MetLife CEO on Missing Annuitants: ‘I Can’t Believe We’re the Only One’
February 16, 2018 by Marie Suszynski
NEW YORK – MetLife Inc.’s review of its retirement business that led to a $510 million pretax charge for reserve strengthening stems from an issue of finding missing annuitants, which could potentially be industrywide, the insurer’s chief executive officer said.
“It’s hard for me to know, really, what happens in the other companies in our industry, but I can’t believe we’re the only one,” Steven Kandarian, chairman, president and CEO, said during the Bank of America Merrill Lynch 2018 Insurance Conference in New York.
The charge is related to MetLife’s pension risk transfer business. MetLife noticed the Department of Labor was approaching employers with suggestions about finding missing annuitants because they were also having trouble locating them, Kandarian said. As a result, MetLife launched a pilot project in 2016 to more aggressively try to find annuitants they previously assumed were lost or no longer living.
MetLife said it found about 13,500 annuitants who the company hadn’t been able to contact over the past 25 years. The company said it will begin making payments with interest (Best’s News Service, Feb. 14, 2018).
Releasing the reserves on those pension payments during previous years was an error, Kandarian said.
MetLife began the pension risk transfer business many decades ago, at least back in the 1950s. The company had no issues with plan members who were already receiving pension checks when MetLife took on the business, he said. However, some beneficiaries were decades away from retirement and left their companies and moved to other areas of the country.
“The question was how do you find those people sometimes decades after we assumed those pension plans?” Kandarian said. “And sometimes we had addresses that were quite old, out of date, etc.”
He said the issue of looking for missing annuitants is probably something other companies in the industry are facing.
“It is an area where I think the entire industry has to find ways to do a better job and find these people and pay the benefits to these people that they’re owed,” he said.
Prudential Financial Inc.’s vice chairman, Mark Grier, noted in a Feb. 8 conference call that MetLife’s move could ultimately lead to “greater standardization of what may currently be divergent practices across the industry.” Grier said Prudential “inevitably” has customers it can’t locate, but noted the number was small (Best’s News Service, Feb. 8, 2018).
As to whether MetLife’s disclosure will have a competitive impact, Kandarian pointed out employers themselves are having the same issues of finding annuitants and he hopes they will understand MetLife “takes very seriously these obligations and that we’re doing everything we can to make this right.”
Metropolitan Life Insurance Co. has a current Best’s Financial Strength Rating of A+ (Superior).
On the afternoon of Feb. 15, shares of MetLife Inc. (NYSE: MET) were $46.71, up 0.03% from the previous close.
(By Marie Suszynski, BestWeek Correspondent: Marie.Suszynski@ambest.com)
