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
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 The escheatment of unclaimed cash and Trust Shares represents a substantial part of the Trust Interests escheated or withdrawn.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 Life’s demutualization and the Holding Company’s 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.
Financial Statements at December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009 and 2008:
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.
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 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 Company’s 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.
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.