NEW YORK, Sept. 16, 2015 - MetLife, Inc. today announced that it expects to record a non-cash charge to operating earnings* and net income of $792 million, after tax, or $0.70 per share*, during the third quarter of 2015, related to the tax treatment of a wholly-owned U.K. investment subsidiary of Metropolitan Life Insurance Company (MLIC).This charge, which is being recorded under accounting guidance for the recognition of tax uncertainties, is the result of the company's consideration of recent decisions of the U.S. Court of Appeals for the Second Circuit upholding the disallowance of foreign tax credits claimed by other corporate entities not affiliated with the company. The company's action relates to tax years 2000 to 2009, during which MLIC, a wholly-owned subsidiary of MetLife, Inc., held non-U.S. investments in support of its life insurance business through a U.K. investment subsidiary that was structured as a joint venture at the time.
On a statutory basis, the third quarter charge for MLIC will be $911 million, after tax. This charge has no impact on the previously disclosed $1.2 billion of dividends permitted to be paid in 2015 by MLIC without regulatory approval. We expect the impact to dividends permitted to be paid in 2016 without regulatory approval to be a reduction of approximately $90 million.
There has been no change in the company's position on the disallowance of its foreign tax credits by the Internal Revenue Service (IRS). MetLife continues to contest the disallowance of these foreign tax credits by the IRS as management believes the facts strongly support the company's position.
After the company records this charge in the third quarter, the company does not expect any additional charges related to this matter.
About MetLife
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates ( MetLife ), is one of the largest life insurance companies in the world. Founded in 1868, MetLife is a global provider of life insurance, annuities, employee benefits and asset management. Serving approximately 100 million customers, MetLife has operations in nearly 50 countries and holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.
* Non-GAAP and Other Financial Disclosures
Any references in this news release (except in this section) to net income (loss), net income (loss) per share, operating earnings and operating earnings per share should be read as net income (loss) available to MetLife, Inc.'s common shareholders, net income (loss) available to MetLife, Inc.'s common shareholders per diluted common share, operating earnings available to common shareholders and operating earnings available to common shareholders per diluted common share, respectively.
Operating earnings is the measure of segment profit or loss that MetLife uses to evaluate segment performance and allocate resources. Consistent with accounting principles generally accepted in the United States of America (GAAP) accounting guidance for segment reporting, operating earnings is MetLife's measure of segment performance. Operating earnings is also a measure by which MetLife senior management's and many other employees' performance is evaluated for the purposes of determining their compensation under applicable compensation plans.
Operating earnings is defined as operating revenues less operating expenses, both net of income tax. Operating earnings available to common shareholders is defined as operating earnings less preferred stock dividends.
Operating revenues and operating expenses exclude results of discontinued operations and other businesses that have been or will be sold or exited by MetLife and are referred to as divested businesses. Operating revenues also excludes net investment gains (losses) (NIGL) and net derivative gains (losses) (NDGL). Operating expenses also excludes goodwill impairments.
The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating revenues:
Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to NIGL and NDGL and certain variable annuity guaranteed minimum income benefits (GMIB) fees (GMIB fees);
Net investment income: (i) includes amounts for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments but do not qualify for hedge accounting treatment, (ii) includes income from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to securitization entities that are variable interest entities (VIEs) consolidated under GAAP; and
Other revenues are adjusted for settlements of foreign currency earnings hedges.
The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses:
Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to NIGL and NDGL, (ii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass through adjustments, (iii) benefits and hedging costs related to GMIBs (GMIB costs), and (iv) market value adjustments associated with surrenders or terminations of contracts (Market value adjustments);
Interest credited to policyholder accou
