Don’t bet your life on...
MetLife
Sightings from The Catbird Seat
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April 8, 2009
Treasury says some insurers
qualify for TARP
By David Lawder
WASHINGTON (Reuters) – The U.S. Treasury said on Wednesday some life insurers have met requirements for government capital investments under an existing rescue plan, and their applications for funds are now being considered.
"There are a number of life insurers that have met requirements for the Capital Purchase Program because of their bank holding company status," said Treasury spokesman Andrew Williams. "These are among the hundreds of financial institutions in the CPP pipeline that will be reviewed and funded as appropriate on a rolling basis."
The statement was made in response to a Wall Street Journal story published late on Tuesday saying the Treasury would extend its $700 billion financial bailout program to certain life insurers and would make an announcement in coming days.
Williams said any capital investments in insurers that have bank holding company status would not constitute a new rescue program for the insurance sector.
The Treasury clarification caused stocks to pare gains, particularly the major insurers who were viewed as the likely benefactors of a widening of the Treasury's financial bailouts. Prudential Financial Inc shares had climbed more than 12 percent at one point in early trade, but by mid-morning were up 6.3 percent at $23.50, while MetLife's earlier 10 percent gain was chopped back to about 3.4 percent at $24.98.
In recent months, some insurance companies have received approval to acquire banks, paving the way for them to participate in the Capital Purchase Program, which the Treasury has estimated will top out at $218 billion.
As of Tuesday, the program had $198.5 billion invested, leaving $19.5 billion in available funds, according to Treasury documents. A Treasury official said only a small number of life insurers have met the qualifications for the program.
Reuters reported in February that the Treasury was actively considering applications for capital injections from about a dozen insurance companies.
In addition to Met Life and Prudential, other insurers that now have bank holding company status include the Hartford Financial Services Group Inc and Lincoln Financial.
(Additional reporting by Patrick Rucker and Karey Wutkowski in Washington and Elinor Comlay and Lilla Zuill in New York; Editing by James Dalgleish)
http://news.yahoo.com/s/nm/20090408/bs_nm/us_financial_bailout_insurers
WANT TO SPOT SOME OF THE BILLIONAIRES GETTING BAILED OUT OF METLIFE WITH U.S. TAXPAYERS’ DOLLARS???
http://finance.yahoo.com/q/mh?s=MET
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AND, WHILE THERE, CHECK OUT SOME OF THESE GIGANTIC, TAX-DODGING, INTERNATIONAL VULTURE NESTS ON THE LIST ALSO GETTING BAILED OUT WITH TAXPAYERS’ DOLLARS...
Barclay’s Global Investors, UK
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For more, GO TO > > > Nests of the Insurance Vampires
MetLife Fraud
The number of denied claims by MetLife has rapidly risen in the last few years. MetLife is one of the leading providers of group disability insurance in the United States has been accused of failing to pay claims of its policy holders.
Day after day, policyholders listen to the same excuses as to why MetLife has denied their claims. Reasons given for denial of claims range from failing to receive medical reports, failing to receive documentation on time, and the ailment is not a covered disability and many others.
Individuals who thought they were well guarded in the event of disability are forced to unnecessarily file for bankruptcy, resulting in the loss of their homes, all while their health is deteriorating. The bulk of victims are professionals including: doctors, lawyers, accountants, corporate executives as well as general employees.
Additionally, many government and corporate employees have also, unfairly, been denied claims by MetLife....
http://www.yourlawyer.com/topics/overview/metlife_fraud
February 16, 2008
The MetLife Demutualization Securities Fraud Masked a Breach of Contract
In April of year 2000, MetLife changed from a mutual life insurance company to a stock insurance company via a process called demutualization.
In the demutualization process MetLife committed securities fraud against participating policyholders who were members of the mutual association.
In July 2005, a federal judge certified a class in a class action law suit against MetLife filed in year 2000....
