MetLife 2008 Annual Report Download - page 195

During the year ended December 31, 2008, the Company recognized $37 million in interest expense associated with the liability for
unrecognized tax benefits. At December 31, 2008, the Company had $176 million of accrued interest associated with the liability for
unrecognized tax benefits. The $42 million decrease from December 31, 2007 in accrued interest associated with the liability for
unrecognized tax benefits resulted from an increase of $37 million of interest expense and a $79 million decrease primarily resulting from
the aforementioned IRS settlements. Of the $79 million decrease, $78 million has been reclassified to current income tax payable and the
remaining $1 million reduced interest expense. Of the $78 million reclassified to current income tax payable, $7 million was paid in 2008
and the remainder of $71 million will be paid in 2009.
On September 25, 2007, the IRS issued Revenue Ruling 2007-61, which announced its intention to issue regulations with respect to
certain computational aspects of the Dividends Received Deduction (“DRD”) on separate account assets held in connection with variable
annuity contracts. Revenue Ruling 2007-61 suspended a revenue ruling issued in August 2007 that would have changed accepted
industry and IRS interpretations of the statutes governing these computational questions. Any regulations that the IRS ultimately proposes
for issuance in this area will be subject to public notice and comment, at which time insurance companies and other interested parties will
have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the
ultimate timing and substance of any such regulations are unknown at this time. For the years ended December 31, 2008 and 2007, the
Company recognized an income tax benefit of $179 million and $188 million, respectively, related to the separate account DRD.
16. Contingencies, Commitments and Guarantees
Contingencies
Litigation
The Company is a defendant in a large number of litigation matters. In some of the matters, very 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.
On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and contingencies to be reflected in
the Company’s consolidated financial statements. In 2007, the Company received $39 million upon the resolution of an indemnification
claim associated with the 2000 acquisition of General American Life Insurance Company (“GALIC”), and the Company reduced legal
liabilities by $38 million after the settlement of certain cases. The review includes senior legal and financial personnel. Unless stated below,
estimatesofpossiblelossesorrangesoflossforparticularmatterscannotintheordinarycoursebemadewithareasonabledegreeof
certainty. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably
estimated. Liabilities have been established for a number of the matters noted below; in 2007 the Company increased legal liabilities for
pending sales practices, employment, property and casualty and intellectual property litigation matters against the Company. 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 at December 31, 2008.
Demutualization Actions
Several lawsuits were brought in 2000 challenging the fairness of the Plan and the adequacy and accuracy of MLIC’s disclosure to
policyholders regarding the Plan. The actions discussed below name as defendants some or all of MLIC, the Holding Company, and
individual directors. MLIC, the Holding Company, and the individual directors believe they have meritorious defenses to the plaintiffs’ claims
and are contesting vigorously all of the plaintiffs’ claims in these actions.
Fiala, et al. v. Metropolitan Life Ins. Co., et al. (Sup. Ct., N.Y. County, filed March 17, 2000). The plaintiffs in the consolidated state
court class action seek compensatory relief and punitive damages against MLIC, the Holding Company, and individual directors. The court
has certified a litigation class of present and former policyholders on plaintiffs’ claim that defendants violated section 7312 of the New York
Insurance Law. Pursuant to the court’s order, plaintiffs have given notice to the class of the pendency of this action. Defendants’ motion for
summary judgment is pending.
In re MetLife Demutualization Litig. (E.D.N.Y., filed April 18, 2000). In this class action against MLIC and the Holding Company,
plaintiffs served a second consolidated amended complaint in 2004. Plaintiffs assert violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934 in connection with the Plan, claiming that the Policyholder Information Booklets failed to disclose certain
material facts and contained certain material misstatements. They seek rescission and compensatory damages. By orders dated July 19,
2005 and August 29, 2006, the federal trial court certified a litigation class of present and former policyholders. The court has directed the
manner and form of notice to the class, but plaintiffs have not yet distributed the notice. MLIC and the Holding Company have moved for
summary judgment, and plaintiffs have moved for partial summary judgment. The court heard oral argument on the parties’ motions for
summary judgment on September 19, 2008.
F-72 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)