METLIFE INCMET

METLIFE INC Goodwill & Intangibles Disclosure

10-KFiled Feb 22, 20193 min read
11. Goodwill
Goodwill is the excess of cost over the estimated fair value of net assets acquired. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business climate, indicate that there may be justification for conducting an interim test. The goodwill impairment process requires a comparison of the estimated fair value of a reporting unit to its carrying value. The Company tests goodwill for impairment by either performing a qualitative assessment or a quantitative test. The qualitative impairment assessment is an assessment of historical information and relevant events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The Company may elect not to perform the qualitative impairment assessment for some or all of its reporting units and perform a quantitative impairment test. In performing the quantitative impairment test, the Company may determine the fair values of its reporting units by applying a market multiple, discounted cash flow, and/or an actuarial-based valuation approach.
The valuation methodologies utilized are subject to key judgments and assumptions that are sensitive to change. Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood, differ in some respects from actual future results. Declines in the estimated fair value of the Company’s reporting units could result in goodwill impairments in future periods which could materially adversely affect the Company’s results of operations or financial position.
Information regarding goodwill by segment, as well as Corporate & Other, was as follows:
 
U.S.
 
Asia (1)
 
Latin
America
 
EMEA
 
MetLife
Holdings
 
Corporate
& Other
 
Total
 
(In millions)
Balance at January 1, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
$
1,451

 
$
4,508

 
$
1,186

 
$
1,143

 
$
1,567

 
$
42

 
$
9,897

Accumulated impairment (2)
—

 
—

 
—

 
—

 
(680
)
 
—

 
(680
)
Total goodwill, net
1,451

 
4,508

 
1,186

 
1,143

 
887

 
42

 
9,217

Dispositions (3)
—

 
—

 
—

 
—

 
—

 
(42
)
 
(42
)
Effect of foreign currency translation and other
—

 
88

 
40

 
(83
)
 
—

 
—

 
45

Balance at December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 

Goodwill
1,451

 
4,596

 
1,226

 
1,060

 
1,567

 
—

 
9,900

Accumulated impairment
—

 
—

 
—

 
—

 
(680
)
 
—

 
(680
)
Total goodwill, net
1,451

 
4,596

 
1,226

 
1,060

 
887

 
—

 
9,220

Acquisition
—

 
—

 
—

 
—

 
—

 
103

 
103

Dispositions (4)
—

 
—

 
(16
)
 
—

 
—

 
—

 
(16
)
Effect of foreign currency translation and other
—

 
77

 
96

 
110

 
—

 
—

 
283

Balance at December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 

Goodwill
1,451

 
4,673

 
1,306

 
1,170

 
1,567

 
103

 
10,270

Accumulated impairment
—

 
—

 
—

 
—

 
(680
)
 
—

 
(680
)
Total goodwill, net
1,451

 
4,673

 
1,306

 
1,170

 
887

 
103

 
9,590

Effect of foreign currency translation and other
—

 
17

 
(134
)
 
(51
)
 
—

 
—

 
(168
)
Balance at December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 


Goodwill
1,451

 
4,690

 
1,172

 
1,119

 
1,567

 
103

 
10,102

Accumulated impairment
—

 
—

 
—

 
—

 
(680
)
 
—

 
(680
)
Total goodwill, net
$
1,451

 
$
4,690

 
$
1,172

 
$
1,119

 
$
887

 
$
103

 
$
9,422

__________________
(1)
Includes goodwill of $4.5 billion, $4.5 billion and $4.4 billion from the Japan operations at December 31, 2018, 2017 and 2016, respectively.
(2)
The $680 million accumulated impairment in the MetLife Holdings segment relates to the retail annuities business impaired in 2012 that was not part of the Separation. See Note 3.
(3)
In connection with the U.S. Retail Advisor Force Divestiture, goodwill in Corporate & Other was reduced by $42 million for the year ended December 31, 2016. See Note 3.
(4)
In connection with the disposition of MetLife Afore, goodwill was reduced by $16 million for the year ended December 31, 2017. See Note 3.

Historical Timeline

Fiscal YearFiled
2018Feb 22, 2019Showing above
2017Mar 1, 2018
2016Mar 1, 2017
2015Feb 25, 2016

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Other Available Disclosures

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