Exhibit 99.1
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Unaudited Pro Forma Condensed Financial Statements
On December 1, 2016, Metropolitan Life Insurance Company paid a dividend of all the issued and outstanding shares of common stock of its wholly-owned subsidiaries, General American Life Insurance Company (“GALIC”) and New England Life Insurance Company (“NELICO”) to MetLife, Inc. (the “Dividends”).
The unaudited pro forma condensed financial statements and accompanying notes present the impact of the Dividends on the historical condensed consolidated financial statements of Metropolitan Life Insurance Company and its subsidiaries (collectively, “MLIC” or the “Company”). When the discontinued operations criteria are met, the Company reports financial results for such operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. The Dividends do not qualify for discontinued operations reporting as the transaction does not represent a strategic shift that will have a major effect on the Company’s operations or financial results.
The unaudited pro forma condensed financial statements include historical unaudited amounts as of September 30, 2016 and for the nine months ended September 30, 2016 and audited amounts for the year ended December 31, 2015 for MLIC, GALIC and NELICO. The unaudited pro forma condensed financial statements give effect to the Dividends as if they had occurred (i) on September 30, 2016 for purposes of the unaudited pro forma condensed balance sheet and (ii) on January 1, 2015 for purposes of the unaudited pro forma condensed statements of operations for the nine months ended September 30, 2016 and for the year ended December 31, 2015. The historical financial information has been adjusted in the unaudited pro forma condensed financial statements to give effect to pro forma events that are directly attributable to the Dividends, factually supportable, and are expected to have a continuing impact on the results.
The unaudited pro forma condensed financial statements, filed as Exhibit 99.1 to the Current Report on Form 8-K, should be read in conjunction with the accompanying notes. In addition, the unaudited pro forma condensed financial statements were derived from and should be read in conjunction with the historical unaudited interim condensed consolidated financial statements of MLIC included in MLIC’s quarterly report on Form10-Q for the nine months ended September 30, 2016 and the historical audited consolidated financial statements of MLIC included in MLIC’s annual report on Form10-K for the year ended December 31, 2015, as revised by MLIC’s current report on Form 8-K filed on December 1, 2016.
The unaudited pro forma condensed financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the Company that would have resulted had the Dividends been effective as of and during the periods presented or the results that may be obtained by the Company in the future. The unaudited pro forma condensed financial statements as of and for the periods presented do not reflect future events that are not directly attributable to the Dividends and that may occur after the Dividends. Future results may vary significantly from the results reflected in the unaudited pro forma condensed financial statements.
1
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Unaudited Pro Forma Condensed Balance Sheet
September 30, 2016
(In millions, except per share data)
| Historical | ||||||||||||||||||||||||
| MLIC | GALIC | NELICO | Adjustments | Notes | MLIC Pro Forma | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||
Fixed maturity securities available-for-sale, at estimated fair value | $ | 186,645 | ($ | 8,167 | ) | ($ | 1,814 | ) | $ | — | $ | 176,664 | ||||||||||||
Equity securities available-for-sale, at estimated fair value | 1,907 | (53 | ) | — | — | 1,854 | ||||||||||||||||||
Trading and fair value option securities, at estimated fair value | 23 | — | — | — | 23 | |||||||||||||||||||
Mortgage loans | 55,238 | (858 | ) | (79 | ) | — | 54,301 | |||||||||||||||||
Policy loans | 8,048 | (1,689 | ) | (421 | ) | — | 5,938 | |||||||||||||||||
