,523 ---------- --------- -------- -------- --------- --------- (358,216) (26,410) (58,320) 290,473 (104,747) (107,523) ---------- --------- -------- -------- --------- --------- 3,542,475 -- -- -- -- -- 1,347,962 (41,015) 36,898 -- (160,953) (51,031) ---------- --------- -------- -------- --------- --------- 4,890,437 (41,015) 36,898 -- (160,953) (51,031) ---------- --------- -------- -------- --------- --------- (771,700) (39,556) 311,329 -- 300,521 452,513 ---------- --------- -------- -------- --------- --------- $3,760,521 $(106,981) $289,907 $290,473 $ 34,821 $ 293,959 ========== ========= ======== ======== ========= =========
The accompanying notes are an integral part of these financial statements. 29 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
MSF MetLife MSF MetLife MSF MetLife Conservative to MSF MetLife Moderate to Aggressive Moderate Moderate Aggressive Allocation Allocation Allocation Allocation Subaccount Subaccount Subaccount Subaccount (Class B) (Class B) (Class B) (Class B) ----------- --------------- ----------- ----------- Investment Income: Dividends .............................. $ 416 $ -- $ -- $ -- ------- ------ ------- ------ Expenses: Insurance charges ...................... 531 145 1,257 687 ------- ------ ------- ------ Net investment income (loss) ....... (115) (145) (1,257) (687) ------- ------ ------- ------ Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ........... 1,834 -- -- -- Realized gain (loss) on sale of investments ........................ (1,910) 53 31 393 ------- ------ ------- ------ Realized gain (loss) ............... (76) 53 31 393 ------- ------ ------- ------ Change in unrealized gain (loss) on investments ..................... 5,795 1,284 14,755 9,902 ------- ------ ------- ------ Net increase (decrease) in net assets resulting from operations ............ $ 5,604 $1,192 $13,529 $9,608 ======= ====== ======= ======
The accompanying notes are an integral part of these financial statements. 30 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
MSF Western MSF Western MSF MFS(R) MSF Oppenheimer Asset Management Asset Management Oppenheimer Total Return Global Equity High Yield Bond U.S. Government Main Street/VA Subaccount Subaccount Subaccount Subaccount Money Market Subaccount (Class F) (Class B) (Class A) (Class A) Subaccount (Service Shares) - ------------ --------------- ---------------- ---------------- ------------ ---------------- $ -- $ -- $ -- $ -- $167,923 $ 3,221 ---------- -------- -------- -------- -------- -------- 206,385 25,079 58,157 84,185 48,000 1,232 ---------- -------- -------- -------- -------- -------- (206,385) (25,079) (58,157) (84,185) 119,923 1,989 ---------- -------- -------- -------- -------- -------- -- -- -- -- -- -- 79,346 (6,196) 22,462 28,652 -- 25,910 ---------- -------- -------- -------- -------- -------- 79,346 (6,196) 22,462 28,652 -- 25,910 ---------- -------- -------- -------- -------- -------- 1,858,296 219,677 470,984 478,560 -- (13,292) ---------- -------- -------- -------- -------- -------- $1,731,257 $188,402 $435,289 $423,027 $119,923 $ 14,607 ========== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements. 31 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
PIMCO VIT PIMCO VIT Putnam VT Real Return Total Return Putnam VT International Subaccount Subaccount Discovery Growth Equity (Administrative (Administrative Subaccount Subaccount Class) Class) (Class IB) (Class IB) --------------- --------------- ---------------- -------------- Investment Income: Dividends ............................ $ 10,042 $305,205 $ -- $ 7,185 -------- -------- ------- -------- Expenses: Insurance charges .................... 2,629 83,238 1,040 15,287 -------- -------- ------- -------- Net investment income (loss) ..... 7,413 221,967 (1,040) (8,102) -------- -------- ------- -------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ......... 6,244 36,964 -- -- Realized gain (loss) on sale of investments ...................... (837) (24,519) 4,876 76,626 -------- -------- ------- -------- Realized gain (loss) ............. 5,407 12,445 4,876 76,626 -------- -------- ------- -------- Change in unrealized gain (loss) on investments .................. (13,598) (57,035) 3,394 223,925 -------- -------- ------- -------- Net increase (decrease) in net assets resulting from operations .......... $ (778) $177,377 $ 7,230 $292,449 ======== ======== ======= ========
The accompanying notes are an integral part of these financial statements. 32 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
Putnam VT Travelers AIM Travelers Travelers Small Cap Value Capital Convertible Disciplined Travelers Travelers Subaccount Appreciation Securities Mid Cap Stock Equity Income Federated Stock (Class IB) Subaccount Subaccount Subaccount Subaccount Subaccount - --------------- ------------- ----------- ------------- ------------- --------------- $ 19,879 $ -- $ 938 $ 40,534 $ 194,527 $ 17,603 -------- --------- ------ ----------- ----------- --------- 72,638 2,328 392 29,761 58,091 4,424 -------- --------- ------ ----------- ----------- --------- (52,759) (2,328) 546 10,773 136,436 13,179 -------- --------- ------ ----------- ----------- --------- 608,713 3,024 1,469 1,209,304 1,485,381 145,703 253,743 158,344 2,281 1,291,798 1,071,356 18,106 -------- --------- ------ ----------- ----------- --------- 862,456 161,368 3,750 2,501,102 2,556,737 163,809 -------- --------- ------ ----------- ----------- --------- 51,412 (121,870) 1,916 (1,839,537) (1,927,404) (136,673) -------- --------- ------ ----------- ----------- --------- $861,109 $ 37,170 $6,212 $ 672,338 $ 765,769 $ 40,315 ======== ========= ====== =========== =========== =========
The accompanying notes are an integral part of these financial statements. 33 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
Travelers Travelers Mercury Travelers MFS(R) Travelers MFS(R) Large Cap Large Cap Core Mid Cap Growth Total Return Subaccount Subaccount Subaccount Subaccount ----------- -------------- ---------------- ---------------- Investment Income: Dividends ...................... $ 29,544 $ 2,228 $ -- $255,568 ----------- -------- ----------- -------- Expenses: Insurance charges .............. 26,641 3,872 15,101 75,390 ----------- -------- ----------- -------- Net investment income (loss) ................... 2,903 (1,644) (15,101) 180,178 ----------- -------- ----------- -------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ... 361,551 32,529 202,916 277,397 Realized gain (loss) on sale of investments ............. (1,096,225) (55,554) (2,234,950) 205,449 ----------- -------- ----------- -------- Realized gain (loss) ....... (734,674) (23,025) (2,032,034) 482,846 ----------- -------- ----------- -------- Change in unrealized gain (loss) on investments ...... 946,044 83,318 2,271,155 (15,368) ----------- -------- ----------- -------- Net increase (decrease) in net assets resulting from operations ................... $ 214,273 $ 58,649 $ 224,020 $647,656 =========== ======== =========== ========
The accompanying notes are an integral part of these financial statements. 34 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
Travelers Travelers MFS(R) Mondrian Travelers Travelers Pioneer Travelers Pioneer Travelers Value International Stock Pioneer Fund Mid Cap Value Strategic Income Quality Bond Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount - ---------------- ------------------- ------------ ----------------- ----------------- ------------ $ -- $ 56,648 $ 16,160 $ -- $ -- $ 457,918 ------- --------- --------- ------ ------- --------- 2,742 5,936 6,649 97 7,246 30,516 ------- --------- --------- ------ ------- --------- (2,742) 50,712 9,511 (97) (7,246) 427,402 ------- --------- --------- ------ ------- --------- 4,265 63,684 -- -- -- -- 60,685 408,278 (297,433) 1,340 (9,572) (545,867) ------- --------- --------- ------ ------- --------- 64,950 471,962 (297,433) 1,340 (9,572) (545,867) ------- --------- --------- ------ ------- --------- (7,791) (311,271) 389,626 237 38,253 57,190 ------- --------- --------- ------ ------- --------- $54,417 $ 211,403 $ 101,704 $1,480 $21,435 $ (61,275) ======= ========= ========= ====== ======= =========
The accompanying notes are an integral part of these financial statements. 35 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
Travelers Travelers Van Kampen Travelers Style Focus Series: U.S. Government LIT Comstock Strategic Equity Small Cap Growth Securities Subaccount Subaccount Subaccount Subaccount (Class II) ---------------- ------------------- --------------- ------------ Investment Income: Dividends ........................... $ 30,616 $ 1 $ 773,424 $ 13,662 ----------- ---- --------- -------- Expenses: Insurance charges ................... 33,743 6 53,288 12,793 ----------- ---- --------- -------- Net investment income (loss) .... (3,127) (5) 720,136 869 ----------- ---- --------- -------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution ........ 335,679 255 188,186 63,519 Realized gain (loss) on sale of investments ..................... (3,714,016) 63 (991,587) 20,133 ----------- ---- --------- -------- Realized gain (loss) ............ (3,378,337) 318 (803,401) 83,652 ----------- ---- --------- -------- Change in unrealized gain (loss) on investments .................. 3,765,901 -- (389,838) 54,621 ----------- ---- --------- -------- Net increase (decrease) in net assets resulting from operations ......... $ 384,437 $313 $(473,103) $139,142 =========== ==== ========= ========
The accompanying notes are an integral part of these financial statements. 36 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Continued) For the year ended December 31, 2006
Van Kampen Van Kampen LIT VIP Dynamic LIT Enterprise Strategic Growth VIP Asset Manager VIP Contrafund(R) Capital Appreciation VIP Mid Cap Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount (Class II) (Class II) (Service Class 2) (Service Class 2) (Service Class 2) (Service Class 2) - -------------- ---------------- ----------------- ------------------ -------------------- ----------------- $ 91 $ -- $ 114,672 $ 66,131 $ 775 $ 13,136 ------ ------- --------- --------- ------- ---------- 705 2,161 18,410 81,521 3,787 89,741 ------ ------- --------- --------- ------- ---------- (614) (2,161) 96,262 (15,390) (3,012) (76,605) ------ ------- --------- --------- ------- ---------- -- -- -- 555,833 9,163 875,840 85 3,268 349,438 273,098 38,268 278,880 ------ ------- --------- --------- ------- ---------- 85 3,268 349,438 828,931 47,431 1,154,720 ------ ------- --------- --------- ------- ---------- 3,357 410 (278,957) (167,000) (2,001) (335,209) ------ ------- --------- --------- ------- ---------- $2,828 $ 1,517 $ 166,743 $ 646,541 $42,418 $ 742,906 ====== ======= ========= ========= ======= ==========
The accompanying notes are an integral part of these financial statements. 37 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENT OF OPERATIONS -- (Concluded) For the year ended December 31, 2006 Wells Fargo VT Advantage Small/Mid Cap Value Subaccount ---------------- Investment Income: Dividends............................ $ -- -------- Expenses: Insurance charges.................... 10,245 -------- Net investment income (loss)..... (10,245) -------- Realized Gain (Loss) and Unrealized Gain (Loss) on Investments: Realized gain distribution......... 123,900 Realized gain (loss) on sale of investments...................... 51,687 -------- Realized gain (loss)........... 175,587 -------- Change in unrealized gain (loss) on investments................... (55,928) -------- Net increase (decrease) in net assets resulting from operations.......... $109,414 ======== The accompanying notes are an integral part of these financial statements. 38 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 2006 and 2005
AIM V.I. AIM V.I. American Funds Core Equity Premier Equity Global Growth Subaccount (Series I) Subaccount (Series I) Subaccount (Class 2) --------------------- --------------------- --------------------- 2006 2005 2006 2005 2006 2005 --------- --------- --------- --------- ---------- -------- Operations: Net investment income (loss).... $ (428) $-- $ 932 $ (575) $ (4,335) $ (2,417) Realized gain (loss)............ (1,132) -- 26,043 10,841 24,353 6,601 Change in unrealized gain (loss) on investments................ 11,878 -- (19,487) (1,408) 210,538 52,251 --------- --- --------- -------- ---------- -------- Net increase (decrease) in net assets resulting from operations.................. 10,318 -- 7,488 8,858 230,556 56,435 --------- --- --------- -------- ---------- -------- Unit Transactions: Participant purchase payments... -- -- -- -- 77,756 329,362 Participant transfers from other funding options............... 224,377 -- -- -- 760,339 346,158 Administrative and asset allocation charges............ -- -- -- -- -- -- Contract surrenders............. (13,577) -- -- (25,940) (88,261) (24,939) Participant transfers to other funding options............... (73,444) -- (155,286) (65,273) (114,181) (87,435) Other receipts/(payments)....... -- -- (1) -- -- -- --------- --- --------- -------- ---------- -------- Net increase (decrease) in net assets resulting from unit transactions........... 137,356 -- (155,287) (91,213) 635,653 563,146 --------- --- --------- -------- ---------- -------- Net increase (decrease) in net assets.................. 147,674 -- (147,799) (82,355) 866,209 619,581 Net Assets: Beginning of year .............. -- -- 147,799 230,154 819,177 199,596 --------- --- --------- -------- ---------- -------- End of year..................... $ 147,674 $-- $ -- $147,799 $1,685,386 $819,177 ========= === ========= ======== ========== ========
The accompanying notes are an integral part of these financial statements. 39 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
American Funds American Funds Growth Growth-Income Capital Appreciation Subaccount (Class 2) Subaccount (Class 2) Subaccount ------------------------------------------------------------------------------ 2006 2005 2006 2005 2006 2005 ---------- ---------- ---------- ---------- ------------ ----------- Operations: Net investment income (loss).... $ (9,641) $ (2,656) $ 16,935 $ 8,315 $ (56,502) $ (163,265) Realized gain (loss)............ 73,748 4,776 90,125 7,757 (94,338) (168,590) Change in unrealized gain (loss) on investments............... 166,818 200,297 265,288 68,434 31,217 2,456,221 ---------- ---------- ---------- ---------- ------------ ----------- Net increase (decrease) in net assets resulting from operations................... 230,925 202,417 372,348 84,506 (119,623) 2,124,366 ---------- ---------- ---------- ---------- ------------ ----------- Unit Transactions: Participant purchase payments .. 57,693 778,378 173,253 987,272 64,824 905,400 Participant transfers from other funding options.............. 1,525,859 848,448 1,069,753 652,437 212,769 805,692 Administrative and asset allocation charges........... -- -- -- -- -- -- Contract surrenders............. (216,855) (70,358) (104,516) (86,197) (919,500) (1,196,611) Participant transfers to other funding options.............. (453,400) (33,793) (148,782) (72,087) (14,133,214) (446,972) Other receipts/(payments)....... (21,123) -- -- 72 -- (10,372) ---------- ---------- ---------- ---------- ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions.......... 892,174 1,522,675 989,708 1,481,497 (14,775,121) 57,137 ---------- ---------- ---------- ---------- ------------ ----------- Net increase (decrease) in net assets................ 1,123,099 1,725,092 1,362,056 1,566,003 (14,894,744) 2,181,503 Net Assets: Beginning of year............... 2,060,741 335,649 2,083,591 517,588 14,894,744 12,713,241 ---------- ---------- ---------- ---------- ------------ ----------- End of year..................... $3,183,840 $2,060,741 $3,445,647 $2,083,591 $ -- $14,894,744 ========== ========== ========== ========== ============ ===========
The accompanying notes are an integral part of these financial statements. 40 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Delaware VIP Dreyfus VIF Credit Suisse Delaware VIP REIT Small Cap Value Appreciation Trust Emerging Subaccount Subaccount Subaccount Markets Subaccount (Standard Class) (Standard Class) (Initial Shares) - ----------------------- ------------------------ ----------------------- ----------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $ (14,732) $ (9,541) $ 106,101 $ 43,991 $ (62,106) $ (49,671) $ 14,243 $ (50,121) 363,689 51,537 1,960,059 631,710 844,080 610,874 34,331 (13,832) 189,961 390,019 (1,532,801) (336,147) 89,936 (110,634) 493,194 193,013 - ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 538,918 432,015 533,359 339,554 871,910 450,569 541,768 129,060 - ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- -- 10,418 39,966 601,386 25,616 317,614 12,644 229,051 381,302 200,152 151,307 720,028 537,077 505,715 111,313 67,662 -- -- -- -- -- -- -- -- (581,341) (254,606) (143,439) (517,154) (876,997) (652,988) (581,857) (651,199) (468,410) (85,775) (7,099,081) (819,136) (574,865) (162,966) (168,035) (273,537) (4,364) (107) -- -- (5,943) -- 197 (13,284) - ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- (672,813) (129,918) (7,051,247) (14,876) (895,112) 7,375 (625,738) (641,307) - ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- (133,895) 302,097 (6,517,888) 324,678 (23,202) 457,944 (83,970) (512,247) 2,146,285 1,844,188 6,517,888 6,193,210 6,121,661 5,663,717 4,000,987 4,513,234 - ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- $2,012,390 $2,146,285 $ -- $6,517,888 $6,098,459 $6,121,661 $3,917,017 $4,000,987 ========== ========== =========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 41 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Dreyfus VIF FTVIPT Mutual FTVIPT Templeton Developing Leaders Shares Securities Developing Markets Securities Subaccount (Initial Shares) Subaccount (Class 2) Subaccount (Class 2) --------------------------- -------------------- ----------------------------- 2006 2005 2006 2005 2006 2005 ---------- ---------- --------- -------- ---------- ---------- Operations: Net investment income (loss) ... $ (77,301) $ (133,936) $ (1,295) $ (441) $ (2,460) $ (1,010) Realized gain (loss) ........... 634,971 (156,313) 62,966 1,909 110,832 7,621 Change in unrealized gain (loss) on investments ............... (342,051) 749,432 (36,781) 23,010 196,339 111,113 ----------- ----------- --------- -------- ---------- ---------- Net increase (decrease) in net assets resulting from operations ................. 215,619 459,183 24,890 24,478 304,711 117,724 ----------- ----------- --------- -------- ---------- ---------- Unit Transactions: Participant purchase payments .. 26,390 292,148 23,070 31,362 20,981 267,880 Participant transfers from other funding options .............. 193,957 138,508 89,650 110,350 808,820 681,888 Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (2,194,975) (1,095,783) (10,599) (9,128) (142,952) (30,083) Participant transfers to other funding options .............. (480,748) (939,545) (425,742) (98) (599,788) (85,248) Other receipts/(payments) ...... (18,442) (15,926) -- -- -- -- ----------- ----------- --------- -------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions ............... (2,473,818) (1,620,598) (323,621) 132,486 87,061 834,437 ----------- ----------- --------- -------- ---------- ---------- Net increase (decrease) in net assets ................. (2,258,199) (1,161,415) (298,731) 156,964 391,772 952,161 Net Assets: Beginning of year .............. 10,748,190 11,909,605 298,731 141,767 1,013,268 61,107 ----------- ----------- --------- -------- ---------- ---------- End of year .................... $ 8,489,991 $10,748,190 $ -- $298,731 $1,405,040 $1,013,268 =========== =========== ========= ======== ========== ==========
The accompanying notes are an integral part of these financial statements. 42 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
FTVIPT Templeton FTVIPT Templeton Foreign Securities Growth Securities High Yield Bond Janus Aspen Balanced Subaccount (Class 2) Subaccount (Class 2) Subaccount Subaccount (Service Shares) - ----------------------- ------------------------ ------------------------ --------------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - ---------- ---------- ----------- ---------- ----------- ---------- ----------- ----------- $ 1,220 $ 312 $ (11,377) $ (2,183) $ 449,010 $ (97,667) $ (7,559) $ 14,552 33,771 2,770 463,920 9,284 258,181 69,818 305,891 22,677 225,822 85,493 (204,432) 154,559 (527,470) 36,938 (236,939) 67,198 - ---------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- 260,813 88,575 248,111 161,660 179,721 9,089 61,393 104,427 - ---------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- 13,213 328,173 14,469 1,118,105 29,656 487,595 6,128 62,283 471,992 570,391 260,286 938,519 95,476 266,960 309,697 67,791 -- -- -- -- -- -- -- -- (159,308) (15,030) (81,717) (54,383) (455,469) (811,478) (2,295) (129,065) (72,715) (36,602) (3,159,903) (100,444) (7,613,739) (365,617) (2,095,272) (47,944) -- -- -- -- (28,015) (40,361) -- -- - ---------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- 253,182 846,932 (2,966,865) 1,901,797 (7,972,091) (462,901) (1,781,742) (46,935) - ---------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- 513,995 935,507 (2,718,754) 2,063,457 (7,792,370) (453,812) (1,720,349) 57,492 1,192,440 256,933 2,718,754 655,297 7,792,370 8,246,182 1,720,349 1,662,857 - ---------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- $1,706,435 $1,192,440 $ -- $2,718,754 $ -- $7,792,370 $ -- $1,720,349 ========== ========== =========== ========== =========== ========== =========== ==========
The accompanying notes are an integral part of these financial statements. 43 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Janus Aspen Janus Aspen Mid Cap Growth Worldwide Growth Lazard Retirement Subaccount (Service Shares) Subaccount (Service Shares) Small Cap Subaccount --------------------------- --------------------------- -------------------- 2006 2005 2006 2005 2006 2005 -------- -------- ----------- ---------- --------- -------- Operations: Net investment income (loss) ... $ (4,212) $ (2,929) $ 15,473 $ (1,879) $ (3,965) $ (4,114) Realized gain (loss) ........... 19,619 5,881 (325,686) (377,843) 52,050 31,805 Change in unrealized gain (loss) on investments ............... 17,127 23,872 974,465 568,563 (10,600) (16,094) -------- -------- ----------- ---------- --------- -------- Net increase (decrease) in net assets resulting from operations ................. 32,534 26,824 664,252 188,841 37,485 11,597 -------- -------- ----------- ---------- --------- -------- Unit Transactions: Participant purchase payments .. 15,016 93,908 8,407 127,162 10,888 60,292 Participant transfers from other funding options .............. 239,386 42,409 104,503 79,447 64,012 112,328 Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (60,207) (16,276) (900,629) (514,657) (110,238) (10,088) Participant transfers to other funding options .............. (30,625) (13,194) (265,118) (465,633) (363,943) (72,093) Other receipts/(payments) ...... -- -- 131 (7,226) -- -- -------- -------- ----------- ---------- --------- -------- Net increase (decrease) in net assets resulting from unit transactions ............... 163,570 106,847 (1,052,706) (780,907) (399,281) 90,439 -------- -------- ----------- ---------- --------- -------- Net increase (decrease) in net assets ................. 196,104 133,671 (388,454) (592,066) (361,796) 102,036 Net Assets: Beginning of year .............. 317,642 183,971 4,758,342 5,350,408 361,796 259,760 -------- -------- ----------- ---------- --------- -------- End of year .................... $513,746 $317,642 $ 4,369,888 $4,758,342 $ -- $361,796 ======== ======== =========== ========== ========= ========
The accompanying notes are an integral part of these financial statements. 44 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
LMPIS Dividend Strategy LMPIS Premier Selections LMPVPV Small Cap Growth LMPVPI All Cap Subaccount All Cap Growth Subaccount Opportunities Subaccount Subaccount (Class I) - ----------------------- ------------------------- ------------------------ ------------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - ---------- --------- ------- -------- --------- -------- ----------- ----------- $ 1,840 $ 818 $ (325) $ (344) $ (4,077) $ (3,863) $ (1,337) $ (49,267) 3,261 2,706 2,349 1,694 30,071 44,977 1,160,077 221,242 25,410 (8,266) (313) (395) (954) (28,367) 739,950 163,010 -------- --------- ------- -------- --------- -------- ----------- ----------- 30,511 (4,742) 1,711 955 25,040 12,747 1,898,690 334,985 -------- --------- ------- -------- --------- -------- ----------- ----------- -- 11,669 -- -- 1,440 78,974 31,405 615,474 23,567 -- 41,235 5,000 116,077 36,144 92,319 22,453 -- -- -- -- -- -- -- -- (31,238) (22,036) (1,235) (3,014) (22,003) (11,503) (2,760,434) (1,168,279) (6,731) (85,619) (4,164) (23,662) (132,017) (91,081) (609,688) (590,851) -- -- -- -- -- -- (21,146) (3,542) -------- --------- ------- -------- --------- -------- ----------- ----------- (14,402) (95,986) 35,836 (21,676) (36,503) 12,534 (3,267,544) (1,124,745) -------- --------- ------- -------- --------- -------- ----------- ----------- 16,109 (100,728) 37,547 (20,721) (11,463) 25,281 (1,368,854) (789,760) 193,983 294,711 20,171 40,892 331,259 305,978 13,061,825 13,851,585 -------- --------- ------- -------- --------- -------- ----------- ----------- $210,092 $ 193,983 $57,718 $ 20,171 $ 319,796 $331,259 $11,692,971 $13,061,825 ======== ========= ======= ======== ========= ======== =========== ===========
The accompanying notes are an integral part of these financial statements. 45 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
LMPVPI Investors LMPVPI Small Cap Growth LMPVPI Total Return Subaccount (Class I) Subaccount (Class I) Subaccount (Class I) ---------------------- ---------------------- -------------------- 2006 2005 2006 2005 2006 2005 ---------- ---------- --------- --------- -------- -------- Operations: Net investment income (loss) ... $ 13,952 $ (2,754) $ (7,705) $ (7,867) $ 5,412 $ 4,370 Realized gain (loss) ........... 245,855 64,617 59,154 66,856 16,875 12,731 Change in unrealized gain (loss) on investments ............... 361,598 142,250 16,294 (33,903) 41,983 (5,738) ---------- ---------- --------- --------- -------- -------- Net increase (decrease) in net assets resulting from operations ................. 621,405 204,113 67,743 25,086 64,270 11,363 ---------- ---------- --------- --------- -------- -------- Unit Transactions: Participant purchase payments .. 896 174,867 -- 52,681 -- 1,004 Participant transfers from other funding options .............. 62,563 78,066 14,360 77,479 18,000 1,071 Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (762,607) (468,391) (84,914) (62,424) (33,028) (56,830) Participant transfers to other funding options .............. (27,234) (210,050) (110,682) (34,524) (11,901) -- Other receipts/(payments) ...... -- -- -- -- -- 337 ---------- ---------- --------- --------- -------- -------- Net increase (decrease) in net assets resulting from unit transactions ............... (726,382) (425,508) (181,236) 33,212 (26,929) (54,418) ---------- ---------- --------- --------- -------- -------- Net increase (decrease) in net assets ................. (104,977) (221,395) (113,493) 58,298 37,341 (43,055) Net Assets: Beginning of year .............. 4,116,875 4,338,270 684,549 626,251 587,525 630,580 ---------- ---------- --------- --------- -------- -------- End of year .................... $4,011,898 $4,116,875 $ 571,056 $ 684,549 $624,866 $587,525 ========== ========== ========= ========= ======== ========
The accompanying notes are an integral part of these financial statements. 46 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
LMPVPII Appreciation LMPVPII Equity Index LMPVPII Fundamental LMPVPIII Adjustable Rate Subaccount Subaccount (Class II) Value Subaccount Income Subaccount - ---------------------- ------------------------ ------------------------ ------------------------ 2006 2005 2006 2005 2006 2005 2006 2005 - ---------- ---------- ----------- ----------- ----------- ----------- -------- --------- $ (5,600) $ (11,367) $ 2,464 $ (803) $ 28,433 $ (28,144) $ 10,450 $ 5,985 225,725 73,252 527,498 (60,676) 629,790 730,985 571 803 214,359 45,728 1,837,070 658,654 624,007 (402,279) (1,203) (2,842) - ---------- ---------- ----------- ----------- ----------- ----------- -------- --------- 434,484 107,613 2,367,032 597,175 1,282,230 300,562 9,818 3,946 - ---------- ---------- ----------- ----------- ----------- ----------- -------- --------- 44,503 249,241 6,841 1,496,279 23,385 141,496 20,839 36,887 70,240 271,850 322,135 566,321 45,517 64,152 62,740 34,475 -- -- -- -- -- -- -- -- (411,744) (221,070) (3,636,280) (2,423,729) (1,014,014) (809,487) (85,471) (30,372) (221,917) (234,455) (1,482,443) (1,212,366) (595,960) (574,583) (20,958) (46,862) -- -- (29,958) (19,918) -- -- -- 13 - ---------- ---------- ----------- ----------- ----------- ----------- -------- --------- (518,918) 65,566 (4,819,705) (1,593,413) (1,541,072) (1,178,422) (22,850) (5,859) - ---------- ---------- ----------- ----------- ----------- ----------- -------- --------- (84,434) 173,179 (2,452,673) (996,238) (258,842) (877,860) (13,032) (1,913) 3,502,195 3,329,016 20,174,104 21,170,342 9,201,836 10,079,696 332,102 334,015 - ---------- ---------- ----------- ----------- ----------- ----------- -------- --------- $3,417,761 $3,502,195 $17,721,431 $20,174,104 $ 8,942,994 $ 9,201,836 $319,070 $ 332,102 ========== ========== =========== =========== =========== =========== ======== =========
The accompanying notes are an integral part of these financial statements. 47 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
