Equity

3 Months Ended

Mar. 31, 2018

. Equity

Preferred Stock

In March 2018, MetLife, Inc. issued 500,000 shares of 5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D (the “Series D preferred stock”) with a $0.01 par value per share and a liquidation preference of $1,000 per share for aggregate net proceeds of $494 million. In connection with the offering of the Series D preferred stock, MetLife, Inc. incurred approximately $6 million of issuance costs which have been recorded as a reduction of additional paid-in capital.

The Series D preferred stock ranks senior to MetLife, Inc.’s common stock with respect to the payment of dividends and distributions upon liquidation, dissolution or winding-up. Holders of the Series D preferred stock will be entitled to receive dividend payments only when, as and if declared by MetLife, Inc.’s Board of Directors or a duly authorized committee thereof. If dividends are declared on the Series D preferred stock for any dividend period, they will be calculated on a non-cumulative basis at a fixed rate per annum of 5.875% from the date of original issue to, but excluding, March 15, 2028 and at a floating rate per annum equal to three-month U.S. dollar LIBOR plus 2.959% on the related LIBOR determination date from and after March 15, 2028. Dividends for any dividend period will be payable, if declared, semi-annually in arrears on the 15th day of March and September of each year commencing on September 15, 2018 and ending on March 15, 2028, and thereafter quarterly in arrears on the 15th day of June, September, December, and March of each year.

Dividends on the Series D preferred stock will not be cumulative and will not be mandatory. Accordingly, if dividends are not declared on the Series D preferred stock for any dividend period, then any accrued dividends for that dividend period will cease to accrue and be payable. If a dividend is not declared before the dividend payment date for any dividend period, MetLife, Inc. will have no obligation to pay dividends accrued for such dividend period whether or not dividends on the Series D preferred stock are declared for any future dividend period. No dividends may be paid or declared on MetLife, Inc.’s common stock (or any other securities ranking junior to the Series D preferred stock) and MetLife, Inc. may not purchase, redeem, or otherwise acquire its common stock (or other such junior stock) unless the full dividends for the latest completed dividend period on all outstanding shares of Series D preferred stock, and any parity stock, have been declared and paid or provided for.

Holders of the Series D preferred stock do not have voting rights except in certain circumstances, including where the dividends have not been paid for an equivalent of six or more dividend payment periods whether or not those periods are consecutive. Under such circumstances, the holders of the Series D preferred stock have certain voting rights with respect to members of the Board of Directors of MetLife, Inc.

The Series D preferred stock is not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or similar provisions. MetLife, Inc. may, at its option, redeem the Series D preferred stock, (a) in whole but not in part, at any time prior to March 15, 2028, within 90 days after the occurrence of a “rating agency event,” at a redemption price equal to $1,020 per share of Series D preferred stock, plus an amount equal to any accrued and unpaid dividends per share that have accrued but not been declared and paid for the then-current dividend period to but excluding the redemption date and (b) (i) in whole but not in part, at any time prior to March, 15, 2028, within 90 days after the occurrence of a “regulatory capital event” or (ii) in whole or in part, from time to time, on or after March 15, 2028, in each case, at a redemption price equal to $1,000 per share of Series D preferred stock, plus an amount equal to any accrued and unpaid dividends per share that have accrued but not been declared and paid for the then-current dividend period to, but excluding, such redemption date. A “rating agency event” means that any nationally recognized statistical rating organization that then publishes a rating for MetLife, Inc. amends, clarifies or changes the criteria it uses to assign equity credit to securities like the Series D preferred stock, which results in the lowering of the equity credit assigned to the Series D preferred stock or shortens the length of time that the Series D preferred stock is assigned a particular level of equity credit. A “regulatory capital event” could occur as a result of a change or proposed change in capital adequacy rules (or the interpretation or application thereof) of any capital regulator, including but not limited to the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the Federal Insurance Office, the National Association of Insurance Commissioners or any state insurance regulator, as may then have group-wide oversight of MetLife, Inc.’s regulatory capital, from rules (or the interpretation or application thereof) in effect as of March 22, 2018, that would create a more than insubstantial risk, as determined by MetLife, Inc., that the Series D preferred stock would not be treated as “Tier 1 capital” or as capital with attributes similar to those of Tier 1 capital, except that a “regulatory capital event” will not include a change or proposed change (or the interpretation or application thereof) that would result in the adoption of any criterion substantially the same as the criteria in the capital adequacy rules of the Federal Reserve Board applicable to bank holding companies as of March 22, 2018.

Preferred stock authorized, issued and outstanding was as follows:



	March 31, 2018			December 31, 2017
Series	Shares Authorized	Shares Issued	Shares Outstanding	Shares Authorized	Shares Issued	Shares Outstanding
Floating Rate Non-Cumulative Preferred Stock, Series A	27,600,000	24,000,000	24,000,000	27,600,000	24,000,000	24,000,000
5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C	1,500,000	1,500,000	1,500,000	1,500,000	1,500,000	1,500,000
5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D	500,000	500,000	500,000	—	—	—
Series A Junior Participating Preferred Stock	10,000,000	—	—	10,000,000	—	—
Not designated	160,400,000	—	—	160,900,000	—	—
Total	200,000,000	26,000,000	26,000,000	200,000,000	25,500,000	25,500,000

Common Stock

During the three months ended March 31, 2018 and 2017, MetLife, Inc. repurchased 21,405,327 shares and 16,038,791 shares of its common stock through open market purchases for $1.0 billion and $858 million, respectively.

