MetLife Files Correction With SEC After Miscalculating 2014 Risk-Based Capital Ratio
October 16, 2015 by Thomas Harman, Washington Bureau manager, BestWeek: Tom.Harman@ambest.com
WASHINGTON – MetLife Inc. miscalculated its combined risk-based capital ratio for 2014 and has filed a correction with the U.S. Securities and Exchange Commission.
The company’s internally defined combined risk-based capital ratio should have been 398% instead of being in excess of 400% as previously reported in the 10-K form and as was mentioned in MetLife’s first-quarter 2015 earnings call, the filing said.
MetLife made the correction following an internal review of risk-based capital models of its insurance subsidiaries. The adjustment was made to a component of the risk-based capital ratio for subsidiary MetLife Insurance Co. USA and it related to the amount of projected claims on certain variable annuities with guaranteed lifetime withdrawal benefits. The risk-based capital ratio for MetLife USA on Dec. 31, 2014, remained above 350% and did not impact MetLife USA’s statutory capital and surplus, or statutory net income during 2014, the statement said.
The correction has no other impact on financial statements made in the 10-K form, the company said in a statement. MetLife offered no additional comment beyond what was in the corrected form.
MetLife in early 2012 began an internal review of its various product lines and distribution channels. The result was the company’s exit from the universal life secondary guarantee market and a 40% cut to variable annuities sales while it redesigned its variable annuities portfolio (Best’s News Service, May 31, 2013). At that time, it introduced a new line of whole life insurance products and cut back on its sales personnel.
But Eric Steigerwalt, executive vice president, told the Keefe Bruyette & Woods 2015 Insurance Conference that variable annuities sales bounced back by 16% for the year. This was partly due to the introduction of FlexChoice, a variable annuities rider that features a guaranteed withdrawal benefit that guarantees lifetime income, even if a market decline or withdrawals drain the client’s entire account. Steigerwalt said MetLife would become a top player in the variable annuities business (Best’s News Service, Sept. 9, 2015).
On the afternoon of Oct. 14, MetLife Inc. (NYSE: MET) stock was trading on the New York exchange at $47.14 per share, down 1.55% from the prior close.
Metropolitan Life Insurance Co. currently has a Best’s Financial Strength Rating of A+ (Superior).
