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EX-31.1 - EX-31.1 - METLIFE POLICYHOLDER TRUST | y90515exv31w1.htm |
EX-32.1 - EX-32.1 - METLIFE POLICYHOLDER TRUST | y90515exv32w1.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2010
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission file number 000-30195
MetLife Policyholder Trust
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) |
51-6516897 (I.R.S. Employer Identification No.) |
|
Rodney Square North 1100 North Market Street Wilmington, DE (Address of principal executive offices) |
19890 (Zip code) |
(302) 651-1000
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Beneficial interests in the MetLife Policyholder Trust
Securities registered pursuant to section 12(g) of the Act:
Beneficial interests in the MetLife Policyholder Trust
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act (Check one):
Large accelerated filer o Non-accelerated filer þ (Do not check if a smaller reporting company) |
Accelerated filer o Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
As of March 23, 2011, 219,241,081 Trust Interests were outstanding. The Trust Interests
are not transferable except in limited circumstances and have no market value.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
None.
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EX-31.1 | ||||||||
EX-32.1 |
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Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K, including the Managements Discussion and Analysis of
Financial Condition and Results of Operations, may contain or incorporate by reference information
that includes or is based upon forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts
of future events. These statements can be identified by the fact that they do not relate strictly
to historical or current facts. They use words such as anticipate, estimate, expect,
project, intend, plan, believe and other words and terms of similar meaning in connection
with a discussion of future operating or financial performance. In particular, these include
statements relating to future actions, prospective services or products, future performance or
results of current and anticipated services or products, sales efforts, expenses, the outcome of
contingencies such as legal proceedings, trends in operations and financial results. See
Managements Discussion and Analysis of Financial Condition and Results of Operations.
Any or all forward-looking statements may turn out to be wrong. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be
important in determining the actual future results of the MetLife Policyholder Trust (the Trust).
These statements are based on current expectations and the current economic environment. They
involve a number of risks and uncertainties that are difficult to predict. These statements are not
guarantees of future performance. Actual results could differ materially from those expressed or
implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause
such differences include the risks, uncertainties and other factors identified in the Trusts and
MetLife, Inc.s filings with the U.S. Securities and Exchange Commission (SEC). These factors
include: (i) dependence upon MetLife, Inc. for the value of the Trust Shares (as defined herein);
(ii) limited rights of Beneficiaries (as defined herein), including with respect to voting power
over the Trust Shares; (iii) no existing trading market for the Trust Interests (as defined herein)
and limited ability of Beneficiaries to transfer such Trust Interests; (iv) termination of the
Trust at the discretion of MetLife, Inc.; (v) adverse results or other consequences from
litigation, arbitration or regulatory investigations, including as a result of the appointment of a
representative on behalf of certain Beneficiaries; and (vi) other risks and uncertainties described
from time to time in the Trusts and MetLife, Inc.s filings with the SEC.
The Trust does not undertake any obligation to publicly correct or update any forward-looking
statement if the Trust later becomes aware that such statement is not likely to be achieved. Please
consult any further disclosures the Trust or MetLife, Inc. make on related subjects in reports to
the SEC.
Note Regarding Reliance on Statements in Our Contracts
In reviewing the agreements included as exhibits to this Annual Report on Form 10-K, please
remember that they are included to provide you with information regarding their terms and are not
intended to provide any other factual or disclosure information about the Trust or the other
parties to the agreements. The agreements contain representations and warranties by each of the
parties to the applicable agreement. These representations and warranties have been made solely for
the benefit of the other parties to the applicable agreement and:
| should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
| may apply standards of materiality in a way that is different from what may be viewed as material to investors; and |
| were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs
as of the date they were made or at any other time. Additional information about the Trust may be
found elsewhere in this Annual Report on Form 10-K and its other public filings, which are
available without charge through the SEC website at www.sec.gov.
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Part I
Item 1. | Business. |
The MetLife Policyholder Trust (the Trust) was established under the Metropolitan Life
Insurance Company (Metropolitan Life) plan of reorganization (the Plan) and pursuant to the
MetLife Policyholder Trust Agreement, dated as of November 3, 1999, by and among Metropolitan Life,
MetLife, Inc. (the Holding Company), Wilmington Trust Company (not in its individual capacity,
but solely as trustee for the Trust, the Trustee) and ChaseMellon Shareholder Services, L.L.C.,
as custodian (now known as Mellon Investor Services LLC, the Custodian), as amended on November
8, 2001 (the Trust Agreement), in connection with the conversion of Metropolitan Life from a
mutual life insurance company to a stock life insurance company. The Trust is a single-purpose
trust that does not engage in any business or activity other than voting and holding the Trust
Shares (as defined below) and certain closely related activities, such as distributing cash
dividends. The Trust has no employees. See Financial Statements and Supplementary Data for
financial information about the Trust.
Under the Plan and the Trust Agreement, each policyholders membership interest was
extinguished and certain eligible policyholders of Metropolitan Life (the Trust Eligible
Policyholders) received, in exchange for that interest, a number of interests in the Trust (Trust
Interests) equal to the number of shares of common stock of the Holding Company, par value $0.01
per share (the Common Stock), allocated to them in accordance with the Plan. The assets of the
Trust consist principally of the shares of Common Stock issued to the Trust (the Trust Shares)
for the benefit of the Trust Eligible Policyholders and permitted transferees (collectively, the
Beneficiaries). The Trust Shares are held in the name of the Trustee, on behalf of the Trust,
which has legal title over the Trust Shares. The Beneficiaries do not have legal title to any part
of the assets of the Trust. The Trust Interests represent undivided fractional interests in the
Trust Shares and other assets of the Trust beneficially owned by a Trust Beneficiary through the
Custodian. On April 7, 2000, the date of demutualization of Metropolitan Life, the Holding Company
distributed to the Trust 494,466,664 shares of Common Stock for the benefit of policyholders of
Metropolitan Life. Withdrawals by Beneficiaries of Trust Shares, transactions by Beneficiaries
under the Purchase and Sale Program (as defined below), and escheatment of unclaimed Trust Shares
resulted in a decrease in the number of Trust Shares from 233,157,716 at December 31, 2009 to
222,321,295 at December 31, 2010.
A Trust Interest entitles the Beneficiary to certain rights, including the right to: (i)
receive dividends distributed upon Trust Shares; (ii) have Trust Shares withdrawn from the Trust to
be sold for cash through a purchase and sale program established by the Holding Company pursuant to
the Plan (the Purchase and Sale Program); (iii) deposit in the Trust additional shares of Common
Stock purchased through the Purchase and Sale Program; (iv) withdraw Trust Shares; and (v) instruct
the Trustee to vote the Trust Shares on certain matters, each as further described in and limited
by the terms of the Trust Agreement. The Trustee has no beneficial interest in the Trust Shares.
As a general rule, Beneficiaries are prohibited from selling, assigning, transferring,
encumbering or granting any option or any other interest in their Trust Interests; however, Trust
Interests may be transferred:
(i) from the estate of a deceased Beneficiary to one or more beneficiaries taking by
operation of law or pursuant to testamentary succession;
(ii) to the spouse or issue of a Beneficiary or to an entity selected by a Beneficiary,
provided that transfers to such entity are deductible for federal income, gift and estate tax
purposes under §§170, 2055 and 2522 of the Internal Revenue Code of 1986, as amended, or to a
trust established for the exclusive benefit of one or more of the following: (x) Beneficiaries,
(y) individuals described in this clause (ii), or (z) entities described in this clause (ii);
(iii) to a trust established to hold Trust Interests on behalf of an employee benefit
plan;
(iv) if the Beneficiary is not a natural person, by operation of law to the surviving entity
upon the merger or consolidation of such Beneficiary into another entity, to the purchaser of
substantially all the assets of such Beneficiary or to the appropriate persons upon the
dissolution, termination or winding up of such Beneficiary;
(v) by operation of law as a consequence of the bankruptcy or insolvency of such Beneficiary
or the granting of relief to such Beneficiary under the Federal bankruptcy laws; or
(vi) from a trust holding an insurance policy or annuity contract on behalf of the insured
person under such policy or contract, to those persons to whom Trust Interests are required to be
so transferred pursuant to the terms of such trust.
