MetLife 2002 Annual Report Download - page 76

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
have gone to trial. Most of the current cases seek substantial damages, including in some cases punitive and treble damages and attorneys’ fees.
Additional litigation relating to the Company’s marketing and sales of individual life insurance may be commenced in the future.
The Metropolitan Life class action settlement did not resolve two putative class actions involving sales practices claims filed against Metropolitan Life
in Canada, and these actions remain pending. In March 2002, a purported class action complaint was filed in a federal court in Kansas by S-G Metals
Industries, Inc. against New England Mutual. The complaint seeks certification of a class on behalf of corporations and banks that purchased participating
life insurance policies, as well as persons who purchased participating policies for use in pension plans or through work site marketing. These
policyholders were not part of the New England Mutual class action settlement noted above. The action was transferred to a federal court in
Massachusetts. New England Mutual moved to dismiss the case and in November 2002, the federal district court dismissed the case. S-G Metals has
filed a notice of appeal. New England Mutual intends to continue to defend itself vigorously against the case.
The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses
for sales practices claims against Metropolitan Life, New England Mutual and General American.
Regulatory authorities in a small number of states have had investigations or inquiries relating to Metropolitan Life’s, New England Mutual’s or General
American’s sales of individual life insurance policies or annuities. Over the past several years, these and a number of investigations by other regulatory
authorities were resolved for monetary payments and certain other relief. The Company may continue to resolve investigations in a similar manner.
Asbestos-Related Claims
Metropolitan Life is a defendant in thousands of lawsuits seeking compensatory and punitive damages for personal injuries allegedly caused by
exposure to asbestos or asbestos-containing products. Metropolitan Life has never engaged in the business of manufacturing, producing, distributing or
selling asbestos or asbestos-containing products nor has Metropolitan Life issued liability or workers’ compensation insurance to companies in the
business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. Rather, these lawsuits have principally been
based upon allegations relating to certain research, publication and other activities of one or more of Metropolitan Life’s employees during the period from
the 1920’s through approximately the 1950’s and alleging that Metropolitan Life learned or should have learned of certain health risks posed by asbestos
and, among other things, improperly publicized or failed to disclose those health risks. Metropolitan Life believes that it should not have legal liability in
such cases.
Legal theories asserted against Metropolitan Life have included negligence, intentional tort claims and conspiracy claims concerning the health risks
associated with asbestos. Although Metropolitan Life believes it has meritorious defenses to these claims, and has not suffered any adverse monetary
judgments in respect of these claims, due to the risks and expenses of litigation, almost all past cases have been resolved by settlements. Metropolitan
Life’s defenses (beyond denial of certain factual allegations) to plaintiffs’ claims include that: (i) Metropolitan Life owed no duty to the plaintiffs — it had no
special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs
cannot demonstrate justifiable detrimental reliance; and (iii) plaintiffs cannot demonstrate proximate causation. In defending asbestos cases, Metropolitan
Life selects various strategies depending upon the jurisdictions in which such cases are brought and other factors which, in Metropolitan Life’s judgment,
best protect Metropolitan Life’s interests. Strategies include seeking to settle or compromise claims, motions challenging the legal or factual basis for
such claims or defending on the merits at trial. In early 2002 and in early 2003, two trial courts granted motions dismissing claims against Metropolitan
Life on some or all of the above grounds. Other courts have denied motions brought by Metropolitan Life to dismiss cases without the necessity of trial.
There can be no assurance that Metropolitan Life will receive favorable decisions on motions in the future. Metropolitan Life intends to continue to
exercise its best judgment regarding settlement or defense of such cases, including when trials of these cases are appropriate.
The following table sets forth the total number of asbestos personal injury claims pending against Metropolitan Life as of the dates indicated, the
number of new claims during the years ended on those dates and the total settlement payments made to resolve asbestos personal injury claims during
those years:
At or for the years
ended December 31,
2002 2001 2000
(Dollars in millions)
Asbestos personal injury claims at year end (approximate) **************************** 106,500 89,000 73,000
Number of new claims during the year (approximate) ******************************** 66,000 59,500 54,500
Settlement payments during the year(1)******************************************** $ 95.1 $ 90.7 $ 71.1
(1) Settlement payments represent payments made by Metropolitan Life during the year in connection with settlements made in that year and in prior
years. Amounts do not include Metropolitan Life’s attorneys’ fees and expenses and do not reflect amounts received from insurance carriers.
During the fourth quarter of 2002, Metropolitan Life analyzed its claims experience and reviewed external publications and numerous variables to
identify trends and assessed their impact on its recorded asbestos liability. Certain publications suggest a trend towards more asbestos-related claims
and a greater awareness of asbestos litigation generally by potential plaintiffs and plaintiffs’ lawyers. Plaintiffs’ lawyers continue to advertise heavily with
respect to asbestos litigation. Bankruptcies and reorganizations of other defendants in asbestos litigation may increase the pressures on remaining
defendants, including Metropolitan Life. Through the first nine months of 2002, the number of new claims received by Metropolitan Life was lower than
those received during the comparable 2001 period. However, the number of new claims received by Metropolitan Life during the fourth quarter of 2002
was significantly higher than those received in the prior year quarter, resulting in more new claims being received by Metropolitan Life in 2002 than in
2001. Factors considered also included expected trends in filing cases, the dates of initial exposure of plaintiffs to asbestos, the likely percentage of total
asbestos claims which included Metropolitan Life as a defendant and experience in claims settlement negotiations.
Metropolitan Life also considered views derived from actuarial calculations it made in the fourth quarter of 2002. These calculations were made
using, among other things, current information regarding Metropolitan Life’s claims and settlement experience, information available in public reports, as
well as a study regarding the possible future incidence of mesothelioma. Based on all of the above information, including greater than expected claims
experience over the last three years, Metropolitan Life expects to receive more claims in the future than it had previously expected. Previously,
MetLife, Inc.
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