MetLife 2009 Annual Report Download - page 111

Texas Life into discontinued operations in the consolidated financial statements. As a result, the Company recognized income from
discontinued operations of $32 million, net of income tax, during the year ended December 31, 2009. See also Note 23.
2008 Disposition
In September 2008, the Company completed a tax-free split-off of its majority-owned subsidiary, Reinsurance Group of America,
Incorporated (“RGA”). The Company and RGA entered into a recapitalization and distribution agreement, pursuant to which the Company
agreed to divest substantially all of its 52% interest in RGA to the Company’s stockholders. The split-off was effected through the following:
• A recapitalization of RGA common stock into two classes of common stock — RGA Class A common stock and RGA Class B common
stock. Pursuant to the terms of the recapitalization, each outstanding share of RGA common stock, including the 32,243,539 shares of
RGA common stock beneficially owned by the Company and its subsidiaries, was reclassified as one share of RGA Class A common
stock. Immediately thereafter, the Company and its subsidiaries exchanged 29,243,539 shares of its RGA Class A common stock —
which represented all of the RGA Class A common stock beneficially owned by the Company and its subsidiaries other than
3,000,000 shares of RGA Class A common stock — with RGA for 29,243,539 shares of RGA Class B common stock.
• An exchange offer, pursuant to which the Company offered to acquire MetLife common stock from its stockholders in exchange for all of
its 29,243,539 shares of RGA Class B common stock. The exchange ratio was determined based upon a ratio of the value of the MetLife
and RGA shares during the three-day period prior to the closing of the exchange offer. The 3,000,000 shares of the RGA Class A
common stock were not subject to the tax-free exchange.
As a result of completion of the recapitalization and exchange offer, the Company received from MetLife stockholders 23,093,689 shares
of the Holding Company’s common stock with a market value of $1,318 million and, in exchange, delivered 29,243,539 shares of RGA’s
Class B common stock with a net book value of $1,716 million. The resulting loss on disposition, inclusive of transaction costs of $60 million,
was $458 million. During the third quarter of 2009, the Company incurred $2 million, net of income tax, of additional costs related to this split-
off. The 3,000,000 shares of RGA Class A common stock retained by the Company are marketable equity securities which do not constitute
significant continuing involvement in the operations of RGA; accordingly, they have been classified within equity securities in the consolidated
financial statements of the Company at a cost basis of $157 million which is equivalent to the net book value of the shares. The cost basis will
be adjusted to fair value at each subsequent reporting date. The Company has agreed to dispose of the remaining shares of RGA within the
next five years. In connection with the Company’s agreement to dispose of the remaining shares, the Company also recognized, in its
provision for income tax on continuing operations, a deferred tax liability of $16 million which represents the difference between the book and
taxable basis of the remaining investment in RGA.
The impact of the disposition of the Company’s investment in RGA is reflected in the Company’s consolidated financial statements as
discontinued operations.
2008 Acquisitions
During 2008, the Company made five acquisitions for $783 million. As a result of these acquisitions, MetLife’s Insurance Products
segment increased its product offering of dental and vision benefit plans, MetLife Bank within Banking, Corporate & Other entered the
mortgage origination and servicing business and the International segment increased its presence in Mexico and Brazil. The acquisitions
were each accounted for using the purchase method of accounting, and accordingly, commenced being included in the operating results of
the Company upon their respective closing dates. Total consideration paid by the Company for these acquisitions consisted of $763 million in
cash and $20 million in transaction costs. The net fair value of assets acquired and liabilities assumed totaled $527 million, resulting in
goodwill of $256 million. Goodwill increased by $122 million, $73 million and $61 million in the International segment, Insurance Products
segment and Banking, Corporate & Other, respectively. The goodwill is deductible for tax purposes. VOCRA, VOBA and other intangibles
increased by $137 million, $7 million and $6 million, respectively, as a result of these acquisitions. Further information on VOBA, goodwill and
VOCRA is provided in Notes 6, 7 and 8, respectively.
2007 Acquisition and Dispositions
In June 2007, the Company acquired the remaining 50% interest in a joint venture in Hong Kong, MetLife Fubon Limited (“MetLife Fubon”),
for $56 million in cash, resulting in MetLife Fubon becoming a consolidated subsidiary of the Company. The transaction was treated as a step
acquisition, and at June 30, 2007, total assets and liabilities of MetLife Fubon of $839 million and $735 million, respectively, were included in
the Company’s consolidated balance sheets. The Company’s investment for the initial 50% interest in MetLife Fubon was $48 million. The
Company used the equity method of accounting for such investment in MetLife Fubon. The Company’s share of the joint venture’s results for
the six months ended June 30, 2007, was a loss of $3 million. The fair value of assets acquired and the liabilities assumed in the step
acquisition at June 30, 2007, was $427 million and $371 million, respectively. No additional goodwill was recorded as a part of the step
acquisition. As a result of this acquisition, additional VOBA and VODA of $45 million and $5 million, respectively, were recorded and both have
a weighted average amortization period of 16 years. In June 2008, the Company revised the valuation of certain long-term liabilities, VOBA
and VODA based on new information received. As a result, the fair value of acquired insurance liabilities and VOBA were reduced by $5 million
and $12 million, respectively, offset by an increase in VODA of $7 million. The revised VOBA and VODA have a weighted average amortization
period of 11 years. Further information on VOBA and VODA is described in Notes 6 and 8, respectively.
In August 2007, MetLife Insurance Limited completed the sale of its annuities and pension businesses to a third-party for $25 million in
cash consideration resulting in a gain upon disposal of $41 million, net of income tax.
In June 2007, the Company completed the sale of its Bermuda insurance subsidiary, MetLife International Insurance, Ltd. (“MLII”), to a
third-party for $33 million in cash consideration, resulting in a gain upon disposal of $3 million, net of income tax. The net assets of MLII at
disposal were $27 million. A liability of $1 million was recorded with respecttoaguaranteeprovidedinconnectionwiththisdispositionand
remains outstanding at December 31, 2009. Further information on guarantees is described in Note 16.
F-27MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)