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In addition, if the Board of Directors of the Holding Company determines, based on the advice
of legal counsel, that there is, at any time, a material risk that the assets of the Trust may be
characterized as plan assets under United States Department of Labor Reg. §2510.3-101, as
amended, the Board may direct the Trustee to distribute to the Custodian, for distribution to one
or more Beneficiaries, a number of Trust Shares (not to exceed the total number of such
Beneficiaries Trust Interests) as the Board may determine to be necessary or appropriate to ensure
that the assets of the Trust will not be so characterized as plan assets.
A transferee of Trust Interests will become subject to the Trust Agreement. Trust Interests
are held in the name of the Custodian, which keeps a record of the Trust Interests of the
Beneficiaries on a book-entry system maintained by the Custodian. The Trust Interests are not
represented by certificates or other evidences of ownership.
Beneficiaries may instruct the program agent for the Purchase and Sale Program to withdraw
their allocated shares from the Trust for sale through the Purchase and Sale Program. Beneficiaries
holding a number of Trust Interests that is less than 1,000 are also entitled to purchase in the
Purchase and Sale Program additional shares of Common Stock to be deposited in the Trust and
allocated to the Beneficiary, subject to the limitation that, after such purchase, the Beneficiary
will hold no more than 1,000 Trust Interests, and further, subject to a minimum of $250 per
purchase (or such lesser amount that would cause the Beneficiary to hold the 1,000 maximum number
of Trust Interests). The number of Trust Interests allocated to Beneficiaries will be adjusted for
any shares of Common Stock purchased or sold in the Purchase and Sale Program such that the Trust
Interests held by a Beneficiary will always equal the number of shares of Common Stock allocated to
the Beneficiary.
Beneficiaries may withdraw all, but generally, not less than all, of their allocated shares of
Common Stock at any time by providing written notice to the Custodian.
The Trust Agreement provides the Trustee with directions as to the manner in which to vote,
assent or consent the Trust Shares at all times during the term of the Trust. On all matters
brought for a vote before the stockholders of the Holding Company, with the exception of a
Beneficiary Consent Matter (as defined below), the Trustee will vote or abstain from voting in
accordance with the recommendation given by the Board of Directors of the Holding Company to its
stockholders or, if no such recommendation is given, as directed by the Board. On all Beneficiary
Consent Matters, the Trustee will vote all of the Trust Shares in favor of, in opposition to or
abstain from the matter in the same ratio as the Trust Interests of the Beneficiaries that returned
voting instructions to the Trustee indicated preferences for voting in favor of, in opposition to
or abstaining from such matter. The Trust Agreement also contains provisions allowing Beneficiaries
to instruct the Custodian to withdraw their allocated Trust Shares to participate in any tender or
exchange offer for the Common Stock and to make any cash or share election, or perfect any
dissenters rights, in connection with a merger of the Holding Company.
A Beneficiary Consent Matter is a matter presented to stockholders of the Holding Company
concerning the following:
(i) subject to certain conditions, a contested election of directors or the removal of a
director,
(ii) a merger or consolidation, a sale, lease or exchange of all or substantially all of the
property or assets or a recapitalization or dissolution of the Holding Company, if it requires a
vote of stockholders under applicable Delaware law,
(iii) any transaction that would result in an exchange or conversion of Trust Shares for
cash, securities or other property, and
(iv) proposals submitted to stockholders requiring the Board of Directors to amend the
Holding Companys Stockholder Rights Plan, or redeem rights under that plan, other than a
proposal with respect to which the Holding Company has received advice of nationally-recognized
legal counsel to the effect that the proposal is not a proper subject for stockholder action
under Delaware law. The Holding Company does not currently have a stockholder rights plan.
Proxy solicitation materials, annual reports and information statements received by the
Custodian in connection with any matter not involving a Beneficiary Consent Matter will be made
available by the Holding Company to Beneficiaries for their information on a website maintained by
the Holding Company or by mail upon request and at the Holding Companys expense, but voting
instructions to the Trustee will not be solicited and, if instructions are received, they will not
be binding on the Trustee.
The Trust Agreement provides that regular cash dividends, if any, collected or received by the
Trustee with respect to the Trust Shares will be distributed by the Custodian semi-annually to the
Beneficiaries within 90 days after receipt by the Trustee. Distribution of all other cash dividends
will be made by the Custodian to the Beneficiaries on the first business day following the
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30th day
after the Trust receives the dividends. Alternatively, the Trustee may arrange with the Holding Company
for the direct payment by the Holding Company of such cash dividends to the Beneficiaries.
Historically, the Holding Company has used the latter method. The Trust Agreement further provides
that pending such distribution, cash dividends (unless distributed directly by the Holding Company
to Beneficiaries) shall be invested by the Trustee in short-term obligations of or guaranteed by
the United States, or any agency or instrumentality thereof, and in certificates of deposit of any
bank or trust company having a combined capital and surplus not less than $500,000,000. Dividends
or other distributions in Common Stock will be allocated to the Beneficiaries in proportion to
their Trust Interests and held by the Trustee as Trust Shares. Generally, all other distributions
by the Holding Company to its stockholders will be held and distributed by the Trustee to the
Beneficiaries in proportion to their Trust Interests.
The Trust will terminate on the 90th day after the date on which the Trustee will have
received notice from the Holding Company that the number of Trust Shares held by the Trust is equal
to 10% or less of the number of issued and outstanding shares of Common Stock or on the date on
which the last Trust Share will have been withdrawn, distributed or exchanged. The Trust may be
terminated earlier:
(i) on the 90th day after the date on which the Trustee receives written notice from the
Holding Company, given at the Holding Companys discretion at any time, that the number of Trust
Shares is 25% or less of the number of issued and outstanding shares of Common Stock,
(ii) on the date on which the Trustee receives written notice from the Holding Company that
the Board of Directors of the Holding Company has determined, as a result of any amendment of, or
change (including any announced prospective change) in the laws (or any regulations thereunder)
of the United States or any State, Commonwealth or other political subdivision or authority
thereof or therein, or any official administrative pronouncement or judicial decision
interpreting or applying such law or regulation, or any changes in the facts or circumstances
relating to the Trust, that maintaining the Trust is or is reasonably expected to become
burdensome to the Holding Company or the Beneficiaries,
(iii) on the date on which any rights issued under a stockholder rights plan adopted by the
Holding Company and held by the Trust become separately tradable from the Trust Shares to which
they relate, or
(iv) on the date on which there is an entry of a final order for termination or dissolution
of the Trust or similar relief by a court of competent jurisdiction.
The Trust Agreement also contains a provision which would cause termination under certain
circumstances in order to comply with legal rules governing the duration of trusts.
Upon termination of the Trust, the remaining Trust Shares will be distributed in book entry
form to each Beneficiary, or as otherwise directed by such Beneficiary, together with the
Beneficiarys proportionate share of all unpaid distributions and dividends and interest earned
thereon, if applicable. The Trust Agreement provides that the Holding Company may, at its
discretion, offer to purchase such shares at the market price of the Common Stock at the time of
the purchase.
On November 1, 2010 (the Acquisition Date), the Holding Company completed the acquisition of
American Life Insurance Company (American Life), from ALICO Holdings LLC (ALICO Holdings), a
subsidiary of American International Group, Inc. (AIG), and Delaware American Life Insurance
Company (DelAm), from AIG (American Life, together with DelAm, collectively, ALICO) (the
Acquisition) for a total purchase price of $16.4 billion. In anticipation of the Acquisition, in
August 2010, the Holding Company issued 86,250,000 new shares of its Common Stock. In connection
with the financing of the Acquisition, on the Acquisition Date, the Holding Company issued to ALICO
Holdings 78,239,712 new shares of its Common Stock and 6,857,000 shares of its convertible
preferred stock (the Convertible Preferred Stock).
