NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS UNLESS OTHERWISE STATED)
1. SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF TRUST
The MetLife Policyholder Trust (the "Trust") was established under the
Metropolitan Life Insurance Company ("Metropolitan Life") plan of reorganization
(the "Plan") and pursuant to the MetLife Policyholder Trust Agreement, dated as
of November 3, 1999, by and among Metropolitan Life, MetLife, Inc. (the "Holding
Company"), Wilmington Trust Company (not in its individual capacity, but solely
as trustee for the Trust, the "Trustee") and ChaseMellon Shareholder Services
LLC, as custodian (now known as Mellon Investor Services LLC, the "Custodian"),
as amended on November 8, 2001 (the "Trust Agreement"), in connection with the
conversion of Metropolitan Life from a mutual life insurance company to a stock
life insurance company. The Trust is a single-purpose trust that does not engage
in any business or activity other than voting and holding the Trust Shares (as
defined below) and certain closely related activities, such as distributing cash
dividends. The Trust has no employees.
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 the Holding Company, 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, the Holding Company
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 decrease
in the number of Trust Shares from 321,314,794 in 2004 to 298,777,053 in 2005.
A Trust Interest entitles the Beneficiary to certain rights, including the
right to: (i) receive dividends distributed upon Trust Shares; (ii) have Trust
Shares withdrawn from the Trust to be sold for cash through a purchase and sale
program established by the Holding Company pursuant to the Plan (the "Purchase
and Sale Program"); (iii) deposit in the Trust additional shares of Common Stock
purchased through the Purchase and Sale Program; (iv) withdraw Trust Shares; and
(v) instruct the Trustee to vote the Trust Shares on certain matters, each as
further described in and limited by the terms of the Trust Agreement. The
Trustee has no beneficial interest in the Trust Shares.
The Holding Company pays the Trustee an annual fee of $50,000. In addition,
the Holding Company will reimburse the Trustee for all reasonable out-of-pocket
expenses it incurs in the performance of its duties under the Trust Agreement.
However, the Holding Company is not required to reimburse the Trust or Trustee
for the expense of mailing to the Custodian any proxy and other materials
received by the Trustee from persons other than the Holding Company, including
mailings with respect to any Beneficiary Consent Matter. The Holding Company
paid to the Trustee $20,986 and $15,317 for out-of-pocket expenses for the years
ended December 31, 2005 and 2004, respectively.
Equity securities are reported at their fair value based on quoted market
prices and unrealized investment gains and losses on securities are recorded in
the Statements of Operations. Realized gains and losses on sales
METLIFE POLICYHOLDER TRUST
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
of securities are determined on a first-in first-out basis. Regular cash
dividends, if any, collected or received by the Trustee with respect to the
Trust Shares will be distributed by the Custodian semi-annually to the
Beneficiaries within 90 days after receipt by the Trustee. Distribution of all
other cash dividends will 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 Trustee may arrange with the Holding Company for
the direct payment by the Holding Company of such cash dividends to the
Beneficiaries. All security transactions are recorded on a trade date basis.
CASH AND CASH EQUIVALENTS
The Trust considers all highly liquid investments purchased with an
original or remaining maturity of three months or less at the date of purchase
to be cash equivalents.
As a qualified regulated trust, the Trust is not subject to income taxes to
the extent that it distributes substantially all of its taxable income in its
2. PURCHASE AND SALE PROGRAM
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 11,187,498, 11,780,561 and
11,468,650 for the years ended December 31, 2005, 2004 and 2003, 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 170,425, 155,874 and 193,261 for the years ended
December 31, 2005, 2004 and 2003, 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.
