MetLife 2005 Annual Report Download - page 107

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Sales Practices Claims
Over the past several years, Metropolitan Life, New England Mutual Life Insurance Company (‘‘New England Mutual’’) and General American Life
Insurance Company (‘‘General American’’) have faced numerous claims, including class action lawsuits, alleging improper marketing and sales of
individual life insurance policies or annuities. These lawsuits generally are referred to as ‘‘sales practices claims.’’
In December 1999, a federal court approved a settlement resolving sales practices claims on behalf of a class of owners of permanent life insurance
policies and annuity contracts or certificates issued pursuant to individual sales in the United States by Metropolitan Life, Metropolitan Insurance and
Annuity Company or Metropolitan Tower Life Insurance Company between January 1, 1982 and December 31, 1997.
Similar sales practices class actions against New England Mutual, with which Metropolitan Life merged in 1996, and General American, which was
acquired in 2000, have been settled. In October 2000, a federal court approved a settlement resolving sales practices claims on behalf of a class of
owners of permanent life insurance policies issued by New England Mutual between January 1, 1983 through August 31, 1996. A federal court has
approved a settlement resolving sales practices claims on behalf of a class of owners of permanent life insurance policies issued by General American
between January 1, 1982 through December 31, 1996. An appellate court has affirmed the order approving the settlement.
Certain class members have opted out of the class action settlements noted above and have brought or continued non-class action sales practices
lawsuits. In addition, other sales practices lawsuits, including lawsuits or other proceedings relating to the sale of mutual funds and other products, have
been brought. As of December 31, 2005, there are approximately 338 sales practices litigation matters pending against Metropolitan Life; approximately
45 sales practices litigation matters pending against New England Mutual, New England Life Insurance Company, and New England Securities
Corporation (collectively, ‘‘New England’’); approximately 34 sales practices litigation matters pending against General American; and approximately 35
sales practices litigation matters pending against Walnut Street Securities, Inc. (‘‘Walnut Street’’). In addition, similar litigation matters are pending against
MetLife Securities, Inc. (‘‘MSI’’). Metropolitan Life, New England, General American, MSI and Walnut Street continue to defend themselves vigorously
against these litigation matters. Some individual sales practices claims have been resolved through settlement, won by dispositive motions, or, in a few
instances, 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, mutual funds and other products 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.
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, General American, MSI and Walnut Street.
Regulatory authorities in a small number of states have had investigations or inquiries relating to Metropolitan Life’s, New England’s, General
American’s, MSI’s or Walnut Street’s sales of individual life insurance policies or annuities or other products. 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 also 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 principally have 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 have alleged 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. Since 2002, trial courts in California, Utah, Georgia, New York, Texas, and Ohio 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.
Metropolitan Life continues to study its claims experience, review external literature regarding asbestos claims experience in the United States and
consider numerous variables that can affect its asbestos liability exposure, including bankruptcies of other companies involved in asbestos litigation and
legislative and judicial developments, to identify trends and to assess their impact on the recorded asbestos liability.
Bankruptcies of other companies involved in asbestos litigation, as well as advertising by plaintiffs’ asbestos lawyers, may be resulting in an increase
in the cost of resolving claims and could result in an increase in the number of trials and possible adverse verdicts Metropolitan Life may experience.
Plaintiffs are seeking additional funds from defendants, including Metropolitan Life, in light of such bankruptcies by certain other defendants. In addition,
publicity regarding legislative reform efforts may result in an increase or decrease in the number of claims.
Metropolitan Life previously reported that it had received approximately 23,500 asbestos-related claims in 2004. In the context of reviewing in the
third quarter of 2005 certain pleadings received in 2004, it was determined that there was a small undercount of Metropolitan Life’s asbestos-related
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