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St. Paul, MN 55101
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Thursday, April 26, 2007
Attorney General Swanson Files Lawsuit Against Another Annuity Insurer
Attorney General’s Office Continues Crackdown On Senior Fraud
Attorney General Lori Swanson today filed another lawsuit against a life insurance company for unsuitable sales of long term annuities to Minnesota senior citizens. American Equity Investment Life Insurance Company, domiciled in Des Moines, Iowa, is part of a $14 billion dollar holding company that is traded on the New York Stock Exchange. The company had almost one billion dollars in nationwide sales last year through independent agents.
Swanson said the company failed to follow the state suitability statute, in existence since the 1980’s, which requires an insurance company to ensure that an annuity is suitable for the particular customer. “From 2000 through 2006, American Equity sold approximately $46 million in long term annuities to more than 1,200 Minnesotans who were over 75 years of age at the time of purchase, essentially locking up their savings for up to ten to sixteen years,” said Swanson. “The maturity date of the annuities in some cases was longer than the life expectancy of the senior citizen,” Swanson said. Swanson also described the 25 percent surrender penalty in the early years of certain annuities as particularly outrageous.
The Attorney General said she is particularly troubled that the policies in some cases tied up the majority of the senior citizen’s net worth, which the senior needed to support themselves in retirement. “It was not uncommon for the insurance company to tie up over 50% of the senior citizen’s net worth,” said Swanson.
Swanson said that the lawsuit is a continuation of her office’s efforts to protect the elderly from investment fraud. “There is a strong and consistent message in this lawsuit and others like it: Minnesota will not tolerate financial abuse of our senior citizens.”
In January, the Attorney General’s Office filed a lawsuit against Allianz Life Insurance Company of North America over similar practices. In March, the office filed a lawsuit against American Family Legal Plan and Heritage Marketing and Insurance Services for operating a trust mill.
The suit against American Equity was filed in Hennepin County District Court. It alleges violations of the State insurance suitability law, as well as state laws against fraud, false advertising, and deceptive trade practices. The suit seeks restitution, injunctive relief, and civil penalties.
Consumers with a complaint against American Equity or any other annuity insurance company should call the Attorney General’s Office at 1-800-657-3787 or 651-296-3353.