LMPVPIII Aggressive LMPVPIII High Income LMPVPIII International Growth Subaccount Subaccount All Cap Growth Subaccount ------------------------- --------------------- ------------------------- 2006 2005 2006 2005 2006 2005 ----------- ----------- -------- ---------- ----------- ----------- Operations: Net investment income (loss) ... $ (138,459) $ (137,972) $ 62,483 $ 63,775 $ 13,880 $ 1,279 Realized gain (loss) ........... 552,752 254,407 (4,894) (328) 149,982 18,832 Change in unrealized gain (loss) on investments ............... 386,007 1,005,161 31,668 (50,444) 260,197 175,745 ----------- ----------- -------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations ................. 800,300 1,121,596 89,257 13,003 424,059 195,856 ----------- ----------- -------- ---------- ---------- ---------- Unit Transactions: Participant purchase payments .. 57,638 725,139 44,228 84,977 12,202 32,740 Participant transfers from other funding options .............. 178,159 225,102 193,552 58,483 109,024 20,173 Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (1,483,868) (943,992) (247,926) (136,621) (378,531) (283,769) Participant transfers to other funding options .............. (701,642) (911,894) (69,253) (161,083) (186,007) (251,054) Other receipts/(payments) ...... -- -- -- (17,126) -- (9,693) ----------- ----------- -------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions ............... (1,949,713) (905,645) (79,399) (171,370) (443,312) (491,603) ----------- ----------- -------- ---------- ---------- ---------- Net increase (decrease) in net assets ................. (1,149,413) 215,951 9,858 (158,367) (19,253) (295,747) Net Assets: Beginning of year .............. 11,854,942 11,638,991 960,690 1,119,057 1,934,443 2,230,190 ----------- ----------- -------- ---------- ---------- ---------- End of year .................... $10,705,529 $11,854,942 $970,548 $ 960,690 $1,915,190 $1,934,443 =========== =========== ======== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 48 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Lord Abbett Lord Abbett LMPVPIII Large Cap LMPVPIII Social Awareness Growth and Income Mid-Cap Value Growth Subaccount Stock Subaccount Subaccount (Class VC) Subaccount (Class VC) - ------------------------- ------------------------- --------------------- --------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - ----------- ----------- ---------- ---------- --------- -------- --------- -------- $ (62,850) $ (79,604) $ (20,909) $ (18,373) $ 288 $ 607 $ (4,007) $ (2,726) 104,178 (25,493) (11,933) (58,579) 43,430 41,201 56,659 39,916 105,283 304,618 187,628 161,992 82,505 (20,994) 15,020 (591) - ----------- ----------- ---------- ---------- --------- -------- --------- -------- 146,611 199,521 154,786 85,040 126,223 20,814 67,672 36,599 - ----------- ----------- ---------- ---------- --------- -------- --------- -------- 61,250 240,812 59,274 117,295 64,291 258,362 36,304 172,916 318,106 99,059 -- -- 215,491 127,332 67,139 226,687 -- -- -- -- -- -- -- -- (1,109,354) (1,078,146) (547,745) (643,393) (52,978) (15,233) (19,511) (31,476) (1,023,706) (1,053,419) (205,792) (170,958) (118,293) (5,100) (116,561) (43,865) (32,554) (764) -- (2,538) (21,687) -- -- -- - ----------- ----------- ---------- ---------- --------- -------- --------- -------- (1,786,258) (1,792,458) (694,263) (699,594) 86,824 365,361 (32,629) 324,262 - ----------- ----------- ---------- ---------- --------- -------- --------- -------- (1,639,647) (1,592,937) (539,477) (614,554) 213,047 386,175 35,043 360,861 6,811,499 8,404,436 3,098,703 3,713,257 683,562 297,387 615,829 254,968 - ----------- ----------- ---------- ---------- --------- -------- --------- -------- $ 5,171,852 $ 6,811,499 $2,559,226 $3,098,703 $ 896,609 $683,562 $ 650,872 $615,829 =========== =========== ========== ========== ========= ======== ========= ========
The accompanying notes are an integral part of these financial statements. 49 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MIST Batterymarch MIST BlackRock Managed Assets Mid-Cap Stock Large-Cap Core Subaccount Subaccount (Class A) Subaccount (Class A) -------------------------- -------------------- -------------------- 2006 2005 2006 2005 2006 2005 ------------ ----------- ---------- ------- ---------- ------- Operations: Net investment income (loss) ... $ 385,858 $ (277,700) $ (54,413) $-- $ (8,325) $-- Realized gain (loss) ........... 23,861 (22,300) (95,781) -- (1,240) -- Change in unrealized gain (loss) on investments ............... 320,169 863,562 (227,198) -- 68,384 -- ------------ ----------- ---------- --- ---------- --- Net increase (decrease) in net assets resulting from operations ................. 729,888 563,562 (377,392) -- 58,819 -- ------------ ----------- ---------- --- ---------- --- Unit Transactions: Participant purchase payments .. 30,001 1,265,964 9,900 -- -- -- Participant transfers from other funding options .............. 263,438 337,836 7,697,503 -- 1,071,700 -- Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (1,631,779) (2,283,597) (886,704) -- (68,937) -- Participant transfers to other funding options .............. (21,993,289) (1,013,222) (581,337) -- (15,173) -- Other receipts/(payments) ...... (24,030) (35,194) -- -- -- -- ------------ ----------- ---------- --- ---------- --- Net increase (decrease) in net assets resulting from unit transactions ............... (23,355,659) (1,728,213) 6,239,362 -- 987,590 -- ------------ ----------- ---------- --- ---------- --- Net increase (decrease) in net assets ................. (22,625,771) (1,164,651) 5,861,970 -- 1,046,409 -- Net Assets: Beginning of year .............. 22,625,771 23,790,422 -- -- -- -- ------------ ----------- ---------- --- ---------- --- End of year .................... $ -- $22,625,771 $5,861,970 $-- $1,046,409 $-- ============ =========== ========== === ========== ===
The accompanying notes are an integral part of these financial statements. 50 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MIST Dreman MIST Harris MIST Janus MIST Legg Mason Small-Cap Value Oakmark International Capital Appreciation Partners Managed Assets Subaccount (Class A) Subaccount (Class A) Subaccount (Class A) Subaccount (Class A) - --------------------- ---------------------- -------------------- ----------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - -------- ---------- ---------- --------- ----------- ------ ----------- --------- $ 41 $-- $ (13,227) $-- $ (95,488) $-- $ (164,055) $-- 632 -- 17,481 -- (104,182) -- 63,661 -- 6,617 -- 184,399 -- 400,254 -- 1,198,756 -- - -------- --- ---------- --- ----------- --- ----------- --- 7,290 -- 188,653 -- 200,584 -- 1,098,362 -- - -------- --- ---------- --- ----------- --- ----------- --- -- -- 74,228 -- 3,248 -- 102,854 -- 95,708 -- 2,229,268 -- 13,851,828 -- 21,412,256 -- -- -- -- -- -- -- -- -- (1,156) -- (297,190) -- (1,554,253) -- (2,841,308) -- (11,264) -- (249,218) -- (1,141,260) -- (1,056,790) -- -- -- (22,264) -- (16,991) -- 806 -- - -------- --- ---------- --- ----------- --- ----------- --- 83,288 -- 1,734,824 -- 11,142,572 -- 17,617,818 -- - -------- --- ---------- --- ----------- --- ----------- --- 90,578 -- 1,923,477 -- 11,343,156 -- 18,716,180 -- -- -- -- -- -- -- -- -- - -------- --- ---------- --- ----------- --- ----------- --- $ 90,578 $-- $1,923,477 $-- $11,343,156 $-- $18,716,180 $-- ======== === ========== === =========== === =========== ===
The accompanying notes are an integral part of these financial statements. 51 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MIST Lord Abbett MIST Lord Abbett MIST Met/AIM Bond Debenture Growth and Income Capital Appreciation Subaccount (Class A) Subaccount (Class B) Subaccount (Class A) -------------------- -------------------- -------------------- 2006 2005 2006 2005 2006 2005 -------- ---- ---------- ---- --------- ---- Operations: Net investment income (loss) ... $ (2,104) $-- $ (11,101) $-- $ (3,119) $-- Realized gain (loss) ........... (188) -- 2,526 -- 46,507 -- Change in unrealized gain (loss) on investments ............... 18,366 -- 139,597 -- (53,648) -- -------- --- ---------- --- --------- --- Net increase (decrease) in net assets resulting from operations ................. 16,074 -- 131,022 -- (10,260) -- -------- --- ---------- --- --------- --- Unit Transactions: Participant purchase payments .. -- -- -- -- -- -- Participant transfers from other funding options .............. 556,822 -- 1,950,843 -- 572,563 -- Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (98,816) -- (262,039) -- (107,816) -- Participant transfers to other funding options .............. -- -- (38,438) -- (23,402) -- Other receipts/(payments) ...... -- -- -- -- -- -- -------- --- ---------- --- --------- --- Net increase (decrease) in net assets resulting from unit transactions ............... 458,006 -- 1,650,366 -- 441,345 -- -------- --- ---------- --- --------- --- Net increase (decrease) in net assets ................. 474,080 -- 1,781,388 -- 431,085 -- Net Assets: Beginning of year .............. -- -- -- -- -- -- -------- --- ---------- --- --------- --- End of year .................... $474,080 $-- $1,781,388 $-- $ 431,085 $-- ======== === ========== === ========= ===
The accompanying notes are an integral part of these financial statements. 52 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MIST Met/AIM MIST Neuberger Berman Small Cap Growth MIST MFS(R) Value Real Estate MIST Pioneer Fund Subaccount (Class A) Subaccount (Class A) Subaccount (Class A) Subaccount (Class A) - -------------------- -------------------- --------------------- -------------------- 2006 2005 2006 2005 2006 2005 2006 2005 -------- ---- ---------- ---- ---------- ---- ---------- ---- $ (140) $-- $ 4,887 $-- $ (57,777) $-- $ (12,893) $-- (7,537) -- 43,034 -- 87,964 -- 2,845 -- (154) -- 49,287 -- 1,407,834 -- 124,558 -- -------- --- ---------- --- ---------- --- ---------- --- (7,831) -- 97,208 -- 1,438,021 -- 114,510 -- -------- --- ---------- --- ---------- --- ---------- --- -- -- 530 -- 51,813 -- -- -- 105,928 -- 1,036,950 -- 7,298,649 -- 1,667,283 -- -- -- -- -- -- -- -- -- -- -- (8,517) -- (799,029) -- (175,656) -- (83,461) -- (82,324) -- (250,946) -- (9,981) -- -- -- -- -- -- -- -- -- -------- --- ---------- --- ---------- --- ---------- --- 22,467 -- 946,639 -- 6,300,487 -- 1,481,646 -- -------- --- ---------- --- ---------- --- ---------- --- 14,636 -- 1,043,847 -- 7,738,508 -- 1,596,156 -- -- -- -- -- -- -- -- -- -------- --- ---------- --- ---------- --- ---------- --- $ 14,636 $-- $1,043,847 $-- $7,738,508 $-- $1,596,156 $-- ======== === ========== === ========== === ========== ===
The accompanying notes are an integral part of these financial statements. 53 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MIST Pioneer MIST Pioneer MIST Third Avenue Mid-Cap Value Strategic Income Small Cap Value Subaccount (Class A) Subaccount (Class A) Subaccount (Class B) -------------------- -------------------- -------------------- 2006 2005 2006 2005 2006 2005 ------- ---- ---------- ---- -------- ---- Operations: Net investment income (loss) ... $ (139) $-- $ 73,286 $-- $ (590) $-- Realized gain (loss) ........... 839 -- 4,425 -- 656 -- Change in unrealized gain (loss) on investments ............... 1,718 -- (3,737) -- 7,391 -- ------- --- ---------- --- -------- --- Net increase (decrease) in net assets resulting from operations ................. 2,418 -- 73,974 -- 7,457 -- ------- --- ---------- --- -------- --- Unit Transactions: Participant purchase payments .. -- -- 2,727 -- -- -- Participant transfers from other funding options .............. 58,071 -- 2,107,747 -- 360,872 -- Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ -- -- (217,082) -- (24,102) -- Participant transfers to other funding options .............. -- -- (37,850) -- -- -- Other receipts/(payments) ...... -- -- -- -- -- -- ------- --- ---------- --- -------- --- Net increase (decrease) in net assets resulting from unit transactions ............... 58,071 -- 1,855,542 -- 336,770 -- ------- --- ---------- --- -------- --- Net increase (decrease) in net assets ................. 60,489 -- 1,929,516 -- 344,227 -- Net Assets: Beginning of year .............. -- -- -- -- -- -- ------- --- ---------- --- -------- --- End of year .................... $60,489 $-- $1,929,516 $-- $344,227 $-- ======= === ========== === ======== ===
The accompanying notes are an integral part of these financial statements. 54 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MetLife Investment MetLife Investment MetLife Investment MetLife Investment Diversified Bond International Stock Large Company Stock Small Company Stock Subaccount (Class I) Subaccount (Class I) Subaccount (Class I) Subaccount (Class I) - --------------------------- --------------------------- -------------------------- ------------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- $ 2,407,636 $ 1,993,253 $ 233,237 $ 43,176 $ (182,867) $ (67,447) $ (358,216) $ (375,370) 718,992 411,267 3,342,574 361,494 1,233,692 112,348 4,890,437 1,864,320 (598,957) (1,604,051) 5,937,028 4,894,949 5,401,482 3,436,669 (771,700) 512,878 - ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 2,527,671 800,469 9,512,839 5,299,619 6,452,307 3,481,570 3,760,521 2,001,828 - ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- 784,706 11,454,322 275,850 4,415,240 417,143 7,180,883 235,871 3,224,982 5,879,887 3,792,665 1,426,870 570,648 1,234,353 703,372 574,748 527,474 (394,923) (504,953) (189,568) (219,718) (289,650) (366,283) (130,619) (162,609) (17,160,345) (10,772,820) (7,649,828) (4,756,146) (11,121,600) (7,687,193) (5,695,432) (3,994,056) (4,320,330) (2,472,252) (6,212,364) (2,268,745) (2,904,792) (1,907,837) (2,990,616) (1,501,279) (630,362) (378,519) (210,942) (101,435) (323,941) (167,650) (172,938) (74,480) - ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- (15,841,367) 1,118,443 (12,559,982) (2,360,156) (12,988,487) (2,244,708) (8,178,986) (1,979,968) - ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- (13,313,696) 1,918,912 (3,047,143) 2,939,463 (6,536,180) 1,236,862 (4,418,465) 21,860 95,674,147 93,755,235 44,241,133 41,301,670 66,055,340 64,818,478 34,364,986 34,343,126 - ------------ ------------ ------------ ------------ ------------ ----------- ----------- ----------- $ 82,360,451 $ 95,674,147 $ 41,193,990 $ 44,241,133 $ 59,519,160 $66,055,340 $29,946,521 $34,364,986 ============ ============ ============ ============ ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 55 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MSF BlackRock MSF BlackRock MSF BlackRock Aggressive Growth Bond Income Money Market Subaccount (Class D) Subaccount (Class A) Subaccount (Class A) -------------------- -------------------- -------------------- 2006 2005 2006 2005 2006 2005 ---------- ---- ---------- ---- ----------- ---- Operations: Net investment income (loss) ... $ (26,410) $-- $ (58,320) $-- $ 290,473 $-- Realized gain (loss) ........... (41,015) -- 36,898 -- -- -- Change in unrealized gain (loss) on investments ............... (39,556) -- 311,329 -- -- -- ---------- --- ---------- --- ----------- --- Net increase (decrease) in net assets resulting from operations ................. (106,981) -- 289,907 -- 290,473 -- ---------- --- ---------- --- ----------- --- Unit Transactions: Participant purchase payments .. -- -- 21,315 -- 210,590 -- Participant transfers from other funding options .............. 3,747,303 -- 7,453,481 -- 15,865,848 -- Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (628,969) -- (958,150) -- (2,637,675) -- Participant transfers to other funding options .............. (74,708) -- (296,204) -- (2,289,994) -- Other receipts/(payments) ...... 6,251 -- 44,517 -- 6,070 -- ---------- --- ---------- --- ----------- --- Net increase (decrease) in net assets resulting from unit transactions ............... 3,049,877 -- 6,264,959 -- 11,154,839 -- ---------- --- ---------- --- ----------- --- Net increase (decrease) in net assets ................. 2,942,896 -- 6,554,866 -- 11,445,312 -- Net Assets: Beginning of year .............. -- -- -- -- -- -- ---------- --- ---------- --- ----------- --- End of year .................... $2,942,896 $-- $6,554,866 $-- $11,445,312 $-- ========== === ========== === =========== ===
The accompanying notes are an integral part of these financial statements. 56 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MSF MetLife MSF MetLife Conservative MSF FI Large Cap MSF FI Value Leaders Aggressive Allocation to Moderate Allocation Subaccount (Class A) Subaccount (Class D) Subaccount (Class B) Subaccount (Class B) - -------------------- -------------------- --------------------- ------------------------ 2006 2005 2006 2005 2006 2005 2006 2005 - ----------- ------ ----------- ------ -------- ---- ------- ---- $ (104,747) $-- $ (107,523) $-- $ (115) $-- $ (145) $-- (160,953) -- (51,031) -- (76) -- 53 -- 300,521 -- 452,513 -- 5,795 -- 1,284 -- - ----------- --- ----------- --- -------- --- ------- --- 34,821 -- 293,959 -- 5,604 -- 1,192 -- - ----------- --- ----------- --- -------- --- ------- --- 84,493 -- 5,171 -- -- -- -- -- 14,950,290 -- 14,734,688 -- 126,673 -- 78,900 -- -- -- -- -- -- -- -- (2,088,611) -- (1,601,831) -- -- -- (4,417) -- (900,338) -- (796,426) -- (57,596) -- -- -- (8,015) -- (5,853) -- -- -- -- -- - ----------- --- ----------- --- -------- --- ------- --- 12,037,819 -- 12,335,749 -- 69,077 -- 74,483 -- - ----------- --- ----------- --- -------- --- ------- --- 12,072,640 -- 12,629,708 -- 74,681 -- 75,675 -- -- -- -- -- -- -- -- -- - ----------- --- ----------- --- -------- --- ------- --- $12,072,640 $-- $12,629,708 $-- $ 74,681 $-- $75,675 $-- =========== === =========== === ======== === ======= ===
The accompanying notes are an integral part of these financial statements. 57 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MSF MetLife MSF MetLife Moderate Moderate Allocation to Aggressive Allocation MSF MFS(R) Total Return Subaccount (Class B) Subaccount (Class B) Subaccount (Class F) -------------------- ------------------------ ----------------------- 2006 2005 2006 2005 2006 2005 -------- ---- -------- ---- ----------- ---- Operations: Net investment income (loss) ... $ (1,257) $-- $ (687) $-- $ (206,385) $-- Realized gain (loss) ........... 31 -- 393 -- 79,346 -- Change in unrealized gain (loss) on investments ............... 14,755 -- 9,902 -- 1,858,296 -- -------- --- -------- --- ----------- --- Net increase (decrease) in net assets resulting from operations ................. 13,529 -- 9,608 -- 1,731,257 -- -------- --- -------- --- ----------- --- Unit Transactions: Participant purchase payments .. -- -- -- -- 87,995 -- Participant transfers from other funding options .............. 348,382 -- 429,192 -- 27,002,963 -- Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (4,906) -- -- -- (2,984,066) -- Participant transfers to other funding options .............. -- -- -- -- (855,767) -- Other receipts/(payments) ...... -- -- -- -- (120,917) -- -------- --- -------- --- ----------- --- Net increase (decrease) in net assets resulting from unit transactions ............... 343,476 -- 429,192 -- 23,130,208 -- -------- --- -------- --- ----------- --- Net increase (decrease) in net assets ................. 357,005 -- 438,800 -- 24,861,465 -- Net Assets: Beginning of year .............. -- -- -- -- -- -- -------- --- -------- --- ----------- --- End of year .................... $357,005 $-- $438,800 $-- $24,861,465 $-- ======== === ======== === =========== ===
The accompanying notes are an integral part of these financial statements. 58 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
MSF Western Asset MSF Western Asset MSF Oppenheimer Global Management High Yield Bond Management U.S. Government Money Market Equity Subaccount (Class B) Subaccount (Class A) Subaccount (Class A) Subaccount - --------------------------- -------------------------- -------------------------- -------------------------- 2006 2005 2006 2005 2006 2005 2006 2005 ---------- ---- ---------- ---- ----------- ---- ------------ ----------- $ (25,079) $-- $ (58,157) $-- $ (84,185) $-- $ 119,923 $ 218,623 (6,196) -- 22,462 -- 28,652 -- -- -- 219,677 -- 470,984 -- 478,560 -- -- -- ---------- --- ---------- --- ----------- --- ------------ ----------- 188,402 -- 435,289 -- 423,027 -- 119,923 218,623 ---------- --- ---------- --- ----------- --- ------------ ----------- -- -- 11,937 -- 13,527 -- 73,108 1,848,855 3,310,467 -- 7,588,112 -- 12,672,738 -- 1,020,250 1,702,146 -- -- -- -- -- -- -- -- (82,568) -- (868,089) -- (1,232,169) -- (1,386,399) (1,828,395) (85,340) -- (275,632) -- (764,091) -- (12,352,665) (3,642,551) (10,352) -- 22,454 -- (8,981) -- (6,981) (175,088) ---------- --- ---------- --- ----------- --- ------------ ----------- 3,132,207 -- 6,478,782 -- 10,681,024 -- (12,652,687) (2,095,033) ---------- --- ---------- --- ----------- --- ------------ ----------- 3,320,609 -- 6,914,071 -- 11,104,051 -- (12,532,764) (1,876,410) -- -- -- -- -- -- 12,532,764 14,409,174 ---------- --- ---------- --- ----------- --- ------------ ----------- $3,320,609 $-- $6,914,071 $-- $11,104,051 $-- $ -- $12,532,764 ========== === ========== === =========== === ============ ===========
The accompanying notes are an integral part of these financial statements. 59 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Oppenheimer PIMCO VIT PIMCO VIT Main Street/VA Real Return Subaccount Total Return Subaccount Subaccount (Service Shares) (Administrative Class) (Administrative Class) --------------------------- ---------------------- ------------------------ 2006 2005 2006 2005 2006 2005 --------- -------- -------- -------- ----------- ----------- Operations: Net investment income (loss) ... $ 1,989 $ (580) $ 7,413 $ 1,416 $ 221,967 $ 158,514 Realized gain (loss) ........... 25,910 221 5,407 2,108 12,445 133,532 Change in unrealized gain (loss) on investments ............... (13,292) 9,238 (13,598) (2,402) (57,035) (209,487) --------- -------- -------- -------- ----------- ---------- Net increase (decrease) in net assets resulting from operations ................. 14,607 8,879 (778) 1,122 177,377 82,559 --------- -------- -------- -------- ----------- ---------- Unit Transactions: Participant purchase payments .. -- 86,455 -- 181,605 43,246 844,149 Participant transfers from other funding options .............. 135,944 15,867 68,938 11,023 1,085,549 578,963 Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (671) (3,065) (10,278) -- (1,264,341) (708,040) Participant transfers to other funding options .............. (338,352) -- (16,076) -- (529,351) (468,494) Other receipts/(payments) ...... (2) -- -- -- (22,284) (8,571) --------- -------- --------- -------- ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions ............... (203,081) 99,257 42,584 192,628 (687,181) 238,007 --------- -------- -------- -------- ----------- ---------- Net increase (decrease) in net assets ................. (188,474) 108,136 41,806 193,750 (509,804) 320,566 Net Assets: Beginning of year .............. 188,474 80,338 193,750 -- 7,295,065 6,974,499 --------- -------- -------- -------- ----------- ---------- End of year .................... $ -- $188,474 $235,556 $193,750 $ 6,785,261 $7,295,065 ========= ======== ======== ======== =========== ==========
The accompanying notes are an integral part of these financial statements. 60 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Putnam VT Putnam VT Putnam VT Discovery Growth International Equity Small Cap Value Travelers AIM Capital Subaccount (Class IB) Subaccount (Class IB) Subaccount (Class IB) Appreciation Subaccount - --------------------- ----------------------- ------------------------- ----------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - -------- -------- ---------- ---------- ----------- ----------- --------- --------- $ (1,040) $ (776) $ (8,102) $ 2,436 $ (52,759) $ (57,177) $ (2,328) $ (5,944) 4,876 3,799 76,626 39,461 862,456 502,205 161,368 50,714 3,394 62 223,925 70,427 51,412 (122,919) (121,870) (9,026) - -------- -------- ---------- ---------- ---------- ---------- --------- --------- 7,230 3,085 292,449 112,324 861,109 322,109 37,170 35,744 - -------- -------- ---------- ---------- ---------- ---------- --------- --------- -- 2,414 2,235 30,229 57,669 622,433 -- 25,262 39,119 14,287 210,304 95,330 456,558 563,226 6,016 122,079 -- -- -- -- -- -- -- -- -- 39 (109,147) (58,813) (620,644) (388,351) (76,875) (287,760) (21,018) (15,898) (93,951) (80,419) (720,345) (574,448) (565,309) (33,393) -- -- -- -- -- -- (3) -- - -------- -------- ---------- ---------- ---------- ---------- --------- --------- 18,101 842 9,441 (13,673) (826,762) 222,860 (636,171) (173,812) - -------- -------- ---------- ---------- ---------- ---------- --------- --------- 25,331 3,927 301,890 98,651 34,347 544,969 (599,001) (138,068) 76,160 72,233 1,087,010 988,359 5,825,263 5,280,294 599,001 737,069 - -------- -------- ---------- ---------- ---------- ---------- --------- --------- $101,491 $ 76,160 $1,388,900 $1,087,010 $5,859,610 $5,825,263 $ -- $ 599,001 ======== ======== ========== ========== ========== =========== ========= =========
The accompanying notes are an integral part of these financial statements. 61 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Travelers Convertible Travelers Disciplined Travelers Equity Securities Subaccount Mid Cap Stock Subaccount Income Subaccount --------------------- ------------------------ -------------------------- 2006 2005 2006 2005 2006 2005 --------- -------- ----------- ---------- ------------ ----------- Operations: Net investment income (loss) ..... $ 546 $ 1,412 $ 10,773 $ (86,318) $ 136,436 $ (176,960) Realized gain (loss) ............. 3,750 1,705 2,501,102 297,364 2,556,737 414,500 Change in unrealized gain (loss) on investments ................. 1,916 (3,054) (1,839,537) 530,865 (1,927,404) 225,281 --------- -------- ----------- ---------- ------------ ----------- Net increase (decrease) in net assets resulting from operations ................... 6,212 63 672,338 741,911 765,769 462,821 --------- -------- ----------- ---------- ------------ ----------- Unit Transactions: Participant purchase payments .... -- 13,444 38,844 202,681 2,047 927,253 Participant transfers from other funding options ................ 13,763 23,647 117,537 359,731 66,937 542,792 Administrative and asset allocation charges ............. -- -- -- -- -- -- Contract surrenders .............. (1,165) (10,754) (291,231) (832,571) (757,956) (1,503,726) Participant transfers to other funding options ................ (111,340) (574) (7,839,383) (193,961) (15,019,141) (543,906) Other receipts/(payments) ........ (1) -- -- -- (1,811) (22,799) --------- -------- ----------- ---------- ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions ................. (98,743) 25,763 (7,974,233) (464,120) (15,709,924) (600,386) --------- -------- ----------- ---------- ------------ ----------- Net increase (decrease) in net assets ................... (92,531) 25,826 (7,301,895) 277,791 (14,944,155) (137,565) Net Assets: Beginning of year ................ 92,531 66,705 7,301,895 7,024,104 14,944,155 15,081,720 --------- -------- ----------- ---------- ------------ ----------- End of year ...................... $ -- $ 92,531 $ -- $7,301,895 $ -- $14,944,155 ========= ======== =========== ========== ============ ===========
The accompanying notes are an integral part of these financial statements. 62 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Travelers Federated Travelers Large Cap Travelers Mercury Travelers MFS(R) Stock Subaccount Subaccount Large Cap Core Subaccount Mid Cap Growth Subaccount - ------------------------ ------------------------- ------------------------- ------------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - ----------- ---------- ----------- ----------- ----------- --------- ----------- ---------- $ 13,179 $ (14,708) $ 2,903 $ (84,533) $ (1,644) $ (10,004) $ (15,101) $ (48,880) 163,809 27,725 (734,674) (322,942) (23,025) (31,858) (2,032,034) (604,043) (136,673) 31,098 946,044 882,135 83,318 123,192 2,271,155 699,907 - ----------- ---------- ----------- ----------- ----------- --------- ----------- ---------- 40,315 44,115 214,273 474,660 58,649 81,330 224,020 46,984 - ----------- ---------- ----------- ----------- ----------- --------- ----------- ---------- 14 10,200 92 223,172 19 86,371 7,803 68,375 -- 811 75,858 32,034 116,939 76,892 15,538 110,044 -- -- -- -- -- -- -- -- (18,632) (222,375) (470,775) (671,323) (45,756) (127,022) (233,177) (500,066) (1,122,672) (70,916) (6,627,848) (677,447) (1,040,863) (19,601) (3,835,278) (312,070) -- -- (3) (12,908) -- -- (10,175) (796) - ----------- ---------- ----------- ----------- ----------- --------- ----------- ---------- (1,141,290) (282,280) (7,022,676) (1,106,472) (969,661) 16,640 (4,055,289) (634,513) - ----------- ---------- ----------- ----------- ----------- --------- ----------- ---------- (1,100,975) (238,165) (6,808,403) (631,812) (911,012) 97,970 (3,831,269) (587,529) 1,100,975 1,339,140 6,808,403 7,440,215 911,012 813,042 3,831,269 4,418,798 - ----------- ---------- ----------- ----------- ----------- --------- ----------- ---------- $ -- $1,100,975 $ -- $ 6,808,403 $ -- $ 911,012 $ -- $3,831,269 =========== ========== =========== =========== =========== ========= =========== ==========
