Front facade of SEC buildingMetLife has agreed to cough up $10 million to settleSEC allegations that it violated internalaccounting controls related to reserves associated with itsannuities businesses.

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According to the Wall Street Journal, this settlement followsthose with state authorities in Massachusetts and New York after itmiscalculated pension payments, resulting in almost $21 million inpenalties.

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MetLife itself came forward in 2017 after it found that itsefforts to locate beneficiaries ofprivate-sector pension plans for which it had taken responsibilityunder pension risk transfer deals fell far short of the mark.Instead of pursuing searches, it had simply listed people asdeceased or unresponsive who didn't answer a few attempts at mailcontact.

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Following that, it released funds for pension payments thatshould have been held in reserve for those recipients, and actuallyrecorded the money as profit.

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The company ended up making a determination that its procedureshad been inadequate, and undergoing a revamp of the steps taken tolocate beneficiaries. It also boosted its reserves for payment ofpensions by $510 million at the end of 2017. Some of the amountsowed beneficiaries stretched back as far as the 1990s, in amountsof less than $150 per month.

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Separately, the report said, MetLife had overstated its reservesand understated its income regarding variable annuities assumedthrough one of its subsidiaries. The report said Metlife "disclosedthat it revised its 2017 earnings upward after discovering it hadpreviously miscalculated reserves for a retirement-savings productin Japan."

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This was another self-reported error that the company cited as a"failure to properly incorporate the policyholder withdrawals intoits valuation model." It cast additional shade on the company'sinternal controls, with the company saying that the error"represents a material weakness in internal controls over financialreporting," but that the miscalculation "had no impact on paymentsto customers."

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The SEC filing said that in 2017, MetLife cut reserves by $896million to correct for the error and said, "We successfullyremediated both material weaknesses associated with this settlementas of December 2018."

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