Equity

9 Months Ended

Sep. 30, 2018

10. Equity

Preferred Stock

In June 2018, MetLife, Inc. issued 32,200 shares of 5.625% Non-Cumulative Preferred Stock, Series E (the “Series E preferred stock”), with a $0.01 par value per share and a liquidation preference of $25,000 per share, for aggregate net proceeds of $780 million. MetLife, Inc. deposited the Series E preferred stock under a deposit agreement with a depositary, which issued interests in fractional shares of the Series E preferred stock in the form of depositary shares (“Depositary Shares”) evidenced by depositary receipts; each Depositary Share representing 1/1,000th interest in a share of the Series E preferred stock. In connection with the offering of the Depositary Shares, MetLife, Inc. incurred approximately $25 million of issuance costs which have been recorded as a reduction of additional paid-in capital.

The Series E 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 Depositary Shares 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 on the Series E preferred stock. If dividends are declared on the Series E preferred stock for any dividend period, they will be calculated on a non-cumulative basis at a fixed rate per annum of 5.625%. Dividends for any dividend period will be payable, if declared, quarterly in arrears on the 15th day of March, June, September and December of each year, commencing on September 15, 2018.

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 and Series E preferred stock will not be cumulative and will not be mandatory. Accordingly, if dividends are not declared on the Series D or Series E 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 or Series E 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 or Series E 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 and Series E preferred stock, and any parity stock, have been declared and paid or provided for.

Holders of the Series D and Series E 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 and Series E preferred stock have certain voting rights with respect to members of the Board of Directors of MetLife, Inc.

The Series D and Series E preferred stock are 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. MetLife, Inc. may, at its option, redeem the Series E preferred stock, (a) in whole but not in part, at any time prior to June 15, 2023, within 90 days after the occurrence of a “rating agency event,” at a redemption price equal to $25,500 per share of Series E preferred stock (equivalent to $25.50 per Depositary Share), 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 June 15, 2023, 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 June 15, 2023, in each case, at a redemption price equal to $25,000 per share of Series E 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 or Series E preferred stock, which results in the lowering of the equity credit assigned to the Series D or Series E preferred stock, as applicable, or shortens the length of time that the Series D or Series E preferred stock, as applicable, 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, in the case of the Series D preferred stock, or June 4, 2018, in the case of the Series E preferred stock, that would create a more than insubstantial risk, as determined by MetLife, Inc., that the Series D preferred stock or the Series E preferred stock, as applicable, 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, in the case of the Series D preferred stock, or June 4, 2018, in the case of the Series E preferred stock.

Preferred stock authorized, issued and outstanding was as follows:



	September 30, 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	—	—	—
5.625% Non-Cumulative Preferred Stock, Series E	32,200	32,200	32,200	—	—	—
Series A Junior Participating Preferred Stock	10,000,000	—	—	10,000,000	—	—
Not designated	160,367,800	—	—	160,900,000	—	—
Total	200,000,000	26,032,200	26,032,200	200,000,000	25,500,000	25,500,000

The declaration, record and payment dates, as well as per share and aggregate dividend amounts, for MetLife, Inc.’s preferred stock were as follows for the nine months ended September 30, 2018 and 2017:



Declaration Date	Record Date	Payment Date	Preferred Stock Dividend
Declaration Date	Record Date	Payment Date	Series A Per Share		Series A Aggregate		Series C Per Share		Series C Aggregate		Series D Per Share		Series D Aggregate		Series E Per Share		Series E Aggregate
			(In millions, except per share data)
August 15, 2018	August 31, 2018	September 17, 2018	$	0.256	$	6	$	—	$	—	$	28.233	$	14	$	394.531	$	12
May 15, 2018	May 31, 2018	June 15, 2018	$	0.256	7		$	26.250	39		$	—	—		$	—	—
March 5, 2018	February 28, 2018	March 15, 2018	$	0.250	6		$	—	—		$	—	—		$	—	—
					$	19			$	39			$	14			$	12

August 15, 2017	August 31, 2017	September 15, 2017	$	0.256	$	6	$	—	$	—	$	—	$	—	$	—	$	—
May 15, 2017	May 31, 2017	June 15, 2017	$	0.256	7		$	26.250	39		$	—	—		$	—	—
March 6, 2017	February 28, 2017	March 15, 2017	$	0.250	6		$	—	—		$	—	—		$	—	—
					$	19			$	39			$	—			$	—

Common Stock

During the nine months ended September 30, 2018 and 2017, MetLife, Inc. repurchased 59,602,926 shares and 44,737,625 shares of its common stock, respectively, through open market purchases for $2.8 billion and $2.3 billion, respectively.

