Summary
MetLife, Inc. (MET) has filed an 8-K report detailing a significant non-cash charge expected to impact its third quarter 2015 financial results. The company anticipates recording a charge of $792 million after-tax, translating to $0.70 per share, primarily related to the tax treatment of a U.K. investment subsidiary. This charge stems from the disallowance of foreign tax credits claimed for tax years 2000-2009, influenced by recent U.S. Court of Appeals decisions concerning similar tax disputes. While this charge impacts operating earnings and net income, it is a non-cash event and MetLife continues to contest the IRS's position on the disallowance of these foreign tax credits. The company has stated that it does not expect further charges related to this specific matter after this Q3 recognition. The charge will have a modest impact on statutory results and is expected to reduce the dividends permitted to be paid by MLIC to MetLife by approximately $90 million in 2016. Despite this charge, MetLife maintains its belief in the merits of its tax position.
Key Highlights
- 1MetLife Inc. expects a non-cash charge of $792 million (after-tax) for Q3 2015, impacting earnings per share by $0.70.
- 2The charge is related to the tax treatment of a wholly-owned U.K. investment subsidiary and the disallowance of foreign tax credits for tax years 2000-2009.
- 3Recent U.S. Court of Appeals decisions influenced MetLife's decision to reserve fully for this matter under accounting guidance.
- 4MetLife is contesting the IRS's disallowance of foreign tax credits and believes its position is strongly supported.
- 5This is a non-cash charge and does not reflect a change in the company's operational performance or cash position.
- 6The charge is expected to reduce MLIC's permitted dividends to MetLife by approximately $90 million in 2016.
- 7The company does not anticipate any further charges related to this specific tax issue after the Q3 recognition.