MetLife 2007 Annual Report Download - page 154

Thomas, et al. v. Metropolitan Life Ins. Co., et al. (W.D. Okla., filed January 31, 2007). A putative class action complaint was filed
against MLIC and MSI. Plaintiffs assert legal theories of violations of the federal securities laws and violations of state laws with respect to
the sale of certain proprietary products by the Company’s agency distribution group. Plaintiffs seek rescission, compensatory damages,
interest, punitive damages and attorneys’ fees and expenses. The Company is vigorously defending against the claims in this matter.
MLIC also has been named as a defendant in a number of welding and mixed dust lawsuits filed in various state and federal courts. The
Company is continuing to vigorously defend against these claims.
Summary
Putative or certified class action litigation and other litigation and claims and assessments against the Company, in addition to those
discussed previously and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the course of
the Company’s business, including, but not limited to, in connection with its activities as an insurer, employer, investor, investment advisor
and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct
investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.
It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of
potential losses, except as noted previously in connection with specific matters. In some of the matters referred to previously, very large
and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations it is possible
that an adverse outcome in certain cases could have a material adverse effect upon the Company’s financial position, based on information
currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not
likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent
unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect
on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.
Insolvency Assessments
Most of the jurisdictions in which the Company is admitted to transact business require insurers doing business within the jurisdiction to
participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by
impaired, insolvent or failed insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular
state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired,
insolvent or failed insurer engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax
offsets. Assets and liabilities held for insolvency assessments are as follows:
2007 2006
December 31,
(In millions)
Other Assets:
Premiumtaxoffsetforfutureundiscountedassessments.................................... $40 $45
Premium tax offsets currently available for paid assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7
Receivableforreimbursementofpaidassessments(1) ..................................... 7 10
$53 $62
Liability:
Insolvencyassessments......................................................... $74 $90
(1) The Company holds a receivable from the seller of a prior acquisition in accordance with the purchase agreement.
Assessments levied against the Company were ($1) million, $2 million and $4 million for the years ended December 31, 2007, 2006 and
2005, respectively.
Impact of Hurricanes
On August 29, 2005, Hurricane Katrina made landfall in the states of Louisiana, Mississippi and Alabama, causing catastrophic damage
to these coastal regions. MetLife’s cumulative gross losses from Hurricane Katrina were $314 million, $333 million and $335 million at
December 31, 2007, 2006 and 2005, respectively, primarily arising from the Company’s homeowners business. During the years ended
December 31, 2007, 2006 and 2005, the Company recognized net losses, net of income tax and reinsurance recoverables and including
reinstatement premiums and other reinsurance-related premium adjustments related to the catastrophe, of ($13) million, ($2) million and
$134 million, respectively.
On October 24, 2005, Hurricane Wilma made landfall across the state of Florida. MetLife’s cumulative gross losses from Hurricane
Wilma were $66 million, $64 million and $57 million at December 31, 2007, 2006 and 2005, respectively, primarily arising from the
Company’s homeowners and automobile businesses. During the years ended December 31, 2006 and 2005, the Company’s Auto & Home
segment recognized net losses, net of income tax and reinsurance recoverables, of ($3) million and $32 million, respectively, related to
Hurricane Wilma. The Company did not recognize any loss during the year ended December 31, 2007, related to Hurricane Wilma.
Additional hurricane-related losses may be recorded in future periods as claims are received from insureds and claims to reinsurers are
processed. Reinsurance recoveries are dependent upon the continued creditworthiness of the reinsurers, which may be affected by their
other reinsured losses in connection with Hurricanes Katrina and Wilma and otherwise. In addition, lawsuits, including purported class
actions, have been filed in Louisiana and Mississippi challenging denial of claims for damages caused to property during Hurricane Katrina.
Metropolitan Property and Casualty Insurance Company is a named party in some of these lawsuits. In addition, rulings in cases in which
Metropolitan Property and Casualty Insurance Company is not a party may affect interpretation of its policies. Metropolitan Property and
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MetLife, Inc.
Notes to Consolidated Financial Statements — (Continued)