(AP) - An Iowa insurance company became the latest target on Thursday of a widening investigation by Minnesota Attorney General Lori Swanson into long-term annuities marketed to senior citizens.
Swanson sued Des Moines-based American Equity Investment Life Insurance, alleging the company exploited senior citizens by selling them annuities they couldn't access for several years without significant penalty. Some buyers couldn't count on any money until their 90s.
In her first four months on the job, Swanson has filed similar lawsuits against two other insurance companies accused of deceptive annuity practices.
"It is not OK for these financial predators to prey on our senior citizens, and we're going to be very, very aggressive when it comes to protecting the elderly," Swanson said at a news conference.
“It is not OK for these financial predators to prey on our senior citizens, and we're going to be very, very aggressive when it comes to protecting the elderly.”Attorney General Lori Swanson
In the American Equity case, Swanson accused the company of breaking eight Minnesota laws. The primary allegation revolves around a law requiring insurers to take the suitability of products into account before offering them to customers.
American Equity's chairman and chief executive officer David Noble said through his secretary the company received word of the case Thursday morning and there would be no immediate response.
Swanson said she wasn't aware of other attorneys general taking action against the company. Swanson said her office is looking into other companies as well.
According to the lawsuit filed in Hennepin County District Court, American Equity sold more than 1,200 annuity policies to senior citizens 75 years old or older between 2000 and 2006, tying up more than $46 million.
The policies carried surrender charges of up to 25 percent if they were tapped prior to their maturity dates, which in some instances were 16 years after the policies were written.
Helen Nagell, 72 said she and her husband sunk $250,000 into a 12-year annuity and weren't explicitly told of the consequences for trying to access their money sooner. A year after buying it, they removed their investment at a cost of $40,000 in early surrender charges.
"Our agent seemed to dance in and dance off real quickly," Nagell said, adding, "I never felt comfortable."
Swanson is asking a court to force the compnay to change its annuity practices and repay people who were harmed by unsuitable policies.
(Copyright 2007 by The Associated Press. All Rights Reserved.)