Among the unintended consequences of the Sarbanes-Oxley Act of 2002 are that companies are on edge and may be less prone to take risk, said Robert Benmosche, chairman, president and CEO of MetLife, New York.
He spoke recently at “Insurance 2004: Structuring for Success Seminar,” a meeting sponsored by Standard & Poor’s Corp., New York.
“For the industry to remain competitive, it has got to take risk,” Benmosche added. “If business is afraid to risk making a mistake, it will eventually hurt this country.”
Innovation is important, he continued, because “it is increasingly difficult for us to be a country of low-cost producers.”
Other executives who spoke at the meeting expressed different feelings about the requirements of Sarbanes-Oxley.
Seymour Sternberg, chairman and CEO of New York Life Insurance Company, said his company would implement Section 302 of the law but not Section 404, which calls for a certification by management of internal controls over compliance programs. Cost in relation to benefits was the reason, he explained.
Section 302 states that management has reviewed internal controls, that they are fairly presented in financials, and that any material changes have been noted.
Section 404 requires management to attest to the effectiveness of internal controls and an auditor to sign off on that effectiveness.
Edmund Kelly, chairman, president and CEO of Liberty Mutual Group, Boston, said his company is implementing Section 404, which he described as costly and not always of value.