The accompanying notes are an integral part of these financial statements. 63 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Travelers Mondrian Travelers MFS(R) Total Travelers MFS(R) Value International Stock Return Subaccount Subaccount Subaccount --------------------------- ---------------------- ------------------------ 2006 2005 2006 2005 2006 2005 ------------ ------------ --------- ---------- ----------- ---------- Operations: Net investment income (loss) ... $ 180,178 $ 185,101 $ (2,742) $ 440 $ 50,712 $ (16,405) Realized gain (loss) ........... 482,846 1,045,537 64,950 27,514 471,962 68,549 Change in unrealized gain (loss) on investments ............... (15,368) (895,792) (7,791) (4,505) (311,271) 56,132 ------------ ------------ --------- -------- ----------- ---------- Net increase (decrease) in net assets resulting from operations ................. 647,656 334,846 54,417 23,449 211,403 108,276 ------------ ------------ --------- -------- ----------- ---------- Unit Transactions: Participant purchase payments .. 33,637 2,237,514 4,819 126,114 -- 34,073 Participant transfers from other funding options .............. 270,419 742,272 69,590 349,440 115,116 250,705 Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (1,032,445) (2,545,350) (7,503) (50,311) (153,988) (158,910) Participant transfers to other funding options .............. (19,499,261) (706,029) (781,733) (63,471) (1,539,879) (209,080) Other receipts/(payments) ...... (14,123) (28,758) -- -- (1,448) (72) ------------ ------------ --------- -------- ----------- ---------- Net increase (decrease) in net assets resulting from unit transactions ............... (20,241,773) (300,351) (714,827) 361,772 (1,580,199) (83,284) ------------ ------------ --------- -------- ----------- ---------- Net increase (decrease) in net assets ................. (19,594,117) 34,495 (660,410) 385,221 (1,368,796) 24,992 Net Assets: Beginning of year .............. 19,594,117 19,559,622 660,410 275,189 1,368,796 1,343,804 ------------ ------------ --------- -------- ----------- ---------- End of year .................... $ -- $ 19,594,117 $ -- $660,410 $ -- $1,368,796 ============ ============ ========= ======== =========== ==========
The accompanying notes are an integral part of these financial statements. 64 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Travelers Pioneer Fund Travelers Pioneer Mid Cap Travelers Pioneer Strategic Travelers Quality Bond Subaccount Value Subaccount Income Subaccount Subaccount - ------------------------ ------------------------- --------------------------- ------------------------ 2006 2005 2006 2005 2006 2005 2006 2005 - ----------- ---------- ----------- ----------- ------------ ------------ ----------- ---------- $ 9,511 $ (21,500) $ (97) $ (110) $ (7,246) $ 52,950 $ 427,402 $ (100,097) (297,433) (103,930) 1,340 309 (9,572) (972) (545,867) (23,856) 389,626 203,621 237 (237) 38,253 (14,676) 57,190 155,912 - ----------- ---------- -------- ------- ----------- ---------- ----------- ---------- 101,704 78,191 1,480 (38) 21,435 37,302 (61,275) 31,959 - ----------- ---------- -------- ------- ----------- ---------- ----------- ---------- 855 146,093 -- 19,891 46,666 389,973 36,057 897,636 5,608 3,000 -- 22,098 238,109 267,870 70,614 205,625 -- -- -- -- -- -- -- -- (193,668) (274,491) -- (618) (53,834) (52,047) (537,016) (875,814) (1,629,546) (62,426) (36,729) (6,084) (2,050,823) (84,334) (7,557,994) (515,275) -- -- -- -- -- (10,045) (61,957) (6,010) - ----------- ---------- -------- ------- ----------- ---------- ----------- ---------- (1,816,751) (187,824) (36,729) 35,287 (1,819,882) 511,417 (8,050,296) (293,838) - ----------- ---------- -------- ------- ----------- ---------- ----------- ---------- (1,715,047) (109,633) (35,249) 35,249 (1,798,447) 548,719 (8,111,571) (261,879) 1,715,047 1,824,680 35,249 -- 1,798,447 1,249,728 8,111,571 8,373,450 - ----------- ---------- -------- ------- ----------- ---------- ----------- ---------- $ -- $1,715,047 $ -- $35,249 $ -- $1,798,447 $ -- $8,111,571 =========== ========== ======== ======= =========== ========== =========== ==========
The accompanying notes are an integral part of these financial statements. 65 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Travelers Style Focus Travelers Strategic Series: Small Cap Travelers U.S. Government Equity Subaccount Growth Subaccount Securities Subaccount -------------------------- --------------------- --------------------------- 2006 2005 2006 2005 2006 2005 ------------ ------------ --------- ---------- ------------- ------------ Operations: Net investment income (loss) ... $ (3,127) $ (59,332) $ (5) $-- $ 720,136 $ (177,984) Realized gain (loss) ........... (3,378,337) (1,182,351) 318 -- (803,401) 54,523 Change in unrealized gain (loss) on investments ............... 3,765,901 1,222,187 -- -- (389,838) 566,013 ----------- ----------- -------- --- ------------ ----------- Net increase (decrease) in net assets resulting from operations ................. 384,437 (19,496) 313 -- (473,103) 442,552 ----------- ----------- -------- --- ------------ ----------- Unit Transactions: Participant purchase payments .. 27,433 249,671 -- -- 87,952 926,923 Participant transfers from other funding options .............. 16,383 47,938 9,869 -- 135,852 417,519 Administrative and asset allocation charges ........... -- -- -- -- -- -- Contract surrenders ............ (437,453) (1,385,494) -- -- (770,890) (1,592,676) Participant transfers to other funding options .............. (8,577,233) (718,796) (10,182) -- (12,904,104) (1,097,963) Other receipts/(payments) ...... (23,284) (18,272) -- -- (16,134) (1,192) ----------- ----------- -------- --- ------------ ----------- Net increase (decrease) in net assets resulting from unit transactions ............... (8,994,154) (1,824,953) (313) -- (13,467,324) (1,347,389) ----------- ----------- -------- --- ------------ ----------- Net increase (decrease) in net assets ................. (8,609,717) (1,844,449) -- -- (13,940,427) (904,837) Net Assets: Beginning of year .............. 8,609,717 10,454,166 -- -- 13,940,427 14,845,264 ----------- ----------- -------- --- ------------ ----------- End of year .................... $ -- $ 8,609,717 $ -- $-- $ -- $13,940,427 =========== =========== ======== === ============ ===========
The accompanying notes are an integral part of these financial statements. 66 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
Van Kampen LIT VIP Asset Van Kampen LIT Comstock Van Kampen LIT Enterprise Strategic Growth Manager Subaccount Subaccount (Class II) Subaccount (Class II) Subaccount (Class II) (Service Class 2) - ------------------------ ------------------------- --------------------- ------------------------- 2006 2005 2006 2005 2006 2005 2006 2005 - ----------- ----------- ----------- ------------ --------- ---------- ----------- ----------- $ 869 $ (3,853) $ (614) $ (362) $ (2,161) $ (1,867) $ 96,262 $ 61,779 83,652 34,016 85 44 3,268 2,455 349,438 13,697 54,621 12,671 3,357 3,321 410 11,631 (278,957) 41,366 - ---------- ---------- ------- ------- -------- -------- ----------- ---------- 139,142 42,834 2,828 3,003 1,517 12,219 166,743 116,842 - ---------- ---------- ------- ------- -------- -------- ----------- ---------- -- 369,117 -- -- -- 62,593 510 133,549 138,787 518,542 10,000 -- -- 26,240 52,011 167,132 -- -- -- -- -- -- -- -- (308,248) (68,187) -- -- (17,751) (29,362) (90,641) (326,456) (94,136) (198,443) -- -- (7,309) (5,448) (4,891,339) (133,088) (20,916) -- (1) 1 (911) -- (1,567) -- - ---------- ---------- ------- ------- -------- -------- ----------- ---------- (284,513) 621,029 9,999 1 (25,971) 54,023 (4,931,026) (158,863) - ---------- ---------- ------- ------- -------- -------- ----------- ---------- (145,371) 663,863 12,827 3,004 (24,454) 66,242 (4,764,283) (42,021) 1,159,340 495,477 48,937 45,933 184,252 118,010 4,764,283 4,806,304 - ---------- ---------- ------- ------- -------- -------- ----------- ---------- $1,013,969 $1,159,340 $61,764 $48,937 $159,798 $184,252 $ -- $4,764,283 ========== ========== ======= ======= ======== ======== =========== ==========
The accompanying notes are an integral part of these financial statements. 67 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Continued) For the years ended December 31, 2006 and 2005
VIP Dynamic Capital VIP Contrafund(R) Appreciation Subaccount VIP Mid Cap Subaccount Subaccount (Service Class 2) (Service Class 2) (Service Class 2) ---------------------------- ----------------------- ------------------------ 2006 2005 2006 2005 2006 2005 ---------- ---------- --------- ---------- ---------- ----------- Operations: Net investment income (loss) ........ $ (15,390) $ (54,512) $ (3,012) $ (2,796) $ (76,605) $ (64,729) Realized gain (loss) ................ 828,931 114,610 47,431 1,597 1,154,720 162,691 Change in unrealized gain (loss) on investments .................... (167,000) 695,499 (2,001) 43,515 (335,209) 799,433 ---------- ---------- --------- --------- ---------- ---------- Net increase (decrease) in net assets resulting from operations ...................... 646,541 755,597 42,418 42,316 742,906 897,395 ---------- ---------- --------- --------- ---------- ---------- Unit Transactions: Participant purchase payments ....... 164,160 1,440,474 -- 3,393 83,473 1,198,819 Participant transfers from other funding options ................... 1,018,018 824,612 140,279 161,355 1,113,387 1,157,329 Administrative and asset allocation charges ................ -- -- -- -- -- -- Contract surrenders ................. (887,461) (621,797) (176,875) -- (850,871) (314,218) Participant transfers to other funding options ................... (321,792) (80,379) (32,667) (7,339) (697,694) (141,194) Other receipts/(payments) ........... -- -- -- -- (10,350) -- ---------- ---------- --------- --------- ---------- ---------- Net increase (decrease) in net assets resulting from unit transactions .................... (27,075) 1,562,910 (69,263) 157,409 (362,055) 1,900,736 ---------- ---------- --------- --------- ---------- ---------- Net increase (decrease) in net assets ...................... 619,466 2,318,507 (26,845) 199,725 380,851 2,798,131 Net Assets: Beginning of year ................... 6,271,319 3,952,812 372,512 172,787 6,955,003 4,156,872 ---------- ---------- --------- --------- ---------- ---------- End of year ......................... $6,890,785 $6,271,319 $ 345,667 $ 372,512 $7,335,854 $6,955,003 ========== ========== ========= ========= ========== ==========
The accompanying notes are an integral part of these financial statements. 68 METLIFE OF CT SEPARATE ACCOUNT SIX FOR VARIABLE ANNUITIES STATEMENTS OF CHANGES IN NET ASSETS -- (Concluded) For the years ended December 31, 2006 and 2005 Wells Fargo VT Advantage Small/Mid Cap Value Subaccount - ------------------------ 2006 2005 ---------- -------- $ (10,245) $ (5,930) 175,587 30,373 (55,928) 68,011 --------- -------- 109,414 92,454 --------- -------- 3,453 3,383 94,084 135,139 -- -- (126,274) (96,772) (81,501) (50,073) -- -- --------- -------- (110,238) (8,323) --------- -------- (824) 84,131 791,556 707,425 --------- -------- $ 790,732 $791,556 ========= ======== The accompanying notes are an integral part of these financial statements. 69 NOTES TO FINANCIAL STATEMENTS 1. BUSINESS MetLife of CT Separate Account Six for Variable Annuities ("Separate Account Six") (formerly, The Travelers Separate Account Six for Variable Annuities) is a separate account of MetLife Life and Annuity Company of Connecticut (the "Company") (formerly, The Travelers Life and Annuity Company), an indirect wholly owned subsidiary of MetLife, Inc., a Delaware corporation, and is available for funding certain variable annuity contracts issued by the Company. Separate Account Six, established on March 27, 1997, is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. The product supported by Separate Account Six is MetLife Retirement Account Annuity (formerly, Travelers Retirement Account Annuity). Separate Account Six is divided into Subaccounts, each of which is treated as an individual separate account for financial reporting purposes. Each Subaccount invests in shares of the corresponding portfolios, series and funds (with the same name) of registered investment management companies (collectively, the "Funds") which are presented below. For convenience, the portfolios, series or funds are referred to as "portfolios". AIM Variable Insurance Funds American Funds Insurance Series Credit Suisse Trust Delaware VIP Trust Dreyfus Variable Investment Fund Franklin Templeton Variable Insurance Products Trust Janus Aspen Series Legg Mason Partners Investment Series Legg Mason Partners Variable Portfolios V Legg Mason Partners Variable Portfolios I, Inc. Legg Mason Partners Variable Portfolios II Legg Mason Partners Variable Portfolios III, Inc. Lord Abbett Series Fund, Inc. Met Investors Series Trust MetLife Investment Funds, Inc. Metropolitan Series Fund, Inc. PIMCO Variable Insurance Trust Putnam Variable Trust Van Kampen Life Investment Trust Variable Insurance Products Fund Wells Fargo Variable Trust Participant purchase payments applied to Separate Account Six are invested in one or more sub-accounts in accordance with the selection made by the contract owner. The following subaccounts were available for investment as of December 31, 2006 (the share class indicated in parentheses is that of the portfolio in which the subaccount invests): AIM V.I. Core Equity Subaccount (Series I) American Funds Global Growth Subaccount (Class 2) American Funds Growth Subaccount (Class 2) American Funds Growth-Income Subaccount (Class 2) Credit Suisse Trust Emerging Markets Subaccount Delaware VIP Small Cap Value Subaccount (Standard Class) Dreyfus VIF Appreciation Subaccount (Initial Shares) Dreyfus VIF Developing Leaders Subaccount (Initial Shares) FTVIPT Templeton Developing Markets Securities Subaccount (Class 2) FTVIPT Templeton Foreign Securities Subaccount (Class 2) Janus Aspen Mid Cap Growth Subaccount (Service Shares) Janus Aspen Worldwide Growth Subaccount (Service Shares) LMPIS Dividend Strategy Subaccount LMPIS Premier Selections All Cap Growth Subaccount LMPVPV Small Cap Growth Opportunities Subaccount LMPVPI All Cap Subaccount (Class I) LMPVPI Investors Subaccount (Class I) LMPVPI Small Cap Growth Subaccount (Class I) LMPVPI Total Return Subaccount (Class I) LMPVPII Appreciation Subaccount LMPVPII Equity Index Subaccount (Class II) LMPVPII Fundamental Value Subaccount LMPVPIII Adjustable Rate Income Subaccount 70 NOTES TO FINANCIAL STATEMENTS -- (Continued) 1. BUSINESS -- (Continued) LMPVPIII Aggressive Growth Subaccount LMPVPIII High Income Subaccount LMPVPIII International All Cap Growth Subaccount LMPVPIII Large Cap Growth Subaccount LMPVPIII Social Awareness Stock Subaccount Lord Abbett Growth and Income Subaccount (Class VC) Lord Abbett Mid-Cap Value Subaccount (Class VC) MIST Batterymarch Mid-Cap Stock Subaccount (Class A) MIST BlackRock Large-Cap Core Subaccount (Class A) MIST Dreman Small-Cap Value Subaccount (Class A) MIST Harris Oakmark International Subaccount (Class A) MIST Janus Capital Appreciation Subaccount (Class A) MIST Legg Mason Partners Managed Assets Subaccount (Class A) MIST Lord Abbett Bond Debenture Subaccount (Class A) MIST Lord Abbett Growth and Income Subaccount (Class B) MIST Met/AIM Capital Appreciation Subaccount (Class A) MIST Met/AIM Small Cap Growth Subaccount (Class A) MIST MFS(R) Value Subaccount (Class A) MIST Neuberger Berman Real Estate Subaccount (Class A) MIST Pioneer Fund Subaccount (Class A) MIST Pioneer Mid-Cap Value Subaccount (Class A) MIST Pioneer Strategic Income Subaccount (Class A) MIST Third Avenue Small Cap Value Subaccount (Class B) MetLife Investment Diversified Bond Subaccount (Class I) MetLife Investment International Stock Subaccount (Class I) MetLife Investment Large Company Stock Subaccount (Class I) MetLife Investment Small Company Stock Subaccount (Class I) MSF BlackRock Aggressive Growth Subaccount (Class D) MSF BlackRock Bond Income Subaccount (Class A) MSF BlackRock Money Market Subaccount (Class A) MSF FI Large Cap Subaccount (Class A) MSF FI Value Leaders Subaccount (Class D) MSF MetLife Aggressive Allocation Subaccount (Class B) MSF MetLife Conservative to Moderate Allocation Subaccount (Class B) MSF MetLife Moderate Allocation Subaccount (Class B) MSF MetLife Moderate to Aggressive Allocation Subaccount (Class B) MSF MFS(R) Total Return Subaccount (Class F) MSF Oppenheimer Global Equity Subaccount (Class B) MSF Western Asset Management High Yield Bond Subaccount (Class A) MSF Western Asset Management U.S. Government Subaccount (Class A) PIMCO VIT Real Return Subaccount (Administrative Class) PIMCO VIT Total Return Subaccount (Administrative Class) Putnam VT Discovery Growth Subaccount (Class IB) Putnam VT International Equity Subaccount (Class IB) Putnam VT Small Cap Value Subaccount (Class IB) Van Kampen LIT Comstock Subaccount (Class II) Van Kampen LIT Enterprise Subaccount (Class II) Van Kampen LIT Strategic Growth Subaccount (Class II) VIP Contrafund(R) Subaccount (Service Class 2) VIP Dynamic Capital Appreciation Subaccount (Service Class 2) 71 NOTES TO FINANCIAL STATEMENTS -- (Continued) 1. BUSINESS -- (Continued) VIP Mid Cap Subaccount (Service Class 2) Wells Fargo VT Advantage Small/Mid Cap Value Subaccount The operations of the Subaccounts changed as follows during the years ended December 31, 2006 and 2005: For the year ended December 31, 2006: Mergers:
Old Portfolio New Portfolio ------------- ------------- AIM V.I. Premier Equity Portfolio (a) AIM V.I. Core Equity Portfolio (b) Capital Appreciation Fund (a) Janus Capital Appreciation Portfolio (b) High Yield Bond Trust (a) Western Asset Management High Yield Bond Portfolio (b) Managed Assets Trust (a) Legg Mason Partners Managed Assets Portfolio (b) Money Market Portfolio (a) BlackRock Money Market Portfolio (b) Travelers AIM Capital Appreciation Portfolio (a) Met/AIM Capital Appreciation Portfolio (b) Travelers Convertible Securities Portfolio (a) Lord Abbett Bond Debenture Portfolio (b) Disciplined Mid Cap Stock Portfolio (a) Batterymarch Mid Cap Stock Portfolio (b) Travelers Federated Stock Portfolio (a) Lord Abbett Growth and Income Portfolio (b) Travelers Mercury Large Cap Core Portfolio (a) Mercury Large Cap Core Portfolio (b) Travelers MFS(R) Value Portfolio (a) MFS(R) Value Portfolio (b) Travelers Mondrian International Stock Portfolio (a) Harris Oakmark International Portfolio (b) Travelers Pioneer Fund Portfolio (a) Pioneer Fund Portfolio (b) Travelers Pioneer Mid-Cap Value Portfolio (a) Pioneer Mid-Cap Value Portfolio (b) Travelers Pioneer Strategic Income Portfolio (a) Pioneer Strategic Income Portfolio (b) Travelers Style Focus Small Cap Growth Value Portfolio (a) Met/AIM Small Cap Growth Portfolio (b) Travelers Equity Income Portfolio (a) FI Value Leaders Portfolio (b) Travelers Large Cap Portfolio (a) FI Large Cap Portfolio (b) Travelers MFS(R) Mid Cap Growth Portfolio (a) BlackRock Aggressive Growth Portfolio (b) Travelers MFS(R)Total Return Portfolio (a) MFS(R) Total Return Portfolio (b) Travelers Strategic Equity Portfolio (a) FI Large Cap Portfolio (b) Travelers Quality Bond Portfolio (a) BlackRock Bond Income Portfolio (b) Travelers U.S. Government Securities Portfolio (a) Western Asset Management U.S. Government Portfolio (b)
(a) For the period January 1, 2006 to April 30, 2006 (b) For the period May 1, 2006 to December 31, 2006 Substitutions:
Old Portfolio New Portfolio ------------- ------------- Delaware VIP REIT Portfolio (c) Neuberger Berman Real Estate Portfolio (d) Janus Aspen Balanced Portfolio (c) MFS(R) Total Return Portfolio (d) VIP Asset Manager Portfolio (c) MFS(R) Total Return Portfolio (d) Mutual Shares Securities Portfolio (c) Lord Abbett Growth and Income Portfolio (d) Templeton Growth Securities Portfolio (c) Oppenheimer Global Equity Portfolio (d) Oppenheimer Main Street Portfolio (c) Lord Abbett Growth and Income Portfolio (d) Lazard Retirement Small Cap Portfolio (e) Third Avenue Small Cap Value Portfolio (f)
(c) For the period January 1, 2006 to April 30, 2006 (d) For the period May 1, 2006 to December 31, 2006 (e) For the period January 1, 2006 to November 12, 2006 (f) For the period November 13, 2006 to December 31, 2006 72 NOTES TO FINANCIAL STATEMENTS -- (Continued) 1. BUSINESS -- (Concluded) Name Changes:
Old Name New Name -------- -------- CitiStreet Diversified Bond Subaccount MetLife Investment Diversified Bond Subaccount CitiStreet International Stock Subaccount MetLife Investment International Stock Subaccount CitiStreet Large Company Stock Subaccount MetLife Investment Large Company Stock Subaccount CitiStreet Small Company Stock Subaccount MetLife Investment Small Company Stock Subaccount Mercury Large-Cap Core Subaccount MIST BlackRock Large-Cap Core Subaccount Greenwich Street Appreciation Subaccount LMPVPII Appreciation Subaccount Greenwich Street Equity Index Subaccount LMPVPII Equity Index Subaccount Greenwich Street Fundamental Value Subaccount LMPVPII Fundamental Value Subaccount Salomon Brothers Variable All Cap Subaccount LMPVPI All Cap Subaccount Salomon Brothers Variable Investors Subaccount LMPVPI Investors Subaccount Salomon Brothers Variable Small Cap Growth Subaccount LMPVPI Small Cap Growth Subaccount Salomon Brothers Variable Total Return Subaccount LMPVPI Total Return Subaccount SB Dividend Strategy Subaccount LMPIS Dividend Strategy Subaccount Smith Barney Premier Selections All Cap Growth Subaccount LMPIS Premier Selections All Cap Growth Subaccount SB Adjustable Rate Income Subaccount LMPVPIII Adjustable Rate Income Subaccount Smith Barney Aggressive Growth Subaccount LMPVPIII Aggressive Growth Subaccount Smith Barney High Income Subaccount LMPVPIII High Income Subaccount Smith Barney International All Cap Growth Subaccount LMPVPIII International All Cap Growth Subaccount Smith Barney Large Capitalization Growth Subaccount LMPVPIII Large Cap Growth Subaccount Social Awareness Stock Subaccount LMPVPIII Social Awareness Stock Subaccount Smith Barney Small Cap Growth Opportunities Subaccount LMPVPV Small Cap Growth Opportunities Subaccount Van Kampen LIT Emerging Growth Portfolio Van Kampen LIT Strategic Growth Portfolio Wells Fargo Advantage Multi Cap Value Subaccount Wells Fargo VT Advantage Small/Mid Cap Subaccount
For the year ended December 31, 2005: Mergers:
Old Portfolio New Portfolio ------------- ------------- Travelers MFS Emerging Growth Portfolio MFS(R) Mid Cap Growth Portfolio
Not all funds may be available in all states or to all contract owners. This report is prepared for the general information of contract owners and is not an offer of units of Separate Account Six or shares of Separate Account Six's underlying funds. It should not be used in connection with any offer except in conjunction with the prospectus for Separate Account Six product offered by the Company and the prospectuses for the underlying funds, which collectively contain all pertinent information, including additional information on charges and expenses. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by Separate Account Six in the preparation of its financial statements. Investments are valued daily at the net asset values per share of the underlying funds. Short-term investments are reported at fair value based on quoted market prices. Short-term investments, for which there is no reliable quoted market price, are recorded at amortized cost which approximates fair value. Security transactions are accounted for on a trade date basis. Realized gains and losses on the sales of investments are computed on the basis of the average cost of the investment sold. Income from dividends and realized gain distributions are recorded on the ex-distribution date. 73 NOTES TO FINANCIAL STATEMENTS -- (Continued) 2. SIGNIFICANT ACCOUNTING POLICIES (Concluded) Included in "Other receipts/(payments)" in the Statement of Changes in Net Assets are primarily contract benefits which have been re-deposited with the Company and distributions for payouts. The operations of Separate Account Six form a part of the total operations of the Company and are not taxed separately. The Company is taxed as a life insurance company under the Internal Revenue Code of 1986, as amended (the "Code"). Under existing federal income tax law, no taxes are payable on the earnings of Separate Account Six. Separate Account Six is not taxed as a "regulated investment company" under Subchapter M of the Code. Net Assets allocated to contracts in the payout period are computed according to the Annuity 2000 Mortality Table. The assumed investment return is 3.0 to 5.0 percent. The mortality risk is fully borne by the Company and may result in additional amounts being transferred into the variable annuity account by the Company to cover greater longevity of annuitants than expected. Conversely, if amounts allocated exceeds amounts required, transfers may be made to the Company. The financial highlights disclosure is comprised of the units, unit values, net assets, investment income ratio, expense ratios and total returns for each Subaccount. Since each Subaccount offers multiple contract charges, certain information is provided in the form of a range. The range information may reflect varying time periods if assets did not exist with all contract charge options of the Subaccount for the entire year. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 74 NOTES TO FINANCIAL STATEMENTS -- (Continued) 3. CONTRACT CHARGES The asset-based charges listed below are deducted, as appropriate, each business day and are assessed through the calculation of accumulation and/or annuity unit values: -- Mortality and Expense Risks assumed by the Company ("M&E") -- Floor Benefit ("FL") Below is a table displaying separate account charges with their associated products offered in Separate Account Six for each funding option. The table displays Standard ("S") and Optional ("O") Death Benefit ("Dth Ben") designations.
Separate Account Six - ----------------------------------------------------------------------------------------------------- Asset-based Charges --------------------- Separate Account Charge (1) (5) Dth Ben Product (notes3-4) M&E FL (2) Total - ------------------------------------- ------- -------------------------- ---- ------ ----- Separate Account Charge 0.80% 3% AIR S MetLife Retirement Account 0.80% 0.80% Separate Account Charge 0.80% 5% AIR S MetLife Retirement Account 0.80% 0.80% Separate Account Charge 0.80% 0.25% FL S MetLife Retirement Account 0.80% 0.25% 1.05% Separate Account Charge 0.80% 0.43% FL S MetLife Retirement Account 0.80% 0.43% 1.23% Separate Account Charge 0.80% 0.62% FL S MetLife Retirement Account 0.80% 0.62% 1.42% Separate Account Charge 0.80% 1.10% FL S MetLife Retirement Account 0.80% 1.10% 1.90% Separate Account Charge 1.25% 3% AIR O MetLife Retirement Account 1.25% 1.25% Separate Account Charge 1.25% 5% AIR O MetLife Retirement Account 1.25% 1.25% Separate Account Charge 1.25% 0.33% FL O MetLife Retirement Account 1.25% 0.33% 1.58% Separate Account Charge 1.25% 0.53% FL O MetLife Retirement Account 1.25% 0.53% 1.78% Separate Account Charge 1.25% 0.83% FL O MetLife Retirement Account 1.25% 0.83% 2.08% Separate Account Charge 1.25% 1.40% FL O MetLife Retirement Account 1.25% 1.40% 2.65%
(1) Certain accumulation and annuity unit values may not be available through certain Subaccounts. (2) This charge applies in the annuitization phase when the floor benefit has been selected. (3) An amount equal to the underlying fund expenses that are in excess of 0.90% is being waived for the Harris Oakmark International Subaccount (Class A) of the Met Investors Series Trust. (4) A waiver of 0.15% of the M&E charge applies to the Subaccount investing in the Western Asset Management U.S. Government Subaccount (Class A) of the Metropolitan Series Fund, Inc. (5) Assumed Interest Rate (AIR) No sales charges are deducted from participant purchase payments when they are received. However, the Company assesses a withdrawal charge if a participant's purchase payment is surrendered within five years of its payment date. The maximum charge, applied to the amount withdrawn, is 5% decreasing to 0% after five full years and assessed through the redemption of units. 75 NOTES TO FINANCIAL STATEMENTS -- (Continued) 3. CONTRACT CHARGES -- (Concluded) If the Variable Annuitization Floor Benefit is selected, a charge is assessed through the redemption of units upon election of this benefit. This charge compensates the Company for guaranteeing a minimum variable annuity payment regardless of the performance of the variable funding option. The charge will vary based upon market conditions, but will never exceed the annual separate account charge by more than 3% annually. It will be set at the time of election and remain level throughout the term of annuitization. If the Liquidity Benefit is selected, there is a surrender charge of 5% of the amount withdrawn assessed through the redemption of units. Participants in the CHART asset allocation program enter into an agreement with MetLife Investment Fund Services LLC ("MIFS"), an affiliate of the Company. Under this arrangement, MIFS provides asset allocation advice and charges participants an annual fee, plus a one-time set-up fee of $30. The maximum annual fee is 0.75% which decreases as a participant's assets increase. Effective February 1, 2006, this program was closed to new participants. If the Optional Death Benefit and Credit is selected, the Company will add a credit to the applicable purchase contract with each purchase payment. Each credit is added to the contract value when the payment is applied and will equal 2% of each purchase payment. These credits are applied, pro rata, to the same funding option(s) to which the purchase payment was applied. An additional annuitization credit is applied to the contract value once an annuity option is purchased. This credit equals 0.5% of the contract value if annuitized during contract years 2-5, 1% during contract years 6-10, and 2% after contract year 10. There is no credit applied to contracts held less than one year. For a full explanation of product charges and associated product features and benefits, please refer to your product prospectus. 76 NOTES TO FINANCIAL STATEMENTS -- (Continued) 4. STATEMENT OF INVESTMENTS
