MetLife has agreed to pay $10 million to settle with the U.S. Securities and Exchange Commission over long-standing violations of internal accounting rules associated with its annuities businesses.

According to the SEC complaint, MetLife disclosed two significant errors in its accounting for reserves associated with its annuities businesses during a series of announcements beginning in December 2017 and culminating in MetLife’s Form 10-K for the fiscal year ending December 31, 2017. MetLife attributed those errors to a material weakness in its internal control over financial reporting.

The first error involved MetLife’s reserves for benefits owed to annuity customers under certain group annuities in its Retirement and Income Solutions (RIS) business whom MetLife had been unable to locate or reach via the information in its systems. The complaint said MetLife for more than 25 years had utilized a practice of releasing reserves – that is, reducing liability for future policy benefits with a corresponding increase in income – associated with RIS group annuitants who had not responded to MetLife after two mailing attempts, based on a presumption that those annuitants were dead or otherwise would never be found.

But MetLife later determined that those practices were insufficient to justify that presumption, the complaint said, and in correcting the error MetLife increased reserves by $510 million as of year-end 2017.

The insurer also disclosed in its 2017 10-K a second, unrelated reserve error involving a different line of annuity products, the complaint said. This second error related to accounting for variable annuity guarantees assumed by a MetLife subsidiary, MetLife Reinsurance Company of Bermuda (MrB), from a former operating joint venture in Japan. Unlike the RIS error, which resulted in MetLife understating its reserves (and overstating income) prior to the correction, this error involved an overstatement of reserves (and understatement of income).

The complaint said MetLife disclosed that the MrB error was caused by data errors, including a failure to properly incorporate policyholder withdrawals into MetLife’s valuation model.

“Investors are entitled to the reliability and accuracy of financial information,” Marc Berger, director of the SEC’s New York Regional Office, said Wednesday in the settlement order. “The Commission found that MetLife’s insufficient internal controls caused longstanding accounting errors.”

A MetLife spokeswoman in an emailed statement said the company has successfully remediated both material weaknesses associated with this settlement as of December 2018. “Our focus since we self-identified these issues has been to improve our processes to deliver better service to our customers.”

The SEC said that MetLife, without admitting or denying the commission’s findings, has agreed to cease and desist from committing or causing any future violations of these provisions and to pay a civil penalty of $10 million.