Real estate and real estate joint ventures | 6,556 | (54 | ) | — | — | 6,502 | ||||||||||||||||||
Other limited partnership interests | 3,943 | (180 | ) | (3 | ) | — | 3,760 | |||||||||||||||||
Short-term investments, principally at estimated fair value | 5,734 | (131 | ) | (16 | ) | 30 | 3(a) | 5,617 | ||||||||||||||||
Other invested assets | 19,869 | (221 | ) | (31 | ) | (30 | ) | 3(a) | 19,587 | |||||||||||||||
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Total investments | 287,963 | (11,353 | ) | (2,364 | ) | — | 274,246 | |||||||||||||||||
Cash and cash equivalents, principally at estimated fair value | 4,176 | (216 | ) | (11 | ) | — | 3,949 | |||||||||||||||||
Accrued investment income | 2,278 | (96 | ) | (28 | ) | — | 2,154 | |||||||||||||||||
Premiums, reinsurance and other receivables | 26,339 | (2,902 | ) | (1,357 | ) | 440 | 3(a) | 22,520 | ||||||||||||||||
Deferred policy acquisition costs and value of business acquired | 5,529 | (494 | ) | (556 | ) | (37 | ) | 3(a) | 4,442 | |||||||||||||||
Current income tax recoverable | — | (18 | ) | (8 | ) | 26 | 3(b) | — | ||||||||||||||||
Other assets | 4,455 | (138 | ) | (21 | ) | — | 4,296 | |||||||||||||||||
Separate account assets | 144,162 | (832 | ) | (7,826 | ) | — | 135,504 | |||||||||||||||||
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Total assets | $ | 474,902 | ($ | 16,049 | ) | ($ | 12,171 | ) | $ | 429 | $ | 447,111 | ||||||||||||
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Liabilities and Equity | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Future policy benefits | $ | 123,356 | $ | (6,077 | ) | $ | (734 | ) | $ | 287 | 3(a) | $ | 116,832 | |||||||||||
Policyholder account balances | 98,125 | (5,338 | ) | (1,295 | ) | — | 91,492 | |||||||||||||||||
Other policy-related balances | 7,404 | (251 | ) | (329 | ) | 3 | 3(a) | 6,827 | ||||||||||||||||
Policyholder dividends payable | 666 | (88 | ) | (3 | ) | 3 | 3(a) | 578 | ||||||||||||||||
Policyholder dividend obligation | 3,352 | — | — | — | 3,352 | |||||||||||||||||||
Payables for collateral under securities loaned and other transactions | 23,635 | (492 | ) | (12 | ) | — | 23,131 | |||||||||||||||||
Short-term debt | 100 | — | — | — | 100 | |||||||||||||||||||
Long-term debt | 1,661 | (104 | ) | — | — | 1,557 | ||||||||||||||||||
Current income tax payable | 65 | — | — | 26 | 3(b) | 91 | ||||||||||||||||||
Deferred income tax liability | 4,856 | (258 | ) | (162 | ) | (13 | ) | 3(d) | 4,423 | |||||||||||||||
Other liabilities | 34,529 | (785 | ) | (484 | ) | 147 | 3(a) | 33,407 | ||||||||||||||||
Separate account liabilities | 144,162 | (832 | ) | (7,826 | ) | — | 135,504 | |||||||||||||||||
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Total liabilities | 441,911 | (14,225 | ) | (10,845 | ) | 453 | 417,294 | |||||||||||||||||
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Equity | ||||||||||||||||||||||||
Metropolitan Life Insurance Company stockholder’s equity: | ||||||||||||||||||||||||
Common stock, par value $0.01 per share | 5 | (3 | ) | (3 | ) | 6 | 3(c) | 5 | ||||||||||||||||
Additional paid-in capital | 14,375 | (853 | ) | (453 | ) | 1,306 | 3(c) | 14,375 | ||||||||||||||||
Retained earnings | 11,599 | (499 | ) | (799 | ) | (1,336 | ) | 3(c), (d) | 8,965 | |||||||||||||||
Accumulated other comprehensive income (loss) | 6,852 | (469 | ) | (71 | ) | — | 6,312 | |||||||||||||||||
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Total stockholder’s equity | 32,831 | (1,824 | ) | (1,326 | ) | (24 | ) | 29,657 | ||||||||||||||||
Noncontrolling interests | 160 | — | — | — | 160 | |||||||||||||||||||
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Total equity | 32,991 | (1,824 | ) | (1,326 | ) | (24 | ) | 29,817 | ||||||||||||||||
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Total liabilities and equity | $ | 474,902 | ($ | 16,049 | ) | ($ | 12,171 | ) | $ | 429 | $ | 447,111 | ||||||||||||
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See accompanying notes to unaudited pro forma condensed financial statements.
