MetLife Inc. uncovered a "material weakness" in financial reporting and reached out to regulators about its lapses after determining that it didn't have enough money set aside to pay some annuity and pension customers. Shares plunged 9.9% on the news.
Full-year net income for 2017 was cut by $165 million to $195 million, the New York-based insurer said Monday in a statement. The company said it is responding to inquiries from the Securities and Exchange Commission as well as state regulators from New York and other locations.
MetLife said it was reviewing its processes for finding missing group annuity policyholders and pension beneficiaries after disclosing in December that it had lost track of some. Reserves were boosted by $525 million to $575 million before taxes, and the earnings report and conference call was postponed.
The charges add to a pile of expenses MetLife incurred last year, many of them spurred by the separation of a U.S. retail business called Brighthouse Financial Inc. Chief Executive Officer Steve Kandarian spun off that unit in August to help it remove some volatility in results and focus on other businesses, including ones selling insurance through employers and international markets.
Shares declined to as low as $49.02 in extended trading from $54.40 at the close in New York.
MetLife is among insurers that have built businesses to take on pension obligations from employers such as Sears Holdings Corp. and PPG Industries Inc. Those deals provide assets for investment, while helping the employer cut the risk of volatility in results. But they also require insurers and the employers to clean up and transfer data for many workers, including some that have left the company long ago.
The insurer said in December that the customers MetLife lost track of had average benefits of about $150 a month. Regulators took notice, with Massachusetts saying in December that it was investigating the matter. New York's financial regulator said it was reviewing the issue and working with MetLife to fix it.
MetLife pushed back its earnings release for the fourth quarter, which was originally scheduled for this week, to Feb. 13 and said it will hold a call the next day.
In the release, the company also noted it expects net income of $2 billion to $2.1 billion for the fourth quarter, which includes a $1.2 billion after-tax benefit from U.S. tax reform. It expects to file its 10-K by March 1.