N.Y. subpoenas MetLife, Prudential on soldier death benefits

New York's attorney general has subpoenaed MetLife Inc and Prudential Financial Inc as part of a probe into whether life insurers are defrauding families of deceased military personnel by siphoning off millions of dollars of death benefits for themselves, Reuters reports.

Attorney General Andrew Cuomo announced the subpoenas of the largest U.S. life insurers on Thursday, one day after the U.S. Department of Veterans Affairs said in a published report that it had begun its own investigation into the issue.

MetLife spokesman John Calagna declined to comment, saying the New York-based insurer has yet to see the subpoena.

Bob DeFillippo, a spokesman for Prudential, said the Newark, New Jersey-based insurer will cooperate with Cuomo.

At issue is whether the insurers, rather than pay out lump sums to military families upon the deaths of policyholders, instead would keep money in potentially risky accounts they controlled, known as retained-asset accounts, while paying out low yields to surviving families.

Cuomo said the insurers reportedly earned upward of 4.8 percent annually on these accounts, but paid families interest as low as 0.5 percent, less than the rates they might find at their local banks. The insurers' accounts, moreover, are not guaranteed by the Federal Deposit Insurance Corp, Cuomo said.

The attorney general said the subpoenas seek data on how and when beneficiaries learn about the terms and conditions of retained-asset accounts, and data on the differences between interest earned by insurers and beneficiaries.