As of and for the period ended December 31, 2006 ------------------------------------------------ INVESTMENTS No. of Market Cost of Proceeds Shares Value Purchases from Sales ------- ----------- ---------- ----------- AIM Variable Insurance Funds (0.0%) AIM V.I. Core Equity Subaccount (Series I) (Cost $135,806) 5,426 $ 147,684 $ 225,177 $ 88,239 AIM V.I. Premier Equity Subaccount (Series I) (Cost $0) -- -- 1,546 155,906 ------- ----------- ---------- ----------- Total (Cost $135,806) 5,426 $ 147,684 $ 226,723 $ 244,145 ======= =========== ========== =========== American Funds Insurance Series (1.7%) American Funds Global Growth Subaccount (Class 2) (Cost $1,405,168) 72,370 $ 1,685,494 $ 855,921 $ 224,520 American Funds Growth Subaccount (Class 2) (Cost $2,793,220) 49,689 3,184,051 1,600,465 701,222 American Funds Growth-Income Subaccount (Class 2) (Cost $3,084,266) 81,675 3,445,865 1,360,081 289,251 ------- ----------- ---------- ----------- Total (Cost $7,282,654) 203,734 $ 8,315,410 $3,816,467 $ 1,214,993 ======= =========== ========== =========== Capital Appreciation Fund (0.0%) Capital Appreciation Subaccount Total (Cost $0) -- $ -- $ 689,298 $15,008,314 ======= =========== ========== =========== Credit Suisse Trust (0.4%) Credit Suisse Trust Emerging Markets Subaccount Total (Cost $1,227,851) 92,106 $ 2,012,526 $ 421,507 $ 1,082,595 ======= =========== ========== =========== Delaware VIP Trust (1.2%) Delaware VIP REIT Subaccount (Standard Class) (Cost $0) -- $ -- $ 692,091 $ 7,195,515 Delaware VIP Small Cap Value Subaccount (Standard Class) (Cost $4,328,937) 182,491 6,098,862 1,009,456 1,538,653 ------- ----------- ---------- ----------- Total (Cost $4,328,937) 182,491 $ 6,098,862 $1,701,547 $ 8,734,168 ======= =========== ========== =========== Dreyfus Variable Investment Fund (2.5%) Dreyfus VIF Appreciation Subaccount (Initial Shares) (Cost $3,392,381) 92,063 $ 3,917,277 $ 186,185 $ 797,553 Dreyfus VIF Developing Leaders Subaccount (Initial Shares) (Cost $9,063,181) 202,012 8,490,556 1,095,473 2,811,643 ------- ----------- ---------- ----------- Total (Cost $12,455,562) 294,075 $12,407,833 $1,281,658 $ 3,609,196 ======= =========== ========== =========== Franklin Templeton Variable Insurance Products Trust (0.6%) FTVIPT Mutual Shares Securities Subaccount (Class 2) (Cost $0) -- $ -- $ 112,722 $ 437,647 FTVIPT Templeton Developing Markets Securities Subaccount (Class 2) (Cost $1,086,421) 101,895 1,405,131 806,177 721,517 FTVIPT Templeton Foreign Securities Subaccount (Class 2) (Cost $1,373,925) 91,161 1,706,542 503,796 249,324 FTVIPT Templeton Growth Securities Subaccount (Class 2) (Cost $0) -- -- 245,941 3,224,273 ------- ----------- ---------- ----------- Total (Cost $2,460,346) 193,056 $ 3,111,673 $1,668,636 $ 4,632,761 ======= =========== ========== =========== High Yield Bond Trust (0.0%) High Yield Bond Subaccount Total (Cost $0) -- $ -- $ 631,857 $ 8,117,004 ======= =========== ========== =========== Janus Aspen Series (1.0%) Janus Aspen Balanced Subaccount (Service Shares) (Cost $0) -- $ -- $ 320,225 $ 2,109,583 Janus Aspen Mid Cap Growth Subaccount (Service Shares) (Cost $440,545) 15,961 513,781 266,145 106,762 Janus Aspen Worldwide Growth Subaccount (Service Shares) (Cost $4,911,105) 135,678 4,370,185 243,361 1,280,458 ------- ----------- ---------- ----------- Total (Cost $5,351,650) 151,639 $ 4,883,966 $ 829,731 $ 3,496,803 ======= =========== ========== =========== Lazard Retirement Series, Inc. (0.0%) Lazard Retirement Small Cap Subaccount Total (Cost $0) -- $ -- $ 107,732 $ 478,241 ======= =========== ========== =========== Legg Mason Partners Investment Series (0.1%) LMPIS Dividend Strategy Subaccount (Cost $182,018) 20,927 $ 210,106 $ 27,822 $ 40,376 LMPIS Premier Selections All Cap Growth Subaccount (Cost $55,666) 4,314 57,722 43,109 5,725 ------- ----------- ---------- ----------- Total (Cost $237,684) 25,241 $ 267,828 $ 70,931 $ 46,101 ======= =========== ========== ===========
77 NOTES TO FINANCIAL STATEMENTS -- (Continued) 4. STATEMENT OF INVESTMENTS -- (Continued)
As of and for the period ended December 31, 2006 -- (Continued) --------------------------------------------------- INVESTMENTS No. of Market Cost of Proceeds Shares Value Purchases from Sales --------- ----------- ----------- ----------- Legg Mason Partners Variable Portfolios V (0.1%) LMPVPV Small Cap Growth Opportunities Subaccount Total (Cost $301,538) 27,980 $ 319,817 $ 138,506 $ 157,836 ========= =========== =========== =========== Legg Mason Partners Variable Portfolios I, Inc. (3.4%) LMPVPI All Cap Subaccount (Class I) (Cost $9,003,784) 599,066 $11,693,762 $ 705,163 $ 3,561,902 LMPVPI Investors Subaccount (Class I) (Cost $3,109,674) 242,427 4,012,169 215,401 837,191 LMPVPI Small Cap Growth Subaccount (Class I) (Cost $478,950) 38,956 571,095 41,196 203,126 LMPVPI Total Return Subaccount (Class I) (Cost $539,404) 50,888 624,908 41,413 51,805 --------- ----------- ----------- ----------- Total (Cost $13,131,812) 931,337 $16,901,934 $ 1,003,173 $ 4,654,024 ========= =========== =========== =========== Legg Mason Partners Variable Portfolios II (6.0%) LMPVPII Appreciation Subaccount (Cost $2,675,062) 127,775 $ 3,417,989 $ 229,187 $ 658,240 LMPVPII Equity Index Subaccount (Class II) (Cost $15,767,586) 519,268 17,722,602 769,497 5,369,274 LMPVPII Fundamental Value Subaccount (Cost $7,329,202) 392,435 8,943,590 573,607 1,735,934 --------- ----------- ----------- ----------- Total (Cost $25,771,850) 1,039,478 $30,084,181 $ 1,572,291 $ 7,763,448 ========= =========== =========== =========== Legg Mason Partners Variable Portfolios III, Inc. (4.3%) LMPVPIII Adjustable Rate Income Subaccount (Cost $324,222) 32,297 $ 319,089 $ 106,761 $ 119,152 LMPVPIII Aggressive Growth Subaccount (Cost $7,857,016) 662,515 10,706,242 243,195 2,319,580 LMPVPIII High Income Subaccount (Cost $1,002,141) 132,779 970,613 357,962 374,845 LMPVPIII International All Cap Growth Subaccount (Cost $1,472,789) 110,840 1,915,318 201,178 591,796 LMPVPIII Large Cap Growth Subaccount (Cost $4,657,844) 327,977 5,172,200 400,822 2,249,812 LMPVPIII Social Awareness Stock Subaccount (Cost $2,446,577) 94,828 2,559,398 148,851 863,956 --------- ----------- ----------- ----------- Total (Cost $17,760,589) 1,361,236 $21,642,860 $ 1,458,769 $ 6,519,141 ========= =========== =========== =========== Lord Abbett Series Fund, Inc. (0.3%) Lord Abbett Growth and Income Subaccount (Class VC) (Cost $810,813) 30,561 $ 896,667 $ 315,511 $ 199,888 Lord Abbett Mid-Cap Value Subaccount (Class VC) (Cost $614,588) 29,886 650,914 154,766 142,553 --------- ----------- ----------- ----------- Total (Cost $1,425,401) 60,447 $ 1,547,581 $ 470,277 $ 342,441 ========= =========== =========== =========== Managed Assets Trust (0.0%) Managed Assets Subaccount Total (Cost $0) -- $ -- $ 1,494,127 $23,822,310 ========= =========== =========== =========== Met Investors Series Trust (10.9%) MIST Batterymarch Mid-Cap Stock Subaccount (Class A) (Cost $6,089,558) 301,717 $ 5,862,360 $ 7,705,905 $ 1,520,566 MIST BlackRock Large-Cap Core Subaccount (Class A) (Cost $978,095) 93,436 1,046,479 1,071,683 92,348 MIST Dreman Small-Cap Value Subaccount (Class A) (Cost $83,968) 6,578 90,585 90,632 7,104 MIST Harris Oakmark International Subaccount (Class A) (Cost $1,739,203) 101,083 1,923,602 2,258,430 536,708 MIST Janus Capital Appreciation Subaccount (Class A) (Cost $10,943,649) 146,109 11,343,903 13,761,329 2,713,498 MIST Legg Mason Partners Managed Assets Subaccount (Class A) (Cost $17,518,675) 1,035,829 18,717,432 21,456,009 4,000,995 MIST Lord Abbett Bond Debenture Subaccount (Class A) (Cost $455,747) 37,899 474,113 556,822 100,887 MIST Lord Abbett Growth and Income Subaccount (Class B) (Cost $1,641,882) 61,010 1,781,479 1,959,861 320,505 MIST Met/AIM Capital Appreciation Subaccount (Class A) (Cost $484,762) 39,807 431,114 627,201 135,082 MIST Met/AIM Small Cap Growth Subaccount (Class A) (Cost $14,791) 1,082 14,637 106,082 83,598 MIST MFS(R) Value Subaccount (Class A) (Cost $994,631) 73,309 1,043,918 1,090,175 97,591 MIST Neuberger Berman Real Estate Subaccount (Class A) (Cost $6,331,179) 426,862 7,739,014 7,234,183 990,967 MIST Pioneer Fund Subaccount (Class A) (Cost $1,471,705) 109,109 1,596,264 1,666,653 197,792 MIST Pioneer Mid-Cap Value Subaccount (Class A) (Cost $58,775) 5,066 60,493 59,042 269 MIST Pioneer Strategic Income Subaccount (Class A) (Cost $1,933,379) 203,979 1,929,642 2,229,555 300,601 MIST Third Avenue Small Cap Value Subaccount (Class B) (Cost $336,858) 19,762 344,250 360,738 24,536 --------- ----------- ----------- ----------- Total (Cost $51,076,857) 2,662,637 $54,399,285 $62,234,300 $11,123,047 ========= =========== =========== ===========
78 NOTES TO FINANCIAL STATEMENTS -- (Continued) 4. STATEMENT OF INVESTMENTS -- (Continued)
As of and for the period ended December 31, 2006 -- (Continued) --------------------------------------------------- INVESTMENTS No. of Market Cost of Proceeds Shares Value Purchases from Sales ---------- ------------ ------------ ----------- MetLife Investment Funds, Inc. (42.7%) MetLife Investment Diversified Bond Subaccount (Class I) (Cost $79,658,083) 7,045,847 $ 82,365,946 $ 9,222,295 $22,653,729 MetLife Investment International Stock Subaccount (Class I) (Cost $28,367,683) 2,165,970 41,196,744 1,623,042 13,948,516 MetLife Investment Large Company Stock Subaccount (Class I) (Cost $50,789,982) 4,344,755 59,523,146 1,133,766 14,303,349 MetLife Investment Small Company Stock Subaccount (Class I) (Cost $26,327,360) 2,089,918 29,948,524 4,136,852 9,130,731 ---------- ------------ ------------ ----------- Total (Cost $185,143,108) 15,646,490 $213,034,360 $ 16,115,955 $60,036,325 ========== ============ ============ =========== Metropolitan Series Fund, Inc. (18.6%) MSF BlackRock Aggressive Growth Subaccount (Class D) (Cost $2,982,648) 123,659 $ 2,943,093 $ 3,756,270 $ 732,607 MSF BlackRock Bond Income Subaccount (Class A) (Cost $6,243,972) 60,356 6,555,301 7,577,643 1,370,569 MSF BlackRock Money Market Subaccount (Class A) (Cost $11,446,080) 114,461 11,446,080 15,701,556 4,255,476 MSF FI Large Cap Subaccount (Class A) (Cost $11,772,925) 798,508 12,073,446 15,034,252 3,100,374 MSF FI Value Leaders Subaccount (Class D) (Cost $12,178,020) 60,738 12,630,533 14,724,841 2,495,790 MSF MetLife Aggressive Allocation Subaccount (Class B) (Cost $68,891) 6,102 74,686 128,915 58,113 MSF MetLife Conservative to Moderate Allocation Subaccount (Class B) (Cost $74,396) 6,867 75,680 78,900 4,557 MSF MetLife Moderate Allocation Subaccount (Class B) (Cost $342,275) 31,100 357,030 348,206 5,962 MSF MetLife Moderate to Aggressive Allocation Subaccount (Class B) (Cost $428,927) 36,753 438,830 446,691 18,157 MSF MFS(R) Total Return Subaccount (Class F) (Cost $23,004,815) 160,025 24,863,112 26,891,679 3,966,209 MSF Oppenheimer Global Equity Subaccount (Class B) (Cost $3,101,150) 197,668 3,320,828 3,305,924 198,577 MSF Western Asset Management High Yield Bond Subaccount (Class A) (Cost $6,443,550) 670,663 6,914,533 7,618,953 1,197,866 MSF Western Asset Management U.S. Government Subaccount (Class A) (Cost $10,626,140) 902,821 11,104,700 12,692,783 2,095,295 ---------- ------------ ------------ ----------- Total (Cost $88,713,789) 3,169,721 $ 92,797,852 $108,306,613 $19,499,552 ========== ============ ============ =========== Money Market Portfolio (0.0%) Money Market Subaccount Total (Cost $0) -- $ -- $ 1,227,152 $13,738,668 ========== ============ ============ =========== Oppenheimer Variable Account Funds (0.0%) Oppenheimer Main Street/VA Subaccount ( Service Shares) Total (Cost $0) -- $ -- $ 139,164 $ 340,263 ========== ============ ============ =========== PIMCO Variable Insurance Trust (1.4%) PIMCO VIT Real Return Subaccount (Administrative Class) (Cost $251,570) 19,746 $ 235,570 $ 84,845 $ 28,596 PIMCO VIT Total Return Subaccount (Administrative Class) (Cost $6,870,104) 670,525 6,785,708 1,437,557 1,865,600 ---------- ------------ ------------ ----------- Total (Cost $7,121,674) 690,271 $ 7,021,278 $ 1,522,402 $ 1,894,196 ========== ============ ============ =========== Putnam Variable Trust (1.5%) Putnam VT Discovery Growth Subaccount (Class IB) (Cost $81,285) 17,145 $ 101,498 $ 39,120 $ 22,054 Putnam VT International Equity Subaccount (Class IB) (Cost $854,698) 67,296 1,388,992 222,861 221,466 Putnam VT Small Cap Value Subaccount (Class IB) (Cost $4,418,304) 241,450 5,859,997 989,029 1,259,642 ---------- ------------ ------------ ----------- Total (Cost $5,354,287) 325,891 $ 7,350,487 $ 1,251,010 $ 1,503,162 ========== ============ ============ =========== The Travelers Series Trust (0.0%) Travelers AIM Capital Appreciation Subaccount (Cost $0) -- $ -- $ 8,900 $ 644,394 Travelers Convertible Securities Subaccount (Cost $0) -- -- 16,170 112,902 Travelers Disciplined Mid Cap Stock Subaccount (Cost $0) -- -- 1,369,190 8,123,589 Travelers Equity Income Subaccount (Cost $0) -- -- 1,833,936 15,922,534 Travelers Federated Stock Subaccount (Cost $0) -- -- 163,306 1,145,751 Travelers Large Cap Subaccount (Cost $0) -- -- 449,097 7,107,547 Travelers Mercury Large Cap Core Subaccount (Cost $0) -- -- 145,566 1,084,372 Travelers MFS(R) Mid Cap Growth Subaccount (Cost $0) -- -- 229,615 4,097,217
79 NOTES TO FINANCIAL STATEMENTS -- (Continued) 4. STATEMENT OF INVESTMENTS -- (Concluded)
As of and for the period ended December 31, 2006 -- (Concluded) --------------------------------------------- INVESTMENTS No. of Market Cost of Proceeds Shares Value Purchases from Sales ------- ----------- ---------- ----------- The Travelers Series Trust -- (Continued) Travelers MFS(R) Total Return Subaccount (Cost $0) -- -- 868,155 20,652,999 Travelers MFS(R) Value Subaccount (Cost $0) -- -- 78,199 791,525 Travelers Mondrian International Stock Subaccount (Cost $0) -- -- 235,126 1,700,975 Travelers Pioneer Fund Subaccount (Cost $0) -- -- 22,665 1,829,962 Travelers Pioneer Mid Cap Value Subaccount (Cost $0) -- -- -- 36,827 Travelers Pioneer Strategic Income Subaccount (Cost $0) -- -- 274,341 2,101,528 Travelers Quality Bond Subaccount (Cost $0) -- -- 749,992 8,373,157 Travelers Strategic Equity Subaccount (Cost $0) -- -- 421,024 9,082,915 Travelers Style Focus Series: Small Cap Growth Subaccount (Cost $0) -- -- 10,125 10,188 Travelers U.S. Government Securities Subaccount (Cost $0) -- -- 1,302,376 13,861,843 ------- ----------- ---------- ----------- Total (Cost $0) -- $ -- $8,177,783 $96,680,225 ======= =========== ========== =========== Van Kampen Life Investment Trust (0.2%) Van Kampen LIT Comstock Subaccount (Class II) (Cost $895,449) 68,982 $ 1,014,038 $ 215,426 $ 435,521 Van Kampen LIT Enterprise Subaccount (Class II) (Cost $51,989) 3,970 61,768 10,081 692 Van Kampen LIT Strategic Growth Subaccount (Class II) (Cost $135,654) 5,599 159,809 -- 28,127 ------- ----------- ---------- ----------- Total (Cost $1,083,092) 78,551 $ 1,235,615 $ 225,507 $ 464,340 ======= =========== ========== =========== Variable Insurance Products Fund (2.9%) VIP Asset Manager Subaccount (Service Class 2) (Cost $0) -- $ -- $ 166,449 $ 5,001,374 VIP Contrafund(R) Subaccount (Service Class 2) (Cost $5,628,726) 221,512 6,891,242 1,708,642 1,195,026 VIP Dynamic Capital Appreciation Subaccount (Service Class 2) (Cost $291,732) 36,465 345,690 142,454 205,555 VIP Mid Cap Subaccount (Service Class 2) (Cost $5,736,216) 214,200 7,336,337 1,831,444 1,394,011 ------- ----------- ---------- ----------- Total (Cost $11,656,674) 472,177 $14,573,269 $3,848,989 $ 7,795,966 ======= =========== ========== =========== Wells Fargo Variable Trust (0.2%) Wells Fargo VT Advantage Small/Mid Cap Value Subaccount Total (Cost $633,368) 59,592 $ 790,786 $ 217,671 $ 214,226 ======= =========== ========== ===========
80 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- ---------------- AIM Variable Insurance Funds AIM V.I. Core Equity Subaccount (Series I) 2006 136 1.082 148 0.56 1.25 8.20 AIM V.I. Premier Equity Subaccount (Series I) 2006 -- 0.864 - 0.883 -- 1.02 0.80 - 1.25 5.24 2005 180 0.821 - 0.839 148 0.84 0.80 - 1.25 4.32 - 4.88 2004 291 0.787 - 0.800 230 0.47 0.80 - 1.25 4.38 - 4.85 2003 325 0.754 - 0.763 246 0.45 0.80 - 1.25 23.61 - 24.07 2002 278 0.610 - 0.615 170 0.50 0.80 - 1.25 (31.15) - (30.74) American Funds Insurance Series American Funds Global Growth Subaccount (Class 2) 2006 1,136 1.481 - 1.499 1,685 0.82 0.80 - 1.25 18.96 - 19.44 2005 657 1.245 - 1.255 819 0.50 0.80 - 1.25 12.67 - 13.17 2004 180 1.105 - 1.109 200 0.22 0.80 - 1.25 9.41 - 13.74 American Funds Growth Subaccount (Class 2) 2006 2,341 1.359 - 1.375 3,184 0.86 0.80 - 1.25 8.89 - 9.30 2005 1,650 1.248 - 1.258 2,061 0.98 0.80 - 1.25 14.71 - 15.31 2004 309 1.088 - 1.091 336 0.32 0.80 - 1.25 8.45 - 12.16 American Funds Growth-Income Subaccount (Class 2) 2006 2,678 1.283 - 1.299 3,446 1.76 0.80 - 1.25 13.74 - 14.35 2005 1,844 1.128 - 1.136 2,084 1.85 0.80 - 1.25 4.54 - 4.99 2004 479 1.079 - 1.082 518 1.74 0.80 - 1.25 9.51 - 10.21 Capital Appreciation Fund Capital Appreciation Fund Subaccount 2006 -- 0.676 - 0.694 -- -- 0.80 - 1.25 (0.88) - (0.86) 2005 21,791 0.682 - 0.700 14,895 -- 0.80 - 1.25 16.78 - 17.25 2004 21,722 0.584 - 0.597 12,713 -- 0.80 - 1.25 17.98 - 18.69 2003 23,062 0.495 - 0.503 11,430 0.05 0.80 - 1.25 23.44 - 23.89 2002 24,496 0.401 - 0.406 9,839 1.59 0.80 - 1.25 (26.01) - (25.78) Credit Suisse Trust Credit Suisse Trust Emerging Markets Subaccount 2006 883 2.277 - 2.357 2,012 0.52 0.80 - 1.25 30.86 - 31.46 2005 1,232 1.740 - 1.793 2,146 0.71 0.80 - 1.25 26.36 - 26.98 2004 1,338 1.377 - 1.412 1,844 0.29 0.80 - 1.25 23.39 - 23.86 2003 1,367 1.116 - 1.140 1,527 -- 0.80 - 1.25 41.09 - 41.79 2002 1,413 0.791 - 0.804 1,119 0.19 0.80 - 1.25 (12.69) - (12.23) Delaware VIP Trust Delaware VIP REIT Subaccount (Standard Class) 2006 -- 3.203 - 3.312 -- 1.93 0.80 - 1.25 31.00 - 31.59 2005 2,656 2.445 - 2.517 6,518 1.89 0.80 - 1.25 5.84 - 6.29 2004 2,673 2.310 - 2.368 6,193 1.90 0.80 - 1.25 29.78 - 30.40 2003 2,169 1.780 - 1.816 3,872 2.50 0.80 - 1.25 32.34 - 32.94 2002 1,944 1.345 - 1.366 2,621 1.57 0.80 - 1.25 3.22 - 3.64 Delaware VIP Small Cap Value Subaccount (Standard Class) 2006 2,454 2.477 - 2.565 6,098 0.25 0.80 - 1.25 14.73 - 15.28 2005 2,828 2.159 - 2.225 6,122 0.37 0.80 - 1.25 8.06 - 8.54 2004 2,830 1.998 - 2.050 5,664 0.20 0.80 - 1.25 20.00 - 20.52 2003 2,698 1.665 - 1.701 4,499 0.36 0.80 - 1.25 40.15 - 40.81 2002 2,414 1.188 - 1.208 2,870 0.36 0.80 - 1.25 (6.75) - (6.28)
81 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- ---------------- Dreyfus Variable Investment Fund Dreyfus VIF Appreciation Subaccount (Initial Shares) 2006 3,409 1.146 - 1.187 3,917 1.58 0.80 - 1.25 15.06 - 15.58 2005 4,007 0.996 - 1.027 4,001 0.02 0.80 - 1.25 3.11 - 3.53 2004 4,662 0.966 - 0.992 4,513 1.61 0.80 - 1.25 3.76 - 4.20 2003 5,330 0.931 - 0.952 4,971 1.41 0.80 - 1.25 19.67 - 20.20 2002 5,542 0.778 - 0.792 4,318 1.05 0.80 - 1.25 (17.76) - (17.33) Dreyfus VIF Developing Leaders Subaccount (Initial Shares) 2006 5,400 1.568 - 1.624 8,490 0.42 0.80 - 1.25 2.48 - 2.98 2005 7,010 1.530 - 1.577 10,748 -- 0.80 - 1.25 4.51 - 4.92 2004 8,117 1.464 - 1.503 11,910 0.20 0.80 - 1.25 9.91 - 10.51 2003 8,178 1.332 - 1.360 10,908 0.03 0.80 - 1.25 30.08 - 30.64 2002 8,146 1.024 - 1.041 8,351 0.04 0.80 - 1.25 (20.12) - (19.80) Franklin Templeton Variable Insurance Products Trust FTVIPT Mutual Shares Securities Subaccount (Class 2) 2006 -- 1.704 - 1.732 -- -- 0.80 - 1.25 16.87 - 17.42 2005 204 1.458 - 1.475 299 0.91 0.80 - 1.25 9.21 - 9.67 2004 106 1.335 - 1.345 142 0.53 0.80 - 1.25 11.25 - 11.71 2003 25 1.200 - 1.204 30 -- 0.80 - 1.25 9.45 - 12.78 FTVIPT Templeton Developing Markets Securities Subaccount (Class 2) 2006 716 1.958 - 1.982 1,405 0.98 0.80 - 1.25 26.49 - 27.05 2005 654 1.548 - 1.560 1,013 0.94 0.80 - 1.25 24.30 - 25.85 2004 50 1.230 61 -- 1.25 26.67 FTVIPT Templeton Foreign Securities Subaccount (Class 2) 2006 1,131 1.505 - 1.523 1,706 1.24 0.80 - 1.25 20.02 - 20.49 2005 949 1.254 - 1.264 1,192 1.19 0.80 - 1.25 8.76 - 9.34 2004 223 1.153 - 1.156 257 0.15 0.80 - 1.25 7.34 - 19.85 FTVIPT Templeton Growth Securities Subaccount (Class 2) 2006 -- 1.452 - 1.470 -- -- 0.80 - 1.25 20.30 - 20.89 2005 2,251 1.207 - 1.216 2,719 1.09 0.80 - 1.25 7.48 - 7.99 2004 584 1.123 - 1.126 655 -- 0.80 - 1.25 9.99 - 12.60 High Yield Bond Trust High Yield Bond Subaccount 2006 -- 1.528 - 1.576 -- 6.30 0.80 - 1.25 2.41 - 2.47 2005 5,211 1.492 - 1.538 7,792 0.01 0.80 - 1.25 0.07 - 0.52 2004 5,519 1.491 - 1.530 8,246 7.17 0.80 - 1.25 7.34 - 7.90 2003 5,264 1.389 - 1.418 7,321 8.22 0.80 - 1.25 27.55 - 28.09 2002 4,541 1.089 - 1.107 4,951 16.09 0.80 - 1.25 3.32 - 3.75 Janus Aspen Series Janus Aspen Balanced Subaccount (Service Shares) 2006 -- 1.168 - 1.195 -- -- 0.80 - 1.25 3.36 - 3.55 2005 1,520 1.130 - 1.154 1,720 2.09 0.80 - 1.25 6.40 - 6.85 2004 1,563 1.062 - 1.080 1,663 2.20 0.80 - 1.25 6.95 - 7.46 2003 1,581 0.993 - 1.005 1,572 1.89 0.80 - 1.25 12.33 - 12.79 2002 1,371 0.884 - 0.891 1,213 2.53 0.80 - 1.25 (7.92) - (7.38) Janus Aspen Mid Cap Growth Subaccount (Service Shares) 2006 479 1.071 - 1.099 514 -- 0.80 - 1.25 11.91 - 12.37 2005 331 0.957 - 0.978 318 -- 0.80 - 1.25 7.24 - 10.64 2004 213 0.865 184 -- 1.25 18.98 2003 129 0.727 94 -- 1.25 33.15 2002 86 0.546 47 -- 1.25 (29.09) Janus Aspen Worldwide Growth Subaccount (Service Shares) 2006 6,368 0.686 - 0.707 4,370 1.59 0.80 - 1.25 16.47 - 17.05 2005 8,075 0.589 - 0.604 4,758 1.20 0.80 - 1.25 4.25 - 4.68 2004 9,468 0.565 - 0.577 5,350 0.91 0.80 - 1.25 3.29 - 3.78 2003 10,259 0.547 - 0.556 5,615 0.84 0.80 - 1.25 22.10 - 22.74 2002 11,018 0.448 - 0.453 4,937 0.59 0.80 - 1.25 (26.56) - (26.34)
82 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment1 Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ----------- -------------- ----------------- Lazard Retirement Series, Inc. Lazard Retirement Small Cap Subaccount 2006 -- 1.299 - 1.314 -- -- 0.80 - 1.25 12.56 - 13.08 2005 314 1.154 - 1.162 362 -- 0.80 - 1.25 (0.94) - 2.76 2004 231 1.123 260 -- 1.25 11.30 Legg Mason Partners Investment Series LMPIS Dividend Strategy Subaccount 2006 224 0.934 - 0.959 210 2.11 0.80 - 1.25 16.46 - 17.09 2005 241 0.802 - 0.819 194 1.55 0.80 - 1.25 (1.47) - (1.09) 2004 362 0.814 - 0.828 295 1.04 0.80 - 1.25 2.13 - 2.60 2003 269 0.797 - 0.807 214 0.67 0.80 - 1.25 21.87 - 22.46 2002 128 0.647 - 0.652 84 0.63 0.80 - 1.25 (27.71) - (21.73) LMPIS Premier Selections All Cap Growth Subaccount 2006 59 0.971 - 0.996 58 -- 0.80 - 1.25 6.00 - 6.52 2005 22 0.916 - 0.935 20 0.08 0.80 - 1.25 5.05 - 5.41 2004 47 0.872 - 0.887 41 -- 0.80 - 1.25 1.63 - 2.07 2003 28 0.858 - 0.869 24 -- 0.80 - 1.25 32.61 - 33.28 2002 14 0.647 - 0.652 9 0.07 0.80 - 1.25 (27.71) - (21.73) Legg Mason Partners Variable Portfolios V LMPVPV Small Cap Growth Opportunties Subaccount 2006 248 1.284 - 1.318 320 -- 0.80 - 1.25 11.46 - 12.07 2005 287 1.152 - 1.176 331 -- 0.80 - 1.25 3.60 - 4.07 2004 275 1.112 - 1.130 306 0.08 0.80 - 1.25 14.17 - 14.60 2003 179 0.974 - 0.986 174 -- 0.80 - 1.25 40.14 - 40.86 2002 115 0.695 - 0.700 80 -- 0.80 - 1.25 (26.53) - (22.74) Legg Mason Partners Variable Portfolios I, Inc. LMPVPI All Cap Subaccount (Class I) 2006 6,265 1.864 - 1.931 11,693 1.22 0.80 - 1.25 16.65- 17.17 2005 8,162 1.598 - 1.648 13,062 0.85 0.80 - 1.25 2.77 - 3.26 2004 8,897 1.555 - 1.596 13,852 0.55 0.80 - 1.25 6.95 - 7.40 2003 8,378 1.454 - 1.486 12,194 0.27 0.80 - 1.25 37.30 - 37.98 2002 8,083 1.059 - 1.077 8,566 0.44 0.80 - 1.25 (26.00) - (25.67) LMPVPI Investors Subaccount (Class I) 2006 2,577 1.554 - 1.609 4,012 1.58 0.80 - 1.25 16.75 - 17.27 2005 3,090 1.331 - 1.372 4,117 1.16 0.80 - 1.25 5.22 - 5.70 2004 3,426 1.265 - 1.298 4,338 1.51 0.80 - 1.25 9.05 - 9.54 2003 3,364 1.160 - 1.185 3,907 1.44 0.80 - 1.25 30.63 - 31.23 2002 3,395 0.888 - 0.903 3,016 1.19 0.80 - 1.25 (23.97) - (23.67) LMPVPI Small Cap Growth Subaccount (Class I) 2006 473 1.207 - 1.239 571 -- 0.80 - 1.25 11.35 - 11.92 2005 631 1.084 - 1.107 685 -- 0.80 - 1.25 3.63 - 4.04 2004 598 1.046 - 1.064 626 -- 0.80 - 1.25 13.70 - 14.16 2003 420 0.920 - 0.932 386 -- 0.80 - 1.25 46.96 - 47.70 2002 318 0.626 - 0.631 199 -- 0.80 - 1.25 (35.53) - (35.22) LMPVPI Total Return Subaccount (Class I) 2006 467 1.337 - 1.384 625 2.14 0.80 - 1.25 11.23 - 11.70 2005 488 1.202 - 1.239 588 1.96 0.80 - 1.25 2.04 - 2.48 2004 534 1.178 - 1.209 631 1.76 0.80 - 1.25 7.38 - 7.85 2003 548 1.097 - 1.121 601 1.79 0.80 - 1.25 14.51 - 14.97 2002 486 0.958 - 0.975 466 1.75 0.80 - 1.25 (8.06) - (7.58)
83 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ----------- -------------- ----------------- Legg Mason Partners Variable Portfolios II LMPVPII Appreciation Subaccount 2006 2,885 1.182 - 1.213 3,418 1.05 0.80 - 1.25 13.33 - 13.90 2005 3,352 1.043 - 1.065 3,502 0.88 0.80 - 1.25 2.96 - 3.50 2004 3,285 1.013 - 1.029 3,329 1.21 0.80 - 1.25 7.54 - 7.86 2003 2,801 0.942 - 0.954 2,641 0.79 0.80 - 1.25 22.98 - 23.58 2002 1,847 0.766 - 0.772 1,415 2.46 0.80 - 1.25 (18.60) - (18.13) LMPVPII Equity Index Subaccount (Class II) 2006 16,381 1.011 - 1.117 17,721 1.22 0.80 - 2.08 12.83 - 14.21 2005 21,221 0.896 - 0.978 20,174 1.21 0.80 - 2.08 2.05 - 3.49 2004 22,935 0.878 - 0.945 21,170 1.37 0.80 - 2.08 0.00 - 9.38 2003 23,011 0.839 - 0.864 19,501 1.04 0.80 - 1.42 25.98 - 26.69 2002 21,599 0.666 - 0.682 14,504 1.87 0.80 - 1.42 (23.54) - (23.02) LMPVPII Fundamental Value Subaccount 2006 7,136 1.251 - 1.283 8,943 1.53 0.80 - 1.25 15.41 - 15.90 2005 8,473 1.084 - 1.107 9,202 0.92 0.80 - 1.25 3.44 - 3.94 2004 9,608 1.048 - 1.065 10,080 0.68 0.80 - 1.25 6.83 - 7.36 2003 8,875 0.981 - 0.992 8,710 0.67 0.80 - 1.25 37.01 - 37.40 2002 7,493 0.716 - 0.722 5,369 1.41 0.80 - 1.25 (22.26) - (21.86) Legg Mason Partners Variable Portfolios III, Inc. LMPVPIII Adjustable Rate Income Subaccount 2006 306 1.038 - 1.054 319 4.16 0.80 - 1.25 2.77 - 3.33 2005 328 1.010 - 1.020 332 2.95 0.80 - 1.25 1.10 - 1.49 2004 334 0.999 - 1.005 334 1.46 0.80 - 1.25 (0.10) - 0.40 2003 25 1.000 - 1.001 25 0.23 0.80 - 1.25 0.10 LMPVPIII Aggressive Growth Subaccount 2006 9,938 1.075 - 1.103 10,706 -- 0.80 - 1.25 7.39 - 7.93 2005 11,829 1.001 - 1.022 11,855 -- 0.80 - 1.25 10.24 - 10.73 2004 12,808 0.908 - 0.923 11,639 -- 0.80 - 1.25 8.61 - 9.10 2003 10,538 0.836 - 0.846 8,817 -- 0.80 - 1.25 32.91 - 33.44 2002 7,349 0.629 - 0.634 4,626 -- 0.80 - 1.25 (33.51) - (33.19) LMPVPIII High Income Subaccount 2006 767 1.263 - 1.307 971 7.89 0.80 - 1.25 9.54 - 10.11 2005 832 1.153 - 1.187 961 7.44 0.80 - 1.25 1.41 - 1.80 2004 984 1.137 - 1.166 1,119 8.51 0.80 - 1.25 9.01 - 9.48 2003 925 1.043 - 1.065 965 9.59 0.80 - 1.25 25.97 - 26.48 2002 416 0.828 - 0.842 344 25.32 0.80 - 1.25 (4.39) - (3.99) LMPVPIII International All Cap Growth Subaccount 2006 1,620 1.179 - 1.221 1,915 1.92 0.80 - 1.25 24.24 - 24.85 2005 2,035 0.949 - 0.978 1,934 1.29 0.80 - 1.25 10.35 - 10.76 2004 2,589 0.860 - 0.883 2,230 0.92 0.80 - 1.25 16.37 - 16.95 2003 2,810 0.739 - 0.755 2,079 1.04 0.80 - 1.25 25.89 - 26.47 2002 3,051 0.587 - 0.597 1,793 0.96 0.80 - 1.25 (26.63) - (26.30) LMPVPIII Large Cap Growth Subaccount 2006 5,003 1.032 - 1.068 5,172 0.14 0.80 - 1.25 3.30 - 3.69 2005 6,811 0.999 - 1.030 6,811 0.13 0.80 - 1.25 3.95 - 4.36 2004 8,734 0.961 - 0.987 8,404 0.36 0.80 - 1.25 (0.93) - (0.40) 2003 8,150 0.970 - 0.991 7,914 0.03 0.80 - 1.25 45.65 - 46.38 2002 6,579 0.666 - 0.677 4,383 0.34 0.80 - 1.25 (25.67) - (25.36) LMPVPIII Social Awareness Stock Subaccount 2006 2,585 0.988 - 1.023 2,559 0.48 0.80 - 1.25 6.35 - 6.90 2005 3,332 0.929 - 0.957 3,099 0.67 0.80 - 1.25 3.11 - 3.46 2004 4,117 0.901 - 0.925 3,713 0.75 0.80 - 1.25 4.89 - 5.47 2003 4,305 0.859 - 0.877 3,700 0.56 0.80 - 1.25 27.26 - 27.84 2002 4,410 0.675 - 0.686 2,978 0.85 0.80 - 1.25 (25.74) - (25.52)
84 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- --------------- Lord Abbett Series Fund, Inc. Lord Abbett Growth and Income Subaccount (Class VC) 2006 685 1.308 - 1.323 897 1.21 0.80 - 1.25 15.85 - 16.26 2005 605 1.129 - 1.138 684 1.34 0.80 - 1.25 1.99 - 6.06 2004 269 1.107 297 2.17 1.25 14.48 Lord Abbett Mid-Cap Value Subaccount (Class VC) 2006 472 1.376 - 1.392 651 0.51 0.80 - 1.25 10.88 - 11.27 2005 495 1.241 - 1.251 616 0.57 0.80 - 1.25 6.89 - 7.38 2004 219 1.161 - 1.165 255 0.37 0.80 - 1.25 11.91 - 15.41 Managed Assets Trust Managed Assets Subaccount 2006 -- 1.245 - 1.286 -- 2.14 0.80 - 1.25 3.23 - 3.46 2005 18,738 1.206 - 1.243 22,626 0.02 0.80 - 1.25 2.55 - 3.07 2004 20,213 1.176 - 1.206 23,790 2.38 0.80 - 1.25 8.09 - 8.55 2003 19,479 1.088 - 1.111 21,209 2.69 0.80 - 1.25 20.49 - 21.02 2002 18,744 0.903 - 0.918 16,939 6.17 0.80 - 1.25 (9.70) - (9.38) Met Investors Series Trust MIST Batterymarch Mid-Cap Stock Subaccount (Class A) 2006 3,184 1.836 - 1.899 5,862 -- 0.80 - 1.25 (4.57) - (4.28) MIST BlackRock Large-Cap Core Subaccount (Class A) 2006 957 1.091 - 1.130 1,046 -- 0.80 - 1.25 6.13 - 6.50 MIST Dreman Small-Cap Value Subaccount (Class A) 2006 85 1.068 91 0.86 1.25 13.62 MIST Harris Oakmark International Subaccount (Class A) 2006 1,477 1.301 - 1.346 1,923 -- 0.76 - 1.21 10.44 - 10.78 MIST Janus Capital Appreciation Subaccount (Class A) 2006 16,285 0.694 - 0.716 11,343 -- 0.80 - 1.25 2.66 - 3.17 MIST Legg Mason Partners Managed Assets Subaccount (Class A) 2006 14,155 1.319 - 1.366 18,716 -- 0.80 - 1.25 5.94 - 6.22 MIST Lord Abbett Bond Debenture Subaccount (Class A) 2006 412 1.152 - 1.166 474 -- 0.80 - 1.25 5.11 - 5.42 MIST Lord Abbett Growth and Income Subaccount (Class B) 2006 1,648 1.080 - 1.083 1,781 -- 0.55 - 1.00 7.89 - 8.19 MIST Met/AIM Capital Appreciation Subaccount (Class A) 2006 435 0.989 - 1.015 431 0.16 0.80 - 1.25 (1.00) - (0.68) MIST Met/AIM Small Cap Growth Subaccount (Class A) 2006 14 1.026 15 -- 1.25 (0.58) MIST MFS(R) Value Subaccount (Class A) 2006 737 1.415 - 1.432 1,044 1.39 0.80 - 1.25 10.72 - 11.09 MIST Neuberger Berman Real Estate Subaccount (Class A) 2006 6,325 1.223 - 1.227 7,739 -- 0.80 - 1.25 21.93 - 22.33 MIST Pioneer Fund Subaccount (Class A) 2006 1,612 0.989 - 1.024 1,596 -- 0.80 - 1.25 7.73 - 8.13 MIST Pioneer Mid-Cap Value Subaccount (Class A) 2006 54 1.111 60 0.42 1.25 5.51 MIST Pioneer Strategic Income Subaccount (Class A) 2006 1,295 1.483 - 1.534 1,930 4.52 0.80 - 1.25 3.85 - 4.14 MIST Third Avenue Small Cap Value Subaccount (Class B) 2006 259 1.327 - 1.343 344 -- 0.80 - 1.25 2.16 - 2.21