As a result of these Common Stock issuances, as well as withdrawals by Beneficiaries of Trust
Shares, transactions by Beneficiaries under the Purchase and Sale Program and escheatment of
unclaimed Trust Shares, the number of Trust Shares declined to 222,321,295, or 22.6%, of the
outstanding shares of Common Stock at December 31, 2010.
On March 8, 2011, the Holding Company issued 68,570,000 new shares of its Common Stock, the
proceeds of which were used to repurchase and cancel all of the Convertible Preferred Stock. As a
result of this Common Stock issuance, as well as withdrawals by Beneficiaries of Trust Shares,
transactions by Beneficiaries under the Purchase and Sale Program and escheatment of unclaimed
Trust Shares, since December 31, 2010, the number of Trust Shares declined to 219,241,081, or 20.8%
of the outstanding shares of Common Stock at March 23, 2011. Pursuant to the Trust Agreement, the
Trust is eligible to be terminated at the Holding Companys
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discretion, as the Trust Shares constitute less than 25% of the issued and outstanding shares
of Common Stock. The Holding Company has advised the Trustee that it currently has no intention of
voluntarily terminating the Trust.
The Trust Agreement may be amended from time to time by the Trustee, the Custodian, the
Holding Company and Metropolitan Life, without the consent of any Beneficiary, (i) to cure any
ambiguity, correct or supplement any provision therein that may be inconsistent with any other
provision therein, or to make any other provision with respect to matters or questions arising
under the Trust Agreement, which will not be inconsistent with the other provisions of the Trust
Agreement, provided that the action does not adversely affect the Trust Interests of the
Beneficiaries, (ii) to modify, eliminate or add to any provisions of the Trust Agreement to such
extent as will be necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times or to ensure that the Trust will not be
required to register as an investment company under the Investment Company Act of 1940, as amended,
or (iii) to reflect the effect of a merger or consolidation in which the Holding Company is not the
surviving corporation and the other company into which the Holding Company is merged or
consolidated assumes its obligations under the Trust Agreement. The Trust Agreement may also be
amended or provisions thereof waived with the consent of Beneficiaries representing more than
one-half of the Trust Interests, provided that no such amendment or waiver will, without the
consent of each Beneficiary affected thereby, reduce the Trust Interests or otherwise eliminate or
materially postpone the right of any Beneficiary to receive dividends or other distributions or to
make elections under the Purchase and Sale Program or to withdraw Trust Shares.
Beneficiaries will not have any preemptive rights with respect to the Trust Interests. There
is no provision for any sinking fund with respect to the Trust Interests.
The Holding Company pays the Trustee an annual fee of $50,000. In addition, the Holding
Company will reimburse the Trustee for all reasonable out-of-pocket expenses it incurs in the
performance of its duties under the Trust Agreement. However, the Holding Company is not required
to reimburse the Trust or Trustee for the expense of mailing to the Custodian any proxy and other
materials received by the Trustee from persons other than the Holding Company, including mailings
with respect to any Beneficiary Consent Matter. The Holding Company paid to the Trustee $27,651,
$29,385 and $71,539 for out-of-pocket expenses for the years ended December 31, 2010, 2009 and
2008, respectively.
On December 14, 2010, the Holding Company paid an annual dividend of $0.74 per share of its
Common Stock to stockholders of record as of November 9, 2010 for a total of $166 million to the
Beneficiaries. On December 14, 2009, the Holding Company paid an annual dividend of $0.74 per share
of its Common Stock to stockholders of record as of November 09, 2009 for a total of $173 million
to the Beneficiaries.
The Beneficiaries of the Trust are directed to the Holding Companys Annual Report to
Shareholders and the filings of the Holding Company under the Securities Exchange Act of 1934 (the
Exchange Act) for information regarding the Holding Company. See Metropolitan Life Insurance
Company (1999 SEC No-Act. LEXIS 914) (Avail. Nov. 23, 1999). The Trustee does not control the
operations or activities of the Holding Company. The Trustee relies on receiving information,
reports and representations from the Holding Company and the Custodian in the ordinary course of
its business. In executing and submitting this report on behalf of the Trust, the Trustee has
relied upon the accuracy of such reports and representations of the aforementioned entities.
Item 1A. | Risk Factors. |
The Trust has limited resources and is dependent upon the Holding Company.
The Trust was established under the Plan and pursuant to the Trust Agreement in connection
with the conversion of Metropolitan Life from a mutual life insurance company into a stock life
insurance company. The Trust is a single-purpose trust that does not engage in any business or
activity other than voting and holding the Trust Shares and certain closely related activities,
such as distributing cash dividends. The assets of the Trust consist principally of the Trust
Shares. Beneficiaries of the Trust are directed to the Holding Companys Risk Factors set forth in
Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2010, as amended, and as
supplemented by the Risk Factors set forth in the Holding Companys Current Report on Form 8-K
filed on March 1, 2011, and the other Exchange Act filings of the Holding Company for information
regarding certain risks related to the Holding Company that may affect the value of the Trust
Shares.
Beneficiaries do not have legal title to any part of the Trust assets and have only certain
limited rights.
The Trust has legal title over the Trust Shares. The Trust Interests represent undivided
fractional interests in the Trust Shares and other assets of the Trust beneficially owned by a
Trust Beneficiary through the Custodian. A Trust Interest entitles the Beneficiary
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only to certain rights, including the right to: (i) receive dividends distributed upon Trust
Shares; (ii) have Trust Shares withdrawn from the Trust to be sold for cash through the Purchase
and Sale Program; (iii) deposit in the Trust additional shares of Common Stock purchased through
the Purchase and Sale Program; (iv) withdraw Trust Shares; and (v) instruct the Trustee to vote the
Trust Shares on certain matters, each as further described in and limited by the terms of the Trust
Agreement. Voting instructions to the Trustee on any matter not involving a Beneficiary Consent
Matter will not be solicited and, if instructions are received, they will not be binding on the
Trustee. On all matters other than Beneficiary Consent Matters, the Trustee shall vote, assent or
consent the Trust Shares in favor of and in opposition to such matter, or abstain from voting on
such matter, in accordance with the recommendation given by the board of directors of the Holding
Company to its stockholders in respect of the matter, or, if no such recommendation is given, as
directed by the board of directors of the Holding Company.
There is no existing trading market for the Trust Interests and Beneficiaries may transfer their
Trust Interests only in limited circumstances.
There is no existing trading market for the Trust Interests and the Trust Interests have no
market value. Furthermore, Trust Interests may generally be transferred only in the following
situations: (i) from the estate of a deceased Beneficiary to one or more beneficiaries taking by
operation of law or pursuant to testamentary succession; (ii) to the spouse or issue of a
Beneficiary or to an entity selected by a Beneficiary, provided that transfers to such entity are
deductible for federal income, gift and estate tax purposes under §§170, 2055 and 2522 of the
Internal Revenue Code of 1986, as amended, or to a trust established for the exclusive benefit of
one or more of the following: (x) Beneficiaries, (y) individuals described in this clause (ii), or
(z) entities described in this clause (ii); (iii) to a trust established to hold Trust Interests on
behalf of an employee benefit plan; (iv) if the Beneficiary is not a natural person, by operation
of law to the surviving entity upon the merger or consolidation of such Beneficiary into another
entity, to the purchaser of substantially all the assets of such Beneficiary or to the appropriate
persons upon the dissolution, termination or winding up of such Beneficiary; (v) by operation of
law as a consequence of the bankruptcy or insolvency of such Beneficiary or the granting of relief
to such Beneficiary under the Federal bankruptcy laws; or (vi) from a trust holding an insurance
policy or annuity contract on behalf of the insured person under such policy or contract, to those
persons to whom Trust Interests are required to be so transferred pursuant to the terms of such
trust.
The Trust is terminable at any time at the discretion of the Holding Company.
