Less than a week after paying $1 million in a settlement with the U.S. Securities and Exchange Commission over misleading proxy disclosures, an Iowa company now faces a $275,000 fine for allegedly selling unapproved annuity contracts in Minnesota.

American Equity Life Insurance Co., located in Des Moines, Iowa, received the fine March 8 after consumers who purchased their contracts were subject to higher surrender charges and less favorable terms, according to the Minnesota Department of Commerce.

The department estimates the total face value of the unapproved policies sold in the state as more than $28 million.

Minnesota law requires any annuity contract issued to a state resident be presented on a form approved by its commerce department. Between 2002 and November 2008, American Equity allegedly issued 541 annuity contracts in Minnesota on unapproved forms, officials said.

In addition to the fine, American Equity must change the 541 contracts to shorten and reduce the surrender charge provision to comply with Minnesota law, which generally allows up to a 9% surrender charge for a nine-year period, according to the commerce department.

American Equity also must reimburse all policyholders that surrendered their contracts prior to the department’s consent order to make up the difference between the surrender charge they actually incurred and the surrender charge to which they would have been subject had the policy complied with Minnesota law.

The company must notify affected policyholders by mail regarding policy changes, and it must create and maintain procedures to ensure that only policies filed and approved by the commerce department are issued to Minnesota residents.

In addition, the company is required to establish an audit program to ensure its insurance producers comply with these policies and procedures required by law.

Representatives for American Equity did not immediately respond to requests for comment by IFAwebnews.com.

The action in Minnesota comes just five days after two executives with the company agreed to pay a combined $1 million in penalties to settle a disclosure inquiry by the SEC.

The federal agency alleged that the company and the two executives did not properly disclose details of an acquisition that provided $2.5 million for American Equity’s founder, current chairman and former chief executive officer, David Noble.