The litigation is complex but the concepts behind it are not. MetLife omitted material information and made material misrepresentations in its prospectus sent to policyholders to solicit votes for their plan of demutualization. The complaint sets forth how policyholders suffered financial damages due to implementation of the demutualization plan.
As a participating policyholder in a mutual insurance company, class members were entitled to "insurance at cost" from MetLife. The participating policyholders were the sole owners of the insurance company. For a century, MetLife used its mutual form of ownership as a selling point in selling life insurance. It makes logical sense, they argued, that the mutual form of ownership should result in the lowest cost for insurance since the policyholders own the company. There were no other owners with whom earnings had to be divided.
What fundamentally changed as year 2000 approached, that made MetLife abandon this century long business strategy? What convinced 93% of MetLife policyholders who voted, to vote in favor of such a fundamental change? Read the second paragraph of the letter from MetLife's chairman of the board soliciting a yes vote from policyholders. The truth is that because of the demutualization, dividends are now lower and our cost of insurance is higher than would be the case if MetLife had remained a mutual insurer.
"...conversion to a stock insurance company will provide MetLife with the capital structure it needs to aggressively pursue strategic opportunities and to provide a wider array of customer services." was offered as the reason for the demutualization. However, MetLife was not capital constrained. In fact, in 2001 MetLife purchased several million of its own shares at twice the price per share that it sold the these shares one year earlier at the demutualization/initial public offering.
Like many other mutual insurance companies, MetLife insiders choose to disregard the original objective in the company's charter i.e. seeking to be a cost efficient provider of life insurance for members of the mutual association. In defending its conduct MetLife's lawyers described the ownership interests of members as "ephemeral". That must have been the attitude that lead to the securities fraud. In any event, MetLife is now a stock company and rescission of the transition from the mutual form of ownership is not going to happen.
We think that MetLife breached its contracts (life insurance policies) with participating
policyholders by failing to provide "insurance at cost" after the demutualization.
Participating policyholders were allocated shares in the demutualization and that
mitigates any loss. However, the adequacy of such distributions is also at issue in the
law suit. The law suit alleges that only 55 cents on the dollar was distributed to
policyholders in cash or shares.
The funding of the "closed block" is also at issue in the law suit. "Closed block" is the
term used to describe the block of insurance contracts that were matched with certain
MetLife assets in the demutualization process to result in a targeted financial result or
financial performance. Your life insurance contract and mine are in such a closed block
now. Were policyholders provided with any information as to the funding of this closed
block? No. MetLife got away with a statement in its prospectus saying that "reasonable
policyholder dividend expectations will be assured". That was good enough for the New
York State Insurance Commissioner's approval. So much for regulatory oversight!
Meanwhile, since the demutualization in 2000, MetLife has performed well reflected by the fact that the shares of MetLife which were priced at the initial public offering at $14.25 per share are now near $50 per share.
Even if you chose to receive shares rather than cash in the demutualization, your ownership of MetLife has been diluted by shares sold to others at the public offering.
In a separate class action case in New York State Court, a class has been certified against MetLife. The complaint in this case calls into question whether MetLife's internal actuarial accounting is reliable for the purpose of determining persons to be included and excluded form the class in the demutualization securities class action....
We believe that all members of the mutual association that was MetLife before demutualization were defrauded and suffered financial damages...not just, as the definition of the class sets forth "...those policyholders for whom MetLife calculated a positive actuarial equity share..."
If you owned a MetLife participating policy at the time of the demutualization and were allocated only 10 MetLife shares, presumably you are not a member of the class. Yet your life insurance policy is in the under funded closed block. Funding for future dividends on your life insurance policy should be enhanced as well as for class members.
In total damages, the MetLife securities fraud should rank at the top with Enron and Worldcom. The fact that the story gets no publicity might be due to the complexity of the litigation and the fact that members of the mutual association, that was MetLife, did not think of themselves as owners of MetLife. It was almost the perfect crime for the insiders....
