XML 31 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
Dispositions
 6 Months Ended
Jun. 30, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure
3. Dispositions
2018 Disposition
On February 20, 2018, the Company completed the sale of MetLife Afore, S.A. de C.V., its pension fund management business in Mexico. See Note 3 of the Notes to the Consolidated Financial Statement included in the 2017 Annual Report for further information.
2017 Separation of Brighthouse
On August 4, 2017, MetLife, Inc. completed the separation of Brighthouse. MetLife, Inc. retained the remaining ownership interest of 22,996,436 shares, or 19.2%, of Brighthouse Financial, Inc. common stock and recognized its investment in Brighthouse Financial, Inc. common stock based on the NASDAQ reported market price. The Company elected to record the investment under the FVO as an observable measure of estimated fair value that is aligned with the Company’s intent to divest of the retained shares as soon as practicable. Subsequent changes in estimated fair value of the investment were recorded to net investment gains (losses). The estimated fair value of the Brighthouse Financial, Inc. common stock held by the Company (“FVO Brighthouse Common Stock”) at December 31, 2017 was $1.3 billion reported within contractholder-directed equity securities and fair value option securities (“FVO Securities”) (collectively, “Unit-linked and FVO Securities”).
The Company incurred pre-tax Separation-related transaction costs of $330 million and $407 million for the three months and six months ended June 30, 2017, respectively, primarily related to the terminations of financing agreements and third party staffing costs. For both the three months and six months ended June 30, 2017, the Company reported $294 million within discontinued operations for fees for the terminations of financing arrangements. All other Separation-related transaction costs are recorded in other expenses and reported within continuing operations.
In June 2018, the Company sold FVO Brighthouse Common Stock in exchange for $944 million aggregate principal amount of MetLife, Inc. senior notes, which MetLife, Inc. canceled. The Company recorded $159 million and $327 million of mark-to-market and disposition losses on the FVO Brighthouse Common Stock to net investment gains (losses) for the three months and six months ended June 30, 2018, respectively. As of June 30, 2018, the Company no longer held any shares of Brighthouse Financial, Inc. for its own account; however, certain insurance company separate accounts managed by the Company held shares of Brighthouse Financial, Inc. See Note 9 for further information on this transaction.
See Note 3 of the Notes to the Consolidated Financial Statements included in the 2017 Annual Report for further information regarding the Separation, including Separation-related agreements and ongoing transactions with Brighthouse.
Agreements
Tax Agreements
Immediately prior to the Separation, MetLife entered into tax agreements with Brighthouse.
In accordance with the tax separation agreement, at both June 30, 2018 and December 31, 2017, the Company’s current income tax receivable and corresponding payable to Brighthouse, reported in other liabilities, were $726 million.
As part of the tax receivable agreement, MetLife Inc. has the right to receive future payments from Brighthouse for a tax asset that Brighthouse received as a result of restructuring prior to the Separation. Included in other assets at both June 30, 2018 and December 31, 2017, is a receivable from Brighthouse of $333 million related to these future payments.
Ongoing Transactions with Brighthouse
The Company considered all of its continuing involvement with Brighthouse in determining whether to deconsolidate and present Brighthouse results as discontinued operations, including the agreements entered into between MetLife and Brighthouse and the ongoing transactions described below.
The Company entered into reinsurance, committed facility, structured settlement, and contract administrative services transactions with Brighthouse in the normal course of business and such transactions will continue based upon business needs. In addition, prior to and in connection with the Separation, the Company entered into various other agreements with Brighthouse for services necessary for both the Company and Brighthouse to conduct their activities. Intercompany transactions prior to the Separation between the Company and Brighthouse are eliminated and excluded from the interim condensed consolidated statements of operations and comprehensive income (loss). Transactions between the Company and Brighthouse that continue after the Separation are included on the Company’s interim condensed consolidated statements of operations and comprehensive income (loss) and interim condensed consolidated balance sheets.
Reinsurance
The Company entered into reinsurance transactions with Brighthouse in the normal course of business and such transactions will continue based upon business needs. Information regarding the significant effects of reinsurance transactions with Brighthouse was as follows:
 
