MetLife Inc. will pay a $1 million settlement following an investigation by Secretary of the Commonwealth of Massachusetts William F. Galvin connected to the insurer's revelation that it has not paid about 13,500 participants in its group annuity population over the past 25 years due to insufficient administrative practices.
In January, MetLife said it had 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. The insurer followed up in a February 8-K filing with the Securities and Exchange Commission that about 25 years ago, "companies that are or have been MetLife Inc. subsidiaries established a practice of releasing the full insurance liability after two attempts at contacting these annuitants, based on the presumption that these annuitants would never respond and had not become entitled to benefits based on certain contractual provisions." MetLife also said in the February filing it has added $510 million back to the annuity reserves set aside for the 13,500 participants that had been affected and those participants, once located, would receive payments with interest.
Mr. Galvin, who charged the insurer with fraud in June, said in a news release: "My primary goal in this investigation has always been to get this money returned to the retirees to whom it is owed."
MetLife, in a statement emailed by spokeswoman Kim Friedman, said: "Our focus since we self-identified and self-reported this issue has been to enhance our processes so that we deliver better service to our customers. This settlement is in line with that focus."