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Acquisitions and Dispositions
9 Months Ended
Sep. 30, 2013
Business Combinations [Abstract]  
Acquisitions and Dispositions
3. Acquisitions and Disposition
2013 Acquisition
Provida
On October 1, 2013, MetLife, Inc. completed its previously announced acquisition of Administradora de Fondos de Pensiones Provida S.A. (“Provida”), the largest private pension fund administrator in Chile based on assets under management and number of pension fund contributors. The acquisition of Provida supports the Company's growth strategy in emerging markets and further strengthens the Company's overall position in Chile. A subsidiary of MetLife, Inc. conducted a public cash tender offer for all of the outstanding shares of Provida, and under the terms of the acquisition agreement with Banco Bilbao Vizcaya Argentaria, S.A. ("BBVA") and BBVA Inversiones Chile S.A (together with BBVA, the "BBVA Sellers"), acquired 64.32% of the outstanding shares of Provida from the BBVA Sellers. An additional 27.06% of remaining publicly traded shares were acquired through the public cash tender offer, resulting in a 91.38% total ownership in Provida by MetLife as of October 1, 2013, for a total acquisition price of $1.9 billion. Due to limited access to Provida's financial information prior to the acquisition and limited time since the transaction closing, initial accounting for the acquisition is incomplete. The Company is unable to provide its valuation of assets and liabilities acquired, intangible assets associated with the acquired business and goodwill. The Company will complete the allocation of the acquisition price to identifiable assets and liabilities in the fourth quarter of 2013 and provide required disclosures in the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2013.
2013 Disposition
MetLife Bank
On January 11, 2013, MetLife Bank and MetLife, Inc. completed the sale of MetLife Bank’s $6.4 billion of deposits to GE Capital Retail Bank for $6.4 billion in net consideration paid. On February 14, 2013, MetLife, Inc. announced that it had received the required approvals from both the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) to de-register as a bank holding company. Subsequently, MetLife Bank terminated its deposit insurance and MetLife, Inc. de-registered as a bank holding company. In August 2013, MetLife Bank merged with and into MLHL, its former subsidiary, with MLHL as the surviving, non-bank entity.
MetLife Bank has sold or has otherwise committed to exit substantially all of its operations. In conjunction with exiting its businesses (the “MetLife Bank Divestiture”), the Company recorded net losses of $22 million and $96 million, net of income tax, for the three months and nine months ended September 30, 2013, respectively, related to the gain on disposal of the depository business and other costs related to MetLife Bank’s businesses. For the three months and nine months ended September 30, 2012, the Company recorded net losses of $45 million and $155 million, respectively, net of income tax, related to the loss on disposal of mortgage servicing rights (“MSRs”), gains (losses) on securities and mortgage loans sold and other costs related to MetLife Bank’s businesses. See Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report. The Company expects to incur additional charges of $40 million to $65 million, net of income tax, exclusive of incremental legal settlements, related to the MetLife Bank Divestiture. See Note 15.
Each of the businesses that were exited as part of the MetLife Bank Divestiture could not be separated from the rest of the operations since the Company did not separately manage the businesses as a reportable segment, operating segment, or reporting unit. As a result, the businesses have not been reported as discontinued operations in the consolidated financial statements.
2010 Acquisition
American Life Insurance Company
Branch Restructuring
During the first quarter of 2013, and in accordance with the closing agreement, American Life Insurance Company (“American Life”) entered into on March 4, 2010 (the “Closing Agreement”) with the Commissioner of the Internal Revenue Service (see Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report), the Company transferred the business of American Life in Portugal and Spain to wholly-owned subsidiaries. The deferred tax asset valuation allowance associated with this branch restructuring was reduced from $25 million at December 31, 2012 to $0 at September 30, 2013. For further information, see Note 19 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report.
A liability of $277 million was recognized in purchase accounting at November 1, 2010 for the anticipated and estimated costs associated with restructuring American Life’s foreign branches into subsidiaries in connection with the Closing Agreement. This liability has been reduced based on payments and revised estimates through September 30, 2013 resulting in a liability of $42 million at September 30, 2013.
Japan Income Tax Refund
In December 2012, the Tokyo District Court ruled in favor of the Japan branch of American Life in a tax case related to the deduction of unrealized foreign exchange losses on certain securities held by American Life prior to its acquisition by MetLife. See Note 3 of the Notes to the Consolidated Financial Statements included in the 2012 Annual Report. During the first quarter of 2013, American Life received a refund of ¥16 billion ($176 million) related to income tax, interest and penalties. Under the indemnification provisions of the stock purchase agreement dated March 7, 2010, as amended, by and among MetLife, Inc., American International Group, Inc. (“AIG”) and AM Holdings LLC (formerly known as ALICO Holdings LLC), MetLife, Inc. has remitted the refund to AIG, net of certain amounts it can retain as a counter claim. The receipt of the refund, net of obligations to AIG with related foreign currency exchange impact and corresponding U.S. tax effects, resulted in a net charge of $16 million in the interim condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2013, which was comprised of a $154 million charge included in other expenses, a $19 million gain included in other net investment gains (losses) and a $119 million benefit included in provision for income tax expense (benefit).