Pursuant to the Trust Agreement, the Trust will be terminated on the 90th day after the date
on which the Trustee receives written notice from the Holding Company, given at the Holding
Companys discretion at any time, that the number of Trust Shares is 25% or less of the number of
issued and outstanding shares of Common Stock. At March 23, 2011, the number of Trust Shares
represented 20.8% of the number of issued and outstanding shares of Common Stock, and thus the
Trust may be terminated at the discretion of the Holding Company. Furthermore, the Trust will
terminate on the 90th day after the date on which the Trustee will
have received notice
from the Holding Company that the number of Trust Shares held by the Trust is equal to 10% or less
of the number of issued and outstanding shares of Common Stock.
Litigation may result in adverse results or other consequences; a representative may be appointed
for certain Beneficiaries in legal proceedings.
It is possible that claims, litigation, unasserted claims probable of assertion,
investigations and proceedings may be commenced in the future, and the Trust could become subject
to investigations and have lawsuits filed or enforcement actions initiated against it which could
adversely affect the results of the Trust or have other consequences.
In any lawsuit or other legal proceeding involving the Trust Interests, a representative may
be appointed to represent Beneficiaries who do not have the legal capacity to represent themselves
or whose addresses are unknown. The outcome of the lawsuit or other legal proceeding will be
binding on Beneficiaries for whom the representative was appointed in the lawsuit or other
proceeding.
Item 1B. | Unresolved Staff Comments. |
Not applicable.
Item 2. | Properties. |
The Trust does not, as of the date of this filing, hold in fee, own, beneficially hold or
lease any physical properties.
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Table of Contents
Part II
Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
No public market exists for the Trust Interests.
Item 6. | Selected Financial Data. |
The following table sets forth selected financial information for the Trust. The financial
information for the years ended December 31, 2010, 2009 and 2008 and at December 31, 2010 and 2009,
has been derived from the Trusts audited financial statements included elsewhere herein. The
financial information for the years ended December 31, 2007 and 2006 and at December 31, 2008, 2007
and 2006 has been derived from the Trusts audited financial statements not included herein. The
following statements of changes in net assets and balance sheet data have been prepared in
conformity with accounting principles generally accepted in the United States of America. The
following information should be read in conjunction with and is qualified entirely by the
information contained in Managements Discussion and Analysis of Financial Condition and Results
of Operations, and the financial statements appearing elsewhere herein.
For the Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Changes in Net Assets Data |
||||||||||||||||||||
Operations: |
||||||||||||||||||||
Net investment income |
$ | 165,579 | $ | 173,466 | $ | 180,305 | $ | 194,176 | $ | 164,414 | ||||||||||
Net realized investment gains |
181,371 | 90,989 | 394,316 | 516,837 | 432,372 | |||||||||||||||
Change in net unrealized investment gains |
1,790,688 | (84,321 | ) | (7,348,282 | ) | (52,050 | ) | 2,007,740 | ||||||||||||
Net increase (decrease) in net assets
resulting from operations |
2,137,638 | 180,134 | (6,773,661 | ) | 658,963 | 2,604,526 | ||||||||||||||
Distributions to holders of Trust Interests |
||||||||||||||||||||
From net investment income |
(165,579 | ) | (173,466 | ) | (180,305 | ) | (194,176 | ) | (164,414 | ) | ||||||||||
From net realized investment gains |
(181,371 | ) | (90,989 | ) | (394,316 | ) | (516,837 | ) | (432,372 | ) | ||||||||||
Total distributions |
(346,950 | ) | (264,455 | ) | (574,621 | ) | (711,013 | ) | (596,786 | ) | ||||||||||
Trust Interests transactions |
||||||||||||||||||||
Cost of Trust Interests issued |
2,421 | 3,040 | 5,239 | 6,491 | 5,474 | |||||||||||||||
Cost of Trust Interests redeemed |
(99,131 | ) | (74,055 | ) | (143,413 | ) | (147,310 | ) | (160,930 | ) | ||||||||||
Cost of Trust Interests escheated or
withdrawn |
(56,145 | ) | (63,904 | ) | (113,765 | ) | (85,675 | ) | (152,229 | ) | ||||||||||
Net decrease in net assets resulting
from Trust Interests transactions |
(152,855 | ) | (134,919 | ) | (251,939 | ) | (226,494 | ) | (307,685 | ) | ||||||||||
Total increase (decrease) in net assets |
1,637,833 | (219,240 | ) | (7,600,221 | ) | (278,544 | ) | 1,700,055 | ||||||||||||
Net assets |
||||||||||||||||||||
Beginning of year |
8,242,125 | 8,461,365 | 16,061,586 | 16,340,130 | 14,640,075 | |||||||||||||||
End of year |
$ | 9,879,958 | $ | 8,242,125 | $ | 8,461,365 | $ | 16,061,586 | $ | 16,340,130 | ||||||||||
At December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(In thousands, except Trust Interest amounts) | ||||||||||||||||||||
Balance Sheet Data |
||||||||||||||||||||
Assets: |
||||||||||||||||||||
Equity securities, at fair value |
$ | 9,879,958 | $ | 8,242,125 | $ | 8,461,365 | $ | 16,061,586 | $ | 16,340,130 | ||||||||||
Other assets |
107,260 | 107,073 | 113,766 | 7,129 | 10,067 | |||||||||||||||
Total assets |
9,987,218 | 8,349,198 | 8,575,131 | 16,068,715 | 16,350,197 | |||||||||||||||
Total liabilities |
107,260 | 107,073 | 113,766 | 7,129 | 10,067 | |||||||||||||||
Net assets |
$ | 9,879,958 | $ | 8,242,125 | $ | 8,461,365 | $ | 16,061,586 | $ | 16,340,130 | ||||||||||
Net assets consist of: |
||||||||||||||||||||
Trust Interests |
$ | 3,219,120 | $ | 3,371,975 | $ | 3,506,893 | $ | 3,758,832 | $ | 3,985,326 | ||||||||||
Net unrealized investment gains |
6,660,838 | 4,870,151 | 4,954,472 | 12,302,754 | 12,354,804 | |||||||||||||||
Net
assets, for 222,321,295;
233,157,716; 242,724,190; 260,655,407;
and 276,904,422 Trust Interests
outstanding, respectively |
$ | 9,879,958 | $ | 8,242,125 | $ | 8,461,365 | $ | 16,061,586 | $ | 16,340,130 | ||||||||||
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At December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(In thousands, except Trust Interest amounts) | ||||||||||||||||||||
Other Data |
||||||||||||||||||||
Trust Interests rollforward: |
||||||||||||||||||||
Trust Interests at January 1, |
233,157,716 | 242,724,190 | 260,655,407 | 276,904,422 | 298,777,053 | |||||||||||||||
Trust Interests issued |
60,142 | 114,850 | 116,363 | 100,817 | 103,485 | |||||||||||||||
Trust Interests redeemed |
(6,956,541 | ) | (5,196,811 | ) | (10,064,054 | ) | (10,337,547 | ) | (11,293,360 | ) | ||||||||||
Trust Interests escheated or withdrawn |
(3,940,022 | ) | (4,484,513 | ) | (7,983,526 | ) | (6,012,285 | ) | (10,682,756 | ) | ||||||||||
Balance at December 31, |
222,321,295 | 233,157,716 | 242,724,190 | 260,655,407 | 276,904,422 | |||||||||||||||
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations. |
For purposes of this discussion, Trust refers to the MetLife Policyholder Trust. Following
this summary is a discussion addressing the results of operations and financial condition of the
Trust for the periods indicated. This discussion should be read in conjunction with Note Regarding
Forward-Looking Statements, Risk Factors, Selected Financial Data and the Trusts financial
statements included elsewhere herein.
This Managements Discussion and Analysis of Financial Condition and Results of Operations may
contain or incorporate by reference information that includes or is based upon forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements give expectations or forecasts of future events. These statements can be
identified by the fact that they do not relate strictly to historical or current facts. They use
words such as anticipate, estimate, expect, project, intend, plan, believe and other
words and terms of similar meaning in connection with a discussion of future operating or financial
performance. In particular, these include statements relating to future actions, expenses, the
outcome of contingencies such as legal proceedings, trends in operations and financial results. Any
or all forward-looking statements may turn out to be wrong. Actual results could differ materially
from those expressed or implied in the forward-looking statements. See Note Regarding
Forward-Looking Statements.
