WASHINGTON (Reuters) - Insurer MetLife Inc. (MET.N) will pay $10 million to settle with U.S. regulators over longstanding internal controls failures, the Securities and Exchange Commission (SEC) said on Wednesday.
The settlement follows a probe by the SEC into the company’s failure to pay some workers’ pensions, which MetLife disclosed in December 2017. The agency found MetLife violated key provisions of the federal securities laws relating to two errors in how it accounted for reserves associated with its annuities businesses, it said in Wednesday’s statement.
The case centers on MetLife’s business over the last several decades of acquiring the assets of employer pension plans and converting them into group annuity contracts in a process called pension risk transfer.
For over 25 years, MetLife’s practice was to presume annuitants had died or otherwise would never be found if they did not respond to only two mailing attempts made approximately five and half years apart, the SEC said. This led the company to improperly release reserves for their benefits.
The insurer also overstated reserves and understated income relating to certain annuity guarantees assumed by a subsidiary. This was the result of data mistakes, including a failure to properly incorporate policyholder withdrawals. The company did not admit or deny the agency’s findings, the SEC’s statement said.
“Our focus since we self-identified these issues has been to improve our processes to deliver better service to our customers,” said a MetLife spokesperson. “We successfully remediated both material weaknesses associated with this settlement as of December 2018.
MetLife has separately agreed to pay $1 million to Massachusetts to resolve claims that it made misleading statements to investors in failing to pay pension benefits tot thousands of retirees. In January, the company also agreed to a $19.75-million penalty to New York state’s insurance regulator for the failure.
Reporting by Chris Prentice, Additional reporting by Suzanne Barlyn; Editing by Chris Reese and Alistair Bell