The January 29 Postponement
On January 29 MetLife postponed its fourth quarter and full year 2017 earnings report and the related earnings conference call by about two weeks. The company provided preliminary results and said management had found a "material weakness in internal control over financial reporting."
The February 13 Announcement
On February 13 MetLife announced the fourth quarter and full year 2017 earnings report. The following statement appears at the bottom of the first page of the news release:
"Although our underlying financial performance remained solid, the reserve charge and its impact on our fourth quarter and full year earnings—as well as the material weakness that led us to delay our earnings announcement—are unacceptable and deeply disappointing," said Steven A. Kandarian, chairman, president and CEO of MetLife, Inc. "We can and will do better. We are rigorously addressing the situation and are committed to significantly improving our operational performance to better serve our customers and strengthen shareholders' confidence in our organization. MetLife is an iconic franchise with strong businesses, and we are working very hard to continue to successfully execute on our strategy and deliver great value to our customers and shareholders."
The Conference Call
MetLife held its earnings conference call on February 14. Here is the first portion of Kandarian's opening remarks:
Most of my comments this morning will focus on the issue within our Retirement and Income Solutions business that caused us to delay earnings and take an after-tax charge of $331 million or $510 million pre-tax. Simply put, this is not our finest hour. We had an operational failure that never should have happened and it is deeply embarrassing. We are undertaking a thorough review of our practices, processes and people to understand where we fell short and how we can reset the bar at the high level people have come to expect from us over our 150-year history. The Board of Directors is fully engaged on this issue as well.
Replay of the Conference Call
According to the February 13 news release, the conference call will be available for replay by telephone for one week—specifically, until Wednesday, February 21, at 11:59 p.m. (EST). To listen to a replay by telephone, dial 800-475-6701 (U.S.) or 320-365-3844 (outside the U.S.). The access code for the replay is 433148. I am rushing this post in case any readers would like to listen to the replay by telephone.
The Advisory Report to the DOL
Shortly after I began writing about MetLife's lost pensioners, a reader brought to my attention a November 2013 advisory report submitted to Thomas E. Perez, then the Secretary of the U.S. Department of Labor (DOL). The report, produced by the Advisory Council on Employee Welfare and Pension Benefit Plans, is entitled "Locating Missing and Lost Participants." Here is the abstract:
The 2013 ERISA Advisory Council ("Council") examined the issues plan sponsors, fiduciaries, service providers, and other parties ("Plan Representatives") face in handling plan benefits payable to participants and beneficiaries who cannot be found or are nonresponsive ("Lost Participants"). The focus of the Council's examination was on both methods of maintaining contact with participants so they do not become Lost Participants and methods of finding participants once they become Lost Participants.
The Council learned from witnesses who testified that locating Lost Participants to pay them their benefits can be an administrative burden. Further, while there is DOL guidance on dealing with Lost Participants, that guidance is (i) focused on terminated defined contribution plans, (ii) presented in multiple sources rather than one central and cohesive resource, or (iii) outdated. Furthermore, there does not appear to be sufficient inter-agency coordination among the DOL, the Pension Benefit Guaranty Corporation, and the Social Security Administration to address overlapping issues surrounding Lost Participants. The Council makes several recommendations in this report regarding how to address each of these findings.
I am offering a complimentary 47-page PDF consisting of MetLife's February 13 news release without the unaudited statements (17 pages) and the advisory report to the DOL (30 pages). Email email@example.com and ask for the second February 2018 package about MetLife's lost pensioners.