MetLife will pay a civil penalty of $10 million to resolve charges the insurance company violated the books and records and internal accounting controls provisions of federal securities laws relating to two errors in its accounting for reserves associated with its annuities businesses.
According to the Securities and Exchange Commission order, MetLife improperly released reserves for annuity benefits associated with MetLife’s Retirement and Income Solutions Business, resulting in an increase in income. For over 25 years, MetLife presumed annuitants had “died” or otherwise would never be found if they did not respond to two mailing attempts made approximately 5 1/2 years apart.
MetLife later determined its processes for locating and contacting unresponsive annuitants were insufficient to justify this release. To correct this error, MetLife increased reserves by $510 million as of year-end 2017.
The SEC order also finds MetLife overstated reserves and understated income relating to variable annuity guarantees assumed by a MetLife subsidiary. MetLife disclosed this error was caused by data mistakes, including a failure to properly incorporate policyholder withdrawals into MetLife’s valuation model. To correct this error, MetLife reduced reserves by $896 million as of year-end 2017.