Midland National Life Update addresses Sammons Financial Group and its life insurance subsidiaries Midland National Life and North American’s legal problems and how its insurance rating may be affected

Sammons Financial Group, Inc. (SFG) is the parent company of the subsidiary life insurance companies Midland National Life Insurance Company and North American Company for Life and Health Insurance, along with its divisions, Sammons Annuity Group and Sammons Corporate Markets Group, Sammons Retirement Solutions Inc., and Sammons Financial Network LLC.

Because Sammons Financial is not a publically traded company it isn’t subject to the kind of transparent review that those public companies would be. This lack of public scrutiny may have emboldened Sammons Financial management to allow its life insurance affiliates Midland National Life and North American to develop unethical sales practices that have resulted in regulatory actions, Attorney General investigations, and class action lawsuits by policy holders in multiple states.

CONSUMER ISSUES

While North American has had its share of legal problems, Midland National Life is notorious in the life insurance industry as a serial defendant in class action lawsuits brought by seniors and other consumers alleging fraud over Midland National’s business practices. Even though the class action lawsuits and regulatory actions have been initiated in many states around the country the claims seem to be the same – fraud, unethical sales practices, failure to pay claims, and violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act.

Midland National Life and North American even found a way to exploit the Social Security Administration’s Death Master File (DMF) to their advantage. Midland National Life and North American used the DMF records to stop making annuity payments in an effort to increase their profits; however, Midland National and North American chose not to search for beneficiaries of life insurance policies who may be due benefits from Midland National Life and North American.

This ill-advised action cost Midland National Life and North American a $3.3 million settlement agreement with several states’ insurance departments due to their failure to pay claims. Midland National Life and North American also had to agree to implement business reforms and a future business practices review to determine whether they have complied with the agreement.

To be fair, a life insurance company being sued is not unusual; however, a life insurance company being sued by thousands of its policy holders across the country is a red flag. Being sued by a state’s chief law enforcement officer is so unusual it constitutes a flashing neon sign behind the red flag. Being sued under provisions of the RICO (Racketeer Influenced and Corrupt Organizations) Act as they have been on several occasions adds bells and sirens to the neon sign and red flag. To be sued on multiple occasions over an almost thirty year period for various and differing schemes would seem to be a criminal indictment waiting to happen.

Midland National Life has brought much of this on themselves. As the policy holder complaints began to accumulate Midland National had the opportunity to resolve them and avoid litigation. They chose not to, and Sammons Financial management chose not to implement appropriate oversight. That action constituted a clear policy of contempt for their customers, and also for their agents whom are faced with recommending a company that places profits ahead of those policy holders that trusted them.

To research or review Midland National Life, simply Google "Midland National Life" ratings or "Midland National Life" reputation. To review Midland National Life’s legal problems in an easy to read format visit http://www.MidlandNationalLifeUpdate.se.

Sammons Financial has also allowed Midland National Life to partner with sales organizations that have had their own legal problems. First Command Financial Planning is becoming a growing presence in financial services for military members and their families, however, First Command’s business practices and ethics may pose a threat to the financial well-being of military families.

First Command’s marketing strategy is to hire former military members to develop relationships with current and former military families. This contrived fellowship has resulted in documented financial abuse of the very same service members that we depend on to risk their lives on a daily basis protecting us.

First Command Financial has a long history of consumer and regulatory complaints. Beginning in late 2004 with the National Association Of Securities Dealers (NASD) announcing that it had censured and fined First Command Financial Planning $12 million. First Command Financial had made misleading statements and omitted important information when selling mutual fund investments with up-front sales charges of up to 50 percent through a monthly installment method known as a “Systematic Investment Plan.” First Command was ordered to pay restitution from the $12 million fine.

Since then there have been other First Command scandals, lawsuits, and consumer complaints. Simply Google “First Command” lawsuit to learn more.

So far, Midland National Life has managed to avoid serious damage to their company rating, if not their reputation, by including non-disclosure agreements in settlements of the litigation brought against them. This tactic has allowed Midland National to prevent consumers and their own agents and employees from sharing any knowledge they may have of criminal activity with law enforcement agencies.

Life insurance company ratings are based upon formulas that focus on company profitability. Sammons Financial and its subsidiaries Midland National Life and North American’s unethical sales practices have been very profitable for Midland National Life and North American. The insurance company ratings do not reflect the damage done to the policy holders that have been victimized to make those profits.

