Metropolitan Life Insurance Company could pay out more than $500 million to current and former insureds as part of a settlement with insurance regulators regarding its unclaimed property practices, according to regulator statements today, and, actually, may face millions more, as they said on a conference call that their numbers are conservative.
In its statement, MetLife said it is “appropriately reserved” for the claims, which stems from sale of industrial life insurance policies, i.e., small value policies, from the early 1900s to 1964.
The vast majority of the settlement will stem from MetLife’s agreement to “reconnect” with many of its oldest insureds (generally over age 90) who bought industrial life polices from the early 1900s to 1964.
MetLife said in a statement that “many of these either did not have a Social Security number or did not provide the company with a date of birth at the time their policies were issued.”
The total insurance in force for these “industrial” policyholders is approximately $438 million, for which the company is appropriately reserved, MetLife said.
The MetLife statement said the company expects that $188 million of the total will be paid out in 2012, with the remainder paid over the next 17 years.
MetLife also said that in the first quarter of 2012, the company recorded a $52 million post-tax charge representing a multi-state examination payment related to unclaimed property and MetLife’s use of the Social Security Death Master File, as well as the expected acceleration of benefit payments to policyholders under the settlement.
The MetLife statement was in response to competing statements by New York, California and the National Association of Insurance Commissioners (NAIC) centered on a settlement with MetLife regarding its unclaimed property practices.
In statements designed to pre-empt each other, the NAIC and California said MetLife had entered into a settlement with 39 states in which it will pay $40 million to state insurance departments and agreed to reform its settlement policies to ensure it quickly pays out life insurance benefits.
Florida Insurance Office officials added that MetLife has agreed to make “extra efforts to gather information needed to identify these insureds.” It was a statement from the Florida Insurance Office that noted that MetLife’s total compensation to customers could be as much as $500 million, but that figure now appears to be conservative, and the total amount could be well north of the half-billion mark.
And, at the same time, New York Gov. Andrew Cuomo Governor Andrew M. Cuomo announced that a state Department of Financial Services investigation into the issue has resulted in 32,715 payments to consumers nationwide totaling $262.2 million, including 7,525 payments totaling $95.9 million to New Yorkers.
David Neustadt, a spokesman for the New York DFS, said the New York investigation has resulted in $262 million being returned to consumers nationwide by all 172 life insurers doing business in New York.