Following is a portion of the investments footnote from MetLife's 2012 10-K report. Investment earnings are a crucial component of the financial performance of insurance companies such as MetLife, and investments comprise a large part of MetLife's assets. MetLife accounts for its fixed maturity (debt security or bond) investments as available-for-sale securities.

Required

a. At what amount does MetLife report its fixed maturity securities on its balance sheets for 2012 and 2011 ?

b. What is the difference between realized and unrealized gains and losses?

c. What are the net unrealized gains (losses) for 2012 and 2011 on its fixed maturity securities? How did these unrealized gains (losses) affect the company's reported income in 2012 and 2011? (Hint: see the Google footnote excerpt on page 9-7 for an explanation of how OTTI losses affect income.)

Transcribed Image Text:

December 31, 2011 (In millions) Fixed Maturity Securities: U.S. corporate securities. Foreign corporate securities. Foreign government securities.. U.S. Treasury, agency and government guaranteed securities.. RMBS.. CMBS. ABS State and political subdivision securities.. Total fixed maturity securities.... Equity Securities: Common stock... Non-redeemable preferred stock.. Total equity securities... Cost or Amortized Cost 34,132 42,092 18,565 13,018 11,975 $329,811 $98,621 $8,544 $1,380 61,568 49,840 $ 2,219 989 $ 3,208 Gain Gross Unrealized 3,789 3,053 5,882 2,281 730 278 1,416 $25,973 $ 83 $ 114 Temporary OTTI* Estimated Loss Loss Fair Value 31 1,338 357 2 1,033 218 305 156 $4,789 $ 97 $ 299 202 - $- - 1 - 703 8 12 - $724 $105,785 64,018 52,536 40,012 42,637 19,069 12,979 13,235 $350,271 $ 2,205 $ 3,023 818