MetLife Will Take $275 Million In Charges in Q3, 2011

MetLife was subpoenaed by the California regulators earlier this year for its benefits payout practices. The regulators served the subpoena after a state audit found the company failed to pay even when it knew the insured was dead.

The regulators have been conducting a nationwide audit into the industry practice of using the Social Security Administration’s “Death Master File” for ending annuity payments but not to look out for or pay insurance policyholders.

MetLife said it would have to make after-tax provisions of $115 million to $135 million for reserves for cases where claims are due.

Catastrophe losses in its home and auto business will cost it another $80 million to $100 million for the quarter, more than twice what it had expected to pay. It blamed late August’s hurricane Irene for the additional losses, much like other insurers.

MetLife will take another $40 million charge during the period for the liquidation of the Executive Life Insurance Company of New York, its share of liability under the industry guaranty agreements. The insurer Executive Life went into rehabilitation two decades ago in 1991, and the New York authorities decided to go for liquidation this September.

MetLife is expected to report full results for the quarter by month-end. Analysts forecast weak earnings for the insurance industry in particular for the quarter as stock market volatility and low interest rates are expected to hurt investment income.

The market responded to the news along expected lines and MetLife shares, which were the top gainer among S&P insurance stocks on Thursday, lost 2.8 percent in after-hour trading to $29.83 on the news.