Northwestern Mutual Life Insurance Co. has agreed to pay $84million to settle a class-action lawsuit triggered by a change itmade in 1985 in how it calculated dividends for a fixed-incomeannuity.
The plaintiffs in LaPlant vs. Northwestern Mutual claimed thedecision to pay dividends based on the yields from short-termbonds, instead of a dividend based on the overall performance ofthe mutual company, resulted in the loss of millions of dollarsannually to investors.
That change violated the terms of the annuity contracts, allegedthe plaintiffs.
"This lawsuit was a case of a small group of customers seeking morethan their fair share of dividends, which would have come at theexpense of all our other policy owners," Northwestern Mutualspokeswoman Betsy Hoylman told CNBC. "At this point, it is best forour policy owners to close this matter."
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
