A life insurer has paid about $17 million in connection with an annuity class-action lawsuit settlement, according to officials at the California Department of Insurance.
National Western Life Insurance Company, Austin, Texas (NASDAQ:NWLI), paid the money to 3,274 senior citizens who bought annuities from the company, according to California Insurance Commissioner David Jones.
National Western announced the settlement in February 2010 and included the cost of the settlement in 2009 financial results, accounting to reports the company has filed with the U.S. Securities and Exchange Commission (SEC).
Lawyers for the annuity purchasers argued that the senior citizens bought the annuities without receiving adequate explanations of the penalties that would apply if they withdrew money or died within the annuities’ surrender periods.
The class was made of consumers who bought the annuities while living in California, according to National Western.
“National Western denies liability for the claims asserted by the plaintiff in intervention and the plaintiffs on behalf of themselves and the class,” the company said in a statement filed with the SEC when it announced the settlement.
Kent Keller, a Los Angeles lawyer who represents National Western, says the case involved a group annuity arrangement. National Western originally had thought that the arrangement was exempt from two California insurance code provisions, but it latersettled because it appeared that the arrangement would end up coming under the code provisions, Keller says.
The settlement will have no material effect on National Western’s finances or operations, Keller says.
“We’re glad to have [the case] behind us, and we’re moving on,” Keller says.