OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has commented that the Credit Ratings (ratings) of MetLife, Inc. (MetLife) (headquartered in New York, NY) [NYSE: MET] and its insurance subsidiaries remain unchanged following the announcement of a second material weakness in internal controls, both of which impacted 2017 year-end results. On March 1, 2018, MetLife filed its 2017 Form 10-K with the U.S. Securities and Exchange Commission, which included a revision related to a release of reinsurance reserves for its legacy Japanese variable annuity block following an internal review of reserving practices. The reserve release increased full-year 2017 net income by $264 million and shareholders’ equity by $708 million. This announcement of this material weakness followed a previously reported material weakness regarding under-reserving practices within MetLife’s group annuity business.
While there is concern about the two material weaknesses, A.M. Best notes that MetLife is in the process of implementing remediation practices and is engaging a third party to undertake a comprehensive review of the facts and circumstances giving rise to the material weaknesses. A.M. Best notes that the auditors have issued an unqualified opinion on MetLife’s consolidated financial statements, despite issuing an adverse opinion regarding internal controls over financial reporting practices. A.M. Best will monitor the remediation of these weaknesses and any future disclosures regarding MetLife’s internal control environment, which could result in a negative rating action if MetLife fails to effectively remedy the practices or there are additional disclosures that demonstrate a further decline in operational controls or reserving practices.
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