85 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- ---------------- MetLife Investment Funds, Inc. MetLife Investment Diversified Bond Subaccount (Class I) 2006 59,700 1.376 - 1.425 82,360 3.94 0.80 - 1.25 2.99 - 3.49 2005 71,479 1.336 - 1.377 95,674 3.31 0.80 - 1.25 0.83 - 1.25 2004 70,636 1.325 - 1.360 93,755 3.48 0.80 - 1.25 3.35 - 3.82 2003 58,879 1.282 - 1.310 75,590 4.14 0.80 - 1.25 4.23 - 4.72 2002 58,475 1.230 - 1.251 71,981 4.37 0.80 - 1.25 7.61 - 8.12 MetLife Investment International Stock Subaccount (Class I) 2006 29,106 1.412 - 1.462 41,194 1.76 0.80 - 1.25 24.96 - 25.49 2005 39,078 1.130 - 1.165 44,241 1.33 0.80 - 1.25 13.23 - 13.77 2004 41,324 0.998 - 1.024 41,302 1.40 0.80 - 1.25 13.41 - 13.90 2003 38,408 0.880 - 0.899 33,839 0.81 0.80 - 1.25 28.47 - 28.98 2002 36,636 0.685 - 0.697 25,127 0.65 0.80 - 1.25 (23.29) - (22.90) MetLife Investment Large Company Stock Subaccount (Class I) 2006 69,813 0.851 - 0.881 59,519 0.93 0.80 - 1.25 11.24 - 11.66 2005 86,175 0.765 - 0.789 66,055 1.12 0.80 - 1.25 5.37 - 5.76 2004 89,117 0.726 - 0.746 64,818 0.87 0.80 - 1.25 8.68 - 9.22 2003 77,126 0.668 - 0.683 51,612 0.72 0.80 - 1.25 26.52 - 27.19 2002 66,019 0.528 - 0.537 34,901 0.70 0.80 - 1.25 (23.81) - (23.50) MetLife Investment Small Company Stock Subaccount (Class I) 2006 13,062 2.288 - 2.369 29,947 0.12 0.80 - 1.25 12.27 - 12.76 2005 16,835 2.038 - 2.101 34,365 0.11 0.80 - 1.25 5.93 - 6.43 2004 17,829 1.924 - 1.974 34,343 0.11 0.80 - 1.25 13.51 - 13.97 2003 16,816 1.695 - 1.732 28,530 0.14 0.80 - 1.25 41.37 - 41.97 2002 14,207 1.199 - 1.220 17,057 0.55 0.80 - 1.25 (24.69) - (24.32) Metropolitan Series Fund, Inc. MSF BlackRock Aggressive Growth Subaccount (Class D) 2006 2,776 1.058 - 1.095 2,943 -- 0.80 - 1.25 (2.13) - (1.88) MSF BlackRock Bond Income Subaccount (Class A) 2006 5,017 1.270 - 1.349 6,555 -- 0.80 - 1.58 3.93 - 4.41 MSF BlackRock Money Market Subaccount (Class A) 2006 9,886 1.156 - 1.196 11,445 3.29 0.80 - 1.25 2.48 - 2.75 MSF FI Large Cap Subaccount (Class A) 2006 12,891 0.934 - 0.968 12,073 -- 0.80 - 1.25 1.52 - 2.00 MSF FI Value Leaders Subaccount (Class D) 2006 9,327 1.348 - 1.396 12,630 -- 0.80 - 1.25 2.82 - 3.10 MSF MetLife Aggressive Allocation Subaccount (Class B) 2006 69 1.078 75 0.73 1.25 7.80 MSF MetLife Conservative to Moderate Allocation Subaccount (Class B) 2006 72 1.050 76 -- 1.25 5.74 MSF MetLife Moderate Allocation Subaccount (Class B) 2006 338 1.055 357 -- 1.25 5.29
86 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- ---------------- Metropolitan Series Fund, Inc. -- (Continued) MSF MetLife Moderate to Aggressive Allocation Subaccount (Class B) 2006 396 1.107 439 -- 1.25 9.60 MSF MFS(R) Total Return Subaccount (Class F) 2006 16,473 1.505 - 1.558 24,861 -- 0.80 - 1.25 7.19 - 7.52 MSF Oppenheimer Global Equity Subaccount (Class B) 2006 3,153 1.053 - 1.056 3,321 -- 0.79 - 1.24 5.72 - 6.02 MSF Western Asset Management High Yield Bond Subaccount (Class A) 2006 4,241 1.627 - 1.684 6,914 -- 0.80 - 1.25 6.48 - 6.85 MSF Western Asset Management U.S. Government Subaccount (Class A) 2006 7,895 1.403 - 1.453 11,104 -- 0.65 - 1.10 3.77 - 4.08 Money Market Portfolio Money Market Subaccount 2006 -- 1.128 - 1.164 -- 1.40 0.80 - 1.25 1.08 - 1.13 2005 11,199 1.116 - 1.151 12,533 2.83 0.80 - 1.25 1.55 - 2.13 2004 13,085 1.099 - 1.127 14,409 0.99 0.80 - 1.25 (0.18) - 0.18 2003 16,151 1.101 - 1.125 17,831 0.78 0.80 - 1.25 (0.54) - 0.00 2002 20,405 1.107 - 1.125 22,604 1.37 0.80 - 1.25 0.18 - 0.54 Oppenheimer Variable Account Funds Oppenheimer Main Street/VA Subaccount (Service Shares) 2006 -- 1.187 - 1.198 -- 1.03 0.80 - 1.25 5.79 - 5.92 2005 168 1.122 - 1.131 188 0.82 0.80 - 1.25 4.37 - 4.92 2004 75 1.075 - 1.078 80 -- 0.80 - 1.25 10.37 - 11.36 PIMCO Variable Insurance Trust PIMCO VIT Real Return Subaccount (Administrative Class) 2006 234 1.004 - 1.011 236 4.25 0.80 - 1.25 (0.59) - (0.10) 2005 192 1.010 - 1.012 194 1.56 0.80 - 1.25 0.00 - 1.00 PIMCO VIT Total Return Subaccount (Administrative Class) 2006 5,347 1.266 - 1.298 6,785 4.41 0.80 - 1.25 2.59 - 3.02 2005 5,898 1.234 - 1.260 7,295 3.42 0.80 - 1.25 1.15 - 1.61 2004 5,711 1.220 - 1.240 6,974 1.89 0.80 - 1.25 3.57 - 4.03 2003 5,859 1.178 - 1.192 6,906 2.85 0.80 - 1.25 3.79 - 4.20 2002 4,905 1.135 - 1.144 5,572 4.04 0.80 - 1.25 7.69 - 8.23 Putnam Variable Trust Putnam VT Discovery Growth Subaccount (Class IB) 2006 112 0.901 - 0.925 101 -- 0.80 - 1.25 9.61 - 10.25 2005 92 0.822 - 0.839 76 -- 0.80 - 1.25 5.93 - 6.34 2004 93 0.776 - 0.789 72 -- 0.80 - 1.25 6.30 - 6.77 2003 99 0.730 - 0.739 73 -- 0.80 - 1.25 30.36 - 31.03 2002 112 0.560 - 0.564 63 -- 0.80 - 1.25 (30.52) - (27.51)
87 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ -------------- ------- ------------- ---------------- ---------------- Putnam Variable Trust -- (Continued) Putnam VT International Equity Subaccount (Class IB) 2006 976 1.421 - 1.457 1,389 0.57 0.80 - 1.25 26.20 - 26.70 2005 963 1.126 - 1.150 1,087 1.45 0.80 - 1.25 10.83 - 11.33 2004 971 1.016 - 1.033 988 1.48 0.80 - 1.25 14.67 - 15.16 2003 951 0.886 - 0.897 843 0.82 0.80 - 1.25 26.93 - 27.60 2002 779 0.698 - 0.703 544 0.36 0.80 - 1.25 (18.65) - (18.35) Putnam VT Small Cap Value Subaccount (Class IB) 2006 2,946 1.984 - 2.035 5,860 0.33 0.80 - 1.25 15.82 - 16.35 2005 3,395 1.713 - 1.749 5,825 0.17 0.80 - 1.25 5.74 - 6.19 2004 3,256 1.620 - 1.647 5,280 0.32 0.80 - 1.25 24.62 - 25.25 2003 2,304 1.300 - 1.315 2,997 0.33 0.80 - 1.25 47.90 - 48.42 2002 2,190 0.879 - 0.886 1,928 0.11 0.80 - 1.25 (19.36) - (18.94) The Travelers Series Trust Travelers AIM Capital Appreciation Subaccount 2006 -- 0.999 - 1.022 -- -- 0.80 - 1.25 6.62 - 6.79 2005 638 0.937 - 0.957 599 0.21 0.80 - 1.25 7.45 - 7.89 2004 844 0.872 - 0.887 737 0.14 0.80 - 1.25 5.06 - 5.60 2003 806 0.830 - 0.840 669 -- 0.80 - 1.25 27.69 - 28.44 2002 837 0.650 - 0.654 544 -- 0.80 - 1.25 (24.57) - (4.97) Travelers Convertible Securities Subaccount 2006 -- 1.096 - 1.106 -- 0.94 0.80 - 1.25 6.61 - 6.86 2005 90 1.028 - 1.035 93 3.00 0.80 - 1.25 (0.87) - (0.48) 2004 64 1.037 - 1.040 67 3.77 0.80 - 1.25 3.70 - 5.05 Travelers Disciplined Mid Cap Stock Subaccount 2006 -- 1.924 - 1.984 -- 0.54 0.80 - 1.25 9.38 - 9.49 2005 4,142 1.759 - 1.812 7,302 -- 0.80 - 1.25 10.98 - 11.51 2004 4,425 1.585 - 1.625 7,024 0.29 0.80 - 1.25 15.02 - 15.58 2003 4,442 1.378 - 1.406 6,129 0.31 0.80 - 1.25 32.12 - 32.64 2002 4,350 1.043 - 1.060 4,541 0.61 0.80 - 1.25 (15.41) - (15.00) Travelers Equity Income Subaccount 2006 -- 1.311 - 1.354 -- 1.30 0.80 - 1.25 5.22 - 5.37 2005 11,948 1.246 - 1.285 14,944 -- 0.80 - 1.25 3.15 - 3.63 2004 12,452 1.208 - 1.240 15,082 1.41 0.80 - 1.25 8.54 - 9.06 2003 11,197 1.113 - 1.137 12,493 0.99 0.80 - 1.25 29.57 - 30.09 2002 9,855 0.859 - 0.874 8,484 1.21 0.80 - 1.25 (15.03) - (14.65)
88 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- ---------------- The Travelers Series Trust -- (Continued) Travelers Federated Stock Subaccount 2006 -- 1.170 - 1.208 -- 1.57 0.80 - 1.25 3.63 - 3.87 2005 974 1.129 - 1.163 1,101 -- 0.80 - 1.25 4.06 - 4.49 2004 1,232 1.085 - 1.113 1,339 1.40 0.80 - 1.25 9.15 - 9.66 2003 1,366 0.994 - 1.015 1,359 1.52 0.80 - 1.25 25.98 - 26.56 2002 1,388 0.789 - 0.802 1,095 3.11 0.80 - 1.25 (20.30) - (19.96) Travelers Large Cap Subaccount 2006 -- 0.920 - 0.949 -- 0.44 0.80 - 1.25 3.25 - 3.26 2005 7,623 0.891 - 0.919 6,808 -- 0.80 - 1.25 7.35 - 7.86 2004 8,947 0.830 - 0.852 7,440 0.80 0.80 - 1.25 5.20 - 5.58 2003 9,328 0.789 - 0.807 7,372 0.40 0.80 - 1.25 23.09 - 23.77 2002 9,548 0.641 - 0.652 6,127 0.48 0.80 - 1.25 (23.78) - (23.38) Travelers Mercury Large Cap Core Subaccount 2006 -- 1.028 - 1.061 -- 0.23 0.80 - 1.25 6.31 - 6.42 2005 940 0.967 - 0.997 911 -- 0.80 - 1.25 10.64 - 11.15 2004 930 0.874 - 0.897 813 0.57 0.80 - 1.25 14.40 - 15.00 2003 940 0.764 - 0.780 718 0.72 0.80 - 1.25 19.75 - 20.18 2002 923 0.638 - 0.649 589 0.56 0.80 - 1.25 (26.07) - (25.74) Travelers MFS(R) Mid Cap Growth Subaccount 2006 -- 1.081 - 1.116 -- -- 0.80 - 1.25 5.88 - 6.08 2005 3,747 1.021 - 1.052 3,831 -- 0.80 - 1.25 1.79 - 2.24 2004 4,399 1.003 - 1.029 4,419 -- 0.80 - 1.25 12.70 - 13.20 2003 4,894 0.890 - 0.909 4,360 -- 0.80 - 1.25 35.26 - 36.08 2002 5,025 0.658 - 0.668 3,307 -- 0.80 - 1.25 (49.42) - (49.28) Travelers MFS(R) Total Return Subaccount 2006 -- 1.404 - 1.449 -- 1.32 0.80 - 1.25 3.31 - 3.50 2005 14,378 1.359 - 1.400 19,594 2.15 0.80 - 1.25 1.72 - 2.12 2004 14,602 1.336 - 1.371 19,560 2.88 0.80 - 1.25 10.05 - 10.56 2003 13,312 1.214 - 1.240 16,190 2.38 0.80 - 1.25 15.07 - 15.56 2002 12,061 1.055 - 1.073 12,741 7.12 0.80 - 1.25 (6.39) - (5.96) Travelers MFS(R) Value Subaccount 2006 -- 1.278 - 1.289 -- -- 0.80 - 1.25 8.21 - 8.32 2005 559 1.181 - 1.190 660 1.34 0.80 - 1.25 2.23 - 5.16 2004 245 1.123 275 3.38 1.25 15.89 Travelers Mondrian International Stock Subaccount 2006 -- 1.178 - 1.215 -- 3.77 0.80 - 1.25 15.04 - 15.17 2005 1,334 1.024 - 1.055 1,369 0.05 0.80 - 1.25 8.13 - 8.65 2004 1,417 0.947 - 0.971 1,344 1.92 0.80 - 1.25 14.37 - 14.78 2003 877 0.828 - 0.846 727 2.11 0.80 - 1.25 26.99 - 27.60 2002 716 0.652 - 0.663 467 2.81 0.80 - 1.25 (14.10) - (13.67) Travelers Pioneer Fund Subaccount 2006 -- 0.918 - 0.947 -- 0.97 0.80 - 1.25 6.25 - 6.40 2005 1,983 0.864 - 0.890 1,715 -- 0.80 - 1.25 4.73 - 5.08 2004 2,208 0.825 - 0.847 1,825 0.87 0.80 - 1.25 9.71 - 10.29 2003 2,552 0.752 - 0.768 1,922 1.43 0.80 - 1.25 22.28 - 22.88 2002 2,896 0.615 - 0.625 1,783 6.61 0.80 - 1.25 (31.13) - (30.79)
89 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Continued)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- ---------------- The Travelers Series Trust -- (Concluded) Travelers Pioneer Mid Cap Value Subaccount 2006 -- 1.053 -- -- 1.25 5.41 2005 35 0.999 35 0.23 1.25 (0.10) Travelers Pioneer Strategic Income Subaccount 2006 -- 1.428 - 1.473 -- -- 0.80 - 1.25 1.06 - 1.24 2005 1,270 1.413 - 1.455 1,798 4.67 0.80 - 1.25 2.39 - 2.83 2004 905 1.380 - 1.415 1,250 7.32 0.80 - 1.25 9.61 - 10.12 2003 867 1.259 - 1.285 1,093 9.34 0.80 - 1.25 17.99 - 18.54 2002 796 1.067 - 1.084 850 28.67 0.80 - 1.25 4.61 - 5.04 Travelers Quality Bond Subaccount 2006 -- 1.222 - 1.292 -- 5.91 0.80 - 1.58 (0.97) - (0.62) 2005 6,418 1.234 - 1.300 8,112 -- 0.80 - 1.58 0.08 - 0.78 2004 6,653 1.233 - 1.290 8,373 4.44 0.80 - 1.58 0.00 - 2.46 2003 7,480 1.232 - 1.259 9,224 4.94 0.80 - 1.25 5.66 - 6.16 2002 6,977 1.166 - 1.186 8,142 8.04 0.80 - 1.25 4.48 - 4.96 Travelers Strategic Equity Subaccount 2006 -- 0.883 - 0.911 -- 0.36 0.80 - 1.25 4.50 - 4.59 2005 10,173 0.845 - 0.871 8,610 0.57 0.80 - 1.25 0.84 - 1.16 2004 12,448 0.838 - 0.861 10,454 1.38 0.80 - 1.25 8.83 - 9.40 2003 13,775 0.770 - 0.787 10,624 -- 0.80 - 1.25 30.95 - 31.61 2002 14,819 0.588 - 0.598 8,728 0.58 0.80 - 1.25 (34.45) - (34.14) Travelers Style Focus Series: Small Cap Growth Subaccount 2006 -- 1.032 -- 0.01 1.25 3.20 Travelers U.S. Government Securities Subaccount 2006 -- 1.352 - 1.396 -- 5.73 0.80 - 1.25 (3.50) - (3.39) 2005 9,927 1.401 - 1.445 13,940 -- 0.80 - 1.25 3.01 - 3.51 2004 10,899 1.360 - 1.396 14,845 4.12 0.80 - 1.25 4.78 - 5.28 2003 13,517 1.298 - 1.326 17,559 4.63 0.80 - 1.25 1.49 - 1.92 2002 14,236 1.279 - 1.301 18,220 9.27 0.80 - 1.25 12.19 - 12.74 Van Kampen Life Investment Trust Van Kampen LIT Comstock Subaccount (Class II) 2006 592 1.712 - 1.741 1,014 1.32 0.80 - 1.25 14.59 - 15.15 2005 776 1.494 - 1.512 1,159 0.81 0.80 - 1.25 2.82 - 3.28 2004 341 1.453 - 1.464 495 0.35 0.80 - 1.25 15.96 - 16.47 2003 59 1.253 - 1.257 74 -- 0.80 - 1.25 9.78 - 13.19 Van Kampen LIT Enterprise Subaccount (Class II) 2006 68 0.903 - 0.926 62 0.16 0.80 - 1.25 5.37 - 5.83 2005 57 0.857 - 0.875 49 0.47 0.80 - 1.25 6.59 - 7.10 2004 57 0.804 - 0.817 46 0.13 0.80 - 1.25 2.55 - 2.90 2003 57 0.784 - 0.794 45 0.15 0.80 - 1.25 24.05 - 24.65 2002 13 0.632 - 0.637 8 0.17 0.80 - 1.25 (30.47) - (22.97) Van Kampen LIT Strategic Growth Subaccount (Class II) 2006 207 0.772 160 -- 1.25 1.31 2005 242 0.762 184 0.01 1.25 6.28 2004 165 0.717 118 -- 1.25 5.44 2003 146 0.680 99 -- 1.25 25.46 2002 187 0.542 101 0.02 1.25 (32.50)
90 NOTES TO FINANCIAL STATEMENTS -- (Continued) 5. FINANCIAL HIGHLIGHTS -- (Concluded)
Year Unit Value Net Investment(1) Expense Ratio(2) Total Return(3) Ended Units Lowest to Assets Income Lowest to Lowest to Dec 31 (000s) Highest ($) ($000s) Ratio (%) Highest (%) Highest (%) ------ ------ ------------- ------- ------------- ---------------- ---------------- Variable Insurance Products Fund VIP Asset Manager Subaccount (Service Class 2) 2006 -- 1.029 - 1.057 -- 2.47 0.80 - 1.25 3.63 - 3.73 2005 4,790 0.993 - 1.019 4,764 2.56 0.80 - 1.25 2.48 - 2.93 2004 4,953 0.969 - 0.990 4,806 2.38 0.80 - 1.25 3.86 - 4.32 2003 4,344 0.933 - 0.949 4,057 3.20 0.80 - 1.25 16.19 - 16.73 2002 3,804 0.803 - 0.813 3,057 2.96 0.80 - 1.25 (10.18) - (9.67) VIP Contrafund(R) Subaccount (Service Class 2) 2006 4,455 1.543 - 1.583 6,891 0.98 0.80 - 1.25 10.06 - 10.54 2005 4,465 1.402 - 1.432 6,271 0.11 0.80 - 1.25 15.20 - 15.67 2004 3,242 1.217 - 1.238 3,953 0.16 0.80 - 1.25 13.74 - 14.31 2003 1,788 1.070 - 1.083 1,917 0.28 0.80 - 1.25 26.63 - 27.11 2002 1,347 0.845 - 0.852 1,140 0.13 0.80 - 1.25 (11.25) - (10.77) VIP Dynamic Capital Appreciation Subaccount (Service Class 2) 2006 271 1.273 - 1.306 346 0.25 0.80 - 1.25 12.36 - 12.88 2005 328 1.133 - 1.157 373 -- 0.80 - 1.25 19.26 - 19.77 2004 182 0.950 - 0.966 173 -- 0.80 - 1.25 0.00 - 0.42 2003 168 0.950 - 0.962 159 -- 0.80 - 1.25 23.38 - 23.97 2002 142 0.770 - 0.776 110 0.60 0.80 - 1.25 (10.60) - (8.77) VIP Mid Cap Subaccount (Service Class 2) 2006 3,678 1.989 - 2.040 7,336 0.18 0.80 - 1.25 10.99 - 11.48 2005 3,874 1.792 - 1.830 6,955 -- 0.80 - 1.25 16.59 - 17.08 2004 2,701 1.537 - 1.563 4,157 -- 0.80 - 1.25 23.06 - 23.66 2003 1,686 1.249 - 1.264 2,107 0.23 0.80 - 1.25 36.65 - 37.24 2002 1,274 0.914 - 0.921 1,166 0.17 0.80 - 1.25 (11.18) - (10.76) Wells Fargo Variable Trust Wells Fargo VT Advantage Small/Mid Cap Value Subaccount 2006 525 1.507 - 1.559 791 -- 0.80 - 1.25 14.25 - 14.80 2005 600 1.319 - 1.358 792 0.40 0.80 - 1.25 15.10 - 15.57 2004 617 1.146 - 1.175 707 -- 0.80 - 1.25 15.29 - 15.88 2003 688 0.994 - 1.014 684 0.11 0.80 - 1.25 36.73 - 37.21 2002 782 0.727 - 0.739 569 0.56 0.80 - 1.25 (24.11) - (23.74)
(1) These amounts represent the dividends, excluding distributions of capital gains, received by the Subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the Subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the Subaccount invests. (2) These amounts represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund have been excluded. (3) These amounts represent the total return for the period indicated, including changes in the value of the underlying fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. As the total return is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract total returns are not within the ranges presented. 91 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005
AIM V.I. AIM V.I. American Funds Core Equity Premier Equity Global Growth Subaccount (Series I) Subaccount (Series I) Subaccount (Class 2) --------------------- --------------------- -------------------- 2006 2005 2006 2005 2006 2005 ------- ---- -------- -------- --------- -------- Accumulation and annuity units beginning of year ........................ -- -- 179,949 290,662 656,983 180,496 Accumulation units purchased and transferred from other funding options ... 224,872 -- -- -- 629,420 577,067 Accumulation units redeemed and transferred to other funding options ..... (88,439) -- (179,949) (110,713) (150,730) (100,580) Annuity units .............................. -- -- -- -- -- -- ------- --- -------- -------- --------- -------- Accumulation and annuity units end of year .............................. 136,433 -- -- 179,949 1,135,673 656,983 ======= === ======== ======== ========= ========
American Funds American Funds Capital Growth Subaccount Growth-Income Appreciation (Class 2) Subaccount (Class 2) Subaccount --------------------- --------------------- ------------------------ 2006 2005 2006 2005 2006 2005 --------- --------- --------- --------- ----------- ---------- Accumulation and annuity units beginning of year ........................ 1,649,798 308,523 1,844,327 479,291 21,791,392 21,722,427 Accumulation units purchased and transferred from other funding options ... 1,233,877 1,431,412 1,039,571 1,509,663 404,673 2,737,636 Accumulation units redeemed and transferred to other funding options ..... (542,682) (90,137) (205,705) (144,627) (22,196,065) (2,668,671) Annuity units .............................. -- -- -- -- -- -- --------- --------- --------- --------- ----------- ---------- Accumulation and annuity units end of year .............................. 2,340,993 1,649,798 2,678,193 1,844,327 -- 21,791,392 ========= ========= ========= ========= =========== ==========
Credit Suisse Delaware VIP Delaware VIP Trust Emerging REIT Subaccount Small Cap Value Markets Subaccount (Standard Class) Subaccount (Standard Class) --------------------- ---------------------- --------------------------- 2006 2005 2006 2005 2006 2005 --------- --------- --------- --------- --------- --------- Accumulation and annuity units beginning of year ........................ 1,232,363 1,337,942 2,656,498 2,672,651 2,828,453 2,829,571 Accumulation units purchased and transferred from other funding options ... 200,753 133,196 72,866 560,934 238,602 398,883 Accumulation units redeemed and transferred to other funding options ..... (550,383) (238,775) (2,729,364) (577,087) (613,538) (400,001) Annuity units .............................. -- -- -- -- -- -- --------- --------- ---------- --------- --------- --------- Accumulation and annuity units end of year .............................. 882,733 1,232,363 -- 2,656,498 2,453,517 2,828,453 ========= ========= ========== ========= ========= =========
Dreyfus VIF Dreyfus VIF FTVIPT Mutual Appreciation Subaccount Developing Leaders Shares Securities (Initial Shares) Subaccount (Initial Shares) Subaccount (Class 2) ----------------------- --------------------------- -------------------- 2006 2005 2006 2005 2006 2005 --------- --------- ---------- ---------- -------- ------- Accumulation and annuity units beginning of year ........................ 4,006,774 4,661,805 7,010,422 8,116,796 204,210 106,017 Accumulation units purchased and transferred from other funding options ... 122,266 300,197 140,417 291,637 74,147 104,720 Accumulation units redeemed and transferred to other funding options ..... (720,569) (955,060) (1,750,978) (1,398,011) (278,357) (6,527) Annuity units .............................. 182 (168) -- -- -- -- --------- --------- ---------- ---------- -------- ------- Accumulation and annuity units end of year .............................. 3,408,653 4,006,774 5,399,861 7,010,422 -- 204,210 ========= ========= ========== ========== ======== =======
92 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Continued)
FTVIPT Templeton Developing FTVIPT Templeton FTVIPT Templeton Markets Securities Foreign Securities Growth Securities Subaccount (Class 2) Subaccount (Class 2) Subaccount (Class 2) --------------------------- -------------------- ---------------------- 2006 2005 2006 2005 2006 2005 -------- ------- --------- ------- ---------- --------- Accumulation and annuity units beginning of year ........................ 653,848 49,682 949,133 222,726 2,251,064 583,539 Accumulation units purchased and transferred from other funding options ... 491,056 689,018 353,344 770,357 218,206 1,799,656 Accumulation units redeemed and transferred to other funding options ..... (428,672) (84,852) (171,196) (43,950) (2,469,270) (132,131) Annuity units .............................. -- -- -- -- -- -- -------- ------- --------- ------- ---------- --------- Accumulation and annuity units end of year .............................. 716,232 653,848 1,131,281 949,133 -- 2,251,064 ======== ======= ========= ======= ========== =========
Janus Aspen Janus Aspen High Yield Bond Balanced Subaccount Mid Cap Growth Subaccount (Service Shares) Subaccount (Service Shares) ---------------------- ---------------------- --------------------------- 2006 2005 2006 2005 2006 2005 ---------- --------- ---------- --------- ------- ------- Accumulation and annuity units beginning of year ........................ 5,210,550 5,519,327 1,519,776 1,562,703 331,267 212,598 Accumulation units purchased and transferred from other funding options ... 82,353 510,317 271,189 119,327 239,556 152,349 Accumulation units redeemed and transferred to other funding options ..... (5,274,646) (817,562) (1,790,965) (162,254) (91,900) (33,680) Annuity units .............................. (18,257) (1,532) -- -- -- -- ---------- --------- ---------- --------- ------- ------- Accumulation and annuity units end of year .............................. -- 5,210,550 -- 1,519,776 478,923 331,267 ========== ========= ========== ========= ======= =======
Janus Aspen Lazard Retirement LMPIS Dividend Worldwide Growth Subaccount Small Cap Strategy (Service Shares) Subaccount Subaccount --------------------------- ------------------ ------------------ 2006 2005 2006 2005 2006 2005 ---------- ---------- -------- ------- ------- -------- Accumulation and annuity units beginning of year ........................ 8,075,434 9,467,988 313,556 231,226 241,291 361,683 Accumulation units purchased and transferred from other funding options ... 181,638 364,535 60,094 153,478 27,249 14,254 Accumulation units redeemed and transferred to other funding options ..... (1,889,473) (1,757,089) (373,650) (71,148) (44,270) (134,646) Annuity units .............................. -- -- -- -- -- -- ---------- ---------- -------- ------- ------- -------- Accumulation and annuity units end of year .............................. 6,367,599 8,075,434 -- 313,556 224,270 241,291 ========== ========== ======== ======= ======= ========
LMPIS Premier LMPVPV Small Cap LMPVPI All Cap Selections All Cap Growth Opportunities Subaccount Growth Subaccount Subaccount (Class I) ------------------ -------------------- ----------------------- 2006 2005 2006 2005 2006 2005 ------ ------- -------- ------- ---------- ---------- Accumulation and annuity units beginning of year ........................ 21,970 46,844 286,976 275,128 8,162,417 8,896,689 Accumulation units purchased and transferred from other funding options ... 43,553 5,902 90,252 104,008 71,804 414,121 Accumulation units redeemed and transferred to other funding options ..... (6,091) (30,776) (128,837) (92,160) (1,963,104) (1,146,203) Annuity units .............................. -- -- -- -- (6,016) (2,190) ------ ------- -------- ------- ---------- ---------- Accumulation and annuity units end of year .............................. 59,432 21,970 248,391 286,976 6,265,101 8,162,417 ====== ======= ======== ======= ========== ==========
93 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Continued)
LMPVPI Investors LMPVPI Small Cap LMPVPI Total Return Subaccount (Class I) Growth Subaccount (Class I) Subaccount (Class I) --------------------- --------------------------- -------------------- 2006 2005 2006 2005 2006 2005 --------- --------- -------- ------- ------- ------- Accumulation and annuity units beginning of year ........................ 3,089,978 3,426,097 631,353 598,446 487,989 534,420 Accumulation units purchased and transferred from other funding options ... 43,590 200,229 12,952 129,455 14,799 1,763 Accumulation units redeemed and transferred to other funding options ..... (556,165) (536,348) (171,450) (96,548) (35,919) (48,194) Annuity units .............................. -- -- -- -- -- -- --------- --------- -------- ------- ------- ------- Accumulation and annuity units end of year .............................. 2,577,403 3,089,978 472,855 631,353 466,869 487,989 ========= ========= ======== ======= ======= =======
LMPVPII Appreciation LMPVPII Equity Index LMPVPII Fundamental Subaccount Subaccount (Class II) Value Subaccount --------------------- ----------------------- ----------------------- 2006 2005 2006 2005 2006 2005 --------- --------- ---------- ---------- ---------- ---------- Accumulation and annuity units beginning of year ........................ 3,352,432 3,284,862 21,221,236 22,935,218 8,472,993 9,607,960 Accumulation units purchased and transferred from other funding options ... 105,801 513,642 323,367 2,246,201 60,152 194,859 Accumulation units redeemed and transferred to other funding options ..... (573,287) (446,072) (5,157,747) (3,947,435) (1,397,581) (1,329,826) Annuity units .............................. -- -- (5,642) (12,748) -- -- --------- --------- ---------- ---------- ---------- ---------- Accumulation and annuity units end of year .............................. 2,884,946 3,352,432 16,381,214 21,221,236 7,135,564 8,472,993 ========= ========= ========== ========== ========== ==========
LMPVPIII Adjustable Rate LMPVPIII Aggressive LMPVPIII High Income Income Subaccount Growth Subaccount Subaccount ------------------------ ----------------------- -------------------- 2006 2005 2006 2005 2006 2005 -------- ------- ---------- ---------- -------- -------- Accumulation and annuity units beginning of year ........................ 328,231 334,070 11,829,070 12,807,998 832,181 983,645 Accumulation units purchased and transferred from other funding options ... 82,320 70,979 226,450 1,027,564 197,931 124,401 Accumulation units redeemed and transferred to other funding options ..... (104,339) (76,818) (2,117,185) (2,006,492) (263,267) (275,865) Annuity units .............................. -- -- -- -- -- -- -------- ------- ---------- ---------- -------- -------- Accumulation and annuity units end of year .............................. 306,212 328,231 9,938,335 11,829,070 766,845 832,181 ======== ======= ========== ========== ======== ========
LMPVPIII International LMPVPIII LMPVPIII All Cap Growth Large Cap Growth Social Awareness Subaccount Subaccount Stock Subaccount ---------------------- ----------------------- ---------------------- 2006 2005 2006 2005 2006 2005 --------- --------- ---------- ---------- --------- ---------- Accumulation and annuity units beginning of year ........................ 2,034,777 2,588,694 6,810,958 8,734,161 3,332,360 4,116,754 Accumulation units purchased and transferred from other funding options ... 116,361 61,595 402,226 357,972 61,488 130,939 Accumulation units redeemed and transferred to other funding options ..... (531,241) (615,512) (2,208,523) (2,280,370) (808,370) (915,333) Annuity units .............................. -- -- (1,289) (805) -- -- --------- --------- ---------- ---------- --------- --------- Accumulation and annuity units end of year ............................... 1,619,897 2,034,777 5,003,372 6,810,958 2,585,478 3,332,360 ========= ========= ========== ========== ========= =========
94 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Continued)
Lord Abbett Growth and Income Lord Abbett Mid-Cap Value Managed Assets Subaccount (Class VC) Subaccount (Class VC) Subaccount ----------------------------- ------------------------- ------------------------ 2006 2005 2006 2005 2006 2005 -------- ------- -------- ------- ----------- ---------- Accumulation and annuity units beginning of year ........................ 604,754 268,562 495,385 219,429 18,738,214 20,213,234 Accumulation units purchased and transferred from other funding options ... 237,557 354,606 83,891 340,518 231,704 1,367,981 Accumulation units redeemed and transferred to other funding options ..... (157,790) (18,414) (107,134) (64,562) (18,950,517) (2,841,924) Annuity units .............................. -- -- -- -- (19,401) (1,077) -------- ------- -------- ------- ----------- ---------- Accumulation and annuity units end of year .............................. 684,521 604,754 472,142 495,385 -- 18,738,214 ======== ======= ======== ======= =========== ==========
MIST Batterymarch MIST BlackRock MIST Dreman Mid-Cap Stock Large-Cap Core Small-Cap Value Subaccount (Class A) Subaccount (Class A) Subaccount (Class A) -------------------- -------------------- -------------------- 2006 2005 2006 2005 2006 2005 --------- ---- --------- ---- ------- ---- Accumulation and annuity units beginning of year ........................ -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options ... 3,999,374 -- 1,040,392 -- 96,869 -- Accumulation units redeemed and transferred to other funding options ..... (814,950) -- (83,118) -- (12,088) -- Annuity units .............................. -- -- -- -- -- -- --------- --- --------- --- ------- --- Accumulation and annuity units end of year .............................. 3,184,424 -- 957,274 -- 84,781 -- ========= === ========= === ======= ===
MIST Harris Oakmark MIST Janus Capital MIST Legg Mason International Subaccount Appreciation Subaccount Partners Managed Assets (Class A) (Class A) Subaccount (Class A) ------------------------ ----------------------- ----------------------- 2006 2005 2006 2005 2006 2005 --------- ---- ---------- ----- ---------- ---- Accumulation and annuity units beginning of year ........................ -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options ... 1,945,646 -- 20,468,698 -- 17,246,667 -- Accumulation units redeemed and transferred to other funding options ..... (470,234) -- (4,183,473) -- (3,111,924) -- Annuity units .............................. 1,240 -- -- -- 20,622 -- --------- --- ---------- --- ---------- --- Accumulation and annuity units end of year .............................. 1,476,652 -- 16,285,225 -- 14,155,365 -- ========= === ========== === ========== ===
