MetLife to pay $60M in NY state licensing probe
NEW YORK (AP) — Insurer MetLife will pay $60 million to resolve claims that two subsidiaries solicited business without state licenses and lied to regulators about the extent of their New York operations, courting multinational clients in such spots as a Manhattan dining room while saying they didn't seek customers in the state, authorities announced Monday.
MetLife Inc. will pay $50 million to the state Department of Financial Services plus $10 million to the Manhattan district attorney's office. In return, they won't lodge criminal charges or a lawsuit over the allegations against MetLife, while they continue investigating the subsidiaries' activities under prior owner American International Group Inc.
"New York is a center of global commerce," District Attorney Cyrus R. Vance Jr. said in a statement, and "the privilege of soliciting business in Manhattan carries with it certain rules that must apply to all who benefit from our consumers and economy."
MetLife said it was looking forward to continuing to hold meetings and discussions with global clients in its headquarters state. AIG, meanwhile, argued that no laws were broken.
The allegations concern MetLife subsidiaries American Life Insurance Co., known as ALICO, and Delaware American Life Insurance Co., or DelAm.
Both have long provided life, disability and other insurance benefits to large companies for employees working outside the United States. MetLife bought them from AIG in 2010 for about $16.2 billion.
State law requires a license to solicit insurance business within the state. Neither ALICO nor DelAm had a New York license until DelAm got one last year, the district attorney's office said. MetLife has agreed to obtain other required licenses.
In July 2009, ALICO representatives told state insurance regulators that the company had "no insurance operations conducted in New York," adding that while it had executive offices in Manhattan, the staffers there didn't propose insurance contracts or approach anyone to buy them, according to the state Department of Financial Services. Insurance regulators at the time concluded the company's New York activities might be considered "back-office" functions that wouldn't need a license.
But the investigation later found ALICO and DelAm were doing much more than that in New York, authorities said.
The firms had New York-based sales representatives and held sales meetings, visited clients and conducted sales "road shows" in New York, according to the state's agreement with MetLife. One gathering, in AIG's Manhattan corporate dining room, aimed to generate $25 million in new business from companies with operations in Brazil, the agreement says.
Overall, ALICO and other insurers collected $900 million in premiums from new contracts and renewals involving New York sales reps from 2007 to 2012, the agreement says.
AIG pushed back Monday against the authorities' portrayal, maintaining that the licensing requirement applies only to out-of-state insurers issuing policies that cover New Yorkers.
"Moreover, there is no allegation, and we are aware of no evidence, that anyone has been harmed by the conduct at issue," AIG said in a statement.
Regulators were unmoved.
"Obviously, we strongly disagree," said Matt Anderson, a spokesman for state Financial Services Superintendent Benjamin M. Lawsky.
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Reach Jennifer Peltz on Twitter @jennpeltz.
