Lori Swanson, the Attorney General of the US state of Minnesota,
has brought a charge of undertaking unsuitable sales of long-term
deferred annuities to Minnesota senior citizens against Midland
National Life Insurance Company. Iowa-based Midland National became
the third insurer in 2007 to be sued by Swanson for the
miss-selling of annuities.
In the lawsuit, Swanson alleges that Midland National did not
comply with the state’s suitability laws that require an insurance
company to ensure an annuity is suitable for the particular senior
citizen. The lawsuit also alleges that Midland National violated
the state’s consumer fraud laws.
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In particular, Swanson said in a release, the suit alleges that
Midland National sold long-term deferred annuities to some senior
citizens who could not afford to have their money tied up for as
long as ten to 14 years. In some cases, Midland National imposes a
surrender charge of up to 25 percent if the senior withdraws his or
her money early.
In January 2007, Swanson filed a lawsuit against Allianz Life
Insurance Company of North America over similar practices. That
lawsuit was settled in October. Under the settlement, Allianz
agreed to change its sales practices and offer about 7,500 senior
citizens the opportunity to file a claim to get their money back.
In April, Swanson filed a similar suit against American Equity
Investment Life Insurance Company. That suit, which remains
pending, also alleges violations of the state’s suitability and
consumer fraud laws.
Founded in 1909, Midland National’s in-force business is worth $72
billion. The insurer is a wholly owned subsidiary of Sammons
Financial Group, which also owns life insurer North American,
annuity specialist Sammons Annuity Group and insurance broker
Sammons Securities. In total, the group has $25 billion in assets
and $245 billion of life insurance in force.