MIST Lord Abbett MIST Lord Abbett MIST Met/AIM Bond Debenture Growth and Income Capital Appreciation Subaccount (Class A) Subaccount (Class B) Subaccount (Class A) -------------------- -------------------- --------------------- 2006 2005 2006 2005 2006 2005 ------- ---- --------- ---- -------- ---- Accumulation and annuity units beginning of year ........................ -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options ... 501,717 -- 1,946,991 -- 572,167 -- Accumulation units redeemed and transferred to other funding options ..... (90,127) -- (298,491) -- (137,487) -- Annuity units .............................. -- -- -- -- -- -- ------- --- --------- --- -------- --- Accumulation and annuity units end of year .............................. 411,590 -- 1,648,500 -- 434,680 -- ======= === ========= === ======== ===
95 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Continued)
MIST Met/AIM Small Cap MIST MFS(R) Value MIST Neuberger Berman Growth Subaccount (Class A) Subaccount (Class A) Real Estate Subaccount (Class A) --------------------------- -------------------- -------------------------------- 2006 2005 2006 2005 2006 2005 ------- ---- ------- ---- --------- ---- Accumulation and annuity units beginning of year ....................... -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options .. 101,458 -- 807,282 -- 7,281,535 -- Accumulation units redeemed and transferred to other funding options .... (87,197) -- (69,932) -- (956,259) -- Annuity units ............................. -- -- -- -- -- -- ------- --- ------- --- --------- --- Accumulation and annuity units end of year ............................. 14,261 -- 737,350 -- 6,325,276 -- ======= === ======= === ========= ===
MIST Pioneer Fund Subaccount MIST Pioneer Mid-Cap MIST Pioneer Strategic (Class A) Value Subaccount (Class A) Income Subaccount (Class A) ---------------------------- -------------------------- --------------------------- 2006 2005 2006 2005 2006 2005 --------- ---- ------- ---- --------- ---- Accumulation and annuity units beginning of year ....................... -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options .. 1,811,876 -- 54,453 -- 1,471,128 -- Accumulation units redeemed and transferred to other funding options .... (200,114) -- -- -- (176,140) -- Annuity units ............................. -- -- -- -- -- -- --------- --- ------ --- --------- --- Accumulation and annuity units end of year ............................. 1,611,762 -- 54,453 -- 1,294,988 -- ========= === ====== === ========= ===
MIST Third Avenue MetLife Investment MetLife Investment Small Cap Value Subaccount Diversified Bond Subaccount International Stock (Class B) (Class I) Subaccount (Class I) -------------------------- --------------------------- ------------------------ 2006 2005 2006 2005 2006 2005 ------- ---- ------------ ------------ ----------- ---------- Accumulation and annuity units beginning of year ....................... -- -- 71,478,585 70,635,606 39,078,208 41,323,915 Accumulation units purchased and transferred from other funding options .. 277,331 -- 4,969,534 11,447,947 1,334,051 4,953,149 Accumulation units redeemed and transferred to other funding options .... (18,076) -- (16,739,270) (10,596,861) (11,300,773) (7,194,249) Annuity units ............................. -- -- (9,096) (8,107) (4,997) (4,607) ------- --- ----------- ----------- ----------- ---------- Accumulation and annuity units end of year ............................. 259,255 -- 59,699,753 71,478,585 29,106,489 39,078,208 ======= === =========== =========== =========== ==========
MetLife Investment Large MetLife Investment MSF BlackRock Company Stock Subaccount Small Company Stock Aggressive Growth (Class I) Subaccount (Class I) Subaccount (Class D) ------------------------- ----------------------- -------------------- 2006 2005 2006 2005 2006 2005 ----------- ----------- ---------- ---------- ----------- ---- Accumulation and annuity units beginning of year ....................... 86,174,978 89,116,716 16,834,717 17,829,136 -- -- Accumulation units purchased and transferred from other funding options .. 2,101,844 10,808,471 375,416 1,979,867 3,459,316 -- Accumulation units redeemed and transferred to other funding options .... (18,452,163) (13,739,146) (4,145,932) (2,972,328) (690,867) -- Annuity units ............................. (11,915) (11,063) (2,234) (1,958) 7,145 -- ----------- ----------- ---------- ---------- --------- --- Accumulation and annuity units end of year ............................. 69,812,744 86,174,978 13,061,967 16,834,717 2,775,594 -- =========== =========== ========== ========== ========= ===
96 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Continued)
MSF BlackRock Bond Income MSF BlackRock Money MSF FI Large Cap Subaccount (Class A) Market Subaccount (Class A) Subaccount (Class A) ------------------------- --------------------------- -------------------- 2006 2005 2006 2005 2006 2005 --------- ---- ---------- ---- ---------- ---- Accumulation and annuity units beginning of year ....................... -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options .. 5,957,996 -- 14,196,795 -- 16,327,777 -- Accumulation units redeemed and transferred to other funding options .... (985,505) -- (4,315,889) -- (3,456,877) -- Annuity units ............................. 44,601 -- 5,390 -- 19,795 -- --------- --- ---------- --- ---------- --- Accumulation and annuity units end of year ............................. 5,017,092 -- 9,886,296 -- 12,890,695 -- ========= === ========== === ========== ===
MSF FI Value MSF MetLife MSF MetLife Conservative Leaders Subaccount Aggressive Allocation to Moderate Allocation (Class D) Subaccount (Class B) Subaccount (Class B) ------------------ --------------------- ------------------------ 2006 2005 2006 2005 2006 2005 ---------- ---- ------- ---- ------ ---- Accumulation and annuity units beginning of year ....................... -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options .. 11,203,459 -- 128,675 -- 76,492 -- Accumulation units redeemed and transferred to other funding options .... (1,878,107) -- (59,366) -- (4,399) -- Annuity units ............................. 1,515 -- -- -- -- -- ---------- --- ------- --- ------ --- Accumulation and annuity units end of year ............................. 9,326,867 -- 69,309 -- 72,093 -- ========== === ======= === ====== ===
MSF MetLife MSF MetLife Moderate MSF MFS(R) Moderate Allocation to Aggressive Allocation Total Return Subaccount (Class B) Subaccount (Class B) Subaccount (Class F) -------------------- ------------------------ -------------------- 2006 2005 2006 2005 2006 2005 ------- ---- ------- ---- ---------- ---- Accumulation and annuity units beginning of year ....................... -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options .. 343,377 -- 396,457 -- 19,236,086 -- Accumulation units redeemed and transferred to other funding options .... (4,981) -- -- -- (2,774,395) -- Annuity units ............................. -- -- -- -- 10,917 -- ------- --- ------- --- ---------- --- Accumulation and annuity units end of year ............................. 338,396 -- 396,457 -- 16,472,608 -- ======= === ======= === ========== ===
MSF Oppenheimer MSF Western Asset MSF Western Asset Global Equity Subaccount Management High Yield Management U.S. Government (Class B) Bond Subaccount (Class A) Subaccount (Class A) ------------------------ ------------------------- -------------------------- 2006 2005 2006 2005 2006 2005 --------- ---- --------- ---- ---------- ---- Accumulation and annuity units beginning of year ....................... -- -- -- -- -- -- Accumulation units purchased and transferred from other funding options .. 3,338,014 -- 4,963,158 -- 9,360,670 -- Accumulation units redeemed and transferred to other funding options .... (185,512) -- (737,036) -- (1,478,990) -- Annuity units ............................. -- -- 14,682 -- 12,857 -- --------- --- --------- --- ---------- --- Accumulation and annuity units end of year ............................. 3,152,502 -- 4,240,804 -- 7,894,537 -- ========= === ========= === ========== ===
97 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Continued)
Money Market Oppenheimer Main Street/VA PIMCO VIT Real Return Subaccount Subaccount (Service Shares) Subaccount (Administrative Class) ------------------------- ---------------------------- --------------------------------- 2006 2005 2006 2005 2006 2005 ------------ ----------- ------------- ------------- ----------------- -------------- Accumulation and annuity units beginning of year .................... 11,199,422 13,084,846 167,807 74,713 191,822 -- Accumulation units purchased and transferred from other funding options .............................. 975,501 3,209,896 117,603 95,895 68,545 191,822 Accumulation units redeemed and transferred to other funding options.. (12,168,731) (5,094,817) (285,410) (2,801) (26,246) -- Annuity units .......................... (6,192) (503) -- -- -- -- ----------- ---------- -------- ------- ------- ------- Accumulation and annuity units end of year .......................... -- 11,199,422 -- 167,807 234,121 191,822 =========== ========== ======== ======= ======= =======
PIMCO VIT Putnam VT Total Return Subaccount Discovery Growth Putnam VT International (Administrative Class) Subaccount (Class IB) Equity Subaccount (Class IB) ----------------------- --------------------- ---------------------------- 2006 2005 2006 2005 2006 2005 ----------- ---------- --------- ---------- ------------- ------------- Accumulation and annuity units beginning of year .................... 5,898,231 5,710,705 92,429 92,900 963,362 970,917 Accumulation units purchased and transferred from other funding options .............................. 912,339 1,151,993 44,319 20,604 167,696 125,714 Accumulation units redeemed and transferred to other funding options.. (1,463,389) (964,467) (24,459) (21,075) (155,137) (133,269) Annuity units .......................... -- -- -- -- -- -- ---------- --------- ------- ------- -------- -------- Accumulation and annuity units end of year .......................... 5,347,181 5,898,231 112,289 92,429 975,921 963,362 ========== ========= ======= ======= ======== ========
Putnam VT Small Cap Travelers AIM Capital Travelers Convertible Value Subaccount (Class IB) Appreciation Subaccount Securities Subaccount --------------------------- ----------------------- --------------------- 2006 2005 2006 2005 2006 2005 ------------- ------------ ---------- ----------- ---------- --------- Accumulation and annuity units beginning of year .................... 3,394,735 3,255,684 638,237 843,575 90,014 64,342 Accumulation units purchased and transferred from other funding options .............................. 279,389 724,341 6,173 166,801 12,577 37,077 Accumulation units redeemed and transferred to other funding options.. (727,631) (585,290) (644,410) (372,139) (102,591) (11,405) Annuity units .......................... -- -- -- -- -- -- --------- --------- -------- -------- -------- ------- Accumulation and annuity units end of year .......................... 2,946,493 3,394,735 -- 638,237 -- 90,014 ========= ========= ======== ======== ======== =======
Travelers Disciplined Travelers Equity Travelers Federated Mid Cap Stock Subaccount Income Subaccount Stock Subaccount ------------------------ ------------------------- --------------------- 2006 2005 2006 2005 2006 2005 ----------- ----------- ------------ ----------- --------- ---------- Accumulation and annuity units beginning of year .................... 4,141,856 4,425,365 11,947,739 12,451,558 973,647 1,232,467 Accumulation units purchased and transferred from other funding options .............................. 84,879 339,303 53,397 1,202,185 -- 9,754 Accumulation units redeemed and transferred to other funding options.. (4,226,735) (622,812) (11,999,713) (1,705,914) (973,647) (268,574) Annuity units .......................... -- -- (1,423) (90) -- -- ---------- ---------- ----------- ---------- -------- --------- Accumulation and annuity units end of year .......................... -- 4,141,856 -- 11,947,739 -- 973,647 ========== ========== =========== ========== ======== =========
98 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Continued)
Travelers Large Cap Travelers Mercury Large Cap Travelers MFS(R) Mid Cap Subaccount Core Subaccount Growth Subaccount ------------------------ --------------------------- ------------------------ 2006 2005 2006 2005 2006 2005 ----------- ----------- ------------ ------------- ----------- ----------- Accumulation and annuity units beginning of year .................... 7,622,960 8,946,685 940,487 929,870 3,747,482 4,399,375 Accumulation units purchased and transferred from other funding options .............................. 81,465 307,661 115,077 176,415 21,862 185,733 Accumulation units redeemed and transferred to other funding options.. (7,704,425) (1,631,386) (1,055,564) (165,798) (3,759,932) (836,802) Annuity units .......................... -- -- -- -- (9,412) (824) ---------- ---------- ---------- -------- ---------- --------- Accumulation and annuity units end of year .......................... -- 7,622,960 -- 940,487 -- 3,747,482 ========== ========== ========== ======== ========== =========
Travelers MFS(R) Travelers MFS(R) Travelers Mondrian Total Return Subaccount Value Subaccount International Stock Subaccount ------------------------- ------------------- ------------------------------ 2006 2005 2006 2005 2006 2005 ------------ ----------- --------- -------- ------------- -------------- Accumulation and annuity units beginning of year .................... 14,378,200 14,602,425 559,047 244,994 1,334,350 1,417,346 Accumulation units purchased and transferred from other funding options .............................. 216,193 2,214,818 59,615 412,576 107,354 300,029 Accumulation units redeemed and transferred to other funding options.. (14,584,333) (2,438,373) (618,662) (98,523) (1,440,538) (382,952) Annuity units .......................... (10,060) (670) -- -- (1,166) (73) ----------- ---------- -------- ------- ---------- --------- Accumulation and annuity units end of year .......................... -- 14,378,200 -- 559,047 -- 1,334,350 =========== ========== ======== ======= ========== =========
Travelers Pioneer Fund Travelers Pioneer Mid Cap Travelers Pioneer Strategic Subaccount Value Subaccount Income Subaccount ----------------------- ------------------------- ------------ ------------- 2006 2005 2006 2005 2006 2005 ----------- ---------- ----------- ------------ ------------ ------------- Accumulation and annuity units beginning of year .................... 1,983,434 2,207,586 35,272 -- 1,270,194 904,550 Accumulation units purchased and transferred from other funding options .............................. 7,420 178,991 -- 42,317 197,801 471,058 Accumulation units redeemed and transferred to other funding options.. (1,990,854) (403,143) (35,272) (7,045) (1,467,995) (105,414) Annuity units .......................... -- -- -- -- -- -- ---------- --------- ------- ------ ---------- --------- Accumulation and annuity units end of year .......................... -- 1,983,434 -- 35,272 -- 1,270,194 ========== ========= ======= ====== ========== =========
Travelers Quality Travelers Strategic Travelers Style Focus Series: Bond Subaccount Equity Subaccount Small Cap Growth Subaccount ----------------------- ------------------------- ----------------------------- 2006 2005 2006 2005 2006 2005 ----------- ---------- ------------ ----------- -------------- ------------- Accumulation and annuity units beginning of year .................... 6,417,640 6,652,534 10,172,541 12,448,181 -- -- Accumulation units purchased and transferred from other funding options .............................. 83,443 874,839 49,316 375,485 9,869 -- Accumulation units redeemed and transferred to other funding options (6,450,647) (1,105,256) (10,195,519) (2,648,870) (9,869) -- Annuity units .......................... (50,436) (4,477) (26,338) (2,255) -- -- ---------- ---------- ----------- ---------- ------ --- Accumulation and annuity units end of year .......................... -- 6,417,640 -- 10,172,541 -- -- ========== ========== =========== ========== ====== ===
99 NOTES TO FINANCIAL STATEMENTS -- (Continued) 6. Schedules of Accumulation and Annuity Units for the years ended December 31, 2006 and 2005 -- (Concluded)
Travelers U.S. Government Van Kampen LIT Comstock Van Kampen LIT Enterprise Securities Subaccount Subaccount (Class II) Subaccount (Class II) ------------------------- ----------------------- ------------------------- 2006 2005 2006 2005 2006 2005 ----------- ---------- -------- -------- ------ ------ Accumulation and annuity units beginning of year ....................... 9,927,211 10,898,924 775,636 340,734 57,135 57,135 Accumulation units purchased and transferred from other funding options .. 158,842 962,641 89,070 618,640 11,257 -- Accumulation units redeemed and transferred to other funding options .... (10,074,174) (1,933,568) (272,792) (183,738) -- -- Annuity units ............................. (11,879) (786) -- -- -- -- ----------- ---------- -------- -------- ------ ------ Accumulation and annuity units end of year ............................. -- 9,927,211 591,914 775,636 68,392 57,135 =========== ========== ======== ======== ====== ======
Van Kampen LIT VIP Asset Manager VIP Contrafund(R) Strategic Growth Subaccount Subaccount Subaccount (Class II) (Service Class 2) (Service Class 2) --------------------- ---------------------- --------------------- 2006 2005 2006 2005 2006 2005 ------- ------- ---------- --------- --------- --------- Accumulation and annuity units beginning of year ....................... 241,833 164,650 4,790,463 4,953,099 4,465,200 3,242,396 Accumulation units purchased and transferred from other funding options .. (1,148) 127,487 50,007 313,166 815,875 1,762,231 Accumulation units redeemed and transferred to other funding options .... (33,742) (50,304) (4,840,470) (475,802) (826,188) (539,427) Annuity units ............................. -- -- -- -- -- -- ------- ------- ---------- --------- --------- --------- Accumulation and annuity units end of year ............................. 206,943 241,833 -- 4,790,463 4,454,887 4,465,200 ======= ======= ========== ========= ========= =========
VIP Dynamic Capital VIP Mid Cap Wells Fargo VT Appreciation Subaccount Subaccount Advantage Small/Mid Cap (Service Class 2) (Service Class 2) Value Subaccount ------------------------ --------------------- ----------------------- 2006 2005 2006 2005 2006 2005 -------- ------- --------- --------- -------- -------- Accumulation and annuity units beginning of year ....................... 328,499 181,514 3,873,896 2,701,113 600,161 617,173 Accumulation units purchased and transferred from other funding options .. 116,142 153,489 626,623 1,451,619 69,217 110,553 Accumulation units redeemed and transferred to other funding options .... (173,524) (6,504) (822,088) (278,836) (144,854) (127,565) Annuity units ............................. -- -- -- -- -- -- -------- ------- --------- --------- -------- -------- Accumulation and annuity units end of year ............................. 271,117 328,499 3,678,431 3,873,896 524,524 600,161 ======== ======= ========= ========= ======== ========
100 NOTES TO FINANCIAL STATEMENTS -- (Concluded) 7. SUBSEQUENT EVENT Company plans to merge with and into MetLife Insurance Company of Connecticut ("MICC") on or about December 7, 2007. Upon consummation of the merger, the Company's separate corporate existence will cease by operation of law and MICC will assume legal ownership of all the assets of the Company, including the Separate Account and its assets. As a result of the merger, MICC will become responsible for all of the Company's liabilities and obligations, including those created under contracts initially issued by the Company and outstanding on the date of the merger. Such contracts will thereby become variable annuity contracts funded by the Separate Account of MICC, and each owner thereof will become a contractholder of MICC. 101 PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) The financial statements of the Registrant and the report of Independent Registered Public Accounting Firm thereto are contained in the Registrant's Annual Report and are included in the Statement of Additional Information. The financial statements of the Registrant include: (1) Statement of Assets and Liabilities as of December 31, 2006 (2) Statement of Operations for the year ended December 31, 2006 (3) Statement of Changes in Net Assets for the years ended December 31, 2006 and 2005 (4) Notes to Financial Statements The consolidated financial statements and schedules of MetLife Life and Annuity Company of Connecticut and its subsidiary (formerly The Travelers Life and Annuity Company) and the reports of Independent Registered Public Accounting Firms, are contained in the Statement of Additional Information. The consolidated financial statements of MetLife Life and Annuity Company of Connecticut and subsidiaries include: (1) Consolidated Balance Sheets as of December 31, 2006 and 2005 (2) Consolidated Statements of Income for the year ended December 31, 2006, for the six months ended December 31, 2005 and June 30, 2005 and for the year ended December 31, 2004 (3) Consolidated Statements of Stockholder's Equity for the year ended December 31, 2006, for the six months ended December 31, 2005 and June 30, 2005 and for the year ended December 31, 2004 (4) Consolidated Statements of Cash Flows for the year ended December 31, 2006, for the six months ended December 31, 2005 and June 30, 2005 and for the year ended December 31, 2004 (5) Notes to Consolidated Financial Statements (6) Financial Statement Schedules (b) Exhibits
EXHIBIT NUMBER DESCRIPTION ------- ----------- 1. Resolution of The Travelers Life and Annuity Company Board of Directors authorizing the establishment of the Registrant. (Incorporated herein by reference to Exhibit 1 to the Registration Statement on Form N-4, File No. 333-58809, filed July 9, 1998.) 2. Not Applicable. 3(a). Distribution and Principal Underwriting Agreement among the Registrant, The Travelers Life and Annuity Company and Travelers Distribution LLC (Incorporated herein by reference to Exhibit 3(a) to the Registration Statement on Form N-4, File No. 333-58809 filed February 26, 2001.) 3(a)(i). Agreement and Plan of Merger dated as of October 20, 2006. (Incorporated herein by reference to Exhibit 1(a) to the Registration Statement on Form S- 1, File No. 333-138472 filed on November 7, 2006.) 3(b). Selling Agreement. (Incorporated herein by reference to Exhibit 3(b) to Post- Effective Amendment No. 2 and Amendment No. 17 to the Registration Statement on Form N-4, File Nos. 333-65942, 811--08225 filed April 15, 2003.) 3(c). Form of Selling Agreement. (Incorporated herein by reference to Exhibit 3(b) to Post-Effective Amendment No. 14 and Amendment 30 to The Travelers Fund ABD for Variable Annuities to the Registration Statement on Form N-4, File Nos. 033-65343, 811-07463 filed April 5, 2006.) 3(d). Master Retail Sales Agreement (MLIDC). (Incorporated herein by reference to Exhibit 3(d) to Post-Effective Amendment No. 16 to MetLife of CT Fund ABD II for Variable Annuities to the Registration Statement on Form N-4, File No. 033-65339/811-07463 filed April 6, 2007.)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4. Variable Annuity Contract. (Incorporated herein by reference to Exhibit 4 to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-58809, filed November 3, 1998.) a. Company Name Change Endorsement. (Incorporated herein by reference to Exhibit 4(c) to Post-Effective Amendment No. 14 and Amendment 30 to the Registration Statement on Form N-4, File Nos. 033-65339, 811- 07463 filed on April 7, 2006.) 5. 1) Application. (Incorporated herein by reference to Exhibit 5 to Pre- Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-58809, filed November 3, 1998.) a. The Travelers Insurance Company, The Travelers Life and Annuity Company, Deferred Variable Annuity Application Rev. 5-05, National app L-22213* b. The Travelers Insurance Company, The Travelers Life and Annuity Company, Deferred Variable Annuity Application Rev. 7-05 National app L-22213* c. The Travelers Insurance Company, The Travelers Life and Annuity Company, Deferred Variable Annuity Application Rev. 11-05 National app L-22213* d. The Travelers Insurance Company, The Travelers Life and Annuity Company, Deferred Variable Annuity Application Rev. 1-06 National app L-22213* e. The Travelers Insurance Company, The Travelers Life and Annuity Company, Master Application for Group Deferred Variable Annuity L22534 TRA Master App 7-05* f. The Travelers Life and Annuity Company for Deferred Variable Annuity Application (Arizona) L-22213AZ 5-05* g. The Travelers Life and Annuity Company for Deferred Variable Annuity Application (Arizona) L-22213AZ 7-05* h. The Travelers Life and Annuity Company for Deferred Variable Annuity Application (Arizona) L-22213AZ 11-05* i. The Travelers Life and Annuity Company for Deferred Variable Annuity Application (Arizona) L-22213AZ 1-06* * (Incorporated herein by reference to Post-Effective Amendment No. 11 to the Registration Statement on Form N-4, File Nos. 333- 58809/811-08869, filed April 10, 2006.) j. Systematic Withdrawal Program MetLife Retirement Account L- 19066SWP Order # L-19244 1 Rev. 11/06.** k. Dollar Cost Averaging Program MetLife Retirement Account L- 19066DCA Order # L-19243; Rev. 11/06.** * *(Incorporated herein by reference to Exhibit 13 to Post- Effective Amendment No. 13 to this Registration Statement on Form N-4, File No. 333-58809 filed April 9, 2007.) 2) Form of Variable Annuity Application. (Incorporated herein by reference to Exhibit 5 to Post-Effective Amendment No. 14 and Amendment 30 to The Travelers Fund ABD for Variable Annuities to the Registration Statement on Form N-4, File Nos. 033-65343, 811- 07465 filed April 5, 2006.) 6(a). Charter of The Travelers Life and Annuity Company, as amended on April 10, 1990. (Incorporated herein by reference to Exhibit 6(a) to the Registration Statement on Form N-4, File No. 333-40191, filed November 13, 1997.) 1) Certificate of Amendment of the Charter as Amended and Restated of The Travelers Life and Annuity Company effective May 1, 2006. (Incorporated herein by reference to Exhibit 6(c) to Post- Effective Amendment No. 14 and Amendment 30 to The Travelers Fund ABD II for Variable Annuities Registration Statement on Form N-4, File Nos. 033-65339, 811-07463 filed April 7, 2006.) 2) Certificate of Correction of MetLife Life and Annuity Company of Connecticut, to the Amendment to the Charter as Amended and Restated of The Travelers Life and Annuity Company, dated and executed as of the 4(th) day of April, 2007. Filed herewith. 6(b). By-Laws of The Travelers Life and Annuity Company, as amended on October 20, 1994. (Incorporated herein by reference to Exhibit 6(b) to the Registration Statement on Form N-4, File Nos. 333-40191, 811- 08479 filed November 13, 1997.)
EXHIBIT NUMBER DESCRIPTION ------- ----------- 6(c). Certificate of Amendment of the Charter as Amended and Restated of The Travelers Life and Annuity Company effective May 1, 2006. (Incorporated herein by reference to Post-Effective Amendment No. 14 and Amendment 30 to The Travelers Fund ABD II for Variable Annuities Registration Statement on Form N-4 , File Nos. 033-65339, 811-07463 filed April 7, 2006.) 7. Specimen Reinsurance Agreement. (Incorporated herein by reference to Exhibit 7 to Post-Effective Amendment No. 2 and Amendment No. 30 to the Registration Statement on Form N-4, File Nos. 333-65942, 811- 08225 filed April 15, 2003.) 8. Participation Agreements. (Incorporated herein by reference to Exhibit 8 to Post-Effective Amendment No. 8 to the Registration Statement on Form N-4, File No. 333-101778, filed April 21, 2005). 8(a). Participation Agreement Among Met Investors Series Trust, Met Investors Advisory, LLC, MetLife Investors Distribution Company, The Travelers Insurance Company and The Travelers Life and Annuity Company effective November 1, 2005. (Incorporated herein by reference to Exhibit 8(c) to Post- Effective Amendment No. 14 and Amendment 30 to The Travelers Fund ABD for Variable Annuities Registration Statement on Form N-4, File Nos. 033-65343, 811-07463 filed April 5, 2006.) 8(b)(i). Participation Agreement among Metropolitan Series Fund, Inc., MetLife Advisers, LLC, MetLife Securities, Inc. and MetLife Life and Annuity Company of Connecticut entered as of April 30, 2007. Filed herewith. 8(b)(ii). Participation Agreement among Metropolitan Series Fund, Inc., MetLife Advisers, LLC, MetLife Investors Distribution Company and MetLife Life and Annuity Company of Connecticut entered as of August 31, 2007. Filed herewith. 9. Opinion of Counsel as to the legality of securities being registered. (Incorporated herein by reference to Exhibit 9 to this Registration Statement on Form N-4, filed July 9, 1998.) 10. (a) Consent of KPMG LLP, Independent Registered Public Accounting Firm. Filed herewith. 10. (b) Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. Filed herewith. 11. Not applicable. 12. Not applicable. 13. Powers of Attorney authorizing Michele H. Abate, John E. Connolly, Jr., James L. Lipscomb, Gina C. Sandonato, Myra L. Saul, and Marie C. Swift as signatory for Michael K. Farrell, William J. Mullaney, Lisa M. Weber, Stanley J. Talbi and Joseph J. Prochaska. (Incorporated herein by reference to Exhibit 13 to Post-Effective Amendment No. 13 to this Registration Statement on Form N-4, File No. 333-58809 filed April 9, 2007.)
