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MetLife will be paying New York authorities a $60 million penalty for allowing two of their subsidiaries to operate without first securing the required licenses to sell insurance in the state.

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This settlement was reached between New York officials and MetLife after gathering evidence that the subsidiaries did not have the license required to solicit business in New York. Regardless of this shortcoming, both subsidiaries conducted business as usual from 2007 to 2012.

In addition to not obtaining licenses, the subsidiaries misled investigators as to the nature of the activities they were engaged in.

Each subsidiary was acquired by MetLife from American International Group Inc. in 2010, with questionable practices dating back to 2007.

The settlement authorizes MetLife to pay $50 million fine to the New York State Department of Financial Services (DFS) and a $10 million fine to the Manhattan district attorney’s office. MetLife is agreeing to cooperate in accordance with the deferral of prosecution as defined by the settlement with the New York prosecutors.

The subsidiaries, American Life Insurance and Delaware American Life Insurance, generated approximately $900 million in premiums through selling and renewing insurance policies that were sold by sales representatives in New York to multinational companies.
The New York based insurers were not licensed at the time, which meant both companies violated state laws.

MetLife spokesman, Randolph J. Clerihue, said the settlement allows the company to look “forward to continuing to provide our multinational clients with solutions for their growing global employee benefits needs.” He adds the settlement permits the subsidiaries to “continue to have meetings and discussions in New York with our multinational clients.”

MetLife plans on using first quarter earnings to pay the fines, stating that reserve funds have not been set aside to pay for such settlements. Of course a company like mystructuredsettlementcash.com could help them decide how to portion out the money.

The two AIG subsidiaries were purchased by MetLife in 2010 for approximately $16 billion. AIG was selling off many of its businesses at the time.

Jon Diat, an AIG spokesman, said the company has issues with the New York authorities’ findings. “AIG disagrees that the conduct in question violated the law,” he said. “Decades of industry practice and the plain language of the relevant statute make clear that a New York license is required only where a foreign insurer issues policies covering New Yorkers.”

Regulators in New York say they will continue their investigation of the activities conducted by both subsidiaries before they were acquired by MetLife.

“Our department will continue to aggressively investigate and pursue wrongdoing within this industry wherever we uncover it,” said Benjamin M. Lawsky, the New York superintendent of financial services. “MetLife did the right thing by stepping up to resolve this matter.”

According to Insurance Business America, MetLife is the latest of insurers set to pay DFS a penalty in a series of crackdowns issued by the department, coming just weeks after AXA’s U.S. unit was fined $20 million.

In addition to paying the penalty, MetLife has agreed to work with DFS in the investigation of American International Group Inc.

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