MetLife Reaches $60 Million Settlement With New York Authorities

MetLife, one of the world’s largest insurers, is paying a $60 million penalty to the authorities in New York for permitting two subsidiaries to operate without first obtaining the required license to sell insurance.

New York officials reached the settlement after finding that the MetLife subsidiaries had solicited business in the state without having a license and also misled state insurance officials about their activities. MetLife acquired the subsidiaries from American International Group in 2010 and the improper conduct dates back as far as 2007, according to New York officials.

In settling with New York authorities, MetLife agreed to pay a fine of $50 million to the New York State Department of Financial Services and a $10 million fine to the Manhattan district attorney’s office. The settlement with New York prosecutors included a deferred prosecution agreement, which was a recognition of the fact that MetLife cooperated with the investigation.

State regulators found that the two former AIG subsidiaires, American Life Insurance and Delaware American Life Insurance, generated about $900 million in premiums from selling and renewing insurance policies sold by New York sales representatives to multinational companies from 2007 to 2012. State officials said the violations ended in 2012. New York requires insurers entities to obtain a license to sell insurance if they solicit business within the state.

Randolph J. Clerihue, a MetLife spokesman, said with the settlement, the company looks “forward to continuing to provide our multinational clients with solutions for their growing global employee benefits needs.” He said the settlement will permit the MetLife subsidiaries to “continue to have meetings and discussions in New York with our multinational clients.”

MetLife said it would take a charge against its first quarter earnings to cover the cost of the settlement. The company said it had not previously put money for the settlement in reserve.

The insurer purchased the two AIG subsidiaries in 2010 for about $16 billion, at a time that AIG was selling off some of its businesses. The two divisions sold insurance protection to large multinational companies for employees working overseas.

Jon Diat, an AIG spokesman, said the company took issue with the findings of the New York authorities. “AIG disagrees that the conduct in question violated the law,” he said. “Decades of industry practice and the plain language of the relevant statute make clear that a New York license is required only where a foreign insurer issues policies covering New Yorkers.”

New York regulators said they would continue to investigate the conduct of the subsidiaries prior to the period that MetLife acquired them from AIG.

“Our department will continue to aggressively investigate and pursue wrongdoing within this industry wherever we uncover it,” said Benjamin M. Lawsky, the New York superintendent of financial services. “MetLife did the right thing by stepping up to resolve this matter.”