Plaintiffs v London Life Insurance Co. and Great-West Life Assurance Co.
Suit Claims Insurers Improperly Shifted Cash
Directors of London Life Insