MetLife Inc. has agreed to pay $10 million to settle charges that it violated federal securities laws related to "longstanding accounting errors" caused by its insufficient internal controls.
The SEC said the company violated the books and records and internal accounting controls provisions of the federal securities laws due to improperly released reserves for annuity benefits associated with its retirement and income solutions business, which increased its income.
MetLife allegedly presumed annuitants had died or would never be found if they did not respond to two mailing attempts made approximately five and a half years apart. The company later determined that the practice, which it had been doing for more than 25 years, was insufficient to justify the release of reserves. The company corrected the error by increasing reserves by $510 million as of the end of 2017.
The SEC also found that MetLife overstated reserves and understated income related to variable annuity guarantees assumed by its subsidiary. The company corrected the error by reducing reserves by $896 million as of the end of 2017. The company said data mistakes, including its failure to properly incorporate policyholder withdrawals into its valuation model, had caused the error.
The company agreed to cease and desist from committing any future violations, but did not admit or deny the SEC's findings.