Shares of MetLife (MET) - Get Report fell some 7% in after-hours trading Monday after the insurance giant postponed its fourth-quarter earnings release, announced plans to set aside up to $575 million in extra reserves and said it would "correct" some prior results.
"MetLife had previously informed its primary state regulator, the New York Department of Financial Services, about this matter and is responding to questions from them and other state regulators," the company said in a statement shortly after the market closed. "The U.S. Securities and Exchange Commission enforcement staff has also made an inquiry regarding this matter and MetLife is responding to its questions. To date, MetLife is not aware of any intentional wrongdoing in connection with this matter."
MetLife shares, which fell 0.68% earlier Monday to close regular trading at $54.40, lost another 7.4% in after-hours action to hit $50.35 shortly after 6 p.m. ET.
MET last month disclosed that it had begun a review of how much money to set aside for annuity and pension payments to cover recipients "who have been unresponsive or missing over time." The company disclosed Monday that this study had uncovered "a material weakness in internal controls over financial reporting" that had led the firm to incorrectly reduce reserves for such payouts.
MET said it now plans to put back $525 million to $575 million of reserves for such liabilities going forward. The firm added that the expense should cut fourth-quarter pretax net income by $135 million to $165 million and full-year 2017 pretax profits by $165 million to $195 million.
MetLife said the amount of money that it plans to put aside "is based in substantial part on actuarial, legal, statistical, and other assumptions," but added that "if actual facts and factors differ from those the company has assumed, the reserve the company has established could be adversely or positively affected."
The company's problems stem from MetLife's involvement in the so-called "pension-risk transfer" business, where private employers hand over responsibility for paying their pension plans to insurance companies. MET disclosed last month that it had problems locating and paying around 5% of 600,000 such retirees who were due monthly pension checks. Massachusetts and New York regulators recently began reviewing how well the company has done in tracking down such retirees.
In addition to setting aside more reserves for these payments, MetLife said that it "intends to make prior-period revisions to reflect the balance of these adjustments in the appropriate historical periods" and also "correct historical periods for unrelated errors in those periods." However, the firm claimed that such changes "will not constitute a restatement of previously issued financial statements."
Meanwhile, MET postponed plans to release its fourth-quarter and 2017 results until Feb. 13, with an earnings call set for Feb. 14. The company had originally intended to release results this Wednesday and hold its conference call one day later.
However, MetLife pre-released what it called "unaudited preliminary fourth-quarter results" as part of Monday evening's disclosure. MET said that it earned $670 million to $700 million of adjusted earnings in the period, or 61 to 66 cents per share. That's well below the $1.08 per share that analysts had expected.
(This story has been updated with additional details.)
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