5 States Settle Annuity Dispute With Nationwide
February 8, 2010 by Trevor Thomas
Five state insurance regulators have entered into a $2.1 million settlement with Nationwide Life Insurance Co. and Nationwide Life and Annuity Insurance Co. over charges of allegedly unsuitable sales of variable annuities to clients of a Kansas financial advisory firm.
The settlement by regulators in Minnesota, Kansas, California, Missouri and Wisconsin settles charges that Nationwide did not take required steps to adequately supervise some annuity sales by Waddell & Reed Inc., Shawnee Mission, Kan.
According to a statement from the Minnesota Department of Commerce, Waddell & Reed asked Nationwide in 2000 to develop 2 variable annuity products specifically for Waddell & Reed’s clients. At the firm’s recommendation, a number of W&R clients purchased the new annuities to replace variable annuities they already held.
W&R advisors purportedly advised exchanges without having reasonable grounds for believing that the recommendations were suitable for their customers, according to the department’s statement. As a result, customers surrendered 6,742 annuities worth about $616 million. Of the customers that made an exchange, 4,937 incurred surrender charges totaling more than $9.6 million., the department stated.
In June 2005, the Minnesota Department of Commerce and the Kansas Commissioner of Insurance issued a consent order against W&R, censuring the firm for its conduct and ordering it to pay civil money penalties of more $145,000 to Kansas and $68,00 to Minnesota.
In a statement, Nationwide said it has “fully cooperated with state regulators to resolve this matter and reach this settlement agreement.
“We feel it is in the best interests of all parties to settle these matters rather than to continue to engage further resources on them,” Nationwide stated. “The settlement resolves the matter and allows Nationwide and the participating states to move on. Nationwide stands behind its business practices and entered into this agreement without any admission of wrongdoing.”
Nationwide said it will contact individuals affected by the agreement and advise them of their options for remedies.
Five state insurance regulators have entered into a $2.1 million settlement with Nationwide Life Insurance Co. and Nationwide Life and Annuity Insurance Co. over charges of allegedly unsuitable sales of variable annuities to clients of a Kansas financial advisory firm.
The settlement by regulators in Minnesota, Kansas, California, Missouri and Wisconsin settles charges that Nationwide did not take required steps to adequately supervise some annuity sales by Waddell & Reed Inc., Shawnee Mission, Kan.
According to a statement from the Minnesota Department of Commerce, Waddell & Reed asked Nationwide in 2000 to develop 2 variable annuity products specifically for Waddell & Reed’s clients. At the firm’s recommendation, a number of W&R clients purchased the new annuities to replace variable annuities they already held.
W&R advisors purportedly advised exchanges without having reasonable grounds for believing that the recommendations were suitable for their customers, according to the department’s statement. As a result, customers surrendered 6,742 annuities worth about $616 million. Of the customers that made an exchange, 4,937 incurred surrender charges totaling more than $9.6 million., the department stated.
In June 2005, the Minnesota Department of Commerce and the Kansas Commissioner of Insurance issued a consent order against W&R, censuring the firm for its conduct and ordering it to pay civil money penalties of more $145,000 to Kansas and $68,00 to Minnesota.
In a statement, Nationwide said it has “fully cooperated with state regulators to resolve this matter and reach this settlement agreement.
“We feel it is in the best interests of all parties to settle these matters rather than to continue to engage further resources on them,” Nationwide stated. “The settlement resolves the matter and allows Nationwide and the participating states to move on. Nationwide stands behind its business practices and entered into this agreement without any admission of wrongdoing.”
Nationwide said it will contact individuals affected by the agreement and advise them of their options for remedies.