On November 1, 2017 and May 22, 2018, MetLife, Inc. announced that its Board of Directors authorized $2.0 billion and $1.5 billion of common stock repurchases, respectively. In June 2018, MetLife, Inc. completed all common stock repurchases under the November 2017 authorization. At September 30, 2018, MetLife, Inc. had $470 million of common stock repurchases remaining under the May 2018 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 16 for information on a subsequent common stock repurchase authorization.

The declaration, record and payment dates, as well as per share and aggregate dividend amounts, for MetLife, Inc.’s common stock were as follows for the nine months ended September 30, 2018 and 2017:



Declaration Date	Record Date	Payment Date	Common Stock Dividend
Declaration Date	Record Date	Payment Date	Per Share		Aggregate
			(In millions, except per share data)
July 6, 2018	August 6, 2018	September 13, 2018	$	0.420	$	419
April 24, 2018	May 7, 2018	June 13, 2018	$	0.420	428
January 5, 2018	February 5, 2018	March 13, 2018	$	0.400	416
					$	1,263

July 7, 2017	August 7, 2017	September 13, 2017	$	0.400	$	427
April 25, 2017	May 8, 2017	June 13, 2017	$	0.400	431
January 6, 2017	February 6, 2017	March 13, 2017	$	0.400	437
					$	1,295

See also Note 16 for information regarding a common stock dividend declared subsequent to September 30, 2018.

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).

Dividend Restrictions

Insurance Operations

The table below sets forth the dividends permitted to be paid in 2018 by MetLife, Inc.’s primary insurance subsidiaries without insurance regulatory approval and the respective dividends paid during the nine months ended September 30, 2018:



Company	Paid (1)				Permitted Without Approval (2)
	(In millions)
Metropolitan Life Insurance Company	$	2,424	(3	)	$	3,075
American Life Insurance Company	$	2,200	(4	)	$	—
Metropolitan Property and Casualty Insurance Company	$	—			$	125
Metropolitan Tower Life Insurance Company (5)	$	—			$	73
General American Life Insurance Company (5)	$	—			N/A

__________________


(1)	Reflects all amounts paid, including those requiring regulatory approval.


(2)	Reflects dividend amounts that may be paid during 2018 without prior regulatory approval. However, because dividend tests may be based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2018, some or all of such dividends may require regulatory approval.

(3)

Represents ordinary dividends of $1.7 billion and an extraordinary dividend of $705 million that was paid with regulatory approval. The extraordinary dividend was paid in cash with proceeds from the sale to an affiliate of certain property, equipment, leasehold improvements and computer software that were non-admitted by MLIC for statutory accounting purposes. The affiliate received a capital contribution in cash from MetLife, Inc. to fund the purchase.


(4)	Represents extraordinary dividends.

(5)

In April 2018, Metropolitan Tower Life Insurance Company (“MTL”) merged with General American Life Insurance Company (“GALIC”). The surviving entity of the merger was MTL, which re-domesticated from Delaware to Nebraska immediately prior to the merger. Effective as of the re-domestication, MTL is subject to the dividend restrictions under Nebraska law, which are based on amounts reported in MTL’s stand-alone statutory financial statements for the year ended December 31, 2017.

Under the Nebraska Insurance Code, MTL is permitted, without prior insurance regulatory clearance, to pay a stockholder dividend to MetLife, Inc. as long as the amount of the dividend, when aggregated with all other dividends in the preceding 12 months, does not exceed the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) its net statutory gain from operations for the immediately preceding calendar year (excluding realized capital gains), not including pro rata distributions of each insurer's own securities. MTL will be permitted to pay a dividend to MetLife, Inc. in excess of the greater of such two amounts only if it files notice of the declaration of such a dividend and the amount thereof with the Director of the Nebraska Department of Insurance (the “Nebraska Director”) and the Nebraska Director either approves the distribution of the dividend or does not disapprove the distribution within 30 days of its filing. In addition, any dividend that exceeds earned surplus (defined as “unassigned funds (surplus)”), excluding unrealized capital gains) as of the immediately preceding calendar year requires insurance regulatory approval. Under the Nebraska Insurance Code, the Nebraska Director has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders.

See Note 15 of the Notes to Consolidated Financial Statements included in the 2017 Annual Report for additional information on dividend restrictions.

