8-KMaterial Agreements

METLIFE INC 8-K Report, Agreement Terminated (Oct 2, 2008)

Filed October 2, 2008For Securities:METMET-PEMET-PFMET-PA

Summary

MetLife Inc. (MET) has filed an 8-K report detailing the termination of significant asbestos indemnity insurance policies. On September 29, 2008, its subsidiary, Metropolitan Life Insurance Company (MLIC), entered into termination agreements for three policies with affiliates of Swiss Re and American International Group, Inc. These policies provided coverage for asbestos-related claims up to $1.5 billion above a $400 million self-insured retention. The termination resulted in MLIC receiving securities valued at approximately $115 million on September 26, 2008, and is expected to receive the remaining approximately $600 million in cash by January 30, 2009. Despite the substantial recovery, MLIC will recognize a net loss of $22.9 million for the three months ended September 30, 2008, related to this commutation. This event represents a conclusion to these specific asbestos liability exposures for MetLife.

Key Highlights

  • 1MetLife's subsidiary, MLIC, terminated three material definitive agreements related to excess asbestos indemnity insurance policies.
  • 2The terminated policies provided coverage for asbestos-related claims with a limit of $1.5 billion above a $400 million self-insured retention.
  • 3MLIC received approximately $115 million in securities as an initial payment upon termination.
  • 4An additional approximately $600 million in cash is expected to be received by MLIC on or before January 30, 2009.
  • 5MetLife will recognize a net loss of $22.9 million, after tax, in the third quarter of 2008 due to the termination.
  • 6The termination agreements were effective as of September 30, 2008.
  • 7The counterparties to the terminated policies were affiliates of Swiss Re and American International Group, Inc.

Frequently Asked Questions

The terminated policies were Excess Asbestos Indemnity Insurance Policies that provided MetLife's subsidiary, MLIC, with coverage for asbestos-related claims exceeding a $400 million self-insured retention, up to a total of $1.5 billion.

MetLife will recognize a net loss of $22.9 million, after income tax, in the three months ended September 30, 2008, due to this termination. However, the company will receive a significant amount of cash and securities.

MetLife, through its subsidiary MLIC, received approximately $115 million in securities and expects to receive the remaining approximately $600 million in cash by January 30, 2009, for a total recovery of around $715 million.

The insurance providers were affiliates of Swiss Re (Stockwood Reinsurance Company, Ltd. and European Reinsurance Corporation of America) and American International Group, Inc. (Granite State Insurance Company).