Minnesota’s Attorney General and Great American Financial Resources announced a settlement over disputed sales of deferred annuities to seniors in the state by Great American subsidiaries.
The agreement covers 2,000 policies placed by Great American Life Insurance Company and its affiliates, Annuities Investors Life and Loyal American Life, with an estimated value of about $50 million, according to the state’s AG, Lori Swanson.
The settlement allows seniors who bought annuities from the companies to submit refund claims. It also requires the companies to improve its suitability review procedure to assure annuity sales to seniors are appropriate.
“Many senior citizens face economic difficulty in this troubled economy, and this settlement provides a vehicle for them to obtain refunds,” Swanson said in a statement.
Under the agreement, Minnesota consumers aged 65 or older who purchased a deferred annuity from Great American or its affiliates between Jan. 1, 2001 and Aug. 1, 2008 will be offered an opportunity to claim a full refund, without penalties, plus 4.15% interest. Consumers who purchased annuities after Aug. 1, 2008 who feel they were sold an unsuitable product may also file a complaint with the attorney general’s office.
Refund requests will be “liberally construed” in favor of the consumer, according to the settlement announcement. The settlement was approved by Ramsey County District Court Judge Michael Monahan.
Great American Financial, Cincinnati, said the suitability requirements of the agreement are similar to an improved suitability program that its subsidiaries voluntarily put into practice more than a year ago.
“They were put into place to address evolving practices and standards of various state and federal regulators, including the Minnesota Attorney General,” said Charles R. Scheper, chief operating officer for Great American Financial, in a statement. “We’re pleased for the recognition of the effectiveness of our current enhanced suitability program, and have already implemented the minor revisions necessary to address the attorney general’s desire for uniform standards in Minnesota. We have engaged in comprehensive and good faith efforts to reach out to our annuity contract owners and respond to any issues or concerns they had with their product or sales process.”
Great American Financial noted its insurance units did not admit to any wrongdoing in the case and were not subject to any penalty.
Swanson says the settlement is similar to previous agreements it reached with Allianz Life Insurance Company of North America in October 2007, American Equity Investment Life Insurance Company in February 2008, AmerUs Life Insurance Company and American Investors Life Insurance Company, now part of the Aviva Corporation, in October 2008, and Midland National Life Insurance Company in December 2008.