MetLife subpoenaed over death benefits

April 26, 2011
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California regulators subpoenaed MetLife Inc and plan a hearing on the company’s practices involving the payment of benefits after learning of an insured’s death.

Insurance Commissioner Dave Jones and State Controller John Chiang on Monday said they are responding to audit findings indicating that MetLife failed to pay life insurance policy benefits even after learning that an insured had died.

The subpoena comes after Chiang announced a settlement with insurer John Hancock Life Insurance Co last week involving similar issues.

MetLife spokesman John Calagna said the company would fully cooperate with regulators.

“MetLife’s first priority is to keep its promises to its policyholders,” Calagna said, adding that the company made payments in excess of USD 11 billion to beneficiaries in 2010.

MetLife has an estimated USD 1.2 billion worth of so-called Industrial Policies, sold to working-class people in the 1940s and 1950s, the regulators said.

The audit indicates that Metlife did not take steps to determine whether policy owners of dormant accounts are still alive, and if not, pay the beneficiaries — or the state if they cannot be located, the regulators said.

“The thrust of this hearing is to determine whether MetLife, one of the largest life insurers and issuers of annuities in the United States, engaged in unfair practices regarding the payment of life insurance claims to beneficiaries,” Jones said in a statement.

Calagna said MetLife has been proactive in identifying policy owners, establishing a master database in recent years.

In its settlement, John Hancock agreed to restore the full value of more than 6,400 impacted accounts dating back to 1992, and to better identify deceased policy holders, among other provisions.

The MetLife hearing is scheduled for May 23 in Sacramento, California.

SOURCE

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  12. Zachary on February 10, 2012 at 8:12 pm

    The United States Federal Reserve Bank has declined a proposal from the Metropolitan Life Insurance Company to reallocate capital and increase shareholder value. As the largest provider of insurance annuities in the world, MetLife has enjoyed enormous success despite the global financial crisis, and in a recent financial filing it intended to increase the dividend amount it pays to qualified shareholders. According to the company, the Fed saw it fit to hold off on approving a plan which would have allowed the company to repurchase shares and increase annual common stock dividends.

    The Fed’s decision to not approve the insurer’s plan for the time being is based on its current status as a bank holding company. Prior to approving a capital reallocation plan, MetLife must be subjected to a series of tests based on adverse scenarios. The company entered the retail banking industry in 2001 with MetLife Bank. The company later added mortgage operations with firm hopes that the American housing market will eventually recover.

    When MetLife announced the Fed’s decision in late October, the company’s stock took a sudden 5% percent loss. MetLife has been looking for ways to sever ties with its depository and mortgage origination business, and this latest development may accelerate the sale of its banking unit.

    At MetLife’s recent third quarter earnings call, plans to exit the banking business were reiterated by Chief Executive Office Steve Kandarian. Despite the Fed’s strict oversight, the company managed to declare annual dividends of $0.74. Quarterly profits climbed at a nice pace thanks to the company’s stake in the American Life Insurance Company (Alico), an asset which was acquired from the troubled American International Group (AIG) in March 2010. MetLife feels confident that its main insurance and annuity business groups will continue to boost the company’s bottom line and return value to the shareholders.

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