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 September 30, 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	$	8,538		$	1,165		$	(4,670	)	$	(2,179	)	$	2,854
OCI before reclassifications	(1,953		)	(295		)	(240		)	131			(2,357		)
Deferred income tax benefit (expense)	436			(22		)	15			(27		)	402
AOCI before reclassifications, net of income tax	7,021			848			(4,895		)	(2,075		)	899
Amounts reclassified from AOCI	(30		)	4			—			31			5
Deferred income tax benefit (expense)	7			96			—			(7		)	96
Amounts reclassified from AOCI, net of income tax	(23		)	100			—			24			101
Balance, end of period	$	6,998		$	948		$	(4,895	)	$	(2,051	)	$	1,000

	Three Months Ended September 30, 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	$	13,469		$	1,569		$	(4,679	)	$	(1,923	)	$	8,436
OCI before reclassifications	803			(166		)	193			2			832
Deferred income tax benefit (expense)	(270		)	56			(6		)	2			(218		)
AOCI before reclassifications, net of income tax	14,002			1,459			(4,492		)	(1,919		)	9,050
Amounts reclassified from AOCI	(360		)	(307		)	—			40			(627		)
Deferred income tax benefit (expense)	126			107			—			(17		)	216
Amounts reclassified from AOCI, net of income tax	(234		)	(200		)	—			23			(411		)
Disposal of subsidiary (3)	(2,286		)	(305		)	51			28			(2,512		)
Deferred income tax benefit (expense)	800			107			(19		)	(10		)	878
Disposal of subsidiary, net of income tax	(1,486		)	(198		)	32			18			(1,634		)
Balance, end of period	$	12,282		$	1,061		$	(4,460	)	$	(1,878	)	$	7,005



	Nine Months Ended September 30, 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	(8,860		)	(506		)	(657		)	130			(9,893		)
Deferred income tax benefit (expense)	1,977			77			24			(27		)	2,051
AOCI before reclassifications, net of income tax	5,874			476			(5,023		)	(1,742		)	(415		)
Amounts reclassified from AOCI	98			309			—			93			500
Deferred income tax benefit (expense)	(22		)	(47		)	—			(20		)	(89		)
Amounts reclassified from AOCI, net of income tax	76			262			—			73			411
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	$	6,998		$	948		$	(4,895	)	$	(2,051	)	$	1,000

	Nine Months Ended September 30, 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	4,796			37			710			(17		)	5,526
Deferred income tax benefit (expense)	(1,675		)	(14		)	110			7			(1,572		)
AOCI before reclassifications, net of income tax	13,906			1,888			(4,492		)	(1,982		)	9,320
Amounts reclassified from AOCI	(211		)	(965		)	—			125			(1,051		)
Deferred income tax benefit (expense)	73			336			—			(39		)	370
Amounts reclassified from AOCI, net of income tax	(138		)	(629		)	—			86			(681		)
Disposal of subsidiary (3)	(2,286		)	(305		)	51			28			(2,512		)
Deferred income tax benefit (expense)	800			107			(19		)	(10		)	878
Disposal of subsidiary, net of income tax	(1,486		)	(198		)	32			18			(1,634		)
Balance, end of period	$	12,282		$	1,061		$	(4,460	)	$	(1,878	)	$	7,005

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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.

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 September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	101		$	303		$	(36	)	$	386		Net investment gains (losses)
Net unrealized investment gains (losses)	9			(1		)	9			—			Net investment income
Net unrealized investment gains (losses)	(80		)	55			(71		)	(89		)	Net derivative gains (losses)
Net unrealized investment gains (losses)	—			3			—			(86		)	Discontinued operations
Net unrealized investment gains (losses), before income tax	30			360			(98		)	211
Income tax (expense) benefit	(7		)	(126		)	22			(73		)
Net unrealized investment gains (losses), net of income tax	23			234			(76		)	138
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	1			9			18			23			Net derivative gains (losses)
Interest rate swaps	4			5			13			12			Net investment income
Interest rate swaps	—			—			—			2			Discontinued operations
Interest rate forwards	(3		)	(1		)	—			(5		)	Net derivative gains (losses)
Interest rate forwards	1			—			2			2			Net investment income
Interest rate forwards	—			—			1			1			Other expenses
Interest rate forwards	—			—			—			3			Discontinued operations
Foreign currency swaps	(6		)	294			(342		)	915			Net derivative gains (losses)
Foreign currency swaps	(1		)	—			(2		)	(1		)	Net investment income
Foreign currency swaps	—			—			1			1			Other expenses
Foreign currency swaps	—			—			—			11			Discontinued operations
Credit forwards	—			—			—			1			Net derivative gains (losses)
Gains (losses) on cash flow hedges, before income tax	(4		)	307			(309		)	965
Income tax (expense) benefit	(96		)	(107		)	47			(336		)
Gains (losses) on cash flow hedges, net of income tax	(100		)	200			(262		)	629
Defined benefit plans adjustment: (1)
Amortization of net actuarial gains (losses)	(37		)	(46		)	(108		)	(143		)
Amortization of prior service (costs) credit	6			6			15			18
Amortization of defined benefit plan items, before income tax	(31		)	(40		)	(93		)	(125		)
Income tax (expense) benefit	7			17			20			39
Amortization of defined benefit plan items, net of income tax	(24		)	(23		)	(73		)	(86		)
Total reclassifications, net of income tax	$	(101	)	$	411		$	(411	)	$	681

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(1)	These AOCI components are included in the computation of net periodic benefit costs. See Note 12.