MetLife Policyholders' Class Action
January 18, 2008
Life Insurers Fall on
Investment Concern
Forbes, Associated Press
NEW YORK - Shares of life insurers fell Friday as an analyst said concerns about investment quality and credit cycle exposure have become a legitimate valuation consideration for life insurers including Genworth Financial Inc. and Prudential Inc.
Insurers make money by collecting premiums from customers they insure, and by investing the money they collect that is not paid out in claims. They commonly invest the money in bonds and other securities.
Life insurers' exposure to residential mortgage-backed securities, with the exception of Prudential, is fairly limited, but risk to the industry would rise if the credit cycle downturn spread to commercial or corporate markets, Citi Investment Research analyst Colin Devine wrote in a note to clients.
A bond guarantor collapse would also likely not pose a threat except for Genworth, he said. Bond insurers make payments to cover principal and interest when issuers are unable to pay their obligations. Turmoil in the credit markets is pressuring bond insurers as prices of bonds and other forms of debt sinks....
Genworth shares fell $1.16, or 5.1 percent, to $21.46 in midday trading and earlier touched a 52-week low of $21.09.
Prudential also fell. At 20.5 percent, its risk asset ratio is the highest among the life insurers, followed by MetLife Inc. (nyse: MET - news - people ) at 15.6 percent, Devine said.
Prudential shares fell $3.63, or 4.3 percent, to $80.67 in midday trading. Earlier the shares dropped to a year-low of $79.92. MetLife shares fell $1.83, or 3.1 percent, to $56.43 and earlier touch a year-low of $54.77....
January 2, 2007
MetLife Pays $19 Million to Settle Spitzer Investigation
By Mark Johnson
MetLife Inc., the largest group life insurer in the nation, will pay $19 million and change some of its business practices to end an investigation of payments made to brokers to steer clients its way, Attorney General Eliot Spitzer said Friday.
The settlement came as part of a multiyear investigation of bid rigging and price fixing in the insurance industry. Spitzer has argued that "contingent commissions'' paid to brokers and agents to steer business to insurance companies are the equivalent of kickbacks that unfairly increase the prices paid by insurance clients.
New York-based MetLife will ban contingent commissions and disclose broker payments as part of the settlement. The company will pay $16.5 million in restitution to policyholders and penalties of $2.5 million.
MetLife instructed its sales personnel to "leverage'' commission agreements by telling brokers how close they were to meeting certain targets for business provided to MetLife. If met, the targets would guarantee the brokers additional money, Spitzer's office said.
MetLife also arranged lucrative compensation agreements with certain brokers who directed major insurance contracts to MetLife, according to the settlement.
The company, which has more than 70 million customers worldwide, is not admitting to any liability in the settlement. Spokesman John Calagna said MetLife cooperated with Spitzer's investigation and has already changed some of its business practices.
"MetLife believes that resolving this matter is in the best interests of its shareholders, customers and policyholders,'' Calagna said a statement.
Spitzer's probe of the industry began in 2004 and more than 20 insurance companies have agreed to pay more than $3 billion so far.
Earlier this month, Prudential Insurance Co. agreed to pay $19 million in restitution and penalties to settle a similar investigation. Last month, UnumProvident Corp. in Chattanooga, Tenn., agreed to pay $15.5 million in restitution and penalties.
http://www.insurancejournal.com/news/national/2007/01/02/75530.htm
November 18, 2004
INSURANCE COMMISSIONER JOHN GARAMENDI SUES BROKER AND 4 MAJOR INSURERS OVER SECRET COMMISSIONS AND KICKBACK SCHEMES THAT NETTED “MILLIONS OF DOLLARS”
The Commissioner’s suit seeks to end the unethical practices that have harmed consumers while generating millions for the defendants
SAN DIEGO - Commissioner John Garamendi on Thursday announced a major lawsuit against Universal Life Resources of San Diego and four major insurers accused of hiding millions of dollars in secret commissions....
