State-chartered banks have the right to sell annuities to their customers, New York State's appeals court ruled last week.
Modifying a lower court's ruling, the appellate division of the New York Supreme Court said sales of the insurance products are an "incidental power" of banks under a long-standing state law.
The ruling is a setback to the New York State Association of Life Underwriters, which sued the New York State Banking Division in 1991 to stop annuities sales through banks.
The state banking department had approved the sales in a Jan. 24, 1991, opinion letter. State banks had to suspend annuities sales after the New York Supreme Court ruled in the life underwriters' favor in July 1992.
Because the lower court's ruling was modified and affirmed rather than reversed, the life underwriters group apparently is precluded from pursuing the case in the Court of Appeals, the state's highest court.
The life underwriters group could not be reached for comment.
State Banking Superintendent Derrick D. Cephas praised the ruling, saying the court "recognized that annuities are financial instruments similar in character to other financial products which banks are allowed to broker."