Allianz Settlement Wraps Up Nearly 10 Years of Litigation

Despite objections from some Class Members, a federal judge approved a settlement of two annuities class action lawsuits against Allianz Life Insurance Company of America, to the tune of $251 million.

The settlement wraps up two annuity fraud class action lawsuits that began in 2005. Plaintiffs alleged that Allianz had conspired through a network of different organizations to coerce about 238,000 elderly persons into buying annuities with unfavorable terms and poor performance. The plaintiffs had originally sought a total of $489 million in damages.

Allianz Annuity Fraud Allegations

Part of the plaintiffs’ claims in these Allianz class action lawsuits fell under the federal Racketeer Influenced and Corrupt Organizations Act. In March 2013, Allianz lost a preliminary round against those claims in its motion for summary judgment.

The company argued that the RICO claims were barred by the McCarran-Ferguson Act, which prohibits federal law claims that conflict with state insurance laws. The judge disagreed, finding the various states’ interests were in fact advanced by the RICO claims.

Plaintiffs alleged Allianz had falsely offered annuities with an “immediate” 10 percent bonus. The company also allegedly said its annuities would pay full value, when in fact the company would collect a 10 percent charge on premiums received and pay a reduced interest rate and no bonus if the annuity did not remain in deferment for at least five years. Plaintiffs said they would not have purchased these annuities if they had understood these terms.

Counsel for the plaintiffs noted that a similar case that went to trial in Minnesota, the lawsuit resulted in zero damages for the plaintiff class.

The plaintiffs’ attorneys also noted that the challenges of proving a RICO claim were so considerable that failure at any point therein could preclude recovery for the plaintiffs.

Two members of the plaintiff class argued against approval of the settlement, saying it did not adequately compensate class members with annuities that did not provide death benefits and that its release of claims was too broad.

However, in light of the two class action lawsuits’ ten-year history of aggressive litigation, and with the outcome of a trial still uncertain, the judge rejected the objector’s arguments and approved the settlement.

Allianz Settlement Deal

The Allianz settlement divides payment according to the nature of the plaintiffs’ claims. Up to $13.3 million is earmarked for those claiming misrepresentation, $11.9 million for claims of lack of suitability, and $9.8 million for those who could show financial need upon surrendering their annuity.

In addition to the cash awards, Class Members will enjoy new and more favorable terms for their existing accounts, such as increases in the amounts of money available for withdrawal without a penalty and in the amounts of their accounts’ cash surrender value.

The terms of the settlement also require Allianz to cover the plaintiffs’ attorney fees and costs on top of the amount to be distributed to the class. Attorney fees will run $42.5 million, and costs will be $4 million.

These Allianz Class Action Lawsuits are Case Cos. 2:05-CV-06838 and 2:05-CV-08908, in the U.S. District Court for the Central District of California.

Get a Free Life Insurance Claims/Annuity Fraud Lawsuit Review

If you or your loved one purchased a bonus annuity, life insurance policy or Medicaid qualified annuity and it did not turn out as promised, you may need to have an investment fraud lawyer review the policy, the payments, and the potential benefits. You may be surprised at what they find, and you may even qualify for financial compensation beyond what the policy promised.

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