Beneficiaries may withdraw all, but generally, not less than all, of their
allocated shares of Common Stock at any time by providing written notice to the
3. COMMITMENTS AND CONTINGENCIES
4. BENEFICIARY VOTING RIGHTS
The Trust Agreement provides the Trustee with directions as to the manner
in which to vote, assent or consent the Trust Shares at all times during the
term of the Trust. On all matters brought for a vote before the stockholders of
the Holding Company, with the exception of a Beneficiary Consent Matter (as
defined in the Trust Agreement), the Trustee will vote or abstain from voting in
accordance with the recommendation given by the Board of Directors of the
Holding Company to its stockholders or, if no such recommendation is given, as
directed by the Board. On all Beneficiary Consent Matters, the Trustee will vote
all of the Trust Shares in favor of, in opposition to or abstain from the matter
in the same ratio as the Trust Interests of the Beneficiaries that returned
voting instructions to the Trustee indicated preferences for voting in favor of,
in opposition to or abstaining from such matter. The Trust Agreement also
contains provisions allowing Beneficiaries to instruct the Custodian to withdraw
their allocated Trust Shares to participate in any tender or exchange offer for
the Common Stock and to make any cash or share election, or perfect any
dissenter's rights, in connection with a merger of the Holding Company.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
ITEM 9A. CONTROLS AND PROCEDURES.
The Trustee, with the participation of Joseph B. Feil, Assistant Vice
President of Wilmington Trust Company, the Trustee of the Trust, has evaluated
the effectiveness of the design and operation of the Trust's disclosure controls
and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end
of the period covered by this report. Based on that evaluation, Mr. Feil has
concluded that these disclosure controls and procedures are effective. The
Trustee and Mr. Feil, in making these determinations, have relied to the extent
reasonable on information provided by MetLife, Inc. and Mellon Investor Services
LLC. There were no changes in the Trust's internal control over financial
reporting as defined in Rule 13a-15(f) under the Exchange Act during the quarter
ended December 31, 2005 that have materially affected, or are reasonably likely
to materially affect, the Trust's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
There are no directors, executive officers or employees of the Trust. The
Trustee of the Trust is Wilmington Trust Company. The Custodian of the Trust is
Mellon Investor Services LLC, formerly known as ChaseMellon Shareholder Services
The Trust has not adopted a code of ethics applicable to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions because the Trust does not
have any such officers.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
There are no directors or executive officers of the Trust. No person is the
beneficial owner of more than five percent of the Trust Interests.
The Trust has no equity compensation plans.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Pursuant to the Trust Agreement, the independent auditor of the Holding
Company serves as the independent auditor of the Trust, and Deloitte & Touche
LLP ("Deloitte"), the Holding Company's independent auditor, has served as the
independent auditor of the Trust since its inception. Its knowledge of the Trust
has enabled it to carry out its audits of the Trust's financial statements with
effectiveness and efficiency.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S
FEES FOR 2005 AND 2004
Audit fees include fees for services to perform an audit in accordance with
auditing standards of the Public Company Accounting Oversight Board (United
States) and services that generally only the Trust's independent auditor can
reasonably provide, such as attest services, consents and assistance with and
review of documents filed with the Securities and Exchange Commission.
The Trust does not have an audit committee. The Audit Committee of the
Holding Company (the "Audit Committee") approves Deloitte's audit and non-audit
services in advance as required under the Sarbanes-Oxley Act of 2002 and SEC
rules. Under procedures adopted by the Audit Committee, the Audit Committee
reviews, on an annual basis, a schedule of particular audit services that the
Holding Company expects to be performed in the next fiscal year, including for
the Trust, and an estimated amount of fees for each particular audit service.
The Audit Committee also reviews a schedule of audit related, tax and other
permitted non-audit services that the Holding Company may engage the independent
auditor to perform during the next fiscal year, including for the Trust, and an
estimated amount of fees for each of those services, as well as information on
pre-approval services provided by the independent auditor in the current year.
Based on this information, the Audit Committee pre-approves the audit
services that the Holding Company expects to be performed by the independent
auditor in connection with the audit of the Holding Company's financial
statements (including those of the Trust) for the next fiscal year, and the
audit-related, tax and other permitted non-audit services that management may
desire to engage the independent auditor to perform during the next fiscal year.
In addition, the Audit Committee approves the terms of the engagement letter to
be entered into with the independent auditor with respect to such services.
