The New York Department of Financial Services has entered into a consent order under which six U.S.-based life insurers will pay a collective amount of about $1.8 million for leading customers to swap their "more financially favorable" deferred annuities with immediate annuities.
The insurers are Mutual of Omaha Insurance Co. subsidiary Companion Life Insurance Co., Penn Mutual Life Insurance Co., Guardian Insurance & Annuity Co. Inc., Northwestern Mutual Life Insurance Co., Prudential Financial Inc. unit Prudential Insurance Co. of America, and United States Life Insurance Co.
The six insurers did not properly disclose to consumers income comparisons and suitability information in connection with the annuity swapping, according to the regulator's industrywide investigation. Additionally, customers in New York received incomplete information about the replacement annuities, which led to less income for identical or substantially similar options, the regulator said.
The insurers will give back about $1.2 million to New York customers and pay a total of $673,000 in penalties. Companion Life will return $462,122 and pay a $186,000 penalty; Penn Mutual will return $322,584 and pay a $133,000 penalty; Guardian Insurance & Annuity will return $218,589 and pay a $224,000 penalty; Northwestern Mutual will return $31,937 and pay a $26,000 penalty; Prudential Insurance will return $14,020 and pay a $35,000 penalty; and United States Life will return $102,902 and pay a $69,000 penalty.
The six insurers also agreed to take corrective actions.
