Summary
MetLife Inc. (MET) filed a Form 8-K on May 23, 2012, to report the retrospective impact of three significant accounting and organizational changes on its previously filed 2011 Annual Report. These changes include the adoption of new accounting guidance for deferred policy acquisition costs (DAC), a reorganization of its business into three broad geographic regions, and the adoption of new guidance for comprehensive income reporting. Investors should note that these adjustments affect prior financial statements and disclosures, requiring a re-evaluation of historical performance metrics. The most material change for investors likely pertains to the new DAC accounting, which tightens capitalization rules, meaning fewer acquisition-related costs will be deferred and more will be expensed. This could impact reported profitability and the trend of capitalized costs. The business reorganization and comprehensive income reporting changes are primarily for internal alignment and enhanced financial statement transparency, respectively, but also contribute to the need for careful review of revised financial data. Investors are advised to consult the revised sections of the 2011 Annual Report, provided as Exhibit 99.1 to this 8-K, for detailed impacts.
Key Highlights
- 1MetLife is retrospectively applying new accounting guidance for Deferred Policy Acquisition Costs (DAC), impacting its 2011 financial statements.
- 2The revised DAC accounting limits capitalization to costs directly related to successful contract acquisition, expensing other costs as incurred.
- 3MetLife has reorganized its business into three broad geographic regions (The Americas, Asia, EMEA) and six reporting segments, effective Q1 2012, with prior periods restated.
- 4The company adopted new accounting guidance for comprehensive income, presenting it in a two-statement approach for annual reports.
- 5These changes necessitate revisions to multiple sections of MetLife's 2011 Annual Report on Form 10-K, including Business, Selected Financial Data, and Management's Discussion and Analysis.
- 6Revised sections of the 2011 Annual Report are filed as Exhibit 99.1 to this 8-K and supersede the original disclosures for the areas affected.
- 7This 8-K filing does not purport to update the 2011 Annual Report for events or trends occurring after December 31, 2011, beyond the accounting and organizational changes described.