Executive Summary
The Trust was established under the Metropolitan Life Insurance Company (Metropolitan Life)
plan of reorganization (the Plan) and pursuant to the MetLife Policyholder Trust Agreement, dated
as of November 3, 1999, by and among Metropolitan Life, MetLife, Inc. (the Holding Company),
Wilmington Trust Company (not in its individual capacity, but solely as trustee for the Trust, the
Trustee) and ChaseMellon Shareholder Services, L.L.C., as custodian (now known as Mellon Investor
Services LLC, the Custodian), as amended on November 8, 2001 (the Trust Agreement), in
connection with the conversion of Metropolitan Life from a mutual life insurance company to a stock
life insurance company. The Trust is a single-purpose trust that does not engage in any business or
activity other than voting and holding the shares of common stock of MetLife, Inc. issued to the
Trust for the benefit of certain eligible policyholders of Metropolitan Life under the Plan and the
Trust Agreement (the Trust Shares) and certain closely related activities, such as distributing
cash dividends.
Under the Plan and the Trust Agreement, each policyholders membership interest was
extinguished and certain eligible policyholders of Metropolitan Life (the Trust Eligible
Policyholders) received, in exchange for that interest, a number of interests in the Trust (Trust
Interests) equal to the number of shares of common stock of the Holding Company, par value $0.01
per share (the Common Stock), allocated to them in accordance with the Plan. The assets of the
Trust consist principally of the Trust Shares for the benefit of the Trust Eligible Policyholders
and permitted transferees (collectively, the Beneficiaries).
The number of Trust Interests outstanding at December 31, 2010 and 2009 was 222,321,295 and
233,157,716, respectively. The decrease of 10,836,421 in the number of Trust Interests is primarily
attributable to net Trust Interests redeemed and Trust Interests escheated or withdrawn. Net
assets of the Trust consist solely of Trust Shares and will increase or decrease depending upon,
among other things, the movement of Trust Shares into or out of the Trust as directed by the
Beneficiaries.
Results of Operations
Discussion of Results
Year ended December 31, 2010 compared with the year ended December 31, 2009
Net assets in the Trust increased $1,638 million, or 20%, to $9,880 million for the year ended
December 31, 2010 from $8,242 million for the comparable 2009 period. This increase is primarily
due to a change in net unrealized investment gains on the
11
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Trust Shares, partially offset by (i) the impact of withdrawals by Beneficiaries from the Trust, and
(ii) activity under the MetLife, Inc. Purchase and Sale Program (the Purchase and Sale Program).
Net unrealized investment gains, which represent the difference between the fair value and the cost
basis of the Trust Shares, increased $1,791 million from the prior year. A net reduction of
10,836,421 Trust Interests resulted from a decrease of 3,940,022 Trust Interests due to escheatment
of Trust Shares and withdrawals by Beneficiaries from the Trust, and a net decrease of 6,896,399
Trust Interests in connection with issuances and redemptions under the Purchase and Sale Program.
The escheatment of unclaimed cash and Trust Shares represents a substantial part of the Trust
Interests escheated or withdrawn. As part of Metropolitan Lifes demutualization and the Holding
Companys initial public offering, the Holding Company issued shares of its Common Stock to certain
eligible policyholders of Metropolitan Life. Any unclaimed cash and Common Stock become property of
the state of last known residence, as is the case with other types of unclaimed property. The
schedule by which unclaimed property is escheated varies by state, but is generally within three to
five years of abandonment. It is anticipated that the number of Trust Interests will continue to
decrease over time as state dormancy periods expire. Beginning on April 7, 2001, Beneficiaries were
able to withdraw all, but generally, not less than all, of their allocated shares of Common Stock
in the Trust at any time by providing written notice to the Custodian. Net redemptions by
Beneficiaries through the Purchase and Sale Program, and escheatment
of unclaimed cash and Trust Shares and withdrawals by Beneficiaries from the
Trust resulted in a $97 million and $56 million decrease in net assets, respectively, for the year
ended December 31, 2010. Net investment income of $166 million, which consists of dividends
received from the Holding Company on its Common Stock, and net realized investment gains recognized
on the sale of Trust Shares sold in the Purchase and Sale Program of $181 million, were fully
allocated to Beneficiaries.
Year ended December 31, 2009 compared with the year ended December 31, 2008
Net assets in the Trust decreased $219 million, or 3%, to $8,242 million for the year ended
December 31, 2009 from $8,461 million for the comparable 2008 period. This decrease is primarily
due to the impact of withdrawals by Beneficiaries from the Trust, together with (i) a change in net
unrealized investment gains on the Trust Shares, and (ii) activity under the Purchase and Sale
Program. Net unrealized investment gains, which represent the difference between the fair value and
the cost basis of the Trust Shares, decreased $84 million from the prior year. A net reduction of
9,566,474 Trust Interests resulted from a decrease of 4,484,513 Trust Interests due to escheatment
of Trust Shares and withdrawals by Beneficiaries from the Trust, and a net decrease of 5,081,961
Trust Interests in connection with issuances and redemptions under the Purchase and Sale Program.
The escheatment of unclaimed cash and Trust Shares represents a substantial part of the Trust
Interests escheated or withdrawn. As part of Metropolitan Lifes demutualization and the Holding
Companys initial public offering, the Holding Company issued shares of its Common Stock to certain
eligible policyholders of Metropolitan Life. Any unclaimed cash and Common Stock become property of
the state of last known residence, as is the case with other types of unclaimed property. The
schedule by which unclaimed property is escheated varies by state, but is generally within three to
five years of abandonment. It is anticipated that the number of Trust Interests will continue to
decrease over time as state dormancy periods expire. Beginning on April 7, 2001, Beneficiaries were
able to withdraw all, but generally, not less than all, of their allocated shares of Common Stock
in the Trust at any time by providing written notice to the Custodian. Net redemptions by
Beneficiaries through the Purchase and Sale Program, and escheatment
of unclaimed cash and Trust Shares and withdrawals by Beneficiaries from the
Trust resulted in a $71 million and $64 million decrease in net assets, respectively, for the year
ended December 31, 2009. Net investment income of $173 million, which consists of dividends
received from the Holding Company on its Common Stock, and net realized investment gains recognized
on the sale of Trust Shares sold in the Purchase and Sale Program of $91 million, were fully
allocated to Beneficiaries.
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
The Trusts investments in Holding Company securities expose it to changes in equity prices.
The obligations of the Trust are equal to the market value of the equity investments. Therefore,
the Trust has negligible market risk and no further risk management is required.
12
Table of Contents
Item 8. Financial Statements and Supplementary Data.
