MetLife to Pay $10 Million for Longstanding Internal Control Failures
Washington, D.C.--(Newsfile Corp. - December 18, 2019) - The Securities and Exchange Commission today charged MetLife, Inc. with violating the books and records and internal accounting controls provisions of the federal securities laws relating to two errors in its accounting for reserves associated with its annuities businesses. MetLife has agreed to pay $10 million to settle the charges.
According to the SEC’s order, MetLife improperly released reserves for annuity benefits associated with MetLife’s Retirement and Income Solutions Business, which resulted in an increase in income. 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. MetLife later determined that its processes for locating and contacting unresponsive annuitants were insufficient to justify the release of reserves. To correct this error, MetLife increased reserves by $510 million as of year-end 2017.
The SEC’s order also finds that MetLife overstated reserves and understated income relating to variable annuity guarantees assumed by a MetLife subsidiary. MetLife disclosed that 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.
“Investors are entitled to the reliability and accuracy of financial information,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “The Commission found that MetLife’s insufficient internal controls caused longstanding accounting errors.”
The SEC’s order finds that MetLife violated the books and records and internal accounting controls provisions of the federal securities laws. Without admitting or denying the Commission’s findings, MetLife has agreed to cease and desist from committing or causing any future violations of these provisions and to pay a civil penalty of $10 million.
The SEC’s investigation was conducted by Celeste Chase, Derek Schoenmann, Chevon Walker, and Nandy Celamy, and supervised by Lara Shalov Mehraban.