MetLife 2011 Annual Report Download - page 121

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
provides that American Life’s foreign branches will not be required to withhold U.S. income tax on the income portion of payments made pursuant to
American Life’s life insurance and annuity contracts (“Covered Payments”) for any tax periods beginning on January 1, 2005 and ending on
December 31, 2013 (the “Deferral Period”). The Closing Agreement required that American Life submit a plan to the IRS within 90 days after the close of
the Acquisition, indicating the steps American Life would take (on a country by country basis) to ensure that no substantial amount of U.S. withholding
tax will arise from Covered Payments made by American Life’s foreign branches to foreign customers after the Deferral Period. Such plan, which was
submitted to the IRS on January 29, 2011, involves the transfer of businesses from certain of the foreign branches of American Life to one or more
existing or newly-formed subsidiaries of MetLife, Inc. or American Life.
A liability of $277 million was recognized in purchase accounting as of the Acquisition Date for the anticipated and estimated costs associated with
restructuring American Life’s foreign branches into subsidiaries in connection with the Closing Agreement.
See Notes 7, 15 and 19 for additional information related to the Acquisition.
Revenues and Earnings of ALICO
The following table presents information for ALICO that is included in the Company’s consolidated statement of operations from the Acquisition Date
through November 30, 2010:
ALICO’s Operations
Included in MetLife’s
Results for the
Year Ended December 31, 2010
(In millions)
Total revenues ..................................................................... $950
Income (loss) from continuing operations, net of income tax .................................. $ (2)
Supplemental Pro Forma Information (unaudited)
The following table presents unaudited supplemental pro forma information as if the Acquisition had occurred on January 1, 2010 for the year ended
December 31, 2010 and on January 1, 2009 for the year ended December 31, 2009.
Years Ended December 31,
2010 2009
(In millions, except
per share data)
Total revenues ........................................................................ $64,680 $54,282
Income (loss) from continuing operations, net of income tax, attributable to common shareholders ....... $ 3,888 $ (1,353)
Income (loss) from continuing operations, net of income tax, attributable to common shareholders per
common share: .....................................................................
Basic ............................................................................. $ 3.60 $ (1.29)
Diluted ............................................................................ $ 3.57 $ (1.29)
The pro forma information was derived from the historical financial information of MetLife and ALICO, reflecting the results of operations of MetLife
and ALICO for 2010 and 2009. The historical financial information has been adjusted to give effect to the pro forma events that are directly attributable
to the Acquisition and factually supportable and expected to have a continuing impact on the combined results. Discontinued operations and the related
earnings per share have been excluded from the presentation as they are non-recurring in nature. The pro forma information is not intended to reflect the
results of operations of the combined company that would have resulted had the Acquisition been effective during the periods presented or the results
that may be obtained by the combined company in the future. The pro forma information does not reflect future events that may occur after the
Acquisition, including, but not limited to, expense efficiencies or revenue enhancements arising from the Acquisition and also does not give effect to
certain one-time charges that MetLife expects to incur, such as restructuring and integration costs.
The pro forma information primarily reflects the following pro forma adjustments:
‰reduction in net investment income to reflect the amortization or accretion associated with the new cost basis of the acquired fixed maturities
available-for-sale portfolio;
‰elimination of amortization associated with the elimination of ALICO’s historical DAC;
‰amortization of VOBA, VODA and VOCRA associated with the establishment of VOBA, VODA and VOCRA arising from the Acquisition;
‰reduction in other expenses associated with the amortization of negative VOBA;
‰reduction in revenues associated with the elimination of ALICO’s historical unearned revenue liability;
‰interest expense associated with the issuance of the Debt Securities to AM Holdings and the public issuance of senior notes in connection with
the financing of the Acquisition;
‰certain adjustments to conform to MetLife’s accounting policies; and
‰reversal of investment and derivative gains (losses) associated with certain transactions that were completed prior to the Acquisition Date
(conditions of closing).
2009 Disposition
In March 2009, the Company sold Cova Corporation (“Cova”), the parent company of Texas Life Insurance Company (“Texas Life”) to a third-party
for $130 million in cash consideration, excluding $1 million of transaction costs. The net assets sold were $101 million, resulting in a gain on disposal of
$28 million, net of income tax. The Company also reclassified $4 million, net of income tax, of the 2009 operations of 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 Note 23.
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