Following up on a post from last month, a coalition of insurance companies has filed a lawsuit against the Security and Exchange Commission over the new rule that classifies indexed annuities as securities. According to the Coalition for Indexed Products’ lawyer, Eugene Scalia, Rule 151A violates securities laws that give individual states (not the SEC) jurisdiction to regulate annuities. OM Financial Life Insurance, American Equity Investment Life Insurance, National Western Life Insurance, and Midland National Life Insurance are among the coalition members.
The SEC admits that the new regulations could cost insurance companies up to $100 million per year. The coalition’s press release also states that state insurance legislators, as well as the National Association of Insurance Commissioners and several members of Congress, oppose the ruling due to its potentially negative impact on consumer choice and affordability. Since equity indexed annuities guarantee the return of an investor’s principal plus interest, these groups believe that they shouldn’t be put in the same category as riskier securities.
The lawsuit was filed in the Court of Appeals for the District of Columbia on January 16th, the same day Rule 151A was officially published.