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ANNUITY WIRES

Judge Rules Northwestern Breaches Dividend Contracts

A Wisconsin state court judge ruled that Northwestern Mutual breached contracts with nearly 4,000 fixed deferred annuity policyholders when the insurer changed its dividend payment method for its contracts purchased before 1985. Policyholders haven't received an equitable share of the insurer's divisible surplus as dividends since 1985, when it began to base dividend payments on the earnings of a segmented account instead of the insurance company's surplus, according to Judge Dennis J. Flynn. Flynn is requiring Northwestern to pay each of the 3,644 policyholders their portion of the total surplus earned since the 1985 change. The insurer defends its actions and says it had no intention of withholding any rightful allocation of dividends from the policyholders. The insurer also says it has multiple grounds to appeal the ruling, including the court's ignoring essential evidence when it made the ruling in favor of the plaintiffs.


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