More Annuity Class Settlements in California

December 1, 2013
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Federal courts in California have preliminarily approved the class-wide settlement of two lawsuits alleging misconduct in the sale of deferred annuities to seniors. Motions for preliminary approval were granted September 27, 2013 in In re American Equity Annuity Practices and Sales Litigation, in the United States District Court for the Central District of California, and on August 30, 2013 in In re National Western Life Insurance Deferred Annuities Litigation, in the United States District Court for the Southern District of California. The American Equity case encompasses over 149,000 annuities, while the National Western case encompasses over 12,000 annuities. The final approval hearings are set in the American Equity case for January 27, 2014, and in the National Western case for January 10, 2014.

The settlement relief proposed in both cases is similar:

  • Policies in deferral: a bonus to the annuitization value of up to 10% (National Western) or 10.75% (American Equity) on a sliding scale, based on the policy year at the time of annuitization, if the policy is annuitized for a period of life with a 10 year or longer payment guarantee.
  • Annuitized policies: an enhancement in the amount of annuity payments. This benefit is a capped amount in the National Western settlement; it is not capped in the American Equity settlement.
  • Surrendered policies: a refund of a portion of the surrender charges incurred available only in a claim review process with two levels of relief available: a higher amount based on a showing of misrepresentation or unsuitability at the time of purchase; a lesser amount based upon a showing of current need for funds. There is a cap on the amount of this settlement benefit in both of these settlements.

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