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR Principal Business Address: MetLife Life and Annuity Company of Connecticut One Cityplace Hartford, CT 06103-3415
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH INSURANCE COMPANY - -------------------------------- --------------------------------------------------------------------- Michael K. Farrell Director and President 10 Park Avenue Morristown, NJ 07962 William J. Mullaney Director 1 Metlife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Lisa M. Weber Director One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Steven A. Kandarian Executive Vice President and Chief Investment Officer 10 Park Avenue Morristown, NJ 07962
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH INSURANCE COMPANY - -------------------------------- --------------------------------------------------------------------- James L. Lipscomb Executive Vice President and General Counsel One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Joseph J. Prochaska, Jr. Executive Vice President and Chief Accounting Officer One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Stanley J. Talbi Executive Vice President and Chief Financial Officer One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Gwenn L. Carr Senior Vice President and Secretary One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Eric T. Steigerwalt Senior Vice President and Treasurer One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 William D. Cammarata Senior Vice President 18210 Crane Nest Drive Tampa, FL 33647 Elizabeth M. Forget Senior Vice President 260 Madison Ave New York, NY 10016 Gene L. Lunman Senior Vice President 185 Asylum Street Hartford, CT 06103 Roberto Baron Vice President and Senior Actuary One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 S. Peter Headley Vice President and Assistant Secretary 6750 Poplar Avenue Germantown, TN 38138 Daniel D. Jordan Vice President and Assistant Secretary 501 Boylston Street Boston, MA 02116 Bennett Kleinberg Vice President and Actuary 185 Asylum Street Hartford, CT 06103 Christopher A. Kremer Vice President and Actuary 501 Boylston Street Boston, MA 02116 Paul L. LeClair Vice President and Actuary 501 Boylston Street Boston, MA 02116 Jonathan L. Rosenthal Vice President and Chief Hedging Officer 10 Park Avenue Morristown, NJ 07962
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH INSURANCE COMPANY - -------------------------------- --------------------------------------------------------------------- Patrick D. Studley Vice President and Actuary One MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Jeffrey N. Altman Vice President 10 Park Avenue Morristown, NJ 07962 Steven J. Brash Vice President One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Herbert B. Brown Vice President One MetLife Plaza 27-01 Queens Plaza North Long Island City, New York 11101 Vincent Cirulli Vice President 10 Park Avenue Morristown, NJ 07962 James R. Dingler Vice President 10 Park Avenue Morristown, NJ 07962 Judith A. Gulotta Vice President 10 Park Avenue Morristown, NJ 07962 Gregory M. Harrison Vice President One MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 C. Scott Inglis Vice President 10 Park Avenue Morristown, NJ 07962 James M. Koeger Vice President 13045 Tesson Ferry Road St. Louis, MO 63128 Joseph J. Massimo Vice President 18210 Crane Nest Drive Tampa, FL 33647 Daniel A. O'Neill Vice President 10 Park Avenue Morristown, NJ 07962 Mark S. Reilly Vice President 185 Asylum Street Hartford, CT 06103 Mark J. Remington Vice President 185 Asylum Street Hartford, CT 06103 Ragai A. Roushdy Vice President 10 Park Avenue Morristown, NJ 07962
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH INSURANCE COMPANY - -------------------------------- --------------------------------------------------------------------- Kevin M. Thorwarth Vice President 10 Park Avenue Morristown, NJ 07962 Mark. H. Wilsmann Vice President 10 Park Avenue Morristown, NJ 07962
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT The Registrant is a separate account of MetLife Life and Annuity Company of Connecticut under Connecticut insurance law. The Depositor is a wholly owned subsidiary of MetLife, Inc., a publicly traded company. No person is controlled by the Registrant. The following outline indicates those entities that are controlled by MetLife, Inc. or are under the common control of MetLife, Inc. ORGANIZATIONAL STRUCTURE OF METLIFE, INC. AND SUBSIDIARIES AS OF SEPTEMBER 30, 2007 The following is a list of subsidiaries of MetLife, Inc. updated as of September 30, 2007. Those entities which are listed at the left margin (labeled with capital letters) are direct subsidiaries of MetLife, Inc. Unless otherwise indicated, each entity which is indented under another entity is a subsidiary of that other entity and, therefore, an indirect subsidiary of MetLife, Inc. Certain inactive subsidiaries have been omitted from the MetLife, Inc. organizational listing. The voting securities (excluding directors' qualifying shares, (if any)) of the subsidiaries listed are 100% owned by their respective parent corporations, unless otherwise indicated. The jurisdiction of domicile of each subsidiary listed is set forth in the parenthetical following such subsidiary. A. MetLife Group, Inc. (NY) B. MetLife Bank National Association (USA) C. Exeter Reassurance Company, Ltd. (Bermuda) D. MetLife Taiwan Insurance Company Limited (Taiwan) E. Metropolitan Tower Life Insurance Company (DE) 1. TH Tower NGP, LLC (DE) 2. Partners Tower, L.P. (DE) - a 99% limited partnership interest of Partners Tower, L.P. is held by Metropolitan Tower Life Insurance Company and 1% general partnership interest is held by TH Tower NGP, LLC (DE) 3. TH Tower Leasing, LLC (DE) 4. MetLife Reinsurance Company of Charleston (SC) 5. Entrecap Real Estate II, LLC (DE) a) PREFCO Dix-Huit LLC (CT) b) PREFCO X Holdings LLC (CT) c) PREFCO Ten Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Ten Limited Partnership is held by Entrecap Real Estate II, LLC and 0.1% general partnership is held by PREFCO X Holdings LLC. a) PREFCO Vingt LLC (CT) b) PREFCO Twenty Limited Partnership (CT) - a 99% limited partnership interest of PREFCO Twenty Limited Partnership is held by Entrecap Real Estate II, LLC and 1% general partnership is held by PREFCO Vingt LLC. 6. Plaza Drive Properties, LLC (DE) 7. MTL Leasing, LLC (DE) a) PREFCO IX Realty LLC (CT) b) PREFCO XIV Holdings LLC (CT) c) PREFCO Fourteen Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Fourteen Limited Partnership is held by MTL Leasing, LLC and 0.1% general partnership is held by PREFCO XIV Holdings LLC. F. MetLife Pensiones S.A. (Mexico)- 97.4738% is owned by MetLife, Inc. and 2.5262% is owned by Metropolitan Asset Management Corporation. G. MetLife Chile Inversiones Limitada (Chile)- 99.9999999% is owned by MetLife, Inc. and 0.0000001% is owned by Natiloportem Holdings, Inc. 1. MetLife Chile Seguros de Vida S.A. (Chile)- 99.99% is owned by MetLife Chile Inversiones Limitada and 0.01% is owned by MetLife International Holdings, Inc. a) MetLife Chile Administradora de Mutuos Hipotecarios S.A. (Chile)- 99.99% is owned by MetLife Chile Seguros de Vida S.A. and 0.01% is owned by MetLife Chile Inversiones Limitada. H. MetLife Mexico S.A. (Mexico)- 98.70541% is owned by MetLife, Inc., 1.27483% is owned by Metropolitan Asset Management Corporation and 0.01976% is owned by Metlife International Holdings, Inc. 1. MetLife Afore, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Mexico S.A. (Mexico) and 0.01% is owned by MetLife Pensiones S.A. a) Met1 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) b) Met2 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) c) Met3 SIEFORE, S.A. de C.V. (Mexico)- 99.9% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) I. MetLife Mexico Servicios, S.A. de C.V. (Mexico)- 98% is owned by MetLife, Inc. and 2% is owned by MetLife International Holdings, Inc. J. Metropolitan Life Seguros de Vida S.A. (Uruguay) K. MetLife Securities, Inc. (DE) L. Enterprise General Insurance Agency, Inc. (DE) 1. MetLife General Insurance Agency of Texas, Inc. (DE) 2. MetLife General Insurance Agency of Massachusetts, Inc. (MA) 1 M. Metropolitan Property and Casualty Insurance Company (RI) 1. Metropolitan General Insurance Company (RI) 2. Metropolitan Casualty Insurance Company (RI) 3. Metropolitan Direct Property and Casualty Insurance Company (RI) 4. Met P&C Managing General Agency, Inc. (TX) 5. MetLife Auto & Home Insurance Agency, Inc. (RI) 6. Metropolitan Group Property and Casualty Insurance Company (RI) a) Metropolitan Reinsurance Company (U.K.) Limited (United Kingdom) 7. Metropolitan Lloyds, Inc. (TX) a) Metropolitan Lloyds Insurance Company of Texas (TX)- Metropolitan Lloyds Insurance Company of Texas, an affiliated association, provides automobile, homeowner and related insurance for the Texas market. It is an association of individuals designated as underwriters. Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company, serves as the attorney-in-fact and manages the association. 8. Economy Fire & Casualty Company (IL) a) Economy Preferred Insurance Company (IL) b) Economy Premier Assurance Company (IL) N. Cova Corporation (MO) 1. Texas Life Insurance Company (TX) 2. Cova Life Management Company (DE) O. MetLife Investors Insurance Company (MO) P. First MetLife Investors Insurance Company (NY) Q. Walnut Street Securities, Inc. (MO) R. Newbury Insurance Company, Limited (BERMUDA) S. MetLife Investors Group, Inc. (DE) 1. MetLife Investors Distribution Company (MO) 2. Met Investors Advisory, LLC (DE) 3. MetLife Investors Financial Agency, Inc. (TX) 2 T. MetLife International Holdings, Inc. (DE) 1. MetLife Mexico Cares, S.A. de C.V. (Mexico) a) Fundacion MetLife Mexico, A.C. (Mexico) 2. Natiloportem Holdings, Inc. (DE) a) Servicios Administrativos Gen, S.A. de C.V. (Mexico) (1) MLA Comercial, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. (2) MLA Servicios, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. 3. MetLife India Insurance Company Private Limited (India)- 26% is owned by MetLife International Holdings, Inc. and 74% is owned by third parties. 4. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)- 99.99905% is owned by MetLife International Holdings, Inc. and 0.00095% is owned by Natiloporterm Holdings, Inc. 5. Metropolitan Life Seguros de Retiro S.A. (Argentina)- 95.23% is owned by MetLife International Holdings, Inc. and 4.77% is owned by Natiloportem Holdings, Inc. 6. Metropolitan Life Seguros de Vida S.A. (Argentina)- 95.2499% is owned by MetLife International Holdings, Inc. and 4.7473% is owned by Natiloportem Holdings, Inc. 7. MetLife Insurance Company of Korea Limited (South Korea)- 21.22% of MetLife Insurance Company of Korea Limited is owned by MetLife, Mexico, S.A. and 78.78% is owned by Metlife International Holdings, Inc. 8. Metropolitan Life Seguros e Previdencia Privada S.A. (Brazil)- 74.5485235740% is owned by MetLife International Holdings, Inc. and 25.451476126% is owned by MetLife Worldwide Holdings, Inc. and 0.0000003% is owned by Natiloportem Holdings, Inc. 9. MetLife Global, Inc. (DE) 10. MetLife Administradora de Fundos Multipatrocinados Ltda (Brazil) - 95.4635% is owned by MetLife International Holdings, Inc. and 4.5364% is owned by Natiloportem Holdings, Inc. 11. MetLife Insurance Limited (United Kingdom) 12. MetLife General Insurance Limited (Australia) 13. MetLife Limited (United Kingdom) 14. MetLife Insurance S.A./NV (Belgium) - 99.9% is owned by MetLife International Holdings, Inc. and 0.1% is owned by third parties. 15. MetLife Services Limited (United Kingdom) 16. Siembra Seguros de Vida S.A. (Argentina) - 97.9327% is owned by MetLife International Holdings, Inc. and 2.0672% is owned by Natiloportem Holdings, Inc. 17. MetLife Insurance Limited (Australia) a) MetLife Insurance and Investment Trust (Australia) b) MetLife Investments Pty Limited (Australia) c) MetLife Services (Singapore) PTE Limited (Australia) 18. Siembra Seguros de Retiro S.A. (Argentina) - 96.8819% is owned by MetLife International Holdings, Inc. and 3.1180% is owned by Natiloportem Holdings, Inc. 19. Best Market S.A. (Argentina) - 5% of the shares are held by Natiloportem Holdings, Inc. and 94.9999% is owned by MetLife International Holdings Inc. 20. Compania Previsional MetLife S.A. (Brazil) - 95.4635% is owned by MetLife International Holdings, Inc. and 4.5364% is owned by Natiloportem Holdings, Inc. (a) Met AFJP S.A. (Argentina) - 75.4088% of the shares of Met AFJP S.A. are held by Compania Previsional MetLife SA, 19.5912% is owned by Metropolitan Life Seguros de Vida SA, 3.9689% is held by Natiloportem Holdings, Inc. and 1.0310% is held by Metropolitan Life Seguros de Retiro SA. 21. MetLife Worldwide Holdings, Inc. (DE) a) MetLife Towarzystwo Ubezpieczen na Zycie Spolka Akcyjna. (Poland) b) MetLife Direct Co., Ltd. (Japan) c) MetLife Fubon Limited (Japan) U. Metropolitan Life Insurance Company (NY) 1. 334 Madison Euro Investments, Inc. (DE) a) Park Twenty Three Investments Company (United Kingdom)- 1% voting control of Park Twenty Three Investments Company is held by St. James Fleet Investments Two Limited. 1% of the shares of Park Twenty Three Investments Company is held by Metropolitan Life Insurance Company. 99% is owned by 334 Madison Euro Investment, Inc. (1) Convent Station Euro Investments Four Company (United Kingdom)- 1% voting control of Convent Station Euro Investments Four Company is held by 334 Madison Euro Investments, Inc. as nominee for Park Twenty Three Investments Company. 99% is owned by Park Twenty Three Investments Company. 2. St. James Fleet Investments Two Limited (Cayman Islands)- 34% of the shares of St. James Fleet Investments Two Limited is held by Metropolitan Life Insurance Company. 3. One Madison Investments (Cayco) Limited (Cayman Islands)- 10.1% voting control of One Madison Investments (Cayco) Limited is held by Convent Station Euro Investments Four Company. 89.9% of the shares of One Madison Investments (Cayco) Limited is held by Metropolitan Life Insurance Company. 4. CRB Co, Inc. (MA)- AEW Real Estate Advisors, Inc. holds 49,000 preferred non-voting shares and AEW Advisors, Inc. holds 1,000 preferred non-voting shares of CRB, Co., Inc. 5. GA Holding Corp. (MA) 3 6. Thorngate, LLC (DE) 7. Alternative Fuel I, LLC (DE) 8. Transmountain Land & Livestock Company (MT) 9. MetPark Funding, Inc. (DE) 10. HPZ Assets LLC (DE) 11. Missouri Reinsurance (Barbados), Inc. (Barbados) 12. Metropolitan Tower Realty Company, Inc. (DE) a) Midtown Heights, LLC (DE) 13. MetLife Real Estate Cayman Company (Cayman Islands) 14. Metropolitan Marine Way Investments Limited (Canada) 15. MetLife Private Equity Holdings, LLC (DE) 16. 23rd Street Investments, Inc. (DE) a) Mezzanine Investment Limited Partnership-BDR (DE). Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-BDR and 23rd Street Investments, Inc. is a 1% general partner. b) Mezzanine Investment Limited Partnership-LG (DE). 23rd Street Investments, Inc. is a 1% general partner of Mezzanine Investment Limited Partnership-LG. Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-LG. 17. Metropolitan Realty Management, Inc. (DE) 18. Hyatt Legal Plans, Inc. (DE) a) Hyatt Legal Plans of Florida, Inc. (FL) 19. MetLife Holdings, Inc. (DE) a) MetLife Credit Corp. (DE) b) MetLife Funding, Inc. (DE) 4 20. Bond Trust Account A (MA) 21. Metropolitan Asset Management Corporation (DE) a) MetLife Capital Credit L.P. (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc., 9% General Partnership interest is held by Metropolitan Asset Management Corporation and 90% Limited Partnership interest is held by Metropolitan Life Insurance Company. b) MetLife Capital Limited Partnership (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc., 78.5% Limited Partnership interest is held by Metropolitan Life Insurance Company and 20.5% Limited Partnership interest is held by Metropolitan Asset Management Corporation. c) 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. d) MetLife Investments Limited (United Kingdom)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited. e) MetLife Latin America Asesorias e Inversiones Limitada (Chile)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited and 0.01% of MetLife Latin America Asesorias e Inversiones Limitada. 22. New England Life Insurance Company (MA) a) MetLife Advisers, LLC (MA) b) New England Securities Corporation (MA) c) Omega Reinsurance Corporation (AZ) 23. GenAmerica Financial, LLC (MO) a) GenAmerica Capital I (DE) b) General American Life Insurance Company (MO) (1) GenAmerica Management Corporation (MO) 5 (2) Reinsurance Group of America, Incorporated (MO) - 52.8% is owned by General American Life Insurance Company. (a) Reinsurance Company of Missouri, Incorporated (MO) (i) Timberlake Financial, L.L.C. (DE) (A) Timberlake Reinsurance Company II (SC) (ii) RGA Reinsurance Company (MO) (A) Fairfield Management Group, Inc. (MO) (aa) Reinsurance Partners, Inc. (MO) (b) RGA Worldwide Reinsurance Company, Ltd. (Barbados) (c) RGA Americas Reinsurance Company, Ltd. (Barbados) (d) RGA Reinsurance Company (Barbados) Ltd. (Barbados) (i) RGA Financial Group, L.L.C. (DE)- 80% is owned by RGA Reinsurance Company (Barbados) Ltd. RGA Reinsurance Company also owns a 20% non-equity membership in RGA Financial Group, L.L.C. (e) RGA Life Reinsurance Company of Canada (Canada) (f) RGA International Corporation (Nova Scotia/Canada) (g) RGA Holdings Limited (U.K.) (United Kingdom) (i) RGA UK Services Limited (United Kingdom) (ii) RGA Capital Limited U.K. (United Kingdom) (iii) RGA Reinsurance (UK) Limited (United Kingdom) (iv) RGA Services India Private Limited (India) - Reinsurance Group of America Incorporated owns 99% of RGA Services India Private Limited and RGA Holdings Limited owns 1%. (h) RGA South African Holdings (Pty) Ltd. (South Africa) (i) RGA Reinsurance Company of South Africa Limited (South Africa) (i) RGA Australian Holdings PTY Limited (Australia) (i) RGA Reinsurance Company of Australia Limited (Australia) (ii) RGA Asia Pacific PTY, Limited (Australia) (j) General American Argentina Seguros de Vida, S.A. (Argentina) - 95% of General American Argentina Seguros de Vida, S.A. is owned by Reinsurance Group of America, Incorporated and 5% is owned by RGA Reinsurance Company (Barbados) Ltd. 6 (k) RGA Technology Partners, Inc. (MO) (l) RGA International Reinsurance Company (Ireland) (m) RGA Capital Trust I (DE) (i) RGA Global Reinsurance Company, Ltd. (Bermuda) 24. Corporate Real Estate Holdings, LLC (DE) 25. Ten Park SPC (CAYMAN ISLANDS ) - 1% voting control of Ten Park SPC is held by Metropolitan Asset Management Corporation 26. MetLife Tower Resources Group, Inc. (DE) 27. Headland - Pacific Palisades, LLC (CA) 28. Headland Properties Associates (CA) - 1% is owned by Headland - Pacific Palisades, LLC and 99% is owned by Metropolitan Life Insurance Company. 29. Krisman, Inc. (MO) 30. Special Multi-Asset Receivables Trust (DE) 31. White Oak Royalty Company (OK) 32. 500 Grant Street GP LLC (DE) 33. 500 Grant Street Associates Limited Partnership (CT) - 99% of 500 Grant Street Associates Limited Partnership is held by Metropolitan Life Insurance Company and 1% by 500 Grant Street GP LLC 34. MetLife Canada/MetVie Canada (Canada) 35. MetLife Retirement Services LLC (NJ) a) MetLife Investment Funds Services LLC (NJ) b) MetLife Investment Funds Management LLC (NJ) c) MetLife Associates LLC (DE) 36. Euro CL Investments LLC (DE) 37. MEX DF Properties, LLC (DE) 38. MSV Irvine Property, LLC (DE) - 4% of MSV Irvine Property, LLC is owned by Metropolitan Tower Realty Company, Inc. and 96% is owned by Metropolitan Life Insurance Company 39. MetLife Properties Ventures, LLC (DE) a) Citypoint Holdings II Limited (UK) 40. Housing Fund Manager, LLC (DE) 41. MTC Fund I, LLC (DE) 0.01% of MTC Fund I, LLC is held by Housing Fund Manager, LLC. V. MetLife Capital Trust II (DE) W. MetLife Capital Trust III (DE) X. MetLife Insurance Company of Connecticut (Life Department) (Accident Department) (CT) 86.72% is owned by MetLife, Inc. and 13.28% is owned by MetLife Investors Group, Inc. 1. 440 South LaSalle LLC (DE) 2. Pilgrim Investments Oakmont Lane, LLC (DE) - 50% is owned by MetLife Insurance Company of Connecticut and 50% is owned by a third party. 3. Pilgrim Alternative Investments Opportunity Fund I, LLC (DE) - 67% is owned by MetLife Insurance Company of Connecticut, and 33% is owned by third party. 4. Pilgrim Alternative Investments Opportunity Fund III Associates, LLC (CT) - 67% is owned by MetLife Insurance Company of Connecticut, and 33% is owned by third party. 5. Pilgrim Investments Highland Park, LLC (DE) 6. Metropolitan Connecticut Properties Ventures, LLC (DE) 7. Metropolitan Canadian Property Ventures LLC (NY) 8. Euro TI Investments LLC (DE) 9. Greenwich Street Investments, LLC (DE) a) Greenwich Street Capital Offshore Fund, Ltd. (Virgin Islands) b) Greenwich Street Investments, L.P. (DE) 10. Hollow Creek, L.L.C. (CT) 11. One Financial Place Corporation (DE) - 100% is owned in the aggregate by MetLife Insurance Company of Connecticut and MetLife Life and Annuity Company of Connecticut. 12. One Financial Place Holdings, LLC (DE)-100% is owned in the aggregate by MetLife Insurance Company of Connecticut and MetLife Life and Annuity Company of Connecticut. 13. Plaza LLC (CT) a) Tower Square Securities, Inc. (CT) 1) Tower Square Securities Insurance Agency of New Mexico, Inc. (NM) 2) Tower Square Securities Insurance Agency of Ohio, Inc. (OH) 99% is owned by Tower Square Securities, Inc. 14. TIC European Real Estate LP, LLC (DE) 15. MetLife European Holdings, Inc. (UK) a) MetLife Europe Limited (IRELAND) (i) MetLife Pensions Trustees Limited (UK) b) MetLife Assurance Limited (UK) 16. Travelers European Investments LLC (CT) 17. Travelers International Investments Ltd. (Cayman Islands) 18. MetLife Life and Annuity Company of Connecticut (CT) a) Euro TL Investments LLC (DE) 19. TLA Holdings LLC (DE) a) The Prospect Company (DE) 1) Panther Valley, Inc. (NJ) 20. TRAL & Co. (CT) - TRAL & Co. is a general partnership. Its partners are MetLife Insurance Company of Connecticut and MetLife Life and Annuity Company of Connecticut. 21. Tribeca Distressed Securities L.L.C. (DE) 22. MetLife Investors USA Insurance Comapny (DE) 23. MetLife Property Ventures Canada ULC (Canada) Y. MetLife Reinsurance Company of South Carolina (SC) Z. MetLife Investment Advisors Company, LLC (DE) AA. MetLife Standby I, LLC (DE) 1. MetLife Exchange Trust I (DE) BB. MetLife Services and Solutions, LLC (DE) 1. MetLife Solutions Pte. Ltd. (Singapore) (i) MetLife Services East Private Limited (India) CC. Soap Acquisition Corporation (NY) The voting securities (excluding directors' qualifying shares, if any) of each subsidiary shown on the organizational chart are 100% owned by their respective parent corporation, unless otherwise indicated. In addition to the entities shown on the organizational chart, MetLife, Inc. (or where indicated, a subsidiary) also owns interests in the following entities: 1) Metropolitan Life Insurance Company owns varying interests in certain mutual funds distributed by its affiliates. These ownership interests are generally expected to decrease as shares of the funds are purchased by unaffiliated investors. 2) Metropolitan Life Insurance Company indirectly owns 100% of the non-voting preferred stock of Nathan and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting common stock of this company is held by an individual who has agreed to vote such shares at the direction of N.L. HOLDING CORP. (DEL), a direct wholly owned subsidiary of MetLife, Inc. 3) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited partnerships, are investment vehicles through which investments in certain entities are held. A wholly owned subsidiary of Metropolitan Life Insurance Company serves as the general partner of the limited partnerships and Metropolitan Life Insurance Company directly owns a 99% limited partnership interest in each MILP. The MILPs have various ownership and/or debt interests in certain companies. 4) The Metropolitan Money Market Pool and MetLife Intermediate Income Pool are pass-through investment pools, of which Metropolitan Life Insurance Company and/or its subsidiaries and/or affiliates are general partners. NOTE: THE METLIFE, INC. ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE JOINT VENTURES AND PARTNERSHIPS OF WHICH METLIFE, INC. AND/OR ITS SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE SUBSIDIARIES HAVE ALSO BEEN OMITTED. 7 ITEM 27. NUMBER OF CONTRACT OWNERS As of August 31, 2007, Qualified: 5,776 ITEM 28. INDEMNIFICATION The Depositor's parent, MetLife, Inc. has secured a Financial Institutions Bond in the amount of $50,000,000, subject to a $5,000,000 deductible. MetLife, Inc. also maintains a Directors and Officers Liability and Corporate Reimbursement Insurance Policy with limits of $400 million under which the Depositor and MetLife Investors Distribution Company, the Registrant's underwriter (the "Underwriter"), as well as certain other subsidiaries of MetLife are covered. A provision in MetLife, Inc.'s by-laws provides for the indemnification (under certain circumstances) of individuals serving as directors or officers of certain organizations, including the Depositor and the Underwriter. Sections 33-770 to 33-778, inclusive of the Connecticut General Statutes ("C.G.S.") regarding indemnification of directors and officers of Connecticut corporations provides in general that Connecticut corporations shall indemnify their officers, directors and certain other defined individuals against judgments, fines, penalties, amounts paid in settlement and reasonable expenses actually incurred in connection with proceedings against the corporation. The corporation's obligation to provide such indemnification generally does not apply unless (1) the individual is wholly successful on the merits in the defense of any such proceeding; or (2) a determination is made (by persons specified in the statute) that the individual acted in good faith and in the best interests of the corporation and in all other cases, his conduct was at least not opposed to the best interests of the corporation, and in a criminal case he had no reasonable cause to believe his conduct was unlawful; or (3) the court, upon application by the individual, determines in view of all of the circumstances that such person is fairly and reasonably entitled to be indemnified, and then for such amount as the court shall determine. With respect to proceedings brought by or in the right of the corporation, the statute provides that the corporation shall indemnify its officers, directors and certain other defined individuals, against reasonable expenses actually incurred by them in connection with such proceedings, subject to certain limitations. C.G.S. Section 33-778 provides an exclusive remedy; a Connecticut corporation cannot indemnify a director or officer to an extent either greater or less than that authorized by the statute, e.g., pursuant to its certificate of incorporation, by-laws, or any separate contractual arrangement. However, the statute does specifically authorize a corporation to procure indemnification insurance to provide greater indemnification rights. The premiums for such insurance may be shared with the insured individuals on an agreed basis. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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, the registrant 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 UNDERWRITER (a) MetLife Investors Distribution Company 5 Park Plaza, Suite 1900 Irvine, CA 92614 Prior to October 20, 2006, MLI Distribution LLC was the principal underwriter and distributor. On that date MLI Distribution LLC merged into MetLife Investors Distribution Company. MetLife Investors Distribution Company also serves as principal underwriter and distributor for the following investment companies (other than the Registrant): MetLife of CT Fund ABD for Variable Annuities MetLife of CT Fund ABD II for Variable Annuities MetLife of CT Fund BD for Variable Annuities MetLife of CT Fund BD II for Variable Annuities MetLife of CT Fund BD III for Variable Annuities MetLife of CT Fund BD IV for Variable Annuities MetLife of CT Fund U for Variable Annuities MetLife of CT Separate Account Five for Variable Annuities MetLife of CT Separate Account Six for Variable Annuities MetLife of CT Separate Account Seven for Variable Annuities MetLife of CT Separate Account Eight for Variable Annuities MetLife of CT Separate Account Nine for Variable Annuities MetLife of CT Separate Account Ten for Variable Annuities MetLife of CT Separate Account Eleven for Variable Annuities MetLife of CT Separate Account Twelve for Variable Annuities MetLife of CT Separate Account Thirteen for Variable Annuities MetLife of CT Separate Account Fourteen for Variable Annuities MetLife Insurance Company of CT Variable Annuity Separate Account 2002 and MetLife Life and Annuity Company of CT Variable Annuity Separate Account 2002 MetLife of CT Separate Account PF for Variable Annuities MetLife of CT Separate Account PF II for Variable Annuities MetLife of CT Separate Account QP for Variable Annuities MetLife of CT Separate Account QPN for Variable Annuities MetLife of CT Separate Account TM for Variable Annuities MetLife of CT Separate Account TM II for Variable Annuities MetLife of CT Fund UL for Variable Life Insurance MetLife of CT Fund UL II for Variable Life Insurance MetLife of CT Fund UL III for Variable Life Insurance MetLife of CT Variable Life Insurance Separate Account One MetLife of CT Variable Life Insurance Separate Account Two MetLife of CT Variable Life Insurance Separate Account Three Metropolitan Life Variable Annuity Separate Account I and Metropolitan Life Variable Annuity Separate Account II Met Investors Series Trust MetLife Investors USA Separate Account A MetLife Investors Variable Annuity Account One MetLife Investors Variable Annuity Account Five MetLife Investors Variable Life Account One MetLife Investors Variable Life Account Five First MetLife Investors Variable Annuity Account One General American Separate Account Eleven General American Separate Account Twenty-Eight General American Separate Account Twenty-Nine General American Separate Account Two Security Equity Separate Account 26 Security Equity Separate Account 27 Metropolitan Life Separate Account E Metropolitan Life Separate Account UL Metropolitan Tower Separate Account One Metropolitan Tower Separate Account Two Paragon Separate Account A Paragon Separate Account B Paragon Separate Account C and Paragon Separate Account D (b) MetLife Investors Distribution Company is the principal underwriter for the Contracts. The following persons are officers and managers of MetLife Investors Distribution Company. The principal business address for MetLife Investors Distribution Company is 5 Park Plaza, Suite 1900, Irvine, CA 92614.
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH UNDERWRITER - -------------------------- --------------------------------------------------------------------- Michael K. Farrell Director 5 Park Plaza Suite 1900 Irvine, CA 92614 Craig W. Markham Director and Vice President 13045 Tesson Ferry Road St. Louis, MO 63128 William J. Toppeta Director 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Paul A. Sylvester President, National Sales Manager-Annuities & LTC 10 Park Avenue Morristown, NJ 07962 Elizabeth M. Forget Executive Vice President, Investment Fund Management & Marketing 260 Madison Avenue New York, NY 10016
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH UNDERWRITER - -------------------------- --------------------------------------------------------------------- Paul A. LaPiana Executive Vice President, National Sales Manager-Life 5 Park Plaza Suite 1900 Irvine, CA 92614 Richard C. Pearson Executive Vice President, General Counsel and Secretary 5 Park Plaza Suite 1900 Irvine, CA 92614 Andrew Aiello Senior Vice President, Distribution Head-National Accounts Channel 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Jeffrey A. Barker Senior Vice President, Channel Head-Independent Accounts 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Douglas P. Rodgers Senior Vice President, Channel Head-LTC 10 Park Avenue, 1st Floor Morristown, NJ 07962 Myrna F. Solomon Senior Vice President, Channel Head-Banks 501 Boylston Street Boston, MA 02116 Leslie Sutherland Senior Vice President, Channel Head-Broker/Dealers 1 MetLife Plaza Long Island City, NY 11101 Edward C. Wilson Senior Vice President, Channel Head-Wirehouse 5 Park Plaza Suite 1900 Irvine, CA 92614 Curtis Wohlers Senior Vice President, Channel Head-Planners 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Jay S. Kaduson Senior Vice President 10 Park Avenue Morristown, NJ 07962 Eric T. Steigerwalt Treasurer 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Peter Gruppuso Vice President and Chief Financial Officer 485-E US Highway 1 South Iselin, NJ 08830 Debora L. Buffington Vice President, Director of Compliance 5 Park Plaza Suite 1900 Irvine, CA 92614 David DeCarlo Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Charles M. Deuth Vice President, National Accounts 5 Park Plaza Suite 1900 Irvine, CA 92614
NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH UNDERWRITER - -------------------------- --------------------------------------------------------------------- Paul M. Kos Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Craig W. Markham Vice President 13045 Tesson Ferry Rd. St. Louis, MO 63128 Deron J. Richens Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Cathy Sturdivant Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Paulina Vakouros Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614
(c) Compensation from the Registrant. The following commissions and other compensation were received by the Distributor, directly or indirectly, from the Registrant during the Registrant's last fiscal year:
(2) NET (1) UNDERWRITING (3) (4) (5) NAME OF PRINCIPAL DISCOUNTS AND COMPENSATION ON BROKERAGE OTHER UNDERWRITER COMMISSIONS REDEMPTION COMMISSIONS COMPENSATION ----------------- --------------- --------------- --------------- --------------- MLI Distribution LLC...................... $92,981,365 $0 $0 $0
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS (1) MetLife Life and Annuity Company of Connecticut One Cityplace Hartford, Connecticut 06103-3415 ITEM 31. MANAGEMENT SERVICES Not Applicable. ITEM 32. UNDERTAKINGS The undersigned Registrant hereby undertakes: (a) To file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for so long as payments under the variable annuity contracts may be accepted; (b) To include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) 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; and (c) To deliver with any Statement of Additional Information and any financial statements required to be made available under this Form N-4 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) The undersigned registrant represents that for its TSA Deferred Annuities it is relying on the "no-action" position of the Commission staff as contained in its November 7, 1988 letter to the American Council of Life Insurance and has complied with the provisions of numbered paragraphs (1)- (4) or such letter. The Company hereby represents: (a) That the aggregate charges under the Contracts of the Registrant described herein are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company. 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 amendment to this registration statement and has caused this amendment to this registration statement to be signed on its behalf, in the City of Hartford, and State of Connecticut, on this 31st day of October 2007. MetLife of CT Separate Account Six for Variable Annuities (Registrant) METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT (Depositor) By: /s/ BENNETT D. KLEINBERG ------------------------------------ Bennett D. Kleinberg, Vice President and Actuary As required by the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the 31st day of October 2007. /s/ *MICHAEL K. FARRELL Director and President - --------------------------------------------- (Michael K. Farrell) /s/ *STANLEY J. TALBI Executive Vice President and Chief - --------------------------------------------- Financial Officer (Stanley J. Talbi) /s/ *JOSEPH J. PROCHASKA, JR. Executive Vice President and Chief - --------------------------------------------- Accounting Officer (Joseph J. Prochaska, Jr.) /s/ *WILLIAM J. MULLANEY Director - --------------------------------------------- (William J. Mullaney) /s/ *LISA M. WEBER Director - --------------------------------------------- (Lisa M. Weber) *By: /s/ MYRA L. SAUL ---------------------------------------- Myra L. Saul , Attorney-in-fact
* MetLife Life and Annuity Company of Connecticut. Executed by Myra L. Saul on behalf of those indicated pursuant to powers of attorney filed herewith. EXHIBIT INDEX 6(a)(2) Certificate of Correction of MetLife Life and Annuity Company of Connecticut, to the Amendment to the Charter as Amended and Restated of The Travelers Life and Annuity Company, dated and executed as of the 4(th) day of April, 2007. 8(b)(i) Participation Agreement among Metropolitan Series Fund, Inc., MetLife Advisers, LLC, MetLife Securities, Inc. and MetLife Life and Annuity Company of Connecticut entered as of April 30, 2007. Filed herewith. 8(b)(ii) Participation Agreement among Metropolitan Series Fund, Inc., MetLife Advisers, LLC, MetLife Investors Distribution Company an MetLife Life and Annuity Company of Connecticut entered as of August 31, 2007. 10(a) Consent of KPMG LLP, Independent Registered Public Accounting Firm. 10(b) Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.