2
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Unaudited Pro Forma Condensed Statement of Operations
For the Nine Months Ended September 30, 2016
(In millions)
| Historical | ||||||||||||||||||||||||
| MLIC | GALIC | NELICO | Adjustments | Notes | MLIC Pro Forma | |||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Premiums | $ | 16,801 | ($ | 553 | ) | ($ | 31 | ) | $ | 1 | 3 | (a) | $ | 16,218 | ||||||||||
Universal life and investment-type product policy fees | 1,928 | (49 | ) | (190 | ) | (1 | ) | 3 | (a) | 1,688 | ||||||||||||||
Net investment income | 8,349 | (361 | ) | (81 | ) | (11 | ) | 3 | (a) | 7,896 | ||||||||||||||
Other revenues | 1,121 | (6 | ) | 9 | — | 1,124 | ||||||||||||||||||
Net investment gains (losses): | ||||||||||||||||||||||||
Other-than-temporary impairments on fixed maturity securities | (66 | ) | 3 | — | — | (63 | ) | |||||||||||||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss) | (9 | ) | — | — | — | (9 | ) | |||||||||||||||||
Other net investment gains (losses) | 190 | 2 | 1 | — | 193 | |||||||||||||||||||
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Total net investment gains (losses) | 115 | 5 | 1 | — | 121 | |||||||||||||||||||
Net derivative gains (losses) | (562 | ) | 88 | (48 | ) | — | (522 | ) | ||||||||||||||||
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Total revenues | 27,752 | (876 | ) | (340 | ) | (11 | ) | 26,525 | ||||||||||||||||
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Expenses | ||||||||||||||||||||||||
Policyholder benefits and claims | 19,019 | (630 | ) | (82 | ) | 7 | 3 | (a) | 18,314 | |||||||||||||||
Interested credited to policyholder account balances | 1,675 | (98 | ) | (26 | ) | (11 | ) | 3 | (a) | 1,540 | ||||||||||||||
Policyholder dividends | 924 | (114 | ) | (4 | ) | 3 | 3 | (a) | 809 | |||||||||||||||
Other expenses | 4,450 | (107 | ) | (118 | ) | 19 | 3 | (a) | 4,244 | |||||||||||||||
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Total expenses | 26,068 | (949 | ) | (230 | ) | 18 | 24,907 | |||||||||||||||||
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Income (loss) before provision for income tax | 1,684 | 73 | (110 | ) | (29 | ) | 1,618 | |||||||||||||||||
Provision for income tax expense (benefit) | 232 | 29 | (27 | ) | (11 | ) | 3 | (d) | 223 | |||||||||||||||
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Net income (loss) | 1,452 | 44 | (83 | ) | (18 | ) | 1,395 | |||||||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | (9 | ) | — | — | — | (9 | ) | |||||||||||||||||
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Net income (loss) attributable to Metropolitan Life Insurance Company | $ | 1,461 | $ | 44 | ($ | 83 | ) | ($ | 18 | ) | $ | 1,404 | ||||||||||||
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See accompanying notes to unaudited pro forma condensed financial statements.
3
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Unaudited Pro Forma Condensed Statement of Operations
For the Year End December 31, 2015
(In millions)
| Historical | Adjustments | Notes | MLIC Pro Forma | |||||||||||||||||||||
| MLIC | GALIC | NELICO | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Premiums | $ | 21,934 | ($ | 687 | ) | ($ | 43 | ) | $ | 1 | 3 | (a) | $ | 21,205 | ||||||||||
Universal life and investment-type product policy fees | 2,584 | (76 | ) | (259 | ) | (1 | ) | 3 | (a) | 2,248 | ||||||||||||||
Net investment income | 11,577 | (507 | ) | (110 | ) | (13 | ) | 3 | (a) | 10,947 | ||||||||||||||
Other revenues | 1,536 | (6 | ) | 9 | — | 1,539 | ||||||||||||||||||
Net investment gains (losses): | ||||||||||||||||||||||||
Other-than-temporary impairments on fixed maturity securities | (49 | ) | 1 | — | — | (48 | ) | |||||||||||||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss) | (5 | ) | 1 | — | — | (4 | ) | |||||||||||||||||
Other net investment gains (losses) | 313 | 6 | (2 | ) | — | 317 | ||||||||||||||||||
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Total net investment gains (losses) | 259 | 8 | (2 | ) | — | 265 | ||||||||||||||||||
Net derivative gains (losses) | 881 | (219 | ) | (56 | ) | — | 606 | |||||||||||||||||
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Total revenues | 38,771 | (1,487 | ) | (461 | ) | (13 | ) | 36,810 | ||||||||||||||||
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Expenses | ||||||||||||||||||||||||
Policyholder benefits and claims | 24,527 | (763 | ) | (120 | ) | 8 | 3 | (a) | 23,652 | |||||||||||||||
