Lincoln National Life Wins Patent Infringement Suit Over Variable Annuities
Copyright 2009 A.M. Best Company, Inc.All Rights Reserved BestWire
February 25, 2009 Wednesday 02:31 PM EST
503 words
Lincoln National Life Wins Patent Infringement Suit Over Variable Annuities
Fran Lysiak
PHILADELPHIA
Lincoln National Life Insurance Co. has won a patent infringement lawsuit over its variable annuities against three Aegon USA companies, with a jury awarding the company $13.1 million dollars.
A jury handed down the verdict against Transamerica Life Insurance Co., Transamerica Financial Life Insurance Co. and Western Reserve Life Assurance Company of Ohio. It found that Lincoln's patent was valid and determined that "a reasonable royalty" for Transamerica's infringement was $13.1 million, said Lincoln National Corp. in a statement.
The patent claims in the case concerned a computer-based way for administering variable annuity products that combined guaranteed minimum payment features with systematic withdrawals, Lincoln National said. The patent also includes data processing methods used to administer variable annuities in the payout phase and withdrawals from mutual funds, especially systematic withdrawals from funds, it said.
Executives with Lincoln National (NYSE: LNC) have dubbed "i4LIFE" variable annuities the company's leading retirement-income product. Attempts to get additional comment from Lincoln National weren't successful.
In a statement, Transamerica Life said it's disappointed in the verdict "because we believe that our computer system does not infringe and that the concepts expressed in the patent were known in the industry prior to the patent filing date. At this time, we are evaluating our options as to next steps."
Transamerica companies are subsidiaries of Aegon Group, based in the Netherlands.
Lincoln said it filed its first patent for income guarantees in 1998. "We believe in our unique product solutions, our patented method for administering those product solutions and in protecting our intellectual property," said Dennis Schoff, Lincoln National's general counsel, in a statement.
Lincoln National Life Insurance Co. currently has a Best's Financial Strength Rating of A+ (Superior). Transamerica Life Insurance Co., Transamerica Financial Life Insurance Co. and Western Reserve Life Assurance Company of Ohio also currently have Best's Financial Strength Ratings of A+ (Superior).
In the afternoon of Feb. 25, Lincoln National Corp.'s stock plummeted 17.4%, trading at $10.77 a share. A day earlier, the company said it was slashing its quarterly common stock dividend from 21 cents to 1 cent a share. Dennis R. Glass, president and chief executive officer, said in a statement that the move, combined with the company's third-quarter reduction, will reduce the annual dividend payouts by about $400 million.
Lincoln National is a top seller of variable annuities in the United States. Through the first nine months of 2008, sales stood at $8.8 billion, making it No. 5-ranked in the United States, according to data tracked by Morningstar Inc. (BestWire, Jan. 5, 2009). Aegon/Transamerica is ranked 14th based on $2.6 billion in sales through the same period, according to Morningstar.
(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])
February 26, 2009
Health Insurance is a Necessity
Advisor News
Annuity News
Health/Employee Benefits News
Property and Casualty News