Minnesota fines WDM company over annuities
March 9, 2010 by Karen Mracek
By KAREN MRACEK • kmracek@dmreg.com • March 9, 2010
American Equity Investment Life Insurance Co. has been fined $275,000 for allegedly selling unapproved annuity contracts in Minnesota.
Consumers who purchased the annuity contacts by the West Des Moines company between 2002 and November 2008 were “subject to higher surrender charges and less favorable terms” because the contracts weren’t approved, the Department of Commerce said in a press release Monday.
Minnesota law requires annuity contracts issued to a Minnesota resident be presented on a form approved by the Minnesota Department of Commerce. American Equity allegedly issued 541 annuity contracts, with a total face value of more than $28 million, on forms not approved by the department.
American Equity is the third largest provider of equity-indexed annuities.
In addition to the fine, American Equity must change the contracts to shorten and reduce the surrender charge provisions to comply with Minnesota law. The state generally allows up to a 9 percent surrender charge for a 9-year period, the commerce department said.
The company must also reimburse policyholders that surrendered their contracts, to make up the difference between what they were charged and the surrender charge to which they would have been subject had the policy complied with Minnesota law.
Affected policyholders will be notified by American Equity by mail of the policy changes, the release said.
