Cuomo Said to Subpoena Genworth, Unum as Life-Insurer Fraud Probe Widens
By David Evans and Andrew Frye
July 28, 2010
New York Attorney General has subpoenaed Genworth Financial Inc., Unum Group and an insurer acquired by France's Axa SA as the state widens a life- insurance fraud probe, said a person briefed on the demands.
New York Life Insurance Co., Northwestern Mutual Life Insurance Co. and Guardian Life Insurance Co. of America also were ordered to turn over information, said the person, who declined to be identified because the subpoenas hadn't been publicly disclosed. Cuomo is probing profits insurers earn on death benefits that the companies retain on behalf of the families of deceased policyholders including military personnel.
More than 100 carriers earn investment income on $28 billion owed to life insurance beneficiaries, Bloomberg Markets magazine reported this week. Cuomo announced an investigation today into what he called "secret profits" and said he subpoenaed MetLife Inc. and Prudential Financial Inc. His probe follows reviews by the New York State Insurance Department and U.S. Department of Veterans Affairs.
"It is shocking and plain wrong for these multinational life insurance companies to pocket hundreds of millions in profits that really belong to those who have lost family members," Cuomo said in a statement today.
Richard Jones, a spokesman for Guardian, Genworth's Thomas Topinka and Unum's James Sabourin didn't immediately return calls for comment left after business hours. Axa's Winans and William Werfelman of New York Life had no immediate comment. A call and e-mail to Northwestern's media department wasn't returned.
Prudential Chief Executive Officer John Strangfeld said the Newark, New Jersey-based company is in talks with Veterans Affairs to address the agency's concerns. By holding beneficiaries' funds and allowing access on demand, the insurer provides security to its clients, he said in a statement.
"Beneficiaries are vulnerable targets for abusive sales
tactics," he said. "We believe that the Alliance Account takes
the pressure off beneficiaries to do something with the money --
- a situation that may lead to imprudent and expensive
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