On November 1, 2017, MetLife, Inc. announced that its Board of Directors authorized $2.0 billion of common stock repurchases. At March 31, 2018, MetLife, Inc. had $720 million remaining under this common stock repurchase authorization. Common stock repurchases are dependent upon several factors, including the Company’s capital position, liquidity, financial strength and credit ratings, general market conditions, the market price of MetLife, Inc.’s common stock compared to management’s assessment of the stock’s underlying value and applicable regulatory approvals, as well as other legal and accounting factors.

See Note 15 for information on subsequent common stock repurchases.

Stock-Based Compensation Plans

Performance Shares and Performance Units

Final Performance Shares are paid in shares of MetLife, Inc. common stock. Final Performance Units are payable in cash equal to the closing price of MetLife, Inc. common stock on a date following the last day of the three-year performance period. The performance factor for the January 1, 2015 – December 31, 2017 performance period was 46.3%, which was determined within a possible range from 0% to 175%. This factor has been applied to the 1,194,283 Performance Shares and 186,085 Performance Units associated with that performance period that vested on December 31, 2017. As a result, in the first quarter of 2018, MetLife, Inc. issued 552,953 shares of its common stock (less withholding for taxes and other items, as applicable), excluding shares that payees choose to defer, and MetLife, Inc. or its affiliates paid the cash value of 86,157 Performance Units (less withholding for taxes and other items, as applicable).

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI attributable to MetLife, Inc., was as follows:



	Three Months Ended March 31, 2018
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, beginning of period	$	12,757		$	905		$	(4,390	)	$	(1,845	)	$	7,427
OCI before reclassifications	(3,811		)	(352		)	552			(4		)	(3,615		)
Deferred income tax benefit (expense)	835			58			3			1			897
AOCI before reclassifications, net of income tax	9,781			611			(3,835		)	(1,848		)	4,709
Amounts reclassified from AOCI	45			(165		)	—			31			(89		)
Deferred income tax benefit (expense)	(10		)	27			—			(7		)	10
Amounts reclassified from AOCI, net of income tax	35			(138		)	—			24			(79		)
Cumulative effects of changes in accounting principles	(425		)	—			—			—			(425		)
Deferred income tax benefit (expense), cumulative effects of changes in accounting principles	1,473			210			36			(382		)	1,337
Cumulative effects of changes in accounting principles, net of income tax (2)	1,048			210			36			(382		)	912
Sale of subsidiary (3)	—			—			92			—			92
Balance, end of period	$	10,864		$	683		$	(3,707	)	$	(2,206	)	$	5,634

	Three Months Ended March 31, 2017
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, beginning of period	$	10,785		$	1,865		$	(5,312	)	$	(1,972	)	$	5,366
OCI before reclassifications	703			210			348			(20		)	1,241
Deferred income tax benefit (expense)	(273		)	(73		)	122			2			(222		)
AOCI before reclassifications, net of income tax	11,215			2,002			(4,842		)	(1,990		)	6,385
Amounts reclassified from AOCI	196			(229		)	—			44			11
Deferred income tax benefit (expense)	(75		)	80			—			(5		)	—
Amounts reclassified from AOCI, net of income tax	121			(149		)	—			39			11
Balance, end of period	$	11,336		$	1,853		$	(4,842	)	$	(1,951	)	$	6,396

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(1)	See Note 6 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI, and the policyholder dividend obligation.


(2)	See Note 1 for further information on adoption of new accounting pronouncements.


(3)	See Note 3 for further information on the 2018 disposition.

Information regarding amounts reclassified out of each component of AOCI was as follows:



AOCI Components	Amounts Reclassified from AOCI						Consolidated Statements of Operations and Comprehensive Income (Loss) Locations
	Three Months Ended March 31,
	2018			2017
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	(101	)	$	40		Net investment gains (losses)
Net unrealized investment gains (losses)	3			6			Net investment income
Net unrealized investment gains (losses)	53			(151		)	Net derivative gains (losses)
Net unrealized investment gains (losses)	—			(91		)	Discontinued operations
Net unrealized investment gains (losses), before income tax	(45		)	(196		)
Income tax (expense) benefit	10			75
Net unrealized investment gains (losses), net of income tax	(35		)	(121		)
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	16			8			Net derivative gains (losses)
Interest rate swaps	3			4			Net investment income
Interest rate swaps	—			1			Discontinued operations
Interest rate forwards	5			(4		)	Net derivative gains (losses)
Interest rate forwards	1			—			Net investment income
Interest rate forwards	—			1			Discontinued operations
Foreign currency swaps	139			208			Net derivative gains (losses)
Foreign currency swaps	1			1			Other expenses
Foreign currency swaps	—			10			Discontinued operations
Gains (losses) on cash flow hedges, before income tax	165			229
Income tax (expense) benefit	(27		)	(80		)
Gains (losses) on cash flow hedges, net of income tax	138			149
Defined benefit plans adjustment: (1)
Amortization of net actuarial gains (losses)	(36		)	(49		)
Amortization of prior service (costs) credit	5			5
Amortization of defined benefit plan items, before income tax	(31		)	(44		)
Income tax (expense) benefit	7			5
Amortization of defined benefit plan items, net of income tax	(24		)	(39		)
Total reclassifications, net of income tax	$	79		$	(11	)

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(1)	These AOCI components are included in the computation of net periodic benefit costs. See Note 11.