Commissioner Garamendi began investigating this problem in February. The suit, filed in California Superior Court in San Diego, names MetLife Inc., Cigna Corporation, Prudential Financial Inc., and UnumProvident Corporation as defendants. They are accused of collaborating with ULR to carry out the schemes that caused financial harm to California consumers.
“Employers and consumers put their trust in brokers to help them find the best insurance at the best price,” said Commissioner Garamendi. “But that trust has been broken. This lawsuit is one of many steps I will take to ensure that insurance consumers don’t suffer because of backroom kick-back deals.”...
“These brokers and insurers are lining their pockets at the expense of consumers,” said Commissioner Garamendi.
“This is a scandal that has disillusioned consumers from coast to coast. Confidence must now be restored.”
Harken Makes Bid for Tesoro
The New York Times
The Harken Energy Corporation, an energy development company, today offered to acquire the Tesoro Petroleum Corporation of San Antonio for $11.75 a share, or about $190 million, in cash.
Tesoro's board has turned down several other, higher offers to sell the company, whose major asset is considered to be its Alaska-based refining and marketing business.
The chairman of Harken's board, Alan G. Quasha, said in an interview that he felt confident that the Tesoro board would be willing to consider an offer at this time.
He said he believed that the company's three major shareholders, which control about 40 percent of the shares, would also support the sale.
The Metropolitan Life Insurance Company, which controls 25 percent of Tesoro's shares and has two members on Tesoro's board, indicated earlier this year that it wanted to sell its stake.
G. Bryan Dutt, an oil and gas industry analyst at the Howard Weil Corporation in New Orleans, said Harken's offer was substantially lower than the breakup value of the company, which he placed at $15 a share.
Tesoro's share price rose 1.25 today, to $10.875, in New York Stock Exchange trading.
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February 28, 1990
Harken Withdraws Offer for Tesoro
The New York Times
The Harken Energy Corporation withdrew its offer to acquire the Tesoro Petroleum Corporation for $11.75 a share, or about $190 million, in cash. Harken's chairman, Alan G. Quasha, said in a letter to Tesoro's chairman, Dr. Richard V. West Jr., that Harken had concluded the San Antonio-based oil refining and marketing company's board was not interested in maximizing shareholder value.
It was unclear whether Harken, a diversified energy company, would now make a hostile offer for Tesoro, whose largest operations are in Alaska. The Metropolitan Insurance Company, which holds about one-fourth of the company's shares, indicated previously that it was interested in divesting itself of its shares.
Tesoro shares closed today at $8.75, down 62.5 cents, or 6.7 percent, in New York Stock Exchange trading. Harken fell 37.5 cents, or 6.8 percent, to $5.125.
From No One Left to Lie To:
. . . The late Les Aspin, Clinton’s luckless and incompetent secretary of defense, once told me that he had planned to make a brief personal appearance in Sarajevo, in order to keep some small part of the empty campaign promise made by Clinton to the Bosnians, but had been ordered to stay at home lest attention be distracted from “Hillary’s health-care drive.” . . .
Perhaps you remember the highly successful “Harry and Louise” TV slots, where a painfully average couple pondered looming threats to their choice of family physician. As Mrs. Clinton put it in a fighting speech in the fall of 1993: “I know you/ve all seen the ads. You know, the kind of homey kitchen ads where you’ve got the couple sitting there talking about how the President’s plan is going to take away choice and the President’s plan is going to narrow options, and then that sort of heartfelt sigh by that woman at the end, ‘There must be a better way’...
“What you don’t get told in the ad is that it is paid for by insurance companies.”...
It is fortunate for the Clintons that this populist appeal was unsuccessful. Had the masses risen up against the insurance companies, they would have discovered that the four largest of them — Aetna, Prudential, Met Life, and Cigna — had helped finance and design the “managed-competition” scheme which the Clintons and their Jackson Hole Group had put forward in the first place....