EX-99.6.A.2 2 y39340exv99w6waw2.txt EX-99.6.A.2 [SECRETARY OF THE STATE RECEIVED APR 9 2007 STAMP] CERTIFICATE OF CORRECTION OF METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT This Certificate of Correction is filed pursuant to Section 33-611 of the Connecticut Business Corporation Act to correct an inaccuracy in that certain Certificate of Amendment dated February 10, 2006 and filed with the State of Connecticut Secretary of the State on February 14, 2006 (the "Certificate of Amendment") amending the Charter of The Travelers Life and Annuity Company (the "Charter"). The Certificate of Amendment inaccurately stated that Section 1 of the Charter was "amended and restated in its entirety" when, instead, it should have amended Section 1 of the Charter to delete the words "The Travelers Life and Annuity Company" and to substitute the words "MetLife Life and Annuity Company of Connecticut" in their stead. The remainder of Section 1 of the Charter shall remain in place unaffected by the Certificate of Amendment. IN WITNESS WHEREOF, this Certificate of Correction is dated and executed as of the 4th day of April, 2007. METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT By: /s/ Daniel D. Jordan --------------------------------------------- Name: Daniel D. Jordan Title: Vice President and Assistant Secretary [CORPORATE SEAL] STATE OF CONNECTICUT Insurance Department [STATE OF CONNECTICUT LOGO] This is to Certify, that the Certificate of Correction to the Certificate of Amendment to the Charter of the MetLife Life and Annuity Company of Connecticut, dated February 10, 2006, is approved. WITNESS MY HAND AND OFFICIAL SEAL, AT HARTFORD, THIS 9TH DAY OF APRIL, 2007 /s/ Susan F. Cogswell Insurance Commissioner EX-99.8.B.I 3 y39340exv99w8wbwi.txt EX-99.8.B.I PARTICIPATION AGREEMENT Among METROPOLITAN SERIES FUND, INC., METLIFE ADVISERS, LLC, METLIFE SECURITIES, INC. and METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT AGREEMENT, made and entered into as of the 30th day of April, 2007 by and among METROPOLITAN SERIES FUND, INC., a corporation organized under the laws of the State of Maryland (the "Fund"), METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT, a stock insurance company organized under the laws of Connecticut (the "Company"), on its own behalf and on behalf of any current or future separate accounts of the company that invest in the Fund (each an "Account"), METLIFE ADVISERS, LLC, a limited liability company organized under the laws of the State of Delaware (the "Adviser") and METLIFE SECURITIES, INC., a corporation organized under the laws of the State of Delaware (the "Underwriter"). WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), and its shares are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Fund serves as an investment vehicle underlying variable life insurance policies and variable annuity contracts (collectively, "Variable Insurance Products") offered by insurance companies ("Participating Insurance Companies"); and WHEREAS, the shares of common stock of the Fund are divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission ("SEC") granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from certain provisions of the 1940 Act and certain rules and regulations thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by both variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Adviser acts as the investment adviser and/or administrator or sub-administrator to each series of the Fund and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended; and WHEREAS, the Company has registered or will register certain variable life and/or variable annuity contracts under the 1933 Act, if required; WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act, if required; WHEREAS, the Underwriter is registered as a broker dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of certain series of the Fund (the "Series") on behalf of each Account to fund certain variable life and variable annuity contracts (each, a "Contract") and the Underwriter is authorized to sell such shares to each Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and the Underwriter agree as follows: 1. Sale of Fund Shares. 1.1 Subject to the terms of the Distribution Agreement in effect from time to time between the Fund and the Underwriter, the Underwriter agrees to sell to the Company those shares of each Series which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1 and Section 1.4, the Company is the Fund's designee. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates the net asset value of shares of the Series. The Company shall use commercially reasonable efforts to communicate notice of orders for the purchase of Shares of each Series to the Fund's custodian by 10:00 a.m. Eastern time on the following Business Day (the "Next Business Day"), and the Company and the Fund shall each use commercially reasonable efforts to wire (or cause to be wired) funds to the other, for the purpose of settling net purchase orders or orders of redemption, by 3:00 p.m. of the Next Business Day. 1.2 The Fund agrees to make its shares available for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates its net asset value. The Fund agrees to use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter the "Board" or the "Directors") may refuse to sell shares of any Series to any person, or suspend or terminate the offering of shares of any Series, if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Directors acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, in the best interests of the shareholders of such Series. 1.3 The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts, or to other purchasers of the kind specified in Treas. Reg. Section 1.817-5(f)(3) (or any successor regulation) as from time to time in effect. 2 1.4 The Fund agrees to redeem, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. The Company shall use commercially reasonable efforts to communicate notice of orders for the redemption of Shares of each Series to the Fund's custodian by 10:00 a.m. Eastern time on the Next Business Day, and the Company and the Fund shall each use commercially reasonable efforts to wire (or cause to be wired) funds to the other, for the purpose of settling net purchase orders or orders of redemption, by 3:00 p.m. of the Next Business Day. 1.5 The Company agrees that all purchases and redemptions by it of the shares of each Series will be in accordance with the provisions of the then current prospectus and statement of additional information of the Fund for the respective Series and in accordance with any procedures that the Fund, the Underwriter or the Fund's transfer agent may have established governing purchases and redemptions of shares of the Series generally. 1.6 The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1. hereof. Payment shall be in federal funds transmitted by wire to the Fund's custodian. 1.7 Issuance and transfer of the Fund's shares will be by book entry only. Share certificates will not be issued. Shares ordered from the Fund will be recorded on the transfer records of the Fund in an appropriate title for each Account or the appropriate subaccount of each Account. 1.8 The Fund shall furnish same day notice (by e-mail, fax or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the shares of any Series. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Series shares in additional shares of that Series. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.9 The Fund shall make the net asset value per share for each Series available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 7:00 p.m. Eastern time. The Fund shall furnish the Company's daily share balance to the Company as soon as reasonably practicable. 3 2. Representations and Warranties. 2.1 The Company represents and warrants that each Contract shall be either (i) registered, or prior to the purchase of shares of any Series in connection with the funding of such Contract, will be registered under the 1933 Act or (ii) exempt from such registration; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws, including all applicable customer suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account as a separate account pursuant to relevant state insurance law prior to any issuance or sale of any Contract by such Account and that each Account shall be either (i) registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act; or (ii) exempt from such registration. 2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the State of Maryland and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund agrees that it will amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to permit the continuous public offering of its shares in accordance with the 1933 Act. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3 The Fund represents that each Series is currently qualified as a "regulated investment company" under subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and agrees that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company promptly upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4 Subject to Section 6.1, the Company represents that the Contracts are currently treated as endowment, annuity or life insurance contracts under applicable provisions of the Code and agrees that it will make every effort to maintain such treatment and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5 The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states. 2.6 The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. 4 2.7 The Underwriter further represents that it will sell and distribute the Fund shares in accordance with all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act and the 1940 Act. 2.8 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Maryland and that it does and will comply in all material respects with the 1940 Act. 2.9 Each of the Fund, the Adviser and the Underwriter represent and warrant that all of their directors, officers and employees dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage in an amount, in the case of the Adviser and the Underwriter, of not less than $5,000,000 and, in the case of the Fund, not less than the minimal coverage as required by Rule 17g-1 under the 1940 Act or any successor regulations as may be promulgated from time to time. Each aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.10 The Company represents and warrants that all of its directors, officers, employees and other individuals/entities dealing with the money and/or securities representing amounts intended for the purchase of shares of the Fund or proceeds of the redemption of shares of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage in an amount not less than $5,000,000. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.11 The Company represents and warrants that it will not, without the prior written consent of the Fund and the Adviser, purchase Fund shares with Account assets derived from the sale of Contracts to individuals or entities which would cause the investment policies of any Series to be subject to any limitations not in the Fund's then current prospectus or statement of additional information with respect to any Series. 3. Prospectuses and Proxy Statements; Voting. 3.1 The Underwriter (or the Fund) shall provide the Company with as many copies of the Fund's current prospectus as the Company may reasonably request (at the Company's expense with respect to other than existing Contract owners). If requested by the Company in lieu thereof, the Underwriter (or the Fund) shall provide such documentation (including a final copy of the new prospectus as set in type at the Fund's expense) and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Fund is amended) to have the prospectus for the Contracts and the Fund's prospectus printed together in one document (such printing to be at the Company's expense with respect to other than existing Contract owners). 5 3.2 The Underwriter (or the Fund), at its expense, shall print and provide the Fund's then current statement of additional information free of charge to the Company and to any owner of a Contract or prospective owner who requests such statement. 3.3 The Fund, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders and other communications to shareholders in such quantity as the Company shall reasonably require for distribution (at the Fund's expense) to Contract owners. 3.4 So long as and to the extent that the SEC or its staff continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners, or if and to the extent required by law, the Company shall: (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in the same proportion as Fund shares of such Series for which instructions have been received. The Company reserves the right to vote Fund shares held in any Account in its own right, to the extent permitted by law. The Company shall be responsible for assuring that each Account participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule A hereto, which standards will also be provided to the other Participating Insurance Companies. 4. Sales Material and Information. 4.1 The Company shall be solely responsible for sales literature or other promotional material, in which the Fund, a Series, the Adviser, any subadviser to any Series, or the Underwriter (in its capacity as distributor of the Fund) is named, the substance of which is contained in the then current prospectus or statement of additional information of the Fund. Other sales literature or other promotional material may also be used by the Company if such sales literature or other promotional material (or the substance thereof) has been previously approved by the Fund or its designee. All other sales literature or other promotional material shall not be used by the Company until it has been approved by the Fund or its designee. The Company shall deliver such draft sales literature or other promotional material to the Fund or its designee at least thirty Business days prior to its use. The Fund or such designee shall use commercially reasonable efforts to review sales literature so delivered within ten days. 4.2 The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement, prospectus or statement of additional information for the Fund shares, as such registration statement and prospectus or statement of additional information may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the approval of the Fund or the Underwriter or the designee of either. 6 4.3 The obligations set forth in Section 4.1 herein shall apply mutatis mutandis to the Fund and the Underwriter with respect to each piece of sales literature or other promotional material in which the Company and/or any Account is named. 4.4 The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, any Account or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5 The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, proxy statements, applications for exemptions, requests for no-action letters and any amendments to any of the above, that relate to any Series, promptly after the filing of each such document with the SEC or any other regulatory authority. 4.6 The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, solicitations for voting instructions, applications for exemptions, requests for no-action letters and any amendments to any of the above, that relate to the Contracts or any Account, promptly after the filing of such document with the SEC or any other regulatory authority. Each party hereto will provide to each other party, to the extent it is relevant to the Contracts or the Fund, a copy of any comment letter received from the staff of the SEC or the NASD, and the Company's response thereto, following any examination or inspection by the staff of the SEC or the NASD. 4.7 As used herein, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees. 7 5. Fees and Expenses. 5.1 The Fund, the Adviser and the Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Series adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses or to provide personal account services to the owners of the Contracts, then the Fund may make payments to the Underwriter or to the Company. Each party acknowledges that the Adviser may pay service or administrative fees to the Company and other Participating Insurance Companies pursuant to separate agreements. 6. Diversification. 6.1 The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and any Treasury Regulations thereunder relating to the diversification requirements for variable annuity, endowment or life insurance contracts, as from time to time in effect. 7. Potential Conflicts. 7.1 To the extent required by the Shared Funding Exemptive Order or by applicable law, the Board of Directors of the Fund (the "Board") will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Series are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Fund shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2 The Company will report to the Board any potential or existing conflicts between the interests of contract owners of different separate accounts of which the Company is or becomes aware. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order and under applicable law, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation of the Company to inform the Board whenever contract owner voting instructions are disregarded. 8 7.3 If it is determined by a majority of the Board, or a majority of its disinterested Directors, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, which steps could include: (1) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Series and reinvesting such assets in a different investment medium, including (but not limited to) another series of the Fund, or submitting the question of whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the relevant Account's investment in the Fund and terminate this Agreement; provided, however, that such withdrawal and termination shall be limited to the extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination will take place within six (6) months after the Fund gives written notice that this provision is being implemented. 7.5 If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 9 7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. 8. Indemnification. 8.1 Indemnification by the Company (a) The Company agrees to indemnify and hold harmless the Fund and each of its Directors and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of additional information (if applicable) or sales literature or other promotional material of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or 10 statement of additional information (if applicable) or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Section 8.1(b) and 8.1(c) hereof. (b) The Company shall not be liable under this Section 8.1 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. (c) Each Indemnified Party shall notify the Company of any claim made against an Indemnified Party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought under this indemnification provision unless the Company's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Company from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to each Indemnified Party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An Indemnified Party shall not settle any claim involving a remedy other than monetary damages without the prior written consent of the Company. (d) The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 11 8.2 Indemnification by the Adviser and the Underwriter (a) The Adviser and the Underwriter agree to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser and the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information, or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Adviser, the Underwriter, or Fund by or on behalf of the Company for use in the registration statement, prospectus or statement of additional information for the Fund or in sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of additional information or sales literature or other promotional material for the Contracts not supplied by the Adviser, the Underwriter or the Fund or persons under their control) or wrongful conduct of the Adviser, the Underwriter or the Fund or persons under their control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or statement of additional information or sales literature or other promotional material covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Adviser, the Underwriter, or the Fund; or (iv) arise as a result of any failure by the Adviser, the Underwriter or the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Underwriter, or the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Underwriter, or the Fund; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 12 (b) Neither the Adviser nor the Underwriter shall be liable under this Section 8.2 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company or each Account, whichever is applicable. (c) Each Indemnified Party shall notify each of the Adviser, the Underwriter, and the Fund of any claim made against the Indemnified Party within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify each of the Adviser, the Underwriter, and the Fund of any such claim shall not relieve the Adviser or the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought under this indemnification provision unless the Adviser or the Underwriter's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Adviser or the Underwriter from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, the Adviser and the Underwriter will be entitled to participate, at their own expense, in the defense thereof. The Adviser and/or the Underwriter shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Adviser and/or the Underwriter to such party of the election of the Adviser and/or the Underwriter to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Adviser and/or the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An Indemnified Party shall not settle any claim involving any remedy other than monetary damages without the prior written consent of the Adviser and/or the Underwriter. (d) The Company agrees promptly to notify the Adviser, the Underwriter and the Fund of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 9. Applicable Law. 9.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Maryland. 9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the 13 Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. 10. Termination. 10.1 This Agreement shall terminate: (a) at the option of any party upon 180 days' advance written notice to the other parties; provided, however, that such notice shall not be given earlier than one year following the date of this Agreement; or (b) at the option of the Company to the extent that shares of a Series are not reasonably available to meet the requirements of the Contracts as determined by the Company, provided however, that such termination shall apply only to those Series the shares of which are not reasonably available. Prompt notice of the election to terminate for such cause shall be furnished by the Company; or (c) at the option of the Fund in the event that formal administrative proceedings are instituted against the Company by the NASD, the SEC, any state insurance department or commissioner or similar insurance regulator or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, with respect to the operation of any Account or the purchase by any Account of Fund shares, provided, however, that the Fund determines in its sole judgment, exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or (d) at the option of the Company in the event that formal administrative proceedings are instituted against the Fund, the Adviser or the Underwriter by the NASD, the SEC or any state securities or insurance department or commissioner or any other regulatory body, provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund, the Adviser or the Underwriter to perform its obligations under this Agreement; or (e) with respect to any Account, upon requisite authority (by vote of the Contract owners having an interest in such Account or any subaccount thereof, or otherwise) to substitute the shares of another investment company (or separate series thereof) for the shares of any Series in accordance with the terms of the Contracts for which shares of that Series had been selected to serve as the underlying investment medium. The Company will give 90 days' prior written notice to the Fund of the date of any proposed vote to replace the Fund's shares or of the filing by the Company with the SEC of any application relating to any such substitution; or (f) at the option of the Company, in the event any shares of any Series are not registered, issued or sold in accordance with applicable state and/or federal law or such law 14 precludes the use of such shares as the underlying investment medium of the Contracts issued or to be issued by the Company; or (g) at the option of the Company, if any Series ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that any Series may fail to so qualify; or (h) at the option of the Company, if the Fund fails to meet the diversification requirements specified in Section 6 hereof; or (i) at the option of the Fund, the Adviser or the Underwriter, if (1) the Fund, the Adviser or the Underwriter, as the case may be, shall determine, in its sole judgment reasonably exercised in good faith, that the Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact on the business and operations of the Fund, the Adviser or the Underwriter, as the case may be, (2) the Fund, the Adviser or the Underwriter shall notify the Company in writing of such determination and its intent to terminate this Agreement, and (3) after considering the actions taken by the Company and any other changes in circumstances since the giving of such notice, such determination of the Fund, the Adviser or the Underwriter shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or (j) at the option of the Company, if (1) the Company shall determine, in its sole judgment reasonably exercised in good faith, that the Fund, the Adviser or the Underwriter has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact upon the business and operations of the Company, (2) the Company shall notify the Fund, the Adviser and the Underwriter in writing of such determination and its intent to terminate the Agreement, and (3) after considering the actions taken by the Fund, the Adviser and/or the Underwriter and any other changes in circumstances since the giving of such notice, such determination shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or (k) in the case of an Account not registered under the 1933 Act or 1940 Act, the Company shall give the Fund 90 days' prior written notice if the Company chooses to cease using any Series as an investment vehicle for such Account. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no reason. 10.2 Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate which notice shall set forth the basis for such 15 termination. Furthermore, in the event that any termination is based upon the provisions of Article VII, or the provision of Section 10.1(a), 10.1(i) or 10.1(j) of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and 10.3 In the event that any termination is based upon the provisions of Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination. 10.4 Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall, at the option of the Company, continue to make available additional shares of each Series pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.4 shall not apply to any terminations under Section 10.1(b) or Section 7, and in the case of terminations under Section 7 terminations, the effect of such terminations shall be governed by Section 7 of this Agreement. 11. Notices. Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund or to the Adviser: 501 Boylston Street Boston, Massachusetts 02116 Attention: Thomas M. Lenz, Secretary 16 If to the Company: MetLife Life and Annuity Company of Connecticut 501 Boylston Street Boston, Massachusetts 02116 Attention: Daniel D. Jordan, Vice President and Assistant Secretary If to the Underwriter: MetLife Securities, Inc. 501 Boylston Street Boston, Massachusetts 02116 Attention: Michael Lacek, Associate General Counsel 12. Miscellaneous. 12.1 A copy of the Articles of Incorporation establishing Metropolitan Series Fund, Inc. is on file with the Secretary of State of Maryland, and notice is hereby given that this Agreement is executed on behalf of the Fund by officers of the Fund as officers and not individually and that the obligations of or arising out of this Agreement are not binding upon any of the Directors, officers or shareholders of the Fund individually but are binding only upon the assets and property belonging to the Series. 12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 17 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. Signatures appear on the following page. 18 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative as of the date first specified above. METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT By: /s/ Elizabeth M. Forget --------------------------------- Elizabeth M. Forget Vice President METROPOLITAN SERIES FUND, INC. By: /s/ Elizabeth M. Forget --------------------------------- Elizabeth M. Forget Chairman, Chief Executive Officer and President METLIFE ADVISERS, LLC By: /s/ John F. Guthrie, Jr. --------------------------------- John F. Guthrie, Jr. Senior Vice President METLIFE SECURITIES, INC. By: /s/ John G. Martinez --------------------------------- John G. Martinez Vice President and Financial and Operations Principal 19 PARTICIPATION AGREEMENT Among METROPOLITAN SERIES FUND, INC., METLIFE ADVISERS, LLC, METLIFE SECURITIES, INC. and METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT SCHEDULE A With respect to each Account, all shares of each Series attributable to such policies and contracts for which no owner instructions have been received by the Company and all shares of the Series attributable to charges assessed by the Company against such policies and contracts will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are the shares for which owner instructions have been received by the Company with respect to policies or contracts issued by such Account. To the extent the Company has so agreed with respect to an Account not registered with the SEC under the 1940 Act, all shares of each Series held by the Account will be voted for, voted against or withheld from voting on any proposal in the same proportions as are the shares of such Series for which contract owners' voting instructions have been received. If the Company has not so agreed, the shares of each Series attributable to such unregistered Account will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are all other shares for which the Company has received voting instructions. 20 EX-99.8.B.II 4 y39340exv99w8wbwii.txt EX-99.8.B.II PARTICIPATION AGREEMENT Among METROPOLITAN SERIES FUND, INC., METLIFE ADVISERS, LLC, METLIFE INVESTORS DISTRIBUTION COMPANY and METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT AGREEMENT, made and entered into as of the 31st day of August, 2007 by and among METROPOLITAN SERIES FUND, INC., a corporation organized under the laws of the State of Maryland (the "Fund"), METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT, a stock insurance company organized under the laws of Connecticut (the "Company"), on its own behalf and on behalf of any current or future separate accounts of the company that invest in the Fund (each an "Account"), METLIFE ADVISERS, LLC, a limited liability company organized under the laws of the State of Delaware (the "Adviser") and METLIFE INVESTORS DISTRIBUTION COMPANY, a corporation organized under the laws of the State of Missouri (the "Underwriter"). WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), and its shares are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Fund serves as an investment vehicle underlying variable life insurance policies and variable annuity contracts (collectively, "Variable Insurance Products") offered by insurance companies ("Participating Insurance Companies"); and WHEREAS, the shares of common stock of the Fund are divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission ("SEC") granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from certain provisions of the 1940 Act and certain rules and regulations thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by both variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Adviser acts as the investment adviser and/or administrator or sub-administrator to each series of the Fund and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended; and WHEREAS, the Company has registered or will register certain variable life and/or variable annuity contracts under the 1933 Act, if required; WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act, if required; WHEREAS, the Underwriter is registered as a broker dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of certain series of the Fund (the "Series") on behalf of each Account to fund certain variable life and variable annuity contracts (each, a "Contract") and the Underwriter is authorized to sell such shares to each Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and the Underwriter agree as follows: 1. Sale of Fund Shares. 1.1 Subject to the terms of the Distribution Agreement in effect from time to time between the Fund and the Underwriter, the Underwriter agrees to sell to the Company those shares of each Series which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1 and Section 1.4, the Company is the Fund's designee. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates the net asset value of shares of the Series. The Company shall use commercially reasonable efforts to communicate notice of orders for the purchase of Shares of each Series to the Fund's custodian by 10:00 a.m. Eastern time on the following Business Day (the "Next Business Day"), and the Company and the Fund shall each use commercially reasonable efforts to wire (or cause to be wired) funds to the other, for the purpose of settling net purchase orders or orders of redemption, by 3:00 p.m. of the Next Business Day. 1.2 The Fund agrees to make its shares available for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates its net asset value. The Fund agrees to use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter the "Board" or the "Directors") may refuse to sell shares of any Series to any person, or suspend or terminate the offering of shares of any Series, if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Directors acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, in the best interests of the shareholders of such Series. 1.3 The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts, or to other purchasers of the kind specified in Treas. Reg. Section 1.817-5(f)(3) (or any successor regulation) as from time to time in effect. 1.4 The Fund agrees to redeem, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. The Company shall use commercially reasonable efforts to communicate notice of orders for the redemption of Shares of each Series to the Fund's custodian by 10:00 a.m. Eastern time on the Next Business Day, and the Company and the Fund shall each use commercially reasonable efforts to wire (or cause to be wired) funds to the other, for the purpose of settling net purchase orders or orders of redemption, by 3:00 p.m. of the Next Business Day. 1.5 The Company agrees that all purchases and redemptions by it of the shares of each Series will be in accordance with the provisions of the then current prospectus and statement of additional information of the Fund for the respective Series and in accordance with any procedures that the Fund, the Underwriter or the Fund's transfer agent may have established governing purchases and redemptions of shares of the Series generally. 1.6 The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1. hereof. Payment shall be in federal funds transmitted by wire to the Fund's custodian. 1.7 Issuance and transfer of the Fund's shares will be by book entry only. Share certificates will not be issued. Shares ordered from the Fund will be recorded on the transfer records of the Fund in an appropriate title for each Account or the appropriate subaccount of each Account. 1.8 The Fund shall furnish same day notice (by e-mail, fax or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the shares of any Series. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Series shares in additional shares of that Series. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.9 The Fund shall make the net asset value per share for each Series available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 7:00 p.m. Eastern time. The Fund shall furnish the Company's daily share balance to the Company as soon as reasonably practicable. 2. Representations and Warranties. 2.1 The Company represents and warrants that each Contract shall be either (i) registered, or prior to the purchase of shares of any Series in connection with the funding of such Contract, will be registered under the 1933 Act or (ii) exempt from such registration; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws, including all applicable customer suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account as a separate account pursuant to relevant state insurance law prior to any issuance or sale of any Contract by such Account and that each Account shall be either (i) registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act; or (ii) exempt from such registration. 2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the State of Maryland and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund agrees that it will amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to permit the continuous public offering of its shares in accordance with the 1933 Act. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3 The Fund represents that each Series is currently qualified as a "regulated investment company" under subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and agrees that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company promptly upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4 Subject to Section 6.1, the Company represents that the Contracts are currently treated as endowment, annuity or life insurance contracts under applicable provisions of the Code and agrees that it will make every effort to maintain such treatment and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5 The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states. 2.6 The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. 2.7 The Underwriter further represents that it will sell and distribute the Fund shares in accordance with all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act and the 1940 Act. 2.8 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Maryland and that it does and will comply in all material respects with the 1940 Act. 2.9 Each of the Fund, the Adviser and the Underwriter represent and warrant that all of their directors, officers and employees dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage in an amount, in the case of the Adviser and the Underwriter, of not less than $5,000,000 and, in the case of the Fund, not less than the minimal coverage as required by Rule 17g-1 under the 1940 Act or any successor regulations as may be promulgated from time to time. Each aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.10 The Company represents and warrants that all of its directors, officers, employees and other individuals/entities dealing with the money and/or securities representing amounts intended for the purchase of shares of the Fund or proceeds of the redemption of shares of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage in an amount not less than $5,000,000. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.11 The Company represents and warrants that it will not, without the prior written consent of the Fund and the Adviser, purchase Fund shares with Account assets derived from the sale of Contracts to individuals or entities which would cause the investment policies of any Series to be subject to any limitations not in the Fund's then current prospectus or statement of additional information with respect to any Series. 3. Prospectuses and Proxy Statements; Voting. 3.1 The Underwriter (or the Fund) shall provide the Company with as many copies of the Fund's current prospectus as the Company may reasonably request (at the Company's expense with respect to other than existing Contract owners). If requested by the Company in lieu thereof, the Underwriter (or the Fund) shall provide such documentation (including a final copy of the new prospectus as set in type at the Fund's expense) and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Fund is amended) to have the prospectus for the Contracts and the Fund's prospectus printed together in one document (such printing to be at the Company's expense with respect to other than existing Contract owners). 3.2 The Underwriter (or the Fund), at its expense, shall print and provide the Fund's then current statement of additional information free of charge to the Company and to any owner of a Contract or prospective owner who requests such statement. 3.3 The Fund, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders and other communications to shareholders in such quantity as the Company shall reasonably require for distribution (at the Fund's expense) to Contract owners. 3.4 So long as and to the extent that the SEC or its staff continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners, or if and to the extent required by law, the Company shall: (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in the same proportion as Fund shares of such Series for which instructions have been received. The Company reserves the right to vote Fund shares held in any Account in its own right, to the extent permitted by law. The Company shall be responsible for assuring that each Account participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule A hereto, which standards will also be provided to the other Participating Insurance Companies. 4. Sales Material and Information. 4.1 The Company shall be solely responsible for sales literature or other promotional material, in which the Fund, a Series, the Adviser, any subadviser to any Series, or the Underwriter (in its capacity as distributor of the Fund) is named, the substance of which is contained in the then current prospectus or statement of additional information of the Fund. Other sales literature or other promotional material may also be used by the Company if such sales literature or other promotional material (or the substance thereof) has been previously approved by the Fund or its designee. All other sales literature or other promotional material shall not be used by the Company until it has been approved by the Fund or its designee. The Company shall deliver such draft sales literature or other promotional material to the Fund or its designee at least thirty Business days prior to its use. The Fund or such designee shall use commercially reasonable efforts to review sales literature so delivered within ten days. 4.2 The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement, prospectus or statement of additional information for the Fund shares, as such registration statement and prospectus or statement of additional information may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the approval of the Fund or the Underwriter or the designee of either. 4.3 The obligations set forth in Section 4.1 herein shall apply mutatis mutandis to the Fund and the Underwriter with respect to each piece of sales literature or other promotional material in which the Company and/or any Account is named. 4.4 The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, any Account or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5 The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, proxy statements, applications for exemptions, requests for no-action letters and any amendments to any of the above, that relate to any Series, promptly after the filing of each such document with the SEC or any other regulatory authority. 4.6 The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, solicitations for voting instructions, applications for exemptions, requests for no-action letters and any amendments to any of the above, that relate to the Contracts or any Account, promptly after the filing of such document with the SEC or any other regulatory authority. Each party hereto will provide to each other party, to the extent it is relevant to the Contracts or the Fund, a copy of any comment letter received from the staff of the SEC or the NASD, and the Company's response thereto, following any examination or inspection by the staff of the SEC or the NASD. 4.7 As used herein, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees. 5. Fees and Expenses. 5.1 The Fund, the Adviser and the Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Series adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses or to provide personal account services to the owners of the Contracts, then the Fund may make payments to the Underwriter or to the Company. Each party acknowledges that the Adviser may pay service or administrative fees to the Company and other Participating Insurance Companies pursuant to separate agreements. 6. Diversification. 6.1 The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and any Treasury Regulations thereunder relating to the diversification requirements for variable annuity, endowment or life insurance contracts, as from time to time in effect. 7. Potential Conflicts. 7.1 To the extent required by the Shared Funding Exemptive Order or by applicable law, the Board of Directors of the Fund (the "Board") will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Series are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Fund shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2 The Company will report to the Board any potential or existing conflicts between the interests of contract owners of different separate accounts of which the Company is or becomes aware. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order and under applicable law, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation of the Company to inform the Board whenever contract owner voting instructions are disregarded. 7.3 If it is determined by a majority of the Board, or a majority of its disinterested Directors, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, which steps could include: (1) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Series and reinvesting such assets in a different investment medium, including (but not limited to) another series of the Fund, or submitting the question of whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the relevant Account's investment in the Fund and terminate this Agreement; provided, however, that such withdrawal and termination shall be limited to the extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination will take place within six (6) months after the Fund gives written notice that this provision is being implemented. 7.5 If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. 8. Indemnification. 8.1 Indemnification by the Company (a) The Company agrees to indemnify and hold harmless the Fund and each of its Directors and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of additional information (if applicable) or sales literature or other promotional material of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or statement of additional information (if applicable) or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Section 8.1(b) and 8.1(c) hereof. (b) The Company shall not be liable under this Section 8.1 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. (c) Each Indemnified Party shall notify the Company of any claim made against an Indemnified Party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought under this indemnification provision unless the Company's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Company from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to each Indemnified Party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An Indemnified Party shall not settle any claim involving a remedy other than monetary damages without the prior written consent of the Company. (d) The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2 Indemnification by the Adviser and the Underwriter (a) The Adviser and the Underwriter agree to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser and the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information, or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Adviser, the Underwriter, or Fund by or on behalf of the Company for use in the registration statement, prospectus or statement of additional information for the Fund or in sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of additional information or sales literature or other promotional material for the Contracts not supplied by the Adviser, the Underwriter or the Fund or persons under their control) or wrongful conduct of the Adviser, the Underwriter or the Fund or persons under their control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or statement of additional information or sales literature or other promotional material covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Adviser, the Underwriter, or the Fund; or (iv) arise as a result of any failure by the Adviser, the Underwriter or the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Underwriter, or the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Underwriter, or the Fund; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. (b) Neither the Adviser nor the Underwriter shall be liable under this Section 8.2 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company or each Account, whichever is applicable. (c) Each Indemnified Party shall notify each of the Adviser, the Underwriter, and the Fund of any claim made against the Indemnified Party within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify each of the Adviser, the Underwriter, and the Fund of any such claim shall not relieve the Adviser or the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought under this indemnification provision unless the Adviser or the Underwriter's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Adviser or the Underwriter from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, the Adviser and the Underwriter will be entitled to participate, at their own expense, in the defense thereof. The Adviser and/or the Underwriter shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Adviser and/or the Underwriter to such party of the election of the Adviser and/or the Underwriter to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Adviser and/or the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An Indemnified Party shall not settle any claim involving any remedy other than monetary damages without the prior written consent of the Adviser and/or the Underwriter. (d) The Company agrees promptly to notify the Adviser, the Underwriter and the Fund of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 9. Applicable Law. 9.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Maryland. 9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. 10. Termination. 10.1 This Agreement shall terminate: (a) at the option of any party upon 180 days' advance written notice to the other parties; provided, however, that such notice shall not be given earlier than one year following the date of this Agreement; or (b) at the option of the Company to the extent that shares of a Series are not reasonably available to meet the requirements of the Contracts as determined by the Company, provided however, that such termination shall apply only to those Series the shares of which are not reasonably available. Prompt notice of the election to terminate for such cause shall be furnished by the Company; or (c) at the option of the Fund in the event that formal administrative proceedings are instituted against the Company by the NASD, the SEC, any state insurance department or commissioner or similar insurance regulator or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, with respect to the operation of any Account or the purchase by any Account of Fund shares, provided, however, that the Fund determines in its sole judgment, exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or (d) at the option of the Company in the event that formal administrative proceedings are instituted against the Fund, the Adviser or the Underwriter by the NASD, the SEC or any state securities or insurance department or commissioner or any other regulatory body, provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund, the Adviser or the Underwriter to perform its obligations under this Agreement; or (e) with respect to any Account, upon requisite authority (by vote of the Contract owners having an interest in such Account or any subaccount thereof, or otherwise) to substitute the shares of another investment company (or separate series thereof) for the shares of any Series in accordance with the terms of the Contracts for which shares of that Series had been selected to serve as the underlying investment medium. The Company will give 90 days' prior written notice to the Fund of the date of any proposed vote to replace the Fund's shares or of the filing by the Company with the SEC of any application relating to any such substitution; or (f) at the option of the Company, in the event any shares of any Series are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment medium of the Contracts issued or to be issued by the Company; or (g) at the option of the Company, if any Series ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that any Series may fail to so qualify; or (h) at the option of the Company, if the Fund fails to meet the diversification requirements specified in Section 6 hereof; or (i) at the option of the Fund, the Adviser or the Underwriter, if (1) the Fund, the Adviser or the Underwriter, as the case may be, shall determine, in its sole judgment reasonably exercised in good faith, that the Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact on the business and operations of the Fund, the Adviser or the Underwriter, as the case may be, (2) the Fund, the Adviser or the Underwriter shall notify the Company in writing of such determination and its intent to terminate this Agreement, and (3) after considering the actions taken by the Company and any other changes in circumstances since the giving of such notice, such determination of the Fund, the Adviser or the Underwriter shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or (j) at the option of the Company, if (1) the Company shall determine, in its sole judgment reasonably exercised in good faith, that the Fund, the Adviser or the Underwriter has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact upon the business and operations of the Company, (2) the Company shall notify the Fund, the Adviser and the Underwriter in writing of such determination and its intent to terminate the Agreement, and (3) after considering the actions taken by the Fund, the Adviser and/or the Underwriter and any other changes in circumstances since the giving of such notice, such determination shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or (k) in the case of an Account not registered under the 1933 Act or 1940 Act, the Company shall give the Fund 90 days' prior written notice if the Company chooses to cease using any Series as an investment vehicle for such Account. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no reason. 10.2 Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate which notice shall set forth the basis for such termination. Furthermore, in the event that any termination is based upon the provisions of Article VII, or the provision of Section 10.1(a), 10.1(i) or 10.1(j) of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and 10.3 In the event that any termination is based upon the provisions of Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination. 10.4 Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall, at the option of the Company, continue to make available additional shares of each Series pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.4 shall not apply to any terminations under Section 10.1(b) or Section 7, and in the case of terminations under Section 7 terminations, the effect of such terminations shall be governed by Section 7 of this Agreement. 11. Notices. Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund or to the Adviser: 501 Boylston Street Boston, Massachusetts 02116 Attention: Thomas M. Lenz, Secretary If to the Company: MetLife Life and Annuity Company of Connecticut 501 Boylston Street Boston, Massachusetts 02116 Attention: Daniel D. Jordan, Vice President and Assistant Secretary If to the Underwriter: MetLife Investors Distribution Company 5 Park Plaza Suite 1900 Irvine, CA 92614 Attention: Richard C. Pearson Executive Vice President, General Counsel and Secretary 12. Miscellaneous. 12.1 A copy of the Articles of Incorporation establishing Metropolitan Series Fund, Inc. is on file with the Secretary of State of Maryland, and notice is hereby given that this Agreement is executed on behalf of the Fund by officers of the Fund as officers and not individually and that the obligations of or arising out of this Agreement are not binding upon any of the Directors, officers or shareholders of the Fund individually but are binding only upon the assets and property belonging to the Series. 12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. Signatures appear on the following page. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative as of the date first specified above. METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT By: /s/ Elizabeth M. Forget ----------------------------- Elizabeth M. Forget Senior Vice President METROPOLITAN SERIES FUND, INC. By: /s/ Alan C. Leland, Jr. ----------------------------- Alan C. Leland, Jr. Senior Vice President METLIFE ADVISERS, LLC By: /s/ John F. Guthrie, Jr. ----------------------------- John F. Guthrie, Jr. Senior Vice President METLIFE INVESTORS DISTRIBUTION COMPANY By: /s/ Richard C. Pearson ----------------------------- Richard C. Pearson Executive Vice President, General Counsel and Secretary PARTICIPATION AGREEMENT Among METROPOLITAN SERIES FUND, INC., METLIFE ADVISERS, LLC, METLIFE INVESTORS DISTRIBUTION COMPANY and METLIFE LIFE AND ANNUITY COMPANY OF CONNECTICUT SCHEDULE A With respect to each Account, all shares of each Series attributable to such policies and contracts for which no owner instructions have been received by the Company and all shares of the Series attributable to charges assessed by the Company against such policies and contracts will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are the shares for which owner instructions have been received by the Company with respect to policies or contracts issued by such Account. To the extent the Company has so agreed with respect to an Account not registered with the SEC under the 1940 Act, all shares of each Series held by the Account will be voted for, voted against or withheld from voting on any proposal in the same proportions as are the shares of such Series for which contract owners' voting instructions have been received. If the Company has not so agreed, the shares of each Series attributable to such unregistered Account will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are all other shares for which the Company has received voting instructions. EX-99.10.A 5 y39340exv99w10wa.txt EX-99.10.A: CONSENT OF KPMG LLP Exhibit 10(a) The Board of Directors MetLife Life and Annuity Company of Connecticut: We consent to the use of our reports incorporated herein by reference and to the reference to our firm under the heading "Independent Registered Public Accounting Firm". /s/ KPMG LLP Hartford, Connecticut October 31, 2007 EX-99.10.B 6 y39340exv99w10wb.txt EX-99.10.B: CONSENT OF DELOITTE & TOUCHE LLP Consent of Independent Registered Public Accounting Firm We consent to the use in this Post-Effective Amendment No. 14/Amendment No. 14 to the Registration Statement No. 333-58809/811-08869 on Form N-4 of our report dated March 19, 2007 (October 30, 2007 as to Note 7), relating to the financial statements of MetLife of CT Separate Account Six for Variable Annuities (formerly, The Travelers Separate Account Six for Variable Annuities) appearing in the Statement of Additional Information Supplement, and to the use our report dated March 6, 2007 (October 30, 2007 as to Note 15) on the consolidated financial statements and financial schedules of MetLife Life and Annuity Company of Connecticut, (the "Company") (formerly, The Travelers Life and Annuity Company) (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the acquisition of the Company by MetLife Inc. on July 1, 2005, and the application of the purchase method of accounting) appearing in the Statement of Additional Information Supplement, which are part of such Registration Statement. We also consent to the reference to us under the heading "Independent Registered Public Accounting Firm" appearing in the Statement of Additional Information, which is incorporated by reference to such Registration Statement. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Tampa, Florida October 31, 2007 -----END PRIVACY-ENHANCED MESSAGE-----