MetLife 2012 Annual Report Download - page 205

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
other litigation. The MetLife Bank Divestiture may not relieve MetLife from complying with the consent decrees, or protect it from the inquiries and
investigations relating to residential mortgage servicing and foreclosure activities, or any fines, penalties, equitable remedies or enforcement actions that
may result, the costs of responding to any such governmental investigations, or other litigation. Management believes that the Company’s consolidated
financial statements as a whole will not be materially affected by the MetLife Bank regulatory matters.
United States of America v. EME Homer City Generation, L.P., et al. (W.D. Pa., filed January 4, 2011)
On January 4, 2011, the U.S. commenced a civil action in United States District Court for the Western District of Pennsylvania against EME Homer
City Generation L.P. (“EME Homer City”), Homer City OL6 LLC, and other defendants regarding the operations of the Homer City Generating Station, an
electricity generating facility. At the time the action was commenced, Homer City OL6 LLC, an entity owned by MLIC, was a passive investor with a non-
controlling interest in the electricity generating facility, which was solely operated by the lessee, EME Homer City. In a 2012 transaction, ownership of the
electricity generating facility was transferred to Homer City Generation, LP., and Homer City OL6 LLC was merged into Homer City Generation, L.P.
MLIC is a limited partner in Homer City Generation, LP. The complaint sought injunctive relief and assessment of civil penalties for alleged violations of
the federal Clean Air Act and Pennsylvania’s State Implementation Plan. The alleged violations were the subject of Notices of Violations (“NOVs”) that the
Environmental Protection Agency (“EPA”) issued to EME Homer City, Homer City OL6 LLC, and others in June 2008 and May 2010. On January 7,
2011, the United States District Court for the Western District of Pennsylvania granted the motion by the Pennsylvania Department of Environmental
Protection and the State of New York to intervene in the lawsuit as additional plaintiffs. On February 16, 2011, the State of New Jersey filed an
Intervenor’s Complaint in the lawsuit. On October 12, 2011, the court issued an order dismissing the U.S.’s lawsuit with prejudice. The Government
entities have appealed from the order granting defendants’ motion to dismiss. EME Homer City acknowledged its obligation to indemnify the owners of
the electricity generating facility for any claims relating to the NOVs. The Sierra Club, which, in a February 13, 2012 letter to the operator and ownersof
the electricity generating facility had stated its intent to sue for alleged violations of the Clean Air Act, subsequently indicated that it does not intend to
commence suit. As a result of the change in the ownership structure, the parties to the proceeding no longer include a subsidiary of MetLife.
In the Matter of Chemform, Inc. Site, Pompano Beach, Broward County, Florida
In July 2010, the EPA advised MLIC that it believed payments were due under two settlement agreements, known as “Administrative Orders on
Consent,” that New England Mutual Life Insurance Company (“New England Mutual”) signed in 1989 and 1992 with respect to the cleanup of a
Superfund site in Florida (the “Chemform Site”). The EPA originally contacted MLIC (as successor to New England Mutual) and a third party in 2001, and
advised that they owed additional clean-up costs for the Chemform Site. The matter was not resolved at that time. The EPA is requesting payment of an
amount under $1 million from MLIC and such third party for past costs and an additional amount for future environmental testing costs at the Chemform
Site. In June 2012, the EPA, MLIC and the third party executed an Administrative Order on Consent under which MLIC and the third party have agreed to
be responsible for certain environmental testing at the Chemform site. The Company estimates that its costs for the environmental testing will not exceed
$100,000. The June 2012 Administrative Order on Consent does not resolve the EPA’s claim for past clean-up costs. The EPA may seek additional costs
if the environmental testing identifies issues. The Company estimates that the aggregate cost to resolve this matter will not exceed $1 million.
Metco Site, Hicksville, Nassau County, New York
On February 22, 2012, the New York State Department of Environmental Conservation (“Department of Environmental Conservation”) issued a notice
to MLIC, as purported successor in interest to New England Mutual, that it is a potentially responsible party with respect to hazardous substances and
hazardous waste located on a property that New England Mutual owned for a time in 1978. MLIC has responded to the Department of Environmental
Conservation and asserted that it is not a potentially responsible party under the law.
Sales Practices Regulatory Matters
Regulatory authorities in a small number of states and FINRA, and occasionally the SEC, have had investigations or inquiries relating to sales of
individual life insurance policies or annuities or other products by MLIC, MICC, New England Life Insurance Company and General American Life
Insurance Company (“GALIC”), and four Company broker-dealers, which are MetLife Securities, Inc., New England Securities Corporation, Walnut Street
Securities, Inc. and Tower Square Securities, Inc. These investigations often focus on the conduct of particular financial services representatives and the
sale of unregistered or unsuitable products or the misuse of client assets. Over the past several years, these and a number of investigations by other
regulatory authorities were resolved for monetary payments and certain other relief, including restitution payments. The Company may continue to
resolve investigations in a similar manner. The Company believes adequate provision has been made in its consolidated financial statements for all
probable and reasonably estimable losses for these sales practices-related investigations or inquiries.
Unclaimed Property Inquiries and Related Litigation
In April 2012, the Company reached agreements with representatives of the U.S. jurisdictions that were conducting audits of MetLife, Inc. and certain
of its affiliates for compliance with unclaimed property laws, and with state insurance regulators directly involved in a multistate targeted market conduct
examination relating to claim-payment practices and compliance with unclaimed property laws. At December 31, 2012, the unclaimed property
regulators of 39 states and the District of Columbia, and the insurance regulators of 48 states and the District of Columbia have accepted the respective
agreements. Pursuant to the agreements, the Company will, among other things, take specified action to identify liabilities under life insurance, annuity,
and retained asset contracts, to adopt specified procedures for seeking to contact and pay owners of the identified liabilities, and, to the extent that it is
unable to locate such owners, to escheat these amounts with interest at a specified rate to the appropriate states. Additionally, the Company has
agreed to accelerate the final date of certain industrial life policies and to escheat unclaimed benefits of such policies. Pursuant to the agreement to
resolve the market conduct examination, MetLife, Inc. made a $40 million multi-state examination payment, to be allocated among the settling states.In
the third quarter of 2011, the Company incurred a $117 million after tax charge to increase reserves in connection with the Company’s use of the U.S.
Social Security Administration’s Death Master File and similar databases to identify potential life insurance claims that had not been presented to the
Company. In the first quarter of 2012, the Company recorded a $52 million after tax charge for the multistate examination payment and the expected
acceleration of benefit payments to policyholders under the settlements. On September 20, 2012, the West Virginia Treasurer filed an action against
MLIC in West Virginia state court (West Virginia ex rel. John D. Perdue v. Metropolitan Life Insurance Company, Circuit Court of Putnam County, Civil
Action No. 12-C-295) alleging that the Company violated the West Virginia Uniform Unclaimed Property Act, seeking to compel compliance with the
Act, and seeking payment of unclaimed property, interest, and penalties. On November 14, 2012, November 21, 2012, December 28, 2012, and
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