Transamerica Violates Annuity Exemption In Texas

BOCA RATON, Fla., May 18, 2012 /PRNewswire-USNewswire/ -- The following is being released by Structured Settlement Institute:

A lawsuit in Texas has accused Transamerica Life Insurance Company of violating Texas law exempting annuity benefits, reports the Structured Settlement Institute.  In the suit (Cause No. 2011-05238,FinServ Casualty Corp. and Capstone Associated Services, Ltd. vs. Transamerica Occidental Life Insurance Company, Transamerica Annuity Service Corporation and Liquidating Marketing, Ltd., in the 165th Judicial District Court of Harris County, TX), Transamerica stands accused of unlawfully failing to pay annuity proceeds, choosing to keep the monies for Transamerica's own benefit.  Transamerica is a subsidiary of Aegon, a foreign based insurance holding company.  A May 2012 supplemental court filing accuses Transamerica of defaulting on an increasing number of annuity benefits under additional policies.

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"Longstanding Texas Insurance Code Section 1108.051 makes annuity benefits exempt from attempts by creditors to seize those benefits to pay a debt owed by the annuity's beneficiary," reports Stewart Feldman, CEO of RSL Funding, LLC, a national purchaser of annuity benefits in the secondary market and member of the Structured Settlement Institute. "As alleged in this Texas litigation, Transamerica not only disregarded the exempt nature of the annuity benefit but kept the monies for its own benefit when those benefits were due to another party.  Transamerica knew better.  Quite frankly, I don't know why anyone would trust Transamerica with their insurance business," commented RSL Funding's Paul McHugh.

In an April 2011 letter to the Texas Department of Insurance, Transamerica's general counsel, Andrew Martin, told regulators that annuity benefits are not exempt under Texas law because the annuitant cannot invoke the protections of the statutory exemption.  Separately Transamerica was stating the exact opposite to Texas courts. In videotaped testimony with general counsel Andrew Martin sitting in attendance, Transamerica's representative could give no meaningful answer as to why Transamerica wouldn't pay the annuity, claiming only that the "lawyers told her to do it."  Stone-faced, Mr. Martin made no comment, before leaving the room and slamming the door.

According to Stewart Feldman of RSL Funding, LLC:  "The Texas court in question ordered Transamerica to immediately deposit all contested annuity proceeds into the Court's registry, rejecting Transamerica's argument that it should be allowed to hold onto the funds.  The Court declined to accept Transamerica's argument of 'trust me.'"

When asked for comment about this revelation, RSL Funding's Paul McHugh observed, "One of the reasons that customers sell their structured settlements is a lack of confidence in life insurance companies to make the called-for payments.  Only three years ago, Transamerica was on the edge of failing financially, pleading with the U.S. government for aid and trying to become a 'bank' in order to seek emergency funds from the U.S. government before being bailed out by The Netherlands and Belgium.  You can well understand why customers don't want to rely on companies like Transamerica." 

For further information, contact the Structured Settlement Institute (SSI), a not-for-profit organization established to educate sellers of structured settlements regarding fair and equitable practices among providers of structured settlement transfers.                   

Structured Settlement Institute
Boca Raton, FL, 1-800-409-1975

SOURCE Structured Settlement Institute