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Corporate & Securities Law

: OverRegd - Securities Regulation and Litigation Blog

Minnesota Files Another Lawsuit Involving the Sale of Deferred Annuities to Seniors.

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As predicted back in January when I reported on Minnesota’s lawsuit against Allianz, more insurance companies are becoming embroiled in lawsuits because of their annuity sales practices to senior citizens. After filing its lawsuit against Allianz, Minnesota filed a similar suit against American Equity Investment Life Insurance Company in April, again alleging that the company’s annuity sales practices violated the state’s suitability laws. And yesterday, Minnesota filed yet another lawsuit – this time against Midland National Life Insurance Company of West Des Moines, Iowa. www.ag.state.mn.us/Consumer/PressRelease/%20071129MidlandLife.asp

Like the Allianz and American Equity lawsuits, Minnesota’s complaint against Midland National alleges that the company failed to ensure that annuities were suitable for the senior citizens purchasing them. The complaint focuses on the sale of long-term deferred annuities to seniors who cannot afford to have their money tied up for that period, as well as steep surrender charges for early withdrawal.

Allianz settled its suit with Minnesota in October, agreeing to put into place a restitution process for over 7,000 affected seniors, and to change its practices in connection with suitability determinations. Midland National now joins the non-glorious lawsuit ranks with American Equity, whose case is also pending in Hennepin County District Court.

This rocky regulatory terrain for companies selling deferred annuities to seniors exists not only at the state level, but nationally as well. Minnesota’s very own AG, Lori Swanson, recently testified about annuity sales practices to seniors before the Senate’s Special Committee on Aging. It doesn’t take a crystal ball to predict that this heightened scrutiny will continue for some time.

Full post as published by OverRegd - Securities Regulation and Litigation Blog on November 30, 2007 (boomark / email).