BOSTON (Reuters) - Massachusetts’ securities regulator on Monday accused MetLife Inc of making false statements to investors related to its failure to pay pension benefits to thousands of retirees that it improperly treated as “presumed dead.”
Massachusetts Secretary of the Commonwealth William Galvin, the state’s top securities regulator, charged MetLife following a probe that began after the insurer revealed in December it had failed to make payments to retirees.
In an administrative complaint, Galvin’s office accused MetLife of making misleading statements to investors regarding the sufficiency of the reserves it was required to maintain to meet its obligations to pensioners.
Following December’s revelation, MetLife in February announced it would increase those reserves by $510 million. The New York-based company has estimated that the number of retirees affected, both in and outside Massachusetts, is about 13,500.
The complaint seeks an order requiring MetLife to locate all of the hundreds of Massachusetts retirees eligible for benefits and provide them retroactive and continuing payments. It also seeks sanctions, censure and an administrative fine.
MetLife in a statement said it has “taken aggressive steps to locate unresponsive annuitants who are due funds and already have or will commence payment, including interest, once the necessary paperwork is complete.”
The Massachusetts investigation is one of several launched by regulators in the wake of MetLife’s December announcement. It also faces probes by the U.S. Securities and Exchange Commission and New York’s insurance regulator.
The case centers on MetLife’s business over the last several decades of acquiring the assets of employers pension plans and converting them into group annuity contracts in a process called pension risk transfer.
Galvin’s complaint said MetLife relied on inadequate procedures to contact retirees, many of whom may not have known the company took over their former employers’ pension responsibilities.
MetLife’s efforts to contact them primarily involved sending two perfunctory letters at age 65 and 70-1/2, and when retirees did not respond to them, MetLife categorized them as “presumed dead,” the complaint said.
By marking someone as “presumed dead,” the assets to which he or she was entitled were released from the reserve, increasing MetLife’s bottom line, Galvin alleged.
MetLife made no other attempts to contact them, yet Galvin said his office since launching its probe has been able to locate the majority of Massachusetts residents missing out on the payments.
“They weren’t dead at all,” Galvin said in an interview. “No serious effort was made to find these people.”
Reporting by Nate Raymond in Boston; additional reporting by Tim McLaughlin; Editing by David Gregorio and Tom Brown