(Bloomberg) — MetLife Inc., the U.S. life insurer deemed by regulators as too big to fail, engages in practices that threaten national economic health, according to a lawsuit filed by a policyholder.

MetLife, the biggest U.S. life insurer by assets, made misleading statements about its financial condition and overstated the amount of reserves it maintains to absorb unexpected losses or financial shocks, according to a complaint filed today in Manhattan federal court by policyholder Andrew Yale.

MetLife “is engaging in conduct that imperils the financial future of Metropolitan Life’s policyholders, their beneficiaries, and the public at large,” Yale said in his complaint.

Benjamin Lawsky, New York’s financial-services regulator, in 2013 said life insurers were using captive subsidiaries to take on risk from their main companies, a practice he called “shadow insurance.” He told fellow watchdogs in August that they are failing to address the practice. Lawsky called it a “gaping regulatory problem” that allows life insurers to artificially inflate reserves.

“MetLife is a financially strong company that holds more than sufficient reserves to pay claims to policyholders,” John Calagna, a spokesman, said in an e-mail. “The company complies with all laws and regulations in the jurisdictions in which it conducts business. The company believes the lawsuit is without merit and intends to defend itself vigorously.”

Insurance Premiums

Yale is seeking the return of life insurance premiums paid by purchasers of MetLife policies since 2009. Yale in April filed a similar suit against AXA Life Insurance Co. AXA denied the allegations in court papers.

MetLife was designated last month as a systemically important financial institution by the Financial Stability Oversight Counsel, a panel of regulators. The designation subjects MetLife to stricter Federal Reserve oversight that could include tougher capital, leverage and liquidity requirements. It faces a deadline this month to decide whether to appeal the designation in court.

The company has said it wouldn’t pose a risk to the broader financial system even if it were to fail. MetLife, based in New York, didn’t take a bailout during the 2008 financial crisis.

The American Council of Life Insurers, an industry group, said last year that captives benefit consumers by allowing companies to charge less for coverage without taking on excessive risk.

The case is Yale v. Metropolitan Life Insurance Co., 15- cv-00199, U.S. District Court, Southern District of New York (Manhattan).

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.