 
Included on Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
 
Excluded from Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
 
Included on Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
 
Excluded from Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
 
 
Three Months
Ended
June 30,
 
Six Months
Ended
June 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
(In millions)
Premiums
 
 
 
 
 
 
 
 
Reinsurance assumed
 
$
105

 
$
115

 
$
201


$
212

Reinsurance ceded
 
(3
)
 
(4
)
 
(6
)

(7
)
Net premiums
 
$
102

 
$
111

 
$
195

 
$
205

Universal life and investment-type product policy fees
 
 
 
 
 
 
 
 
Reinsurance assumed
 
$
(3
)
 
$
(1
)
 
$
(2
)

$
(5
)
Reinsurance ceded
 
(20
)
 
(22
)
 
(44
)

(46
)
Net universal life and investment-type product policy fees
 
$
(23
)
 
$
(23
)
 
$
(46
)
 
$
(51
)
Policyholder benefits and claims
 
 
 
 
 
 
 
 
Reinsurance assumed
 
$
84

 
$
91

 
$
162


$
166

Reinsurance ceded
 
—

 
(6
)
 
(10
)

(12
)
Net policyholder benefits and claims
 
$
84

 
$
85

 
$
152

 
$
154

Interest credited to policyholder account balances
 
 
 
 
 
 
 
 
Reinsurance assumed
 
$
3

 
$
4

 
$
7


$
8

Reinsurance ceded
 
(17
)
 
(18
)
 
(35
)

(36
)
Net interest credited to policyholder account balances
 
$
(14
)
 
$
(14
)
 
$
(28
)
 
$
(28
)
Other expenses
 
 
 
 
 
 
 
 
Reinsurance assumed
 
$
31

 
$
36

 
$
65


$
6

Reinsurance ceded
 
(4
)
 
(4
)
 
(18
)

(25
)
Net other expenses
 
$
27

 
$
32

 
$
47

 
$
(19
)
Information regarding the significant effects of reinsurance transactions with Brighthouse included on the interim condensed consolidated balance sheets was as follows at:
 
June 30, 2018
 
December 31, 2017
 
Assumed
 
Ceded
 
Assumed
 
Ceded
 
(In millions)
Assets
 
 
 
 
 
 
 
Premiums, reinsurance and other receivables
$
157

 
$
1,788

 
$
167

 
$
1,793

Deferred policy acquisition costs and value of business acquired
381

 
(40
)
 
384

 
(40
)
Total assets
$
538

 
$
1,748

 
$
551

 
$
1,753

Liabilities
 
 
 
 
 
 
 
