The Principal Financial Group has reached a settlement with the Attorney General of the State of Connecticut regarding a limited number of expense reimbursement arrangements made with a few brokers who sold single premium group annuity policies.
The company said that the policies primarily fund terminating defined benefit plans. Those referenced in the settlement represent less than 5% of all single premium group annuity policies written by The Principal between 1998 and 2006.
The settlement calls for The Principal to establish a fund in the amount of $4.4 million to be paid to plan sponsors who purchased single premium group annuity policies from brokers who received these payments from The Principal from 1998 through January 2006. The Principal also agreed to pay a penalty of $600,000 to the State of Connecticut.
Ron Danilson, senior vice president for retirement and investor services at The Principal, said: Throughout the process, we have denied the assertions of the Attorney General and we continue to do so. These payments were legitimate and legal. We disclosed all costs, including all broker payments, to plan sponsors.