Northwestern Mutual Life Insurance Co. has agreed to pay $84 million to settle a class-action lawsuit triggered by a change it made in 1985 in how it calculated dividends for a fixed-income annuity.
The plaintiffs in LaPlant vs. Northwestern Mutual claimed the decision to pay dividends based on the yields from short-term bonds, instead of a dividend based on the overall performance of the mutual company, resulted in the loss of millions of dollars annually to investors.
That change violated the terms of the annuity contracts, alleged the plaintiffs.
"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 policy owners," Northwestern Mutual spokeswoman Betsy Hoylman told CNBC. "At this point, it is best for our 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.
