LONDON, ON, Oct. 1, 2015 /CNW/ - A final judgment has been granted in two separate but related class actions, one filed on behalf of participating life insurance policyholders of London Life Insurance Company ("LLIC") against LLIC and the Great-West Life Assurance Company ("GWL") and the other filed on behalf of participating policyholders of GWL against GWL and Great-West Lifeco Inc. ("Lifeco"). The lawsuits challenged two transactions by LLIC and GWL in 1997 which used $220 million from their participating accounts in order to help pay for the purchase of LLIC by GWL (the "Par Account Transactions" or the "PATs").
The litigation determined that certain provisions of the Insurance Companies Act (ICA) were breached. Specifically, the Ontario Court of Appeal held that the Par Account Transactions (PATs) failed to comply with Generally Accepted Accounting Principles, and therefore breached s. 331(4) of the ICA. Given this finding, the Court concluded that GWL and LLIC made unlawful transfers of money from these companies' participating accounts to the shareholders accounts contrary to s. 462; and GWL and LLIC charged unlawful expenses to the participating accounts in the form of annual amortization charges each year from 1997 to 2011 contrary to s. 458. Notwithstanding these breaches of the ICA, the Court held that there was no evidence of any impact on policyholder dividends. The claim against Lifeco was dismissed.
As a result, the PATs were ordered to be unwound as of December 31, 2011. The Ontario courts cancelled the illegal accounting for the participating account transactions as of December 31, 2011 with the result that future amortization charges will not be incurred by the participating accounts. Further, LLIC and GWL were ordered to pay a total of $56.43 million on an after-tax basis plus an applicable rate of interest from the shareholders accounts to the participating accounts of LLIC and GWL. This means that the Courts did not make an award directing that money be paid directly to participating policyholders. Rather, the amounts to be paid by LLIC and GWL shareholder accounts are payable to the participating accounts by order of the courts. Class Members are therefore not required to make a claim or to otherwise take any steps as the money ordered to be returned to the participating accounts must be dealt with in accordance with the dividend policies of GWL and LLIC in the ordinary course of business. The outcome of the litigation has no impact on policyholder contract terms or conditions.
A hearing has been scheduled for January 20 and 21, 2016. At the hearing, it is expected that (1) lawyers for the Class Members; (2) GWL, Lifeco and LLIC; and (3) the Ontario Class Proceedings Fund will each separately ask the court to approve fees, costs or a levy. To read more about the hearing and how class members can participate, visit www.parpolicyclassaction.com.
The Court-approved Notice of Judgment, copies of the full judicial decisions and other details respecting the class actions can be found at www.parpolicyclassaction.com.
Harrison Pensa LLP, based in London Ontario, is one of Canada's foremost class action law firms and has expertise in a full range of class action matters.
SOURCE Harrison Pensa LLP
For further information: Media contact: Jonathan Foreman - Harrison Pensa LLP - 519.661.6775; [email protected]