MetLife 2007 Annual Report Download - page 148

RGA Capital Trust I. In December 2001, RGA, through its wholly-owned trust, RGA Capital Trust I (the “RGA Trust”), issued 4,500,000
Preferred Income Equity Redeemable Securities (“PIERS”) Units. Each PIERS unit consists of: (i) a preferred security issued by the RGA
Trust, having a stated liquidation amount of $50 per unit, representing an undivided beneficial ownership interest in the assets of the RGA
Trust, which consist solely of junior subordinated debentures issued by RGA which have a principal amount at maturity of $50 and a stated
maturity of March 18, 2051; and (ii) a warrant to purchase, at any time prior to December 15, 2050, 1.2508 shares of RGA stock at an
exercise price of $50.
The fair market value of the warrant on the issuance date was $14.87 and is detachable from the preferred security. RGA fully and
unconditionally guarantees, on a subordinated basis, the obligations of the Trust under the preferred securities. The preferred securities
and subordinated debentures were issued at a discount (original issue discount) to the face or liquidation value of $14.87 per security. The
securities will accrete to their $50 face/liquidation value over the life of the security on a level yield basis. The weighted average effective
interest rate on the preferred securities and the subordinated debentures is 8.25% per annum. Capital securities outstanding were
$159 million, net of unamortized discounts of $66 million at both December 31, 2007 and 2006. Interest expense on these instruments is
included in other expenses and was $13 million for each of the years ended December 31, 2007, 2006 and 2005.
15. Income Taxes
The provision for income tax from continuing operations is as follows:
2007 2006 2005
Years Ended December 31,
(In millions)
Current:
Federal.......................................................... $ 435 $ 618 $ 553
Stateandlocal..................................................... 15 39 63
Foreign.......................................................... 210 156 111
Subtotal ......................................................... 660 813 727
Deferred:
Federal.......................................................... $1,082 $ 220 $ 470
Stateandlocal..................................................... 31 2 14
Foreign.......................................................... (14) 62 11
Subtotal ......................................................... 1,099 284 495
Provisionforincometax ................................................ $1,759 $1,097 $1,222
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:
2007 2006 2005
Years Ended December 31,
(In millions)
TaxprovisionatU.S.statutoryrate......................................... $2,114 $1,459 $1,503
Tax effect of:
Tax-exemptinvestmentincome.......................................... (295) (296) (169)
Stateandlocalincometax............................................. 39 23 35
Prioryeartax ..................................................... 70 (10) (31)
Foreigntaxratedifferentialandchangeinvaluationallowance...................... (116) (57) (44)
Foreignoperationsrepatriation.......................................... — — (27)
Other,net........................................................ (53) (22) (45)
Provisionforincometax................................................ $1,759 $1,097 $1,222
Included in the 2005 total tax provision was a $27 million tax benefit related to the repatriation of foreign earnings pursuant to Internal
Revenue Code Section 965 for which a U.S. deferred tax position had previously been recorded.
F-52 MetLife, Inc.
MetLife, Inc.
Notes to Consolidated Financial Statements — (Continued)