The Minnesota Department of Commerce has imposed a $275,000 fine in connection with allegations that an Iowa insurer sold unapproved annuity contracts to its residents.
American Equity Investment Life Insurance Company, West Des Moines, Iowa (NYSE:AEL), agreed to pay the fine to resolve the allegations.
Minnesota is one of several states that prohibit residents from buying insurance policies and annuity contracts that are not approved for sale within its jurisdiction, even when residents travel outside the state to buy the products.
Minnesota regulators are alleging that American Equity issued 541 annuity contracts between 2002 and November 2008 to Minnesota residents on forms that the Minnesota department has not approved.
The contracts offered a 10% premium bonus to customers who agreed to accept a surrender period that was longer than Minnesota allows, according to American Equity Chief Executive Officer Wendy Waugaman. The surrender period was long
Minnesota generally allows a surrender charge of up to 9% for a surrender period of up to 9 years, Minnesota officials say.