WASHINGTON—Metropolitan Life Insurance Company said Thursday in a securities filing that it will take a charge of $125 million related to its unclaimed property practices.
The filing was made in anticipation of its quarterly earnings announcement, planned for Oct. 27. The charge to earnings will be 12 cents a share.
While MetLife officials said the charge was related to an internal investigation that began before any state probes into its policies, the decision confirms a National Underwriter article Sept. 5 indicating that state probes into life insurer unclaimed property practices are escalating.
Specifically, a securities analyst said today in an investment note that MetLife is under investigation by 30 states for its unclaimed property practices.
The investment note, by Randy Binner, of FBR Capital Research, Arlington Va., also said that “our assumption is that this could broadly be an issue for other life insurers, but perhaps larger insurers would be more at risk as various state interests could see them as a larger source of funds.”
For example, the New York Insurance Department has issued so-called “308 letters” requesting data on the issue from all 172 life insurers registered in the state.
And, the New York Attorney General’s office has issued subpoenas to nine large insurers related to “unclaimed insurance policy proceeds that are supposed to be turned over to the state,” according to several industry lawyers.
There is a also an NAIC task force of 10 states looking into the issue.
A plaintiff’s lawyer in New York who is litigating several cases involving unclaimed property with MetLife called the sum “substantial.”
Moreover, said Hunter Shkolnik, senior partner at Napoli Bern Ripka Shkolnik, “There is a difference between setting aside money to defend against certain actions by investigators, and setting aside money to pay claims. There is a substantial sum of money you are talking about here.”
An industry lawyer who asked not to be named said life insurers nationwide are looking at three different types of probes into their unclaimed property practices.
The lawyer said MetLife’s charge relates to a determination that there are death claims that need to be paid.
But, other part of the probes by state insurance departments, Treasury’s and comptroller’s offices and attorneys general related to funds not appropriately turned over to states, as well as deep concerns that some states may be undertaking market conduct exams related to these practices, the lawyer said.
MetLife’s claims practices were the subject of a July public hearing held by the Florida Insurance Department.
And the investigation by 30 states into MetLife’s claims practices cited in an earlier filing is being led by Illinois, one of the 10 states that are members of the NAIC special task force on the issue, according to a confidential source. The Illinois Insurance Department did not return phone calls requesting confirmation, and MetLife would not comment.
But, in a statement clarifying its securities filing, John Calagna, a vice president of public affairs for MetLife, said, “We did not take a charge for a regulatory investigation.
“We took a charge for a policy record sweep we began in 2010 before any regulator was investigating the topic. And the charge in the 8K was specifically related to monies we were reserving to pay beneficiaries or if appropriate escheat to the states,” Calagna added.