A coalition of insurance companies and independent marketing organizations have filed suit in federal court in Washington, D.C., to overturn a rule published today that classifies indexed annuities as securities.

The U.S. Securities and Exchange Commission (SEC) voted in mid-December to oversee the growing $120 billion equity-indexed annuities market; the new rules would apply to indexed annuities issued on or after Jan. 12, 2011. The final rule was published today in the Federal Register.

The lawsuit, filed by six companies that include West Des Moines-based American Equity Investment Life Insurance Co., is asking the U.S. Court of Appeals for the District of Columbia Circuit to overturn Rule 151A, which requires indexed annuity products to be registered with the SEC as securities, which would take them out of the jurisdiction of insurance regulators. The SEC has said the rule is needed to clarify the status of these products, which have seen dramatic sales growth and an increase in the use of abusive tactics to sell the products to seniors.

Other petitioners in the case are BHC Marketing, Midland National Life Insurance Co., National Western Life Insurance Co., OM Financial Life Insurance Co. and Tucker Advisory Group.

Indexed annuities offer minimum guaranteed values and credit interest based on the performance of a market index such as the Standard & Poor’s 500. Though SEC officials contend that the market risk associated with these products make them more like mutual funds than insurance contracts, the petitioners in the case say indexed annuities are safer than securities because they guarantee a minimum return.

“The securities laws say explicitly that annuities are to be regulated by the states, not the SEC,” said Eugene Scalia, an attorney for the petitioners, in a press release. “Unfortunately, the Commission engaged in a flawed rulemaking process whose result is a rule that conflicts with Congress’ intent and with two Supreme Court decisions.”

The National Association of Insurance Commissioners and a number of state insurance commissioners, including Iowa Insurance Commissioner Susan Voss, have also filed comments in opposition to the rule.