Galvin charges MetLife with inflating bottom line

Galvin charges MetLife with inflating bottom line
Massachusetts securities czar says insurer's failure to make pension payments enabled it to lower reserves
JUN 25, 2018

Continuing to turn the heat on MetLife, Massachusetts securities regulator William F. Galvin has charged the insurer with issuing misleading statements relating to its failure to make pension payments to hundreds of retirees in the state that it had wrongly designated as "presumed dead." In a complaint filed by his office, Secretary of the Commonwealth Galvin alleged that MetLife's public filings contained material misstatements about the company's finances resulting from the insurer's failure to adequately administer employer pension plans. Under these pension plans, MetLife was responsible for reserving enough money to make payments to Massachusetts pensioners, whose average age was 72. Instead, when the company erroneously assumed some pensioners were dead, it released reserves held against pension obligations, which became assets that inflated MetLife's bottom line. The charges are the result of an investigation opened last December, after MetLife announced that it had lost track of tens of thousands of pensioners to whom they owed payments. MetLife had acquired the pension obligations from the retirees' employers. Mr. Galvin said that once his office was notified of the "missing" Massachusetts pensioners, it was able to locate the majority of them "within just a few weeks." "In fact, approximately half of these seniors were still living at the same address MetLife had on file for them for the entire time MetLife failed to make payments to them," he said. Once a plan participant was presumed dead by MetLife, the money to which the retiree was entitled was no longer held in reserve by the company and became assets of MetLife, which were reported in public filings. The complaint states that these reserves should not have been released and resulted in misleading financial statements. Last week, MetLife and its spin-off, Brighthouse Financial, were sued for failing to pay at least $500 million in retirement benefits over the past 2½ decades to thousands of pension plan participants.

Latest News

MAI Capital expands in California with $551 million OG Private Wealth deal
MAI Capital expands in California with $551 million OG Private Wealth deal

The Cleveland-based RIA's latest tie-up extends the firm's national footprint into the Golden State, where opinions continue to be split over a contentious billionaire wealth tax proposal.

Advisor moves: Missouri-based LPL team decamps to Osaic in full-circle succession
Advisor moves: Missouri-based LPL team decamps to Osaic in full-circle succession

Meanwhile, Cetera has welcomed a family-run practice from Commonwealth, and a Merrill advisor joins an existing UBS team in Connecticut.

Wealth Enhancement extends acquisition streak with Washington state deal
Wealth Enhancement extends acquisition streak with Washington state deal

The Olympia, Washington firm's retirement planning expertise reinforces the consolidator's growth momentum to exceed $160 billion in client assets.

Building AI you can trust in wealth management
Building AI you can trust in wealth management

Beyond content generation and execution, firms that can offer answers around governance, transparency, and supervision are set to pull ahead in the next leg of the AI race.

Advisor moves: Veteran teams with $580M in assets leave Wells Fargo
Advisor moves: Veteran teams with $580M in assets leave Wells Fargo

The experienced advisory teams join Ameriprise and Janney as the race for experienced talent continues.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income