Index To Financial Statements
Page | ||||
F-1 | ||||
Financial Statements at December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008: |
||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 |
13
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
MetLife Policyholder Trust:
We have audited the accompanying statements of assets and liabilities of the MetLife Policyholder
Trust (the Trust) as of December 31, 2010 and 2009, and the related statements of operations and
changes in net assets for each of the three years in the period ended December 31, 2010. These
financial statements are the responsibility of the Trusts management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Trust is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Trusts internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial
position of the MetLife Policyholder Trust as of December 31, 2010 and 2009, and the results of its
operations and changes in its net assets for each of the three years in the period ended December
31, 2010, in conformity with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
New York, New York
March 25, 2011
March 25, 2011
F-1
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MetLife Policyholder Trust
Statements of Assets and Liabilities
December 31, 2010 and 2009
December 31, 2010 and 2009
(In thousands, except Trust Interests and per Trust Interest amounts)
2010 | 2009 | |||||||
Assets |
||||||||
Equity securities, at estimated fair value (cost, $3,219,120 and $3,371,975, respectively) |
$ | 9,879,958 | $ | 8,242,125 | ||||
Cash and cash equivalents |
36 | 80 | ||||||
Receivable for investments sold |
4,255 | 4,106 | ||||||
Receivable from MetLife, Inc. |
102,969 | 102,887 | ||||||
Total assets |
9,987,218 | 8,349,198 | ||||||
Liabilities |
||||||||
Payable for investments purchased |
36 | 80 | ||||||
Payable for Trust Interests redeemed |
4,255 | 4,106 | ||||||
Dividends payable to Trust Beneficiaries |
102,969 | 102,887 | ||||||
Total liabilities |
107,260 | 107,073 | ||||||
Net assets |
$ | 9,879,958 | $ | 8,242,125 | ||||
Net assets consist of: |
||||||||
Trust Interests |
$ | 3,219,120 | $ | 3,371,975 | ||||
Net unrealized investment gains |
6,660,838 | 4,870,151 | ||||||
Net assets, for 222,321,295 and 233,157,716 Trust Interests outstanding at December 31,
2010 and 2009, respectively |
$ | 9,879,958 | $ | 8,242,125 | ||||
Net asset value, offering price and redemption price per Trust Interest
($9,879,958/222,321,295) and ($8,242,125/233,157,716) Trust Interests at December 31, 2010
and 2009, respectively |
$ | 44.44 | $ | 35.35 | ||||
See accompanying notes to the financial statements.
F-2
Table of Contents
MetLife Policyholder Trust
Statements of Operations
For the Years Ended December 31, 2010, 2009 and 2008
(In thousands)
(In thousands)
2010 | 2009 | 2008 | ||||||||||
Net investment income |
$ | 165,579 | $ | 173,466 | $ | 180,305 | ||||||
Net investment gains (losses) |
||||||||||||
Net realized investment gains |
181,371 | 90,989 | 394,316 | |||||||||
Change in net unrealized investment gains (losses) |
1,790,688 | (84,321 | ) | (7,348,282 | ) | |||||||
Net gains (losses) |
1,972,059 | 6,668 | (6,953,966 | ) | ||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 2,137,638 | $ | 180,134 | $ | (6,773,661 | ) | |||||
See accompanying notes to the financial statements.
F-3
Table of Contents
MetLife Policyholder Trust
Statement of Changes in Net Assets
For the Years Ended December 31, 2010, 2009 and 2008
(In thousands, except Trust Interests amounts)
(In thousands, except Trust Interests amounts)
2010 | 2009 | 2008 | ||||||||||
Operations |
||||||||||||
Net investment income |
$ | 165,579 | $ | 173,466 | $ | 180,305 | ||||||
Net realized investment gains |
181,371 | 90,989 | 394,316 | |||||||||
Change in net unrealized investment gains (losses) |
1,790,688 | (84,321 | ) | (7,348,282 | ) | |||||||
Net increase (decrease) in net assets resulting from operations |
2,137,638 | 180,134 | (6,773,661 | ) | ||||||||
Distributions to holders of Trust Interests |
||||||||||||
From net investment income |
(165,579 | ) | (173,466 | ) | (180,305 | ) | ||||||
From net realized investment gains |
(181,371 | ) | (90,989 | ) | (394,316 | ) | ||||||
Total distributions |
(346,950 | ) | (264,455 | ) | (574,621 | ) | ||||||
Trust Interests transactions |
||||||||||||
Cost of Trust Interests issued |
2,421 | 3,040 | 5,239 | |||||||||
Cost of Trust Interests redeemed |
(99,131 | ) | (74,055 | ) | (143,413 | ) | ||||||
Cost of Trust Interests escheated or withdrawn |
(56,145 | ) | (63,904 | ) | (113,765 | ) | ||||||
Net decrease in net assets resulting from Trust Interests transactions |
(152,855 | ) | (134,919 | ) | (251,939 | ) | ||||||
Total increase (decrease) in net assets |
1,637,833 | (219,240 | ) | (7,600,221 | ) | |||||||
Net assets |
||||||||||||
Beginning of year |
8,242,125 | 8,461,365 | 16,061,586 | |||||||||
End of year |
$ | 9,879,958 | $ | 8,242,125 | $ | 8,461,365 | ||||||
Other information |
||||||||||||
Trust Interests rollforward: |
||||||||||||
Trust Interests at January 1, |
233,157,716 | 242,724,190 | 260,655,407 | |||||||||
Trust Interests issued |
60,142 | 114,850 | 116,363 | |||||||||
Trust Interests redeemed |
(6,956,541 | ) | (5,196,811 | ) | (10,064,054 | ) | ||||||
Trust Interests escheated or withdrawn |
(3,940,022 | ) | (4,484,513 | ) | (7,983,526 | ) | ||||||
Balance at December 31, |
222,321,295 | 233,157,716 | 242,724,190 | |||||||||
See accompanying notes to the financial statements.
F-4
Table of Contents
MetLife Policyholder Trust
Notes to the Financial Statements
1. Significant Accounting Policies
Description of Trust
The MetLife Policyholder Trust (the Trust) was established under the Metropolitan Life
Insurance Company (Metropolitan Life) plan of reorganization (the Plan) and pursuant to the
MetLife Policyholder Trust Agreement, dated as of November 3, 1999, by and among Metropolitan Life,
MetLife, Inc. (the Holding Company), Wilmington Trust Company (not in its individual capacity,
but solely as trustee for the Trust, the Trustee) and ChaseMellon Shareholder Services, L.L.C.,
as custodian (now known as Mellon Investor Services LLC, the Custodian), as amended on November
8, 2001 (the Trust Agreement), in connection with the conversion of Metropolitan Life from a
mutual life insurance company to a stock life insurance company. The Trust is a single-purpose
trust that does not engage in any business or activity other than voting and holding the Trust
Shares (as defined below) and certain closely related activities, such as distributing cash
dividends. The Trust has no employees.
Under the Plan and the Trust Agreement, each policyholders membership interest was
extinguished and certain eligible policyholders of Metropolitan Life (the Trust Eligible
Policyholders) received, in exchange for that interest, a number of interests in the Trust (Trust
Interests) equal to the number of shares of common stock of the Holding Company, par value $0.01
per share (the Common Stock), allocated to them in accordance with the Plan. The assets of the
Trust consist principally of the shares of Common Stock issued to the Trust (the Trust Shares)
for the benefit of the Trust Eligible Policyholders and permitted transferees (collectively, the
Beneficiaries). The Trust Shares are held in the name of the Trustee, on behalf of the Trust,
which has legal title over the Trust Shares. The Beneficiaries do not have legal title to any part
of the assets of the Trust. The Trust Interests represent undivided fractional interests in the
Trust Shares and other assets of the Trust beneficially owned by a Trust Beneficiary through the
Custodian. On April 7, 2000, the date of demutualization of Metropolitan Life, the Holding Company
distributed to the Trust 494,466,664 shares of Common Stock for the benefit of policyholders of
Metropolitan Life. Withdrawals by Beneficiaries of Trust Shares, transactions by Beneficiaries
under the Purchase and Sale Program (as defined below), and escheatment of unclaimed Trust Shares
resulted in a decrease in the number of Trust Shares from 233,157,716 at December 31, 2009 to
222,321,295 at December 31, 2010. See -Termination of the Trust below.
A Trust Interest entitles the Beneficiary to certain rights, including the right to: (i)
receive dividends distributed upon Trust Shares; (ii) have Trust Shares withdrawn from the Trust to
be sold for cash through a purchase and sale program established by the Holding Company pursuant to
the Plan (the Purchase and Sale Program); (iii) deposit in the Trust additional shares of Common
Stock purchased through the Purchase and Sale Program; (iv) withdraw Trust Shares; and (v) instruct
the Trustee to vote the Trust Shares on certain matters, each as further described in and limited
by the terms of the Trust Agreement. The Trustee has no beneficial interest in the Trust Shares.
