Financial Services Superintendent Linda A. Lacewell Secures $1.15 Million for Consumers from Six Life Insurance Companies for Deferred to Immediate Annuity Replacement Violations

Financial Services Superintendent Linda A. Lacewell Secures $1.15 Million for Consumers from Six Life Insurance Companies for Deferred to Immediate Annuity Replacement Violations

Six Insurers to Pay $1,152,154 in Restitution Collectively to New York State Consumers, Plus $673,000 in Penalties

NEW YORK – Financial Services Superintendent Linda A. Lacewell today announced that the Department of Financial Services (DFS) has entered into consent orders with six life insurance companies:  Companion Life Insurance Co., The Guardian Insurance & Annuity Company, Inc., Northwestern Mutual Life Insurance Co., The Penn Mutual Life Insurance Co., The Prudential Insurance Company of America, and The United States Life Insurance Company in the City of New York for violations of New York Insurance Regulations in deferred to immediate annuity replacement transactions.  The insurers, collectively, will pay $1,152,154 in restitution to New York State consumers, plus $673,000 in penalties. 

“DFS is committed to protecting all New York State consumers, including seniors, to ensure that they receive the maximum retirement income available from their annuities,” said Superintendent Lacewell. “The Department is putting New York's life insurers on notice:  they must comply with our regulations.  DFS will continue to ensure consumers are fully informed when deciding whether to replace existing deferred annuities.”

DFS’s investigation found that these six carriers failed to properly disclose to consumers income comparisons and suitability information, causing consumers to exchange more financially favorable deferred annuities with immediate annuities. Many New York consumers received incomplete information regarding the replacement annuities, resulting in less income for identical or substantially similar options.  Last year DFS issued a regulation that ensures recommendations related to life insurance and annuities are in the best interest of the consumer and appropriately address the insurance needs and financial objectives of the consumer at the time of the transaction.

Today’s settlements are the result of DFS’s ongoing industry-wide investigation into deferred to immediate annuity replacement practices in New York State.  Investigations remain ongoing with regard to additional life insurance carriers licensed by the Department.

Below are the estimated consumer restitution and penalty amounts for each carrier:

CarrierConsumer RestitutionPenalty
Companion Life$462,122$186,000
Northwestern Mutual$31,937$26,000
Penn Mutual$322,584$133,000
U.S. Life$102,902$69,000

As part of the agreements, many New York consumers will receive additional restitution going forward in the form of higher monthly payout amounts for the remainder of their contract terms. The insurers have agreed to take corrective actions, including revising their disclosure statements to include side-by-side monthly income comparison information and revising their disclosure, suitability, and training procedures to comply with regulations. 

Annuities are contracts between life insurance companies and consumers that provide guaranteed payments for the remainder of an individual’s lifetime or for a specified period.  Immediate annuities provide periodic income payments that begin within thirteen months after the annuity is issued, while deferred annuities allow consumers to earn interest on their premium before receiving payments at a future date.  Annuitization is the conversion of the amount of a deferred annuity into a series of payments to the annuitant.  Recommending that consumers replace existing deferred annuities with immediate annuities without proper disclosures may cost consumers substantial lifetime income.

Copies of the six consent orders can be found on the DFS website.


Contact the Press Office

Contact us by phone:
(212) 709-1691
Contact us by email: