Judge Finds in Favor of Principal Life’s Process for Setting GIC Crediting Rate
Principal prevailed in a lawsuit that alleged it set the crediting rate for a guaranteed investment contract (GIC) such that it could “retain unreasonably large and/or excessive profits.”
Following a six-day trial, Judge John A. Jarvey of the U.S. District Court for the Southern District of Iowa ruled in favor of Principal Life Insurance Co. in a lawsuit alleging it violated the Employee Retirement Income Security Act (ERISA) by setting the crediting rate for a guaranteed investment contract (GIC) such that it could “retain unreasonably large and/or excessive profits.” A GIC is a stable value investment contract issued by an insurance company that usually pays a specified rate of return for a specific period of time, guaranteeing principal and accumulated interest.