The Holding Company pays the Trustee an annual fee of $50,000. The Holding Company also
provides the Trustee with minor management and administrative services, the cost of which is not
considered material and, therefore, is not included in these financial statements. In addition, the
Holding Company reimburses the Trustee for all reasonable out-of-pocket expenses it incurs in the
performance of its duties under the Trust Agreement. However, the Holding Company is not required
to reimburse the Trust or Trustee for the expense of mailing to the Custodian any proxy and other
materials received by the Trustee from persons other than the Holding Company, including mailings
with respect to any Beneficiary Consent Matter. The Holding Company paid to the Trustee $27,651,
$29,385 and $71,539 for out-of-pocket expenses for the years ended December 31, 2010, 2009 and
2008, respectively.
Termination of the Trust
On November 1, 2010 (the Acquisition Date), the Holding Company completed the acquisition of
American Life Insurance Company (American Life), from ALICO Holdings LLC (ALICO Holdings), a
subsidiary of American International Group, Inc. (AIG), and Delaware American Life Insurance
Company (DelAm), from AIG (American Life, together with DelAm, collectively, ALICO) (the
Acquisition) for a total purchase price of $16.4 billion. In anticipation of the Acquisition, in
August 2010, the Holding Company issued 86,250,000 new shares of its Common Stock. In connection
with the financing of the Acquisition, on the
F-5
Table of Contents
Acquisition Date, the Holding Company issued to ALICO Holdings 78,239,712 new shares of its
Common Stock and 6,857,000 shares of convertible preferred stock (the Convertible Preferred
Stock).
As a result of the Common Stock issuances described above, as well as withdrawals by
Beneficiaries of Trust Shares, transactions by Beneficiaries under the Purchase and Sale Program
and escheatment of unclaimed Trust Shares, the number of Trust Shares declined to 222,321,295, or
22.6% of the outstanding shares of Common stock as of December 31, 2010. Pursuant to the Trust
Agreement, the Trust is eligible to be terminated at the Holding Companys discretion, as the Trust
Shares constitute 25% or less of the number of issued and outstanding shares of Common Stock. The
Holding Company has advised the Trustee that it currently has no intention of voluntarily
terminating the Trust. Additionally, the Trust will terminate on the 90th day after the date on
which the Trustee will have received notice from the Holding Company that the number of Trust
Shares held by the Trust is equal to 10% or less of the number of issued and outstanding shares of
Common Stock. See Note 5.
Equity Securities
Equity securities are reported at their estimated fair value based on the quoted prices in
active markets that are readily and regularly obtainable. As such, these securities are categorized
as Level 1 in three-level fair value hierarchy in accordance with fair value measurement guidance.
Unrealized investment gains and losses on securities are recorded in the Statements of Operations.
Realized gains and losses on sales of securities are determined on a first-in first-out basis. The
Trust Agreement provides that regular cash dividends, if any, collected or received by the Trustee
with respect to the Trust Shares are to be distributed by the Custodian semi-annually to the
Beneficiaries within 90 days after receipt by the Trustee. Distributions of all other cash
dividends are to be made by the Custodian to the Beneficiaries on the first business day following
the 30th day after the Trust receives the dividends. Alternatively, the Trust Agreement provides
that the Trustee may arrange with the Holding Company for the direct payment by the Holding Company
of such cash dividends to the Beneficiaries. Historically, the Holding Company has used the latter
method. See -Receivable from MetLife, Inc. and Dividends Payable to Trust Beneficiaries. All
security transactions are recorded on a trade date basis.
Cash and Cash Equivalents
The Trust considers all highly liquid investments purchased with an original or remaining
maturity of three months or less at the date of purchase to be cash equivalents.
Receivable from MetLife, Inc. and Dividends Payable to Trust Beneficiaries.
In accordance with the Trust Agreement, the Holding Company distributes cash dividends
directly to the Beneficiaries at the same time as the payment of dividends to the Holding Companys
stockholders. In the event that dividends are undeliverable to the Beneficiaries, the Holding
Company retains such dividends until they are claimed by such Beneficiaries or escheated in
accordance with applicable state law. Cash dividends that have been declared but are undeliverable
to the Beneficiaries and the cash amounts of dividend checks that have not been cashed by the
Beneficiaries have been recorded as a receivable from the Holding Company and a liability of the
Trust to such Beneficiaries.
Income Taxes
As a qualified regulated trust, the Trust is not subject to income taxes to the extent that it
distributes substantially all of its taxable income during each fiscal year.
2. Purchase and Sale Program
Beneficiaries may instruct the program agent for the Purchase and Sale Program to withdraw
their allocated shares from the Trust for sale through the Purchase and Sale Program. Trust
Interests of 6,956,541, 5,196,811 and 10,064,054 for the years ended December 31, 2010, 2009 and
2008, respectively, were redeemed for this purpose. Beneficiaries allocated less than 1,000 shares
of Common Stock under the Plan are also entitled to purchase in the Purchase and Sale Program
additional shares to bring their Trust Interests up to 1,000 shares, subject to a minimum of $250
per purchase (or such lesser amount that would cause the Beneficiary to hold the 1,000 maximum
number of Trust Interests). Trust Interests of 60,142, 114,850 and 116,363 for the years ended
December 31, 2010, 2009 and 2008, respectively, were issued for this purpose. The number of Trust
Interests allocated to Beneficiaries will be adjusted for any shares of Common Stock purchased or
sold in the Purchase and Sale Program such that the Trust Interests held by a Beneficiary will
always equal the number of shares of Common Stock allocated to the Beneficiary.
Beneficiaries may withdraw all, but generally, not less than all, of their allocated shares of
Common Stock at any time by providing written notice to the Custodian.
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3. Commitments and Contingencies
None.
4. Beneficiary Voting Rights
The Trust Agreement provides the Trustee with directions as to the manner in which to vote,
assent or consent the Trust Shares at all times during the term of the Trust. On all matters
brought for a vote before the stockholders of the Holding Company, with the exception of a
Beneficiary Consent Matter (as defined in the Trust Agreement), the Trustee will vote or abstain
from voting in accordance with the recommendation given by the Board of Directors of the Holding
Company to its stockholders or, if no such recommendation is given, as directed by the Board. On
all Beneficiary Consent Matters, the Trustee will vote all of the Trust Shares in favor of, in
opposition to or abstain from the matter in the same ratio as the Trust Interests of the
Beneficiaries that returned voting instructions to the Trustee indicated preferences for voting in
favor of, in opposition to or abstaining from such matter. The Trust Agreement also contains
provisions allowing Beneficiaries to instruct the Custodian to withdraw their allocated Trust
Shares to participate in any tender or exchange offer for the Common Stock and to make any cash or
share election, or perfect any dissenters rights, in connection with a merger of the Holding
Company.
5. Subsequent Events
On March 8, 2011, the Holding Company issued 68,570,000 new shares of its Common Stock, the
proceeds of which were used to repurchase and cancel all of the Convertible Preferred Stock (see
Note 1). As a result of the Common Stock issuance, as well as withdrawals by Beneficiaries of
Trust Shares, transactions by Beneficiaries under the Purchase and Sale Program and escheatment of
unclaimed Trust Shares, the number of Trust Shares declined to 219,241,081, or 20.8% of the
outstanding shares of Common Stock at March 23, 2011.
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
The Trustee, with the participation of Joseph B. Feil, Vice President of Wilmington Trust
Company, the Trustee of the Trust, has evaluated the effectiveness of the design and operation of
the Trusts disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) or
15d-15(e) as of the end of the period covered by this report. Based on that evaluation, Mr. Feil
has concluded that these disclosure controls and procedures are effective.
The Trustee and Mr. Feil, in making these determinations, have relied to the extent reasonable
on information provided by MetLife, Inc. and Mellon Investor Services LLC. There were no changes to
the Trusts internal control over financial reporting as defined in Exchange Act Rule 13a-15(f)
during the quarter ended December 31, 2010 that have materially affected, or are reasonably likely
to materially affect, the Trusts internal control over financial reporting.
