Bloomberg is trying to keep the Retained Asset Accounts pot boiling with a September 28, 2010 article provocatively headlined “MetLife Probed as Asset Accounts Called Deceptive.” http://www.bloomberg.com/news/2010-09-28/metlife-a-focus-of-regulator-probes-as-judge-calls-asset-account-deceptive.html The article centers on dicta contained in a September 9, 2010 Order issued by Federal Judge Larry R. Hicks, in the US District Court in Reno, Nevada that dismissed all remaining claims in a lawsuit brought by a life insurance beneficiary against MetLife.
Judge Hicks pointed out that the beneficiary, Jamie Clark, was paid by MetLife through its Total Control Account Money Market Option. He also points out that during the August 2006 to September 2007 the death benefit proceeds she received were in the account she was credited with interest rates from 3.8% to 4.2% “while the relevant money market rate index ranged from 0.78% to 0.94% during the relevant time period. Thus, Clark earned more interest through MetLife’s TCA than she would have earned if the money had been placed in a money market account.”
An insurance company paying 300 basis points above money market rates certainly sounds like a great consumer benefit to me.
Judge Hicks did say he found that the name of the account “is inherently deceptive because it gives the beneficiary the impression that the account is either a money market account, or is associated with a money market account, and contains the same benefits and protections that a money market account offers, namely that the account is insured by the Federal Deposit Insurance Corporation if MetLife was to become insolvent and file for bankruptcy.” Of course, that statement is pure dicta — and also lacks any basis in fact. Perhaps the Judge was not aware of the hundreds of money market mutual funds, and that MetLife repeatedly disclosed that IT guaranteed the funds in the account and never suggested it was FDIC insured. MetLife also could not state that it was itself guaranteed by the 50 State’s Life and Health Insurance Guarantee Associations as state laws prevent companies from disclosing that fact in most circumstances.
