Minnesota Attorney General Lori Swanson has resolved one suit linked to equity-indexed annuities and filed a second EIA suit.
A state court in Minneapolis has approved a settlement agreement for a suit Swanson filed against American Equity Investment Life Holding Company, West Des Moines, Iowa, in April 2007.
The state of Minnesota argued in the suit that sales representatives saddled some senior citizens with unsuitable annuity products and also misrepresented annuity products in some dealings with senior citizens.
The settlement agreement will create a new system for American Equity to review the suitability of deferred annuity sales to Minnesota consumers, and it also will create a system for handling claims filed by older consumers who believe they bought unsuitable American Equity annuity products, or American Equity annuity products that were misrepresented during the sales process, officials say.
The claim review process could enable 2,400 seniors to apply for about $125 million in refunds, officials say.
Consumers eligible to apply for a refund include those ages 65 or older who bought a deferred annuity from American Equity between Jan. 1, 2001, and the present.
“If it is determined that an American Equity deferred annuity sale was unsuitable or based on misrepresentations, American Equity will offer the consumer a refund of their premium, without surrender charges or penalties, plus 4.15% interest compounded annually,” officials say.
American Equity also has agreed to pay Minnesota $250,000.
American Equity has put out a statement welcoming the settlement but emphasizing that it has not admitted any liability or acknowledged the validity of any claims that were asserted in Swanson’s suit.
“The settlement represents a business decision that will allow us to return our attention to our primary goals,” American Equity Chairman David Noble says in a statement about the settlement. “The burdens of litigation are enormous, and we prefer to use our time and resources in furtherance of our efforts to provide superior products and excellent service.”