If, during the course of the year, the audit, audit-related, tax and other
permitted non-audit fees exceed the previous estimates provided to the Audit
Committee, the Audit Committee determines whether or not to approve the payment
of additional fees. The Audit Committee or a designated member of the Audit
Committee to whom authority has been delegated may, from time to time,
pre-approve additional audit and non-audit services to be performed by the
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following documents are filed as part of this report:
1. Financial Statements
The financial statements are listed in the Index to Financial Statements on
2. Financial Statement Schedules
The exhibits are listed in the Exhibit Index on page E-1.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
METLIFE POLICYHOLDER TRUST
By: Wilmington Trust Company, not in
its individual capacity, but
solely as trustee for the Trust
By:/s/ Joseph B. Feil
Joseph B. Feil
Name: Joseph B. Feil
Title: Assistant Vice President
Dated: March 31, 2006
EXHIBIT NO. DESCRIPTION
4.1 -- MetLife Policyholder Trust Agreement, incorporated herein by
reference to Exhibit 10.12 to the MetLife, Inc. Registration
Statement on Form S-1 (File No. 333-91517) (the "S-1
4.2 -- Amended and Restated Certificate of Incorporation of
MetLife, Inc., incorporated herein by reference to Exhibit
3.1 to MetLife, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 (the "2000 Annual
4.3 -- Amended and Restated By-laws of MetLife, Inc., effective
July 27, 2004, incorporated herein by reference to Exhibit
3.2 to MetLife, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2004.
4.4 -- Text of Amended Section's of Amended and Restated By-laws of
MetLife, Inc., effective March 20, 2006, incorporated herein
by reference to Exhibit 3.1 to MetLife, Inc.'s Current
Report on Form 8-K dated March 24, 2006.
4.5 -- Form of Certificate of Common Stock, par value $0.01 per
share, incorporated herein by reference to Exhibit 4.1 to
the S-1 Registration Statement.
4.6 -- Rights Agreement, between MetLife, Inc. and ChaseMellon
Shareholder Services, Inc., incorporated herein by reference
to Exhibit 10.6 to the 2000 Annual Report.
4.7 -- Amendment to MetLife Policyholder Trust Agreement,
incorporated herein by reference to Exhibit 4.6 to the
MetLife Policyholder Trust's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.
31.1 -- Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 -- Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
SECTION 302 CERTIFICATION
I, Joseph B. Feil, certify that:
1. I have reviewed this annual report on Form 10-K of MetLife Policyholder
Trust, for which Wilmington Trust Company acts as Trustee;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, distributable income and changes in trust corpus of the
registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), or
for causing such procedures to be established and maintained, for the registrant
and I have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this report is being
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report my conclusions about the
effectiveness of the disclosure controls and procedures as of the end of
the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
5. I have disclosed, based on my most recent evaluation of internal control
over financial reporting, to the registrant's auditors:
a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves persons who have
a significant role in the registrant's internal control over financial
In giving the certifications in paragraphs 4 and 5 above, I have relied to
the extent I consider reasonable on information provided to me by MetLife, Inc.
and Mellon Investor Services LLC.
By: /s/ Joseph B. Feil
Joseph B. Feil
Assistant Vice President
Wilmington Trust Company
Date: March 31, 2006
SECTION 906 CERTIFICATION
CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF
THE UNITED STATES CODE
The following certification accompanies the issuer's Annual Report on Form
10-K and is furnished, not filed, as provided in SEC Release Nos. 33-8238,
34-47986 dated June 5, 2003:
I, Joseph B. Feil, Assistant Vice President of Wilmington Trust Company,
trustee of the MetLife Policyholder Trust (the "Trust"), certify that (i) the
Trust's Annual Report on Form 10-K for the year ended December 31, 2005 (the
"Annual Report") fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 and (ii) the information contained in the
Annual Report fairly presents, in all material respects, the financial condition
and results of operations of the Trust.
By: /s/ Joseph B. Feil
Joseph B. Feil
Assistant Vice President
Wilmington Trust Company
Date: March 31, 2006
A signed original of this written statement required by Section 906 has
been provided to the MetLife Policyholder Trust and will be retained by the
MetLife Policyholder Trust and furnished to the Securities and Exchange
Commission or its staff upon request.