MetLife Inc., the largest U.S. life insurer, said third-quarter profit will probably be cut by $792 million, or 70 cents a share, on tax costs for a U.K. investment subsidiary.
The expense is “the result of the company’s consideration of recent decisions of the U.S. Court of Appeals for the Second Circuit upholding the disallowance of foreign tax credits” claimed by entities not affiliated with the company, New York-based MetLife said in a statement Wednesday.
The court ruled Sept. 9 that Bank of New York Mellon Corp. and American International Group Inc. couldn’t claim credits on foreign transactions that were found to have been designed with the purpose of generating tax advantages. MetLife said it will continue to contest the disallowance of credits by the Internal Revenue Service.
The case will limit, by about $90 million, the amount of 2016 dividends payable to the parent company from the Metropolitan Life Insurance Co. unit without regulatory approval, according to the statement. The insurer doesn’t expect additional costs and believes the non-cash charge won’t impact previously disclosed intra-company dividends of $1.2 billion for 2015.
The action relates to tax years 2000 to 2009, according to the statement. MetLife slipped 4 cents to $49.55 in extended trading at 4:20 p.m. in New York. The company announced the charge after the close of regular trading.