Northwestern Mutual Life to settle annuities suit for $84 million
March 26, 2015 by IFAwebnews Staff
Northwestern Mutual Life Insurance Co. has agreed to pay $84 million to settle a long-running class action lawsuit over changes the company made to annuities it sold before 1985.
About 4,000 current and 29,000 former owners of the product will be eligible to share in the settlement of a case that could have carried a much higher price tag if a jury ultimately believed the plaintiffs’ theory.
“This lawsuit was a case of a small group of customers seeking more than their fair share of dividends, which would have come at the expense of all our other policyowners,” said Betsy Hoylman, director of public relations for Northwestern Mutual, as reported by the Hournal-Sentinel.
“We are proud of the significant dividends we have paid to this group over the years, and believe our actions have been right, fair and in the best interest of all of our policyowners, including these annuity owners.”
According to the Journal-Sentinel, Hoylman said the company decided it was in everyone’s interest to avoid continued costs of litigation and the “uncertainty of the legal process.”
George Kersten, one of the lead plaintiff lawyers, called the agreement “a fair resolution of a very complex case.” He said it was especially beneficial “to the majority of class members in or approaching retirement.”
The minimum award is $250, and others could be thousand of dollars, depending on the size of the annuities held and when they were held, based on a complex formula. Kersten said a national firm will administer the notice and claims processing for about $600,000, and the legal fees are capped at 35% of the $84 million.
The proposed settlement must still win final approval from U.S. District Judge Lynn Adelman. That could happen by the end of summer.