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Sept. 14 — A new lawsuit accuses Continental Casualty Co. of mismanaging its 401(k) plan by canceling an in-house group annuity contract that provided employees with a generous guaranteed interest rate of 4 percent ( Dolins v. Continental Casualty Co. , N.D. Ill., No. 1:16-cv-08898, complaint filed 9/14/16 ).
The lawsuit, filed Sept. 14 in the U.S. District Court for the Northern District of Illinois, says that Continental canceled the contract in order to increase its own profits and appear more attractive to potential buyers, regardless of the negative effect it had on employees’ investments. The cancellation of the contract—which was offered by a Continental subsidiary—also caused employees to pay higher administrative fees, the lawsuit contends.
According to the lawsuit, nearly one-third of the billion-dollar plan’s assets have been invested in the guaranteed contract at various points. After the contract was canceled in 2011, employees saw their guaranteed 4 percent return drop to 1.54 percent by 2015, the lawsuit alleges.
Jerrold Dolins, the former CNA Financial Corp. employee who sued multiple Continental affiliates over the cancellation, allegedly invested 100 percent of his 401(k) assets in the fund associated with the annuity contract. He seeks to represent a proposed class of all the plan participants who invested in the contract since 2012, a class he claims includes up to 10,000 people.
Continental didn’t immediately respond to Bloomberg BNA’s request for comment.
Dolins is represented by Keller Rohrback LLP and Levun Goodman & Cohen LLP.
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Text of the complaint is at http://www.bloomberglaw.com/public/document/Dolins_et_al_v_Continental_Casualty_Company_Docket_No_116cv08898_.
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