Managements Annual Report on Internal Control Over Financial Reporting
The Trustee is responsible for establishing and maintaining adequate internal control over
financial reporting. In fulfilling this responsibility, estimates and judgments by the Trustee are
required to assess the expected benefits and related costs of control procedures. The objectives of
internal control include providing the Trustee with reasonable, but not absolute, assurance that
assets are safeguarded against loss from unauthorized use or disposition, and that transactions are
executed in accordance with the Trustees authorization and recorded properly to permit the
preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America.
The Trustee has documented and evaluated the effectiveness of the internal control of the
Trust at December 31, 2010 pertaining to financial reporting in accordance with the criteria
established in Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
In the opinion of the Trustee, the Trust maintained effective internal control over financial
reporting as of December 31, 2010.
Item 9B. Other Information.
None.
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Part III
Item 10. Directors, Executive Officers and Corporate Governance.
There are no directors, executive officers or employees of the Trust. The Trustee of the Trust
is Wilmington Trust Company. The Custodian of the Trust is Mellon Investor Services LLC, formerly
known as ChaseMellon Shareholder Services, L.L.C.
The Trust has not adopted a code of ethics applicable to its principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing
similar functions because the Trust does not have any such officers.
Item 11. Executive Compensation.
Not applicable.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
There are no directors or executive officers of the Trust. No person is the beneficial owner
of more than five percent of the Trust Interests.
The Trust has no equity compensation plans.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Not applicable.
Item 14. Principal Accountant Fees and Services.
Pursuant to the Trust Agreement, the independent auditor of the Holding Company serves as the
independent auditor of the Trust, and Deloitte & Touche LLP (Deloitte), the Holding Companys
independent auditor, has served as the independent auditor of the Trust since its inception.
Deloitte is a registered public accounting firm with the Public Company Accounting Oversight Board
(United States) (PCAOB) as required by the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the
Rules of the PCAOB. Its knowledge of the Trust has enabled it to carry out its audits of the
Trusts financial statements with effectiveness and efficiency.
Independent Auditors Fees for 2010 and 2009 (1)
2010 | 2009 | |||||||
Audit Fees (2) |
$ | 51,300 | $ | 49,950 | ||||
Audit-Related Fees |
$ | | $ | | ||||
Tax Fees |
$ | | $ | | ||||
All Other Fees |
$ | | $ | |
(1) | All fees shown in the table above related to services that were approved by the Audit Committee of the Holding Company (the Audit Committee). | |
(2) | Audit fees include fees for services to perform an audit in accordance with auditing standards of the PCAOB and services that generally only the Trusts independent auditor can reasonably provide, such as attest services, consents and assistance with and review of documents filed with the U.S. Securities and Exchange Commission (the SEC). |
Approval of Fees
The Trust does not have an audit committee. The Audit Committee approves Deloittes audit and
non-audit services in advance as required under Sarbanes-Oxley and SEC rules. Before the
commencement of each fiscal year, the Audit Committee appoints the independent auditor to perform
audit services that the Holding Company expects to be performed for the fiscal year, including for
the Trust, and appoints the auditor to perform audit-related, tax and other permitted non-audit
services. The Audit Committee or a designated member of the Audit Committee to whom authority has
been delegated may, from time to time, pre-
15
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approve additional audit and non-audit services to be performed by the Holding Companys
independent auditor. Any pre-approval of services between Audit Committee meetings must be reported
to the full Audit Committee at its next scheduled meeting.
If the audit, audit-related, tax and other permitted non-audit fees for a particular period or
service exceed the amounts previously approved, the Audit Committee determines whether or not to
approve the additional fees.
Based on this information, the Audit Committee pre-approves the audit services that the
Holding Company expects to be performed by the independent auditor in connection with the audit of
the financial statements of the Holding Company and its subsidiaries, as well as the Trust, for the
current fiscal year, and the audit-related, tax and other permitted non-audit services that
management of the Holding Company may desire to engage the independent auditor to perform during
the twelve month period following such pre-approval. In addition, the Audit Committee approves the
terms of the engagement letter to be entered into by the Holding Company with the independent
auditor. The Audit Committee assures the regular rotation of the audit engagement team partners as
required by law.
Part IV
Item 15. Exhibits and Financial Statement Schedules.
The following documents are filed as part of this report:
1. | Financial Statements | ||
The financial statements are listed in the Index to Financial Statements on page 13. | |||
2. | Financial Statement Schedules | ||
Not applicable. | |||
3. | Exhibits | ||
The exhibits are listed in the Exhibit Index on page E-1. |
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
METLIFE POLICYHOLDER TRUST |
||||
By: | Wilmington Trust Company, not in its individual capacity, but solely as trustee for the Trust |
|||
By: | /s/ Joseph B. Feil | |||
Name: | Joseph B. Feil | |||
Title: | Vice President | |||
Date: March 25, 2011
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Exhibit Index
(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included
as exhibits to this Annual Report on Form 10-K, please remember that they are included to provide
you with information regarding their terms and are not intended to provide any other factual or
disclosure information about the MetLife Policyholder Trust or the other parties to the agreements.
The agreements contain representations and warranties by each of the parties to the applicable
agreement. These representations and warranties have been made solely for the benefit of the other
parties to the applicable agreement and (i) should not in all instances be treated as categorical
statements of fact, but rather as a way of allocating the risk to one of the parties if those
statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the
other party in connection with the negotiation of the applicable agreement, which disclosures are
not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that
is different from what may be viewed as material to investors; and (iv) were made only as of the
date of the applicable agreement or such other date or dates as may be specified in the agreement
and are subject to more recent developments. Accordingly, these representations and warranties may
not describe the actual state of affairs as of the date they were made or at any other time.
Additional information about the MetLife Policyholder Trust may be found elsewhere in this Annual
Report on Form 10-K and its other public filings, which are available without charge through the
SECs website at www.sec.gov.)
Exhibit No. | Description | |||||
3.1 |
|
MetLife Policyholder Trust Agreement (Incorporated by reference to Exhibit 10.12 to MetLife, Inc.s Registration Statement on Form S-1 (File No. 333-91517) (the S-1 Registration Statement)). | ||||
3.2 |
|
Amendment to MetLife Policyholder Trust Agreement (Incorporated by reference to the MetLife Policyholder Trusts Annual Report on Form 10-K for the fiscal year ended December 31, 2007). | ||||
4.1 |
|
Amended and Restated Certificate of Incorporation of MetLife, Inc. (Incorporated by reference to Exhibit 3.1 to MetLife, Inc.s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the 2006 Annual Report)). | ||||
4.2 |
|
Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of MetLife, Inc., filed with the Secretary of State of Delaware on April 7, 2000 (Incorporated by reference to Exhibit 3.2 to the 2006 Annual Report). | ||||
4.3 |
|
Certificate of Designations of Floating Rate Non-Cumulative Preferred Stock, Series A, of MetLife, Inc., filed with the Secretary of State of Delaware on June 10, 2005 (Incorporated by reference to Exhibit 99.5 to MetLife, Inc.s Registration Statement on Form 8-A filed on June 10, 2005). | ||||
4.4 |
|
Certificate of Designations of 6.50% Non-Cumulative Preferred Stock, Series B, of MetLife, Inc., filed with the Secretary of State of Delaware on June 14, 2005 (Incorporated by reference to Exhibit 99.5 to MetLife, Inc.s Registration Statement on Form 8-A filed on June 15, 2005). | ||||
4.5 |
|
Certificate of Designations of Series B Contingent Convertible Junior Participating Non-Cumulative Perpetual Preferred Stock, filed with the Secretary of State of Delaware on October 27, 2010 (Incorporated by reference to Exhibit 3.1 to MetLife, Inc.s Current Report on Form 8-K dated October 27, 2010). | ||||
4.6 |
|
MetLife, Inc. Amended and Restated By-laws, effective January 26, 2010 (Incorporated by reference to Exhibit 3.6 to MetLife, Inc.s Annual Report on Form 10-K for the fiscal year ended December 31, 2010). | ||||
4.7 |
|
Form of Certificate of Common Stock, par value $0.01 per share (Incorporated by reference to Exhibit 4.1 to the S-1 Registration Statement). | ||||
31.1 |
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||
32.1 |
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
E-1