Minnesota AG targets third firm over annuity sales
(AP) - After settling a similar case with a big industry player, Minnesota Attorney General Lori Swanson filed a lawsuit Thursday against a smaller insurance firm that allegedly sold unsuitable deferred annuities to senior citizens.
Swanson's lawsuit against Midland National Life Insurance is her third since January targetting investment plans sold to retirees who say they later learn they can't access money for many years without paying sizable surrender penalties.
"The problem is some senior citizens who need access to their money to pay for health care expenses, living expenses, etc., can't afford to have their money tied up for so long," Swanson said.
Last month, Allianz Life Insurance Co. agreed to refund money with interest to as many as 7,000 policyholders, change its marketing practices and pay $500,000 in fines and expenses to settle an annuities case brought by Swanson. The company didn't admit wrongdoing.
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Swanson also has a case pending against American Equity Investment Life Insurance Co.
In the Midland National case, Swanson alleges the company broke Minnesota laws by selling policies to senior citizens containing sizable penalties if they try to access money before 10- to 14-year maturity periods are up. She also accused the company of false advertising, deceptive practices and consumer fraud. The case was filed in Hennepin County District Court.
Midland National, which operates an annuities division in West Des Moines, Iowa and has executive offices in Sioux Falls, S.D., referred calls to a Chicago-based attorney. That attorney, Steve Horvat, didn't immediately return a phone message.
Swanson said she doesn't know how many policyholders may be affected.
Retired teacher Joseph Grenier of East Grand Forks thinks he was taken advantage of. He bought a $58,000 Midland National annuity in 2002 with money he received from his late wife's insurance policy. At the time, he was 73 years old and it represented about half of his total retirement savings.
He said the agent who sold it to him never told him the money would be locked up in full until he is 82.
"I thought I was investing so I could gain out of it," Grenier said. "I find out now that I've got to die to get it. Now that's not going to do me any good now is it?"
The lawsuit is based in part on a Minnesota law requiring companies selling long-term policies to "have reasonable grounds for believing that the recommendation is suitable for the customer and must make reasonable inquiries to determine suitability."
Swanson said her office is examining sales practices of a dozen other companies.
(Copyright 2007 by The Associated Press. All Rights Reserved.)
