The number of Trust Interests outstanding at December 31, 2014 and 2013 was 180,481,253 and 190,935,381, respectively. The decrease of 10,454,128 in the number of Trust Interests is primarily attributable to Trust Interests redeemed, Trust Interests withdrawn and Trust Interests escheated. Net assets of the Trust consist solely of Trust Shares which will increase or decrease depending upon, among other things, the movement of Trust Shares into or out of the Trust as directed by the Beneficiaries.
Net assets in the Trust decreased $533 million, or 5%, to $9.8 billion at December 31, 2014 from $10.3 billion at December 31, 2013. This decrease is primarily due to a decrease in net unrealized investment gains on the Trust Shares, as well as (i) net activity under the MetLife, Inc. Purchase and Sale Program (the “Purchase and Sale Program”); (ii) the impact of withdrawals by Beneficiaries from the Trust; and (iii) the impact of escheatment of unclaimed cash and Trust Shares. Net unrealized investment gains, which represent the difference between the estimated fair value and the cost basis of the Trust Shares, decreased $387 million from the prior year. A net reduction of 10,454,128 Trust Interests resulted from a net decrease of 6,991,532 Trust Interests in connection with redemptions and issuances under the Purchase and Sale Program, a decrease of 1,449,324 Trust Interests due to withdrawals by Beneficiaries from the Trust, and a decrease of 2,013,272 Trust Interests due to escheatment of Trust Shares. Net redemptions by Beneficiaries through the Purchase and Sale Program, withdrawals by Beneficiaries from the Trust and escheatment of unclaimed cash and Trust Shares, resulted in decreases in net assets for the year ended December 31, 2014 of $96 million, $21 million and $29 million, respectively. Net investment income of $246 million, which consisted of Common Stock dividends received from MetLife, Inc., and net realized investment gains of $274 million recognized on the sale of Trust Shares sold in the Purchase and Sale Program, were fully allocated to Beneficiaries.
Net assets in the Trust increased $3.6 billion, or 54%, to $10.3 billion at December 31, 2013 from $6.7 billion at December 31, 2012. This increase is primarily due to an increase in net unrealized investment gains on the Trust Shares, partially offset by (i) net activity under the Purchase and Sale Program; (ii) the impact of withdrawals by Beneficiaries from the Trust; and (iii) the impact of escheatment of unclaimed cash and Trust Shares. Net unrealized investment gains, which represent the difference between the estimated fair value and the cost basis of the Trust Shares, increased $3.8 billion from the prior year. A net reduction of 11,399,908 Trust Interests resulted from a net decrease of 9,008,998 Trust Interests in connection with redemptions and issuances under the Purchase and Sale Program, a decrease of 1,386,290 Trust Interests due to withdrawals by Beneficiaries from the Trust, and a decrease of 1,004,620 Trust Interests due to escheatment of Trust Shares. Net redemptions by Beneficiaries through the Purchase and Sale Program, withdrawals by Beneficiaries from the Trust and escheatment of unclaimed cash and Trust Shares, resulted in decreases in net assets for the year ended December 31, 2013 of $126 million, $20 million and $14 million, respectively. Net investment income of $198 million, which consisted of Common Stock dividends received from MetLife, Inc., and net realized investment gains of $268 million recognized on the sale of Trust Shares sold in the Purchase and Sale Program, were fully allocated to Beneficiaries.
Under the Plan and the Trust Agreement, each policyholder’s membership interest was extinguished and certain eligible policyholders of Metropolitan Life (the “Trust Eligible Policyholders”) received, in exchange for that interest, a number of interests in the Trust (“Trust Interests”) equal to the number of shares of common stock of MetLife, Inc., par value $0.01 per share (the “Common Stock”), allocated to them in accordance with the Plan. The assets of the Trust consist principally of the shares of Common Stock issued to the Trust (the “Trust Shares”) for the benefit of the Trust Eligible Policyholders and permitted transferees (collectively, the “Beneficiaries”). The Trust Shares are held in the name of the Trustee, on behalf of the Trust, which has legal title over the Trust Shares. The Beneficiaries do not have legal title to any part of the assets of the Trust. The Trust Interests represent undivided fractional interests in the Trust Shares and other assets of the Trust beneficially owned by a Trust Beneficiary through the Custodian. On April 7, 2000, the date of demutualization of Metropolitan Life, MetLife, Inc. distributed to the Trust 494,466,664 shares of Common Stock for the benefit of policyholders of Metropolitan Life. Withdrawals by Beneficiaries of Trust Shares, transactions by Beneficiaries under the Purchase and Sale Program (as defined below), and escheatment of unclaimed Trust Shares resulted in a net decrease in the number of Trust Shares from 190,935,381 at December 31, 2013 to 180,481,253 at December 31, 2014. See “- Termination of the Trust.”
In November 2010, in connection with the financing of the acquisition of American Life Insurance Company and Delaware American Life Insurance Company, MetLife, Inc. issued 40.0 million common equity units which consisted, in part, of three series of stock purchase contracts obligating the holders to purchase, on each of three future settlement dates, a variable number of shares of Common Stock for a fixed price. In October 2014, September 2013 and October 2012, MetLife, Inc. issued 22.9 million, 22.7 million and 28.2 million new shares of its Common Stock, respectively, to settle the three series of the stock purchase contracts. No additional shares of Common Stock are issuable by MetLife, Inc. pursuant to these stock purchase contracts.
The number of Trust Shares declined to 180,481,253 at December 31, 2014 as a result of withdrawals by Beneficiaries of Trust Shares, transactions by Beneficiaries under the Purchase and Sale Program and escheatment of unclaimed Trust Shares. The percentage of outstanding shares of Common Stock owned by the Trust at December 31, 2014 decreased to 15.9% as a result of these withdrawals, transactions and escheatments, as well as due to Common Stock issuances by MetLife, Inc., including those described above, partially offset by the Common Stock repurchases by MetLife, Inc. discussed in “- Common Stock Repurchase Authorizations” below.
Equity securities, which are entirely comprised of the Common Stock, are reported at their estimated fair value based on the quoted prices in active markets that are readily and regularly obtainable. As such, these securities are categorized as Level 1 in three-level fair value hierarchy in accordance with fair value measurement guidance. Unrealized investment gains and losses on securities are recorded in the statements of operations and statements of changes in net assets. Realized gains and losses on sales of securities are determined on a first-in first-out basis.
The Trust Agreement provides that regular cash dividends, if any, collected or received by the Trustee with respect to the Trust Shares shall be distributed by the Custodian semi-annually to the Beneficiaries within 90 days after receipt by the Trustee. Distributions of all other cash dividends shall be made by the Custodian to the Beneficiaries on the first business day following the 30th day after the Trust receives the dividends. Alternatively, the Trust Agreement provides that the Trustee may arrange with MetLife, Inc. for the direct payment by MetLife, Inc. of such cash dividends to the Beneficiaries. Historically, MetLife, Inc. has used the latter method. See “- Receivable from MetLife, Inc. and Dividends Payable to Trust Beneficiaries.” All security transactions are recorded on a trade date basis. See Note 5 for information on Common Stock dividends declared and paid subsequent to December 31, 2014.
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 7,064,546, 9,078,999 and 6,294,540 were redeemed for this purpose, which generated net realized investment gains of $274,104 thousand, $268,040 thousand and $127,560 thousand for the years ended December 31, 2014, 2013 and 2012, respectively. 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 73,014, 70,001 and 65,231 for the years ended December 31, 2014, 2013 and 2012, 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.