LOBBYING EFFORTS

Sammons Financial, through Midland National Life and North American, lobby federal agencies, state legislature, and state insurance departments among others utilizing lobbyist like self-proclaimed “annuity expert” Sheryl J. Moore to reduce or eliminate consumer protections for the products they sell. Based upon the information Ms. Moore has published on her own web sites Ms. Moore is more of a life insurance company shill than an objective annuity authority.

An example of Sammons Financial’s lobbying efforts was their attempt in 2009 to persuade Texas lawmakers to not impose reasonable regulations on companies that sell questionable or downright bogus financial products to elderly Texans.

Under then Texas law, annuities with fixed maturity dates could be written so that no benefits were paid until a person reached up to 115 years of age. To get out of the contract, the elderly citizens faced huge contract surrender charges which could destroy their investment.

Sammons Financial was conducting this lobbying while the Texas Department of Insurance (TDI) had an open enforcement case against Midland National Life based on Midland’s annuity sales and marketing.

AGENT RELATIONS

Life insurance agents attach their personal reputation to any insurance company they represent. Sammons Financial has shown little regard for how their unethical business practices and legal problems affect the life insurance agents they recruit to sell their products. In fact, Sammons Financial’s subsidiary Midland National Life has actually found a way to use their ongoing legal problems to enhance their profitability.

Midland National Life has resolved some of the various lawsuits and consumer complaints against them by frequently refunding the money a consumer paid into a policy to settle or avoid a lawsuit. Midland National is then going back to their agents (who sold what Midland told them to sell the way Midland told them to sell it) and demanding a refund of the commissions they paid the agent regardless of whether the agent did anything wrong. Extremely one sided agent contract language like this

“In addition and not limited by the forgoing, North American reserves the right to chargeback commissions at any time, in its sole discretion, pursuant to paragraphs 7 and 9 of the agent contract, which are expressly incorporated herein.”

allows Midland National Life and North American to recover a portion of any settlement costs paid to a consumer from an innocent agent, and perhaps even make a profit on the interest Sammons Financial earned while it was holding the consumers’ money.

Sammons Financial has allowed Midland National Life to retaliate against those agents that question their business practices in a manner that can best be described as “thuggish”.

As recently as December 19, 2014 Midland National Life abandoned their long standing denial of threatening the family of a former award winning general agent to suppress his efforts to expose Midland National’s unethical sales practices and to cover up their criminal acts. When faced with overwhelming evidence of state and federal crimes in an ongoing federal matter they, in effect exercised their rights under the Fifth Amendment of the United States Constitution – the right to remain silent to avoid incrimination.

EMPLOYEE ISSUES

Sammons Financial employees have described their work environment as “unbearable”, their most common feeling as “fear”, and Sammons Financial management as “tyrannical”. Sammons Financial fosters a work place attitude of “us versus them” with the “us” being what’s in Sammons Financial’s best interest and the “them” being everyone that gets in Sammons Financial’s way.

This extends to abusing their own employees when that employee raises an issue involving Sammons Financial‘s ethics or business practices. Such an employee, whom you might think should be rewarded, is commonly forced out of the company with a one sided non-disclosure agreement imposed upon them.

Sammons Financial subsidiary Midland National Life is quite often cited as a legal precedent when it comes to union busting. Sammons Financial takes pride in locating their offices where they can impose a much lower wage scale than the rest of the country. When Sammons Financial’s subsidiary Midland National Life’s employees considered joining a union to improve their hostile work environment Midland National management distributed anti-union campaign literature that included false impressions and other misleading information to its employees with their paychecks the day before the vote.

Some Midland National employees felt intimidated by their employer’s aggressive anti-union campaign and others were confused by the literature placed in their paychecks about the issues they were voting on. The attempt to improve their working conditions was defeated.

COMMUNITY INVOLVEMENT

Sammons Financial has been generous to charitable groups; however, it’s an open question if those groups are aware how Sammons Financial is earning the money it donates, and how many families have been harmed in the process.


Sammons Financial Group
5949 Sherry Lane
Suite 1900
Dallas, TX 75225

Midland National Life Insurance Company
One Sammons Plaza
Sioux Falls, SD 57193

North American Company for Life and Health
525 West Van Buren
Chicago, IL 60607

Midland Annuity
4601 Westown Pkwy, Suite 300
West Des Moines, IA 50266