Dr. David Himmelstein, one of the leaders of the group, met Mrs. Clinton in early 1993. It became clear, in the course of their conversation, that she wanted two things simultaneously: the insurance giants “on board,” and the option of attacking said giants if things went wrong....
The “triangulation” went like this. Harry and Louise sob-story ads were paid for by the Health Insurance Association of America (HIAA), a group made up of the smaller insurance providers. The major five insurance corporations spent even more money to support “managed competition” and to buy up HMOs as the likeliest investment for the future.
The Clintons demagogically campaigned against the “insurance industry,” while backing — and with the backing of — those large fish that were preparing to swallow the minnows.
This strategy, invisible to the media . . . was neatly summarized by Patrick Woodall of Ralph Nader’s Public Citizen:
“The managed competition-style plan the Clintons have chosen virtually guarantees that the five largest health-insurance companies — Aetna, Prudential, Met Life, Cigna, and The Travelers—will run the show in the health-care system.”...
And Robert Dreyfuss of Physicians for a National Health Program added:
“The Clintons are getting away with murder by portraying themselves as opponents of the insurance industry. It’s only the small fry that oppose their plan. Under any managed-competition scheme, the small ones will be pushed out of the market very quickly.”...
Having come up with a plan that embodied the worst of bureaucracy and the worst of “free enterprise,” and having seen it fail abjectly because of its abysmal and labyrinthine complexity, the Clintons dropped the subject of health care....
Since they had been gambling with other peoples’ chips, the First Couple felt little pain....
The same could not be said for the general population, or for the medical profession, which was swiftly annexed by huge HMO’s like Columbia Sunrise.
Gag rules for doctors, the insistence on no-choice allocation of primary “care givers,” and actual bonuses paid to physicians and nurses and emergency rooms that denied care, or even restricted access to new treatments, soon followed.
So did the exposure of extraordinary levels of corruption in the new health-care conglomerates.
Until the impeachment crisis broke, no comment was made by the administration about any of these phenomena, which left most patients and most doctors measurably worse off than they had been in 1992....
THE HEAT IS ON CLINTON’S MONEYMAN
Laborers.org
Controversy is swirling around fund-raiser Terry McAuliffe....
As finance chairman for the Clinton/Gore Reelection Committee, McAuliffe pulled in a staggering $43 million in eight months. That made him the front runner to head the DNC - a job he turned down. Instead, McAuliff has turned his attention to his home building, insurance, and marketing businesses....
But McAuliff is finding that it’s not easy putting politics behind him. His name has been linked to the fund-raising scandal that resulted in the disqualification of Teamsters President Ronald Carey....
The U.S. Attorney’s Office in Washington is trying to learn more about how McAuliffe earned a lucrative fee in helping Prudential Insurance Co. of America lease a downtown Washington building to the government. Prudential just settled a civil case involving that lease for over $300,000 without admitting any liability....
Blowing the Whistle at Pru
By Jane Bryant Quinn, Newsweek
What’s the best way of righting a massive financial wrong?
I’m thinking of the dishonest life-insurance selling that stained the 1980's and early 1990's. Several insurers settled national class-action lawsuits -- among them New York Life, John Hancock, Transamerica Occidental Life and Prudential Life. A plan for Metropolitan Life is up for approval now.
The insurers are offering various forms of restitution to the consumers who were bilked.
But some say they’re still getting a raw deal -- especially the policyholders at Prudential Life.
Recently, a group of Prudential employees and ex-employees in Plymouth, Minn., stepped forward to say that the angry policyholders may be right. In affidavits filed in the New Jersey federal district court (which is overseeing restitution), they allege that Prudential twisted the process to limit what consumers get...
A number of these whistle-blowers are filing lawsuits in Minnesota, charging that Pru retaliated against them for speaking out at work. . .
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For more, GO TO > > >
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Vultures up to their beaks in Tesoro Petroleum
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Originally posted April 8, 2009
Last Updated May 5, 2009, by The Catbird
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