Variable Annuities: Fifth Third Securities Fined By FINRA For VA Sales

An article by Reuters' Jonathan Stempel further emphasizes the importance of responsibility when selling variable annuities. The Financial Industry Regulatory Authority (FINRA) has fined Fifth Third Securities about $2 million (including $250,000 in restitution) for unsuitable sales of variable annuity products to the elderly, whom are least likely to benefit from them--their long surrender periods, expensive fees, and swings in value make them less than ideal for retirement.However, FINRA... Read More

Annuity Firm Lincoln National Enter Reinsurance Agreement With Commonwealth Annuity and Life Insurance Co.

After severe fourth-quarter losses, annuity provider Lincoln National has decided to enter a reinsurance agreement with Commonwealth Annuity and Life Insurance Co. The Wall Street Journal's Kerry E. Grace writes that the plan will result in capital relief of around $240 million.Details of the agreement between Lincoln and Goldman Sachs subsidiary Commonwealth are as follows:Lincoln will re-insure $1.5 billion of its reserves (solely a closed block of life insurance policies) to... Read More

Thinking About Buying A Variable Annuity? Take Advantage of Current Features Before May

While the value of a variable annuity has sunk along with the stock market, it may actually be a good idea to purchase one soon if you're interested. Marc Ruiz in the Chicago Post-Tribune points out that the variable annuities currently on the market filed their contracts with regulatory agencies last May, before the current financial crisis. Federal law prohibits insurers from deviating from that contract during the regulatory year, and existing investors will not be subject to the changes... Read More

Suitability Rule for Variable Annuities from FINRA

Investment News'  Darla Mercado recently gave an update on how the annuity industry is dealing with a new rule. Last year, the Financial Industry Regulatory Authority (FINRA) passed Rule 2821, a suitability rule in order to ensure that variable annuities are sold to the appropriate investors. Provisions in the rule include:suitability checks (i.e. liquidity needs, taxes, client's assets) formal supervisory systems principal review for all regulated transactionsSome smaller... Read More

Annuity Firm Lincoln National Recieves Tax Relief in Indiana

The Retirement Income Reporter recently reported on annuity provider Lincoln National receiving $300 million in regulatory tax relief from the state of Indiana. The Indiana Department of Insurance is allowing the life insurance company to use a certain accounting practice with deferred tax assets that will free up capital. The division that sells fixed annuities and variable annuities, Lincoln Financial Distributors, has had to lay off over 10% of its workforce over the past few... Read More

Annuities for Retirement: Stricter Regulation in Florida

A press release from Florida's Chief Financial Officer Alex Sink details new legislation the state has passed to protect residents from annuities fraud. Specifically, it bans the practice known as "twisting", where an unscrupulous agent combines several annuities into one with a different holiday. The agent recieves an extra commission from another company, while the investor's retirement nest egg is put in danger. In Florida, this practice is now a third degree felony.Senior citizens also... Read More

SEC Sued By NAIC, NCOIL Over Equity Indexed Annuities Rule 151A

In the National Underwriter, Arthur D. Postal writes that the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL) have jumped into the fray regarding Rule 151A. The rule was enacted by the Security and Exchange Commission (SEC) last December; it seeks to regulate equity indexed annuities as securities. The two regulatory groups have sued in the U.S. Court of Appeals to block the rule from taking effect in early 2011.A coalition... Read More

Insurance Companies Sue SEC Over Indexed Annuity Regulation

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,... Read More

Insurers’ Hope: Lower Reserve Requirements for Annuities

M.P. McQueen from The Wall Street Journal recently reported on the insurance industry's push for states to lower their required reserve amounts. While the states regulate insurance and annuity products, the recommendations of the National Association of Insurance Commissioners (NAIC) are typically adopted by most states. NAIC may make a decision as early as Friday.The life insurance industry is adamant that the current reserve requirements are too conservative; as you would expect, that... Read More

Florida Annuity Laws Changed to Protect Seniors

A new year brings new protections for annuities consumers in Florida, says the Tampa Bay Business Journal. With a massive senior citizen population, the state has been targeted by unscrupulous agents and other individuals that recommended innapropriate financial products to seniors, such as reverse mortgages and certain annuities. Many people lost their entire retirement fund as a result. Florida Chief Financial Officer Alex Sink's office has pushed through this legislation to protect more... Read More

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