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Lincoln Benefit Life Insurance & Annuities / Allstate Financial Sold to Resolution Life Holdings

Lincoln Benefit Life Co. was sold by Allstate Financial to Resolution Life Holdings for $600 million in 2013. Lincoln Benefit Life Co. sold both standard life insurance policies, as well as deferred annuity policies. With the sale, Allstate joined a string of companies selling off their annuity businesses.

The transfer of Lincoln Benefit Life Co. was completed in April of 2014. However, Resolution Life Holdings indicated policies and contracts sold through the Allstate Financial Agency would continue to be serviced by Allstate Life Insurance Company for 12 to 18 months after the acquisition, after which time the contracts will start being managed by Resolution Life Holdings. Some of LBL’s products, including variable annuity contracts, had been reinsured by Prudential Life Insurance in 2006 and these policies would continue to be supported by Prudential Insurance.

When insurance companies change hands, policyholders sometimes face confusion.  Unfortunately, problems could be exacerbated as the 12- to 18-month transition period comes to an end and the new company assumes management of previous contracts.  For example, policyholders who trusted Lincoln Benefit Life and the Allstate Financial network will find themselves with annuity contracts serviced by a company they are unfamiliar with. Policyholders may not be expecting the change to occur and the shift in who is managing the contracts may come as a surprise.

Typically, insurers change hands to benefit shareholders and improve their bottom line. In some circumstances policyholders can suffer from changes made by new owners, which could include new fees or costs; premium increases; changes in effective dates; and new requirements to continue holding policies. Consolidation of companies can, in some instances, also reduce market competition and make it easier for insurers to raise prices and get away with abusive business practices.  Consumers who are harmed need to consult with an Alameda County financial elder abuse attorney to determine their options.

Are Investments in Annuities at Risk?

Insurers getting out of the annuities market have opted out of annuities because interest rates near historic lows have made annuities a drag on corporate balance sheets.  Insurers do not like to have unprofitable products on their balance sheets. Often, when annuities turn out to be unprofitable, the companies with contracts sometimes look for ways to raise costs on consumers or reduce promised benefits. When policyholders expect a safe and secure investment, changes can come as a shock and undermine financial security.

Policyholders who purchase annuities generally do so because of the promise of a safe investment. These investments are routinely targeted to seniors. When an annuity is purchased, policyholders make an investment in the annuity with the expectation they will receive future income.  The policyholder can elect when the payouts from the annuity will begin.

Policyholders who buy deferred annuities, including those sold by Lincoln Benefit Life and Allstate Financial, will have payments from the insurance company deferred until the policyholder chooses to receive them. The policyholder then gets paid either in installments or a single lump sum.

Resolution Life indicates that “industry-leading third party administrators” will provide policyholder services to those with former LBL policies, and Resolution Life also alludes to the fact changes could be coming.  Lincoln Benefit Life/Allstate Financial states that “Before any changes are made, Lincoln Benefit Life will write to brokers and policyholders.”  When and if policyholders receive notice of a change, they may be put in a difficult situation where they have to accept changes in their benefits.

There are regulations aimed at protecting life insurance policyholders and those who purchased annuities. For those concerned about their life insurance and annuity investments, including those from Lincoln Benefit Life Co. and Allstate Financial, it is advisable to consult with a financial elder abuse attorney to determine if there are legal options available.  We will review your insurance and annuity policies for free. Call the Evans Law Firm, Inc. at 415-441-8669 or toll free at 888-503-8267 to discuss your situation.

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