MetLife Inc. postponed its earnings report and said it would revise prior financial reports because of overdue monthly pension benefits that it had failed to pay to possibly tens of thousands of workers in past years.
The giant insurer said it expects to increase its reserves by $525 million to $575 million on a pretax basis. It also disclosed that the Securities and Exchange Commission "has made an inquiry" about the matter.
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The New York insurer disclosed the unpaid pensions in mid-December and has been working with a firm that specializes in finding addresses to get in touch with the retirees who are owed money. It had set a goal to determine by Feb. 1 how much money it owed people. A law firm hired by MetLife has been investigating how its retirement business erred in allowed the pensions to go unpaid.
In its Monday update, MetLife said it had determined that its reserves for the pension-risk-transfer business shouldn't have been reduced earlier, thus the need to take a charge to boost them. "Management of the company has determined the prior release of group annuity reserves resulted from a material weakness in internal control over financial reporting," MetLife said.
The total amount expected to weigh on fourth quarter 2017 net income is between $135 million and $165 million pretax, the company said. The company said the full-year 2017 net income impact would be between $165 million and $195 million pretax. In addition, the company intends to make prior period revisions to reflect the balance of these adjustments in the appropriate historical periods, the company said.
MetLife now expects to release earnings on Feb. 13 instead of January 31.
It said last month that the missing pensioners generally have average benefits of less than $150 a month. It said it believes the group represents less than 5% of about 600,000 people who receive certain benefits from the firm.
The workers who didn't get their pensions were owed a defined amount of monthly income when MetLife took on responsibility for the pensions from their employers, under a booming business known as pension risk transfer.
MetLife didn't say in what years it had acquired these particular pension plans, how many different plans the people were involved in, and how many years of missing income was owed.
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(END) Dow Jones Newswires
January 29, 2018 17:10 ET (22:10 GMT)
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