1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101
(651) 296-3353
(800) 657-3787
TTY:(651) 297-7206
TTY:(800) 366-4812
Tuesday, January 9, 2007
Attorney General Swanson Files Suit Against Allianz Life for Selling Unsuitable Deferred Annuities to Senior Citizens
Suit Alleges Agents Misled Seniors Regarding Lengthy Terms of Annuities, Hefty Surrender Penalties, and “Bonus” Payments
Minnesota Attorney General Lori Swanson filed a lawsuit today against Allianz Life Insurance Company of North America for selling deferred annuities to senior citizens that were unsuitable for seniors’ financial needs. The suit also alleges that the insurance company did not adequately disclose that seniors could have their limited savings tied up for as long as 15 years, could not cash in their annuities early without paying hefty surrender penalties, and that payments advertised as “immediate” bonuses were not payable for up to 15 years.
“Allianz and its agents aggressively marketed deferred annuities to seniors without regard to the suitability of the sale and without disclosing that seniors’ limited savings could be tied up for years,” Swanson said. “It is wrong for a company to mislead seniors into tying up their retirement savings in unsuitable investments in order to generate commissions,” she said.
Swanson noted that the sale of unsuitable, long-term annuities to senior citizens using aggressive and deceptive sales tactics has recently drawn significant national attention. (See, e.g., attached articles.) She said her office was reviewing other companies’ annuities sales practices for evidence of unsuitable sales and/or deceptive marketing.
Swanson said that Allianz agents often lured seniors to attend “estate planning” or “wealth management” seminars. She said the real purpose of the seminars was to sell Allianz annuities to the seniors who attended the seminars. Swanson said Allianz also lured seniors to purchase the annuities by offering “immediate” bonus payments of five to ten percent of the principal of the annuity. In fact, the lawsuit alleges that Allianz does not pay the “immediate” bonus for as long as 15 years.
The lawsuit alleges that, after luring seniors in the above fashion, Allianz agents often:
- Failed to ensure that the annuity was a suitable investment for the particular senior. Minnesota law requires an agent to ensure that an annuity is suitable for the purchaser’s financial needs. Allianz’s deferred annuities are often unsuitable investments for seniors because the circumstances of many seniors requires them to have current income or access to liquid funds to pay living expenses, nursing home expenses, or medical costs. With Allianz’s deferred annuities, seniors could see their savings tied up for as long as 15 years.
- Misled seniors regarding the terms of these “deferred” annuities. In a deferred annuity, after holding the annuity until its “maturity” date (often five to ten years), the senior cannot simply cash it in but rather must have the annuity payments spread out, or “annuitized,” over another lengthy period of up to five to ten years.
- Misled seniors regarding the hefty surrender penalties of up to 15 percent that apply if the senior withdraws more than a small portion of their money before the annuity “matures” (which sometimes exceeds the life expectancy of the senior.)
Allianz Life Insurance Company of North America is based in Golden Valley, Minnesota and is owned by Allianz SE of Germany. Allianz SE is the largest financial services company in the world. Allianz Life Insurance Company of North America has approximately $75 billion in assets and approximately $3.5 billion in net worth.
Since 2000, Allianz sold over 4,900 “deferred” annuities to Minnesota seniors over the age of 70, totaling $259,392,040.
The State’s lawsuit was filed in Hennepin County District Court. The lawsuit alleges that Allianz violated Minnesota’s laws prohibiting the sale of annuities that are unsuitable for the particular purchaser, false advertising, consumer fraud, and deceptive trade practices. The suit seeks to enjoin, or stop, Allianz from further violations of these laws, restitution for injured consumers, and civil penalties.
People who believe they were victimized by Allianz’s practices, or those of another company, should contact the Citizen Assistance Line of the Minnesota Attorney General’s Office at 651-296-3353 or
1-800-657-3787, or complete a Consumer Complaint form and return it to the Attorney General’s Office at:
Minnesota Attorney General's Office
1400 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101
(651) 296-3353
1-800-657-3787
TTY: (651) 297-7206
TTY: 1-800-366-4812