MetLife 2010 Annual Report Download - page 70

Equity Units. In November 2010, the Holding Company issued to ALICO Holdings in connection with the financing of the Acquisition
$3.0 billion aggregate stated amount of Equity Units. The Equity Units, which are mandatorily convertible securities, will initially consist of
(i) purchase contracts obligating the holder to purchase a variable number of shares of MetLife, Inc.’s common stock on each of three
specified future settlement dates (expected to be approximately two, three and four years after closing of the Acquisition), for a fixed amount
per purchase contract, (an aggregate of $1.0 billion on each settlement date) and (ii) an interest in each of three series of Debt Securities of
MetLife, Inc. The value of the purchase contracts at issuance of $247 million was calculated as the present value of the future contract
payments and was recorded in other liabilities. At future dates, the Series C, D and E Debt Securities will be subject to remarketing and sold to
investors. Holders of the Equity Units who elect to include their Debt Securities in a remarketing can use the proceeds thereof to meet their
obligations under the purchase contracts.
See Note 14 of the Notes to the Consolidated Financial Statements for further discussion of the Equity Units.
Liquidity and Capital Uses
Acquisitions. The computation of the purchase price of the Acquisition is presented below:
November 1, 2010
(In millions)
Cash (includes $396 million of contractual purchase price adjustments) . . . . . . . . . . . . . . . . . . . . . $ 7,196
MetLife, Inc.’s common stock (78,239,712 shares at $40.90 per share) . . . . . . . . . . . . . . . . . . . . . 3,200
MetLife,Inc.’sConvertiblePreferredStock........................................ 2,805
MetLife,Inc.’sEquityUnits($3.0billionaggregatestatedamount)......................... 3,189
Totalpurchaseprice..................................................... $16,390
Debt Repayments. During the years ended December 31, 2010, 2009 and 2008, MetLife Bank made repayments of $349 million,
$497 million and $371 million, respectively, to the FHLB of NY related to long-term borrowings. During the years ended December 31, 2010,
2009 and 2008, MetLife Bank made repayments to the FHLB of NY related to short-term borrowings of $12.9 billion, $26.4 billion and
$4.6 billion, respectively. During the years ended December 31, 2009 and 2008, MetLife Bank made repayments related to short-term
borrowings to the Federal Reserve Bank of New York of $21.2 billion and 650 million, respectively. No repayments were made to the Federal
Reserve Bank of New York during the year ended December 31, 2010. During the year ended December 31, 2009, MICC made repayments of
$300 million to the FHLB of Boston related to short-term borrowings. No repayments were made to the FHLB of Boston during the years ended
December 31, 2010 and 2008.
Debt Repurchases. We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges
for other securities, in open market purchases, privately negotiated transactions or otherwise. Any such repurchases or exchanges will be
dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions, and applicable
regulatory, legal and accounting factors. Whether or not to repurchase any debt and the size and timing of any such repurchases will be
determined in the Company’s discretion.
Insurance Liabilities. The Company’s principal cash outflows primarily relate to the liabilities associated with its various life insurance,
property and casualty, annuity and group pension products, operating expenses and income tax, as well as principal and interest on its
outstanding debt obligations. Liabilities arising from its insurance activities primarily relate to benefit payments under the aforementioned
products, as well as payments for policy surrenders, withdrawals and loans. For annuity or deposit type products, surrender or lapse product
behavior differs somewhat by segment. In the Retirement Products segment, which includes individual annuities, lapses and surrenders tend
to occur in the normal course of business. During the years ended December 31, 2010 and 2009, general account surrenders and
withdrawals from annuity products were $3.8 billion and $4.3 billion, respectively. In the Corporate Benefit Funding segment, which includes
pension closeouts, bank owned life insurance and other fixed annuity contracts, as well as funding agreements (including funding
agreements with the FHLB of NY and the FHLB of Boston) and other capital market products, most of the products offered have fixed
maturities or fairly predictable surrenders or withdrawals. With regard to Corporate Benefit Funding liabilities that provide customers with
limited liquidity rights, at December 31, 2010 there were $1,615 million of funding agreements and other capital market products that could be
put back to the Company after a period of notice. Of these liabilities, $1,565 million were subject to notice periods between 15 and 90 days.
The remainder of the balance was subject to a notice period of 9 months or greater. An additional $375 million of Corporate Benefit Funding
liabilities were subject to credit ratings downgrade triggers that permit early termination subject to a notice period of 90 days. See “— The
Company — Liquidity and Capital Uses — Contractual Obligations.”
Dividends. Thetable below presents declaration, record and payment dates, as well as per share and aggregate dividend amounts, for
thecommonstock:
Declaration Date Record Date Payment Date Per Share Aggregate
Dividend
(In millions, except per
share data)
October 26, 2010 . . . . . . . . . . . . . . . . . . . . . . November 9, 2010 December 14, 2010 $0.74 $784(1)
October 29, 2009 . . . . . . . . . . . . . . . . . . . . . . November 9, 2009 December 14, 2009 $0.74 $610
October 28, 2008 . . . . . . . . . . . . . . . . . . . . . . November 10, 2008 December 15, 2008 $0.74 $592
(1) Includes dividends on Convertible Preferred Stock issued in November 2010. See “— The Company — Liquidity and Capital Sources —
Convertible Preferred Stock.”
Future common stock dividend decisions will be determined by the Holding Company’s Board of Directors after taking into consideration
factors such as the Company’s current earnings, expected medium- and long-term earnings, financial condition, regulatory capital position,
and applicable governmental regulations and policies. Furthermore, the payment of dividends and other distributions to the Holding Company
by its insurance subsidiaries is regulated by insurance laws and regulations.
67MetLife, Inc.