Future policy benefits
$
1,842

 
$
—

 
$
1,734

 
$
—

Other policy-related balances
120

 
22

 
119

 
28

Other liabilities
1,446

 
16

 
1,458

 
19

Total liabilities
$
3,408

 
$
38

 
$
3,311

 
$
47

Investment Management
In connection with the Separation, the Company entered into investment management services agreements with Brighthouse. During the three months and six months ended June 30, 2018, the Company recognized $32 million and $61 million, respectively, in other revenues for services provided under such investment management services agreements. Prior to the Separation, during the three months and six months ended June 30, 2017, the Company charged Brighthouse $24 million and $49 million, respectively, for services provided under the agreements, which were intercompany transactions and eliminated and excluded from the interim condensed consolidated statements of operations and comprehensive income (loss).
MetLife Reinsurance Company of Vermont and MetLife, Inc. have a $2.9 billion committed facility which is used as collateral for certain affiliated reinsurance liabilities. At June 30, 2018, Brighthouse was a beneficiary of $2.4 billion of letters of credit issued under this committed facility and, in consideration, Brighthouse reimbursed MetLife, Inc. for a portion of the letter of credit fees. Prior to the Separation, the Company entered into the committed facility with Brighthouse in the normal course of business and such transactions will continue based upon business needs.
Transition Services
In connection with the Separation, the Company entered into a transition services agreement with Brighthouse for services necessary for Brighthouse to conduct its activities. During the three months and six months ended June 30, 2018, the Company recognized $78 million and $157 million, respectively, as other revenue for transitional services provided under the agreement. Prior to the Separation, during the three months and six months ended June 30, 2017, the Company charged Brighthouse $83 million and $164 million, respectively, for services provided under the agreement, which were intercompany transactions and eliminated and excluded from the interim condensed consolidated statements of operations and comprehensive income (loss).
Other
The Company has existing assumed structured settlement claim obligations as an assignment company for Brighthouse. These liabilities are measured at the present value of the periodic claims to be provided and reported as other policy-related balances. The Company receives a fee for assuming these claim obligations and, as the assignee of the claim, is legally obligated to ensure periodic payments are made to the claimant. The Company purchased annuities from Brighthouse to fund these obligations and designates payments to be made directly to the claimant by Brighthouse as the annuity writer. The aggregate contract values of annuities funding structured settlement claims are recorded as an asset for which the Company has also recorded an unpaid claim obligation reported in other policy-related balances. Such aggregated contract values were $1.3 billion at both June 30, 2018 and December 31, 2017. The Company entered into these transactions with Brighthouse in the normal course of business and such transactions will continue based upon business needs.
The Company provides services necessary for Brighthouse to conduct its business, which primarily include contract administrative services for certain Brighthouse investment-type products. During the three months and six months ended June 30, 2018, the Company recognized revenue of $31 million and $63 million, respectively, for administrative services provided to Brighthouse. Prior to the Separation, during the three months and six months ended June 30, 2017, the Company provided administrative services to Brighthouse for $31 million and $62 million, respectively, which were intercompany transactions and eliminated and excluded from the interim condensed consolidated statements of operations and comprehensive income (loss). The Company entered into these transactions with Brighthouse in the normal course of business and such transactions will continue based upon business needs.
In connection with the Separation, the Company entered into an employee matters agreement with Brighthouse to allocate obligations and responsibilities relating to employee compensation and benefit plans and other related matters. The employee matters agreement provides that MetLife will reimburse Brighthouse for certain pension benefit payments, retiree health and life benefit payments and deferred compensation payments. Included in other liabilities at June 30, 2018 and December 31, 2017, are payables to Brighthouse of $179 million and $186 million, respectively, related to these future payments.
At June 30, 2018 and December 31, 2017, the Company had receivables from Brighthouse of $111 million and $97 million, respectively, related to services provided.
Discontinued Operations
The following table presents the amounts related to the operations of Brighthouse that have been reflected in discontinued operations:
 
Three Months
Ended
June 30,
 
Six Months
Ended
June 30,
 
2017
 
(In millions)
Revenues
 
 
 
Premiums
$
355

 
$
705

Universal life and investment-type product policy fees
938

 
1,880

Net investment income
766

 
1,541

Other revenues
90

 
122

Total net investment gains (losses)
—

 
(50
)
Net derivative gains (losses)
(190
)
 
(890
)
Total revenues
1,959

 
3,308

Expenses
 
 
 
Policyholder benefits and claims
881

 
1,883

Interest credited to policyholder account balances
270

 
531

Policyholder dividends
7

 
14

Other expenses
776

 
1,037

Total expenses
1,934

 
3,465

Income (loss) from discontinued operations before provision for income tax
25

 
(157
)
Provision for income tax expense (benefit)
(33
)
 
(139
)
Income (loss) from discontinued operations, net of income tax
$
58

 
$
(18
)
In the interim condensed consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified. The following table presents selected financial information regarding cash flows of the discontinued operations.

 
Six Months
Ended
June 30, 2017
 
 
(In millions)
Net cash provided by (used in):
 
 
Operating activities

$
1,310

Investing activities

$
(2,288
)
Financing activities
 
$
195