MetLife is the latest insurer to pay a multi-million dollar penalty in a series of regulatory crackdowns by New York State Department of Financial Services (DFS). Just weeks after fining AXA’s US unit $20 million—the largest fine ever issued against an insurer in the state—Superintendent of Financial Services Benjamin Lawsky announced DFS had reached $60 million settlement with MetLife following a breach of insurance law.
According to New York officials, MetLife allowed two of its subsidiaries to operate in the state without first obtaining a state-required license to sell insurance. In that period, American Life Insurance and Delaware American Life Insurance generated about $900 million in premiums for their parent company. The violations occurred from 2007 to 2012, after MetLife acquired the companies from AIG, New York officials said.
MetLife announced Monday it would pay the fine, which amounted to $50 million to the DFS and $10 million to the Manhattan district attorney’s office, out of its first quarter earnings. It denied previously setting aside money for the settlement.
“[MetLife] looks forward to continuing to provide our multinational clients with solutions for their growing global employee benefit needs,” commented MetLife spokesman Randolph J. Clerihue. He added that the settlement would allow MetLife’s subsidiaries to “continue to have meetings and discussions in New York with our multinational clients.”
AIG, however, was not so sanguine regarding DFS findings.
“AIG disagrees that the conduct in question violated the law,” said company spokesman Jon Diat. “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.”
Lawsky was firm in the DFS stance, stressing that the department “will continue to aggressively investigate and pursue wrongdoing within this industry wherever we uncover it.”
“MetLife did the right thing by stepping up to resolve this matter,” he said.
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