Genworth Financial Inc., Unum Group, New York Life Insurance Co., Guardian Life Insurance Co., Northwestern Mutual Life Insurance Co. and a unit of AXA SA, MONY Life Insurance, were served, said Richard Bamberger, a spokesman for Attorney General Andrew Cuomo.
The attorney general disclosed subpoenas for the two largest U.S. life insurers, MetLife Inc. and Prudential Financial Inc., in announcing the probe Thursday.
Mr. Cuomo is investigating the practice of retaining a beneficiary's funds until they request the money, and keeping it in accounts that pay yields akin to a money-market account. The practice is common, but not universal, in the life-insurance industry. By keeping the money, insurers are able to earn a higher return on the funds than they pay out in interest.
The retained-asset accounts have been around for at least two decades, and state insurance regulators said they can serve as a useful option for consumers not yet ready to make immediate financial decisions. Still, the National Association of Insurance Commissioners said Thursday that it is reviewing what insurers are required to disclose about the accounts.
Mr. Cuomo said Thursday that the practice results in "millions of secret profits" for life insurers. He announced the probe after Bloomberg Markets magazine ran an article on the practice that focused partly on families of deceased U.S. soldiers.
"We strongly disagree with the misleading and incorrect statements, certainly the initial statements, coming from the press," MetLife Chief Executive C. Robert Henrikson said on an earnings conference call Friday. But he thanked the analysts on the call for "clarifying" the description of the accounts.
Among them was Randy Binner, an analyst with FBR Capital Markets, who said he found the "very sharp and rapid regulatory response to this surprising and apparently unfounded."
Genworth spokesman Al Orendorff said the company sends beneficiaries a letter detailing the choices they have to manage their funds. If the insurer doesn't hear back, the funds are transferred into an account. Mr. Orendorff said about 99% make an election, with 90% choosing to get a lump-sum payment.