MetLife 2011 Annual Report Download - page 204

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales
practices matters.
International Litigation
Sun Life Assurance Company of Canada v. Metropolitan Life Ins. Co. (Super. Ct., Ontario, October 2006). In 2006, Sun Life Assurance Company
of Canada (“Sun Life”), as successor to the purchaser of MLIC’s Canadian operations, filed this lawsuit in Toronto, seeking a declaration that MLIC
remains liable for “market conduct claims” related to certain individual life insurance policies sold by MLIC and that have been transferred to Sun Life.
Sun Life had asked that the court require MLIC to indemnify Sun Life for these claims pursuant to indemnity provisions in the sale agreement for the sale
of MLIC’s Canadian operations entered into in June of 1998. In January 2010, the court found that Sun Life had given timely notice of its claim for
indemnification but, because it found that Sun Life had not yet incurred an indemnifiable loss, granted MLIC’s motion for summary judgment. Both
parties appealed. In September 2010, Sun Life notified MLIC that a purported class action lawsuit was filed against Sun Life in Toronto, Kang v. Sun Life
Assurance Co. (Super. Ct., Ontario, September 2010), alleging sales practices claims regarding the same individual policies sold by MLIC and
transferred to Sun Life. An amended class action complaint in that case was served on Sun Life, again without naming MLIC as a party. On August 30,
2011, Sun Life notified MLIC that a purported class action lawsuit was filed against Sun Life in Vancouver, Alamwala v. Sun Life Assurance Co. (Sup.
Ct., British Columbia, August 2011), alleging sales practices claims regarding certain of the same policies sold by MLIC and transferred to Sun Life. Sun
Life contends that MLIC is obligated to indemnify Sun Life for some or all of the claims in these lawsuits. The Company is unable to estimate the
reasonably possible loss or range of loss arising from this litigation.
Italy Fund Redemption Suspension Complaints and Litigation. As a result of suspension of withdrawals and diminution in value in certain funds
offered within certain unit-linked policies sold by the Italian branch of Alico Life International, Ltd. (“ALIL”), a number of policyholders invested in those
funds have either commenced or threatened litigation against ALIL, alleging misrepresentation, inadequate disclosures and other related claims. These
policyholders contacted ALIL beginning in July 2009 alleging that the funds operated at variance to the published prospectus and that prospectus risk
disclosures were allegedly wrong, unclear, and misleading. The limited number of lawsuits that have been filed to date have either been resolved or are
proceeding through litigation. In March 2011, ALIL began implementing a plan to resolve policyholder claims. Under the plan, ALIL will provide liquidity to
the suspended funds so that policyholders may withdraw investments in these funds, and ALIL will offer policyholders amounts in addition to the
liquidation value of the suspended funds based on the performance of other relevant financial products. The settlement program achieved a 96%
acceptance rate. Those policyholders who did not accept the settlement may still pursue other remedies or commence individual litigation. The formal
investigation opened by the Milan public prosecutor into the actions of ALIL employees, as well as of employees of ALIL’s major distributor, has been
dismissed by the court. Under the terms of the stock purchase agreement dated as of March 7, 2010, as amended, by and among MetLife, Inc., AIG
and AM Holdings, AIG has agreed to indemnify MetLife, Inc. and its affiliates for third party claims and regulatory fines associated with ALIL’s suspended
funds. Due to the acknowledged indemnification obligation, this matter is not included in the aggregate estimate of range of reasonably possible loss.
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, mortgage lending bank, 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. 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 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 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. In addition, Japan has established the Life Insurance
Policyholders Protection Corporation of Japan as a contingency to protect policyholders against the insolvency of life insurance companies in Japan
through assessments to companies licensed to provide life insurance.
200 MetLife, Inc.