MetLife 2006 Annual Report Download - page 138

claims by policyholders for coverage for damages stemming from Hurricane Katrina, including for damages resulting from flooding or storm
surge. It is reasonably possible that other actions will be filed. The Company is vigorously defending against the claims in these matters.
Stern v. Metropolitan Casualty Ins. Co. (S.D. Fla., filed October 18, 1999). A putative class action, seeking compensatory damages
and injunctive relief has been filed against MPC’s subsidiary, Metropolitan Casualty Insurance Company, in Florida alleging breach of
contract and unfair trade practices with respect to allowing the use of parts not made by the original manufacturer to repair damaged
automobiles. Discovery is ongoing and a motion for class certification is pending. The Company is vigorously defending against the claims
in this matter.
Shipley v. St. Paul Fire and Marine Ins. Co. and Metropolitan Property and Casualty Ins. Co. (Ill. Cir. Ct., Madison County, filed February
26 and July 2, 2003). Two putative nationwide class actions have been filed against MPC in Illinois. One suit claims breach of contract
and fraud due to the alleged underpayment of medical claims arising from the use of a purportedly biased provider fee pricing system. A
motion for class certification has been filed and briefed. The second suit originally alleged breach of contract and fraud arising from the
alleged use of preferred provider organizations to reduce medical provider fees covered by the medical claims portion of the insurance
policy. The court granted MPC’s motion to dismiss the fraud claim in the second suit. A motion for class certification has been filed and
briefed. The Company is vigorously defending against the claims in these matters.
Regulatory Matters and Related Litigation
Regulatory bodies have contacted the Company and have requested information relating to market timing and late trading of mutual
funds and variable insurance products and, generally, the marketing of products. The Company believes that many of these inquiries are
similar to those made to many financial services companies as part of industry-wide investigations by various regulatory agencies. The SEC
has commenced an investigation with respect to market timing and late trading in a limited number of privately-placed variable insurance
contracts that were sold through General American. As previously reported, in May 2004, General American received a Wells Notice stating
that the SEC staff is considering recommending that the SEC bring a civil action alleging violations of the U.S. securities laws against
General American. Under the SEC procedures, General American can avail itself of the opportunity to respond to the SEC staff before it
makes a formal recommendation regarding whether any action alleging violations of the U.S. securities laws should be considered. General
American has responded to the Wells Notice. The Company is fully cooperating with regard to these information requests and inves-
tigations. The Company at the present time is not aware of any systemic problems with respect to such matters that may have a material
adverseeffectontheCompany’sconsolidated financial position.
In December 2006, Metropolitan Life resolved a previously disclosed investigation by the Office of the Attorney General of the State of
New York related to payments to intermediaries in the marketing and sale of group life and disability, group long-term care and group
accidental death and dismemberment insurance and related matters. In the settlement, Metropolitan Life did not admit liability as to any
issue of fact or law. Among other things, Metropolitan Life has agreed to certain business reforms relating to compensation of producers of
group insurance, compensation disclosures to group insurance clients and the adoption of related standards of conduct, some of which it
had implemented following the commencement of the investigation. Metropolitan Life has paid a fine and has made a payment to a
restitution fund. It is the opinion of management that Metropolitan Life’s resolution of this matter will not adversely affect its business. The
Company has received subpoenas and/or other discovery requests from regulators, state attorneys general or other governmental
authorities in other states, including Connecticut, Massachusetts, California, Florida, and Ohio, seeking, among other things, information
and documents regarding contingent commission payments to brokers, the Company’s awareness of any “sham” bids for business, bids
and quotes that the Company submitted to potential customers, incentive agreements entered into with brokers, or compensation paid to
intermediaries. The Company also has received a subpoena from the Office of the U.S. Attorney for the Southern District of California
asking for documents regarding the insurance broker Universal Life Resources. The Company continues to cooperate fully with these
inquiries and is responding to the subpoenas and other discovery requests.
Approximately sixteen broker-related lawsuits in which the Company was named as a defendant were filed. Voluntary dismissals and
consolidations have reduced the number of pending actions to two:
The People of the State of California, by and through John Garamendi, Ins. Commissioner of the State of California v. MetLife, Inc., et al.
(Cal. Super. Ct., County of San Diego, filed November 18, 2004). The California Insurance Commissioner filed suit against Metropolitan Life
and other non-affiliated companies alleging that the defendants violated certain provisions of the California Insurance Code. This action
seeks injunctive relief relating to compensation disclosures.
In Re Ins. Brokerage Antitrust Litig. (D. N.J., filed February 24, 2005). In this multi-district proceeding, plaintiffs have filed an amended
class action complaint consolidating the claims from separate actions that had been filed in or transferred to the District of New Jersey in
2004 and 2005. The consolidated amended complaint alleges that the Holding Company, Metropolitan Life, several non-affiliated
insurance companies and several insurance brokers violated RICO, ERISA, and antitrust laws and committed other misconduct in the
context of providing insurance to employee benefit plans and to persons who participate in such employee benefit plans. Plaintiffs seek to
represent classes of employers that established employee benefit plans and persons who participated in such employee benefit plans. A
motion for class certification has been filed. A motion to dismiss has not been fully decided. Plaintiffs in several other actions have
voluntarily dismissed their claims. The Company is vigorously defending against the claims in these matters.
Following an inquiry commencing in March 2004, the staff of NASD notified MSI that it made a preliminary determination to recommend
charging MSI with the failure to adopt, maintain and enforce written supervisory procedures reasonably designed to achieve compliance
with suitability requirements regarding the sale of college savings plans, also known as 529 plans. This notification followed an industry-
F-55MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)