According to the complaint for this class action, MetLife, Inc. seems not to have kept up with some small customer annuities, but the total required to catch up with these small payments is a sizeable amount.
The class for this action is all persons or entities who bought publicly-traded MetLife Securities between February 27, 2013 and January 29, 2018.
MetLife offers insurance, annuities, employee benefits, and asset management. Its Form 10-K annual reports for 2012, 2013, 2014, 2015, and 2016 claimed that its CEO and CFO found the company’s disclosure controls and procedures to be effective. The complaint quotes from each of these filings as saying, “In the opinion of management, MetLife, Inc. maintained effective internal control over financial reporting…” as of the final day of the subject fiscal year.
But the complaint claims these statements were false or misleading because the company had inadequate procedures for determining reserves for annuity and pension payments.
On December 15, 2017, the company filed a Form 8-K announcing that it had not been able to locate “a small subset” or less than 5% of its 600,000 annuitants, most of whom were owed less than $150 per month. It noted that locating these people would “result in strengthening reserves, which in the period recorded may be material to our results of operations and is not reflected in the outlook presented herein.”
An article on the same day in the Wall Street Journal discussed the problem. Since some analysts believed that the payments could be as much as ten years overdue, the article made a calculation: “At $150 a month for 30,000 people—5% of the 600,000—over 10 years, that could be up to $540 million.” At the news, MetLife’s stock price fell by more than 1%.
At the end of January 2018, MetLife announced that it had to reschedule its fourth-quarter and full-year 2017 earnings release because the company would have to revise prior financial statements. The complaint quotes the press release as saying that “the prior release of group annuity reserves resulted from a material weakness in internal control over financial reporting.” It further said, “We expect the full year 2017 net income impact to be between $165 million and $195 million pre-tax…”
The press release also announced that the company had told its primary state regulator, the New York Department of Financial Services, and that it was responding to questions from them, from other state regulators, and from the “enforcement staff” of the Securities and Exchange Commission (SEC).
At this news, the company’s share price fell by over 11%. The complaint claims that the stock losses were due the company’s violations of the Securities Exchange Act of 1934, in not accurately disclosing or controlling its financial information over several years.