The December 15 8-K Report
On December 15, 2017, MetLife filed an 8-K (significant event) report with the Securities and Exchange Commission (SEC). The company said "we are improving the process used to locate a small subset of our total group annuitant population of approximately 600,000 that have moved jobs, relocated, or otherwise can no longer be reached via the information provided for them." The company said it currently believes that "the portion of the subset that is most impacted is less than 5% of our total group annuitant population and they tend to be smaller size cases with average benefits of less than $150 per month."
The same day MetLife's chief financial officer made similar comments during a "Business Update Call" with analysts. I contacted the company, and a spokesman provided a statement. I showed it in No. 246.
The January 30 8-K Report
On January 30, 2018, Metlife filed an 8-K report with the SEC. The text consisted of two sentences:
On January 29, 2018, MetLife, Inc. issued a news release preannouncing preliminary fourth quarter 2017 earnings and the rescheduling of its related earnings and conference call. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The January 29 News Release
The eight-page January 29 news release was entitled "MetLife Preannounces Preliminary Fourth Quarter 2017 Earnings, Reschedules Earnings Release and Conference Call." The news release had two subtitles: "Company Expects to Report Net Income of $2.0 to $2.1 billion and Adjusted Earnings of $650 to $700 million" and "Rescheduling Due to Revision of Prior Year Financials to Reflect Reserve Strengthening." The company had been scheduled to issue its fourth quarter earnings report on January 31, but will now issue the report after the market closes on February 13. The company expects to file its 10-K report for 2017 by March 1.
According to the news release, "Management of the company has determined the prior release of group annuity reserves resulted from a material weakness in internal control over financial reporting." The company "expects to increase reserves in total between $525 million and $575 million pre-tax, to adjust for reserves previously released, as well as accrued interest and other related liabilities." Also, "The total amount expected to impact fourth quarter 2017 net income is between $135 million and $165 million pre-tax," and "the full year 2017 net income impact [is expected] to be between $165 million and $195 million pre-tax."
MetLife said it had previously informed the New York Department of Financial Services (DFS), the company's primary state regulator, about the matter, and is responding to questions from DFS and other state insurance regulators. Also, the enforcement staff of the SEC has made an inquiry and the company is responding. The company said it is not aware of any intentional wrongdoing in the matter.
General Observations
As mentioned in No. 246, I think lost pensioners are a serious problem stemming from the mobility of our population and the administrative challenge of dealing with huge numbers of pensioners. I invited comment from readers—especially from those with direct knowledge of how companies maintain their records. I received very little feedback, and no responses from persons with direct knowledge of record keeping procedures. I plan to prepare another update after February 13 or after March 1, if further significant details emerge.
Available Material
I am offering a complimentary eight-page PDF containing MetLife's January 29 news release. Email jmbelth@gmail.com and ask for the February 2018 package about MetLife's lost pensioners.