Principal Life Wins Trial Decision on Variable Annuity Claims
After a long, tortured procedural history, Principal Life Insurance Co. won a court trial in the United States District Court for the Southern District of Iowa. The case was initially dismissed in an early procedural motion, but then revived by the Eighth Circuit Court of Appeals. Finally set for a bench trial, the court just recently issued a decision in Principal’s favor
The plaintiffs in Principal argued that it was a fiduciary because it had the discretionary authority to set the rate of return for a stable value fund included in the Plaintiffs’ 401(k) Plan. Although this authority may have made Principal an ERISA fiduciary, the court held that Principal was prudent and loyal when setting the rate of return. The Court noted that Principal used actuarially sound principals that took into account the low-risk nature of the fund, and ensure that the investment would be viable over the long term.