Interested credited to policyholder account balances | 2,183 | (133 | ) | (34 | ) | (13 | ) | 3 | (a) | 2,003 | ||||||||||||||
Policyholder dividends | 1,264 | (140 | ) | (6 | ) | 4 | 3 | (a) | 1,122 | |||||||||||||||
Other expenses | 6,258 | (153 | ) | (95 | ) | 1 | 3 | (a) | 6,011 | |||||||||||||||
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Total expenses | 34,232 | (1,189 | ) | (255 | ) | — | 32,788 | |||||||||||||||||
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Income (loss) before provision for income tax | 4,539 | (298 | ) | (206 | ) | (13 | ) | 4,022 | ||||||||||||||||
Provision for income tax expense (benefit) | 1,782 | (103 | ) | (59 | ) | (5 | ) | 3 | (d) | 1,615 | ||||||||||||||
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Net income (loss) | 2,757 | (195 | ) | (147 | ) | (8 | ) | 2,407 | ||||||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | — | — | — | — | — | |||||||||||||||||||
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Net income (loss) attributable to Metropolitan Life Insurance Company | $ | 2,757 | ($ | 195 | ) | ($ | 147 | ) | ($ | 8 | ) | $ | 2,407 | |||||||||||
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See accompanying notes to unaudited pro forma condensed financial statements.
4
Metropolitan Life Insurance Company
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Unaudited Pro Forma Condensed Financial Statements
1. Description of Transaction
On December 1, 2016, Metropolitan Life Insurance Company paid a dividend of all the issued and outstanding shares of common stock of its wholly-owned subsidiaries, General American Life Insurance Company (“GALIC”) and New England Life Insurance Company (“NELICO”) to MetLife, Inc. (the “Dividends”).
2. Basis of Presentation
The unaudited pro forma condensed financial statements and accompanying notes present the impact of the Dividends on the historical condensed consolidated financial statements of Metropolitan Life Insurance Company and its subsidiaries (collectively, “MLIC” or the “Company”). The unaudited pro forma condensed financial statements include historical amounts derived from the unaudited amounts as of September 30, 2016 and for the nine months ended September 30, 2016 and the audited financial statements for the year ended December 31, 2015 for MLIC, GALIC and NELICO. The unaudited pro forma condensed financial statements give effect to the Dividends as if they had occurred (i) on September 30, 2016 for purposes of the unaudited pro forma condensed balance sheet and (ii) on January 1, 2015 for purposes of the unaudited pro forma condensed statements of operations for the nine months ended September 30, 2016 and for the year ended December 31, 2015.
The unaudited pro forma condensed financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and presented in accordance with the requirements of Article 11 of Regulation S-X published by the U.S. Securities and Exchange Commission.
The historical financial information has been adjusted in the unaudited pro forma condensed financial statements to give effect to pro forma events that are directly attributable to the Dividends, factually supportable, and are expected to have a continuing impact on the results. The unaudited pro forma condensed financial statements exclude the effects of adjustments that rely on highly judgmental estimates including how historical management practices and operating decisions may or may not have changed as a result of the Dividends.
The unaudited pro forma condensed financial statements are presented for informational purposes only and are not intended to reflect the results of operations or the financial position of the Company that would have resulted had the Dividends been effective during the periods presented or the results that may be obtained by the Company in the future.
3. Adjustments
The following pro forma adjustments have been recorded in the unaudited pro forma condensed financial statements.
| (a) | Adjustment to MLIC for invested asset transfers, reinsurance and service agreement related party transactions entered into with GALIC and NELICO. |
| (b) | Adjustment to net current income tax recoverable with current income tax payable to conform to the presentation of MLIC’s financial statements. |
| (c) | Adjustment to stockholder’s equity for the dividend of subsidiaries. |
| (d) | Adjustment for the income tax impact for certain adjustments at the federal statutory tax rate of 35%. |
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