Date: June 16, 2008
For more information contact: Mikaela Reck, Public Information Officer, (608) 267-9336 or mikaela.reck@wisconsin.gov

Insurance company ordered to pay record penalty

Madison, WI—The Wisconsin Office of the Commissioner of Insurance (OCI) announced today Pennsylvania Life Insurance Company (Penn Life), a subsidiary of Universal American Corp. (UAM), has agreed to a settlement of allegations of unsuitable annuity sales in Wisconsin.

Penn Life has agreed to pay a record forfeiture of $925,000 and to offer a restitution program to up to 2,200 purchasers, mostly Wisconsin senior citizens, who were sold more than $55 million in annuity products from 2000 to 2007. Under the settlement agreement Penn Life is ordered not to sell annuities in Wisconsin for four years, comply with Wisconsin law regarding suitability and sales practices, and supervise its insurance agents to ensure compliance with the law. Penn Life also agreed OCI may revoke its license to do business in Wisconsin if it is determined to have materially violated this settlement agreement.

Protecting Wisconsin seniors is a top priority for OCI according to Insurance Commissioner Sean Dilweg. Dilweg has said he is determined to protect Wisconsin's senior citizens from unlawful annuity sales tactics. This settlement with Penn Life furthers that goal.

Penn Life discontinued selling annuities and subsequently agreed to the settlement after OCI, beginning in 2006, took action to suspend, revoke or otherwise discipline a number of insurance agents managed by Penn Life's principal Wisconsin insurance agency, Premier Marketing Group (PMG). The enforcement actions originated with complaints filed with OCI alleging Penn Life insurance agents made misleading sales representations or sold unsuitable annuities or asset enhancer policies to Wisconsin seniors.

Penn Life agreed to the penalty, restitution program and order, although it denies violating the law. Penn Life management says that it is committed to ensuring its insurance agents are trained and supervised to use only lawful and ethical sales practices. "OCI will hold Penn Life to the commitments it has made in the settlement agreement by enforcing compliance with the settlement order," said Kim Shaul, Deputy Commissioner of Insurance.

The settlement requires Penn Life to offer up to 2,200 Wisconsin consumers who were sold annuities or asset enhancer policies by its agents or brokers the opportunity to have their purchase reviewed by an independent remediation firm. If the independent remediation firm determines the sale was improper, the consumer will be offered remediation according to the terms of the settlement.

Shaul said Penn Life will mail notice of the right to request review to every eligible customer after an independent remediation firm is retained. OCI anticipates the firm will be retained and notice mailed to eligible consumers by late summer.

"We strongly encourage these consumers to consult with their advisors, including tax and legal counsel, as they participate in this process," Shaul added.

In addition to annuity sales, the settlement agreement addresses practices of Penn Life and its affiliates, Marquette National, Pyramid Life, Constitution Life and Union Bankers, relating to sales of long-term care insurance policies, Medicare Advantage and Medicare Part D Plans, and Medicare supplemental policies.

Penn Life is required under the settlement to maintain an effective compliance program governing its and its affiliates' practices to ensure compliance with Wisconsin law. OCI may revoke Penn Life's license if it fails to maintain an effective compliance program as required in the settlement agreement.

Consumers who have any complaint regarding any insurance company or insurance agent, including any matter related to this settlement, should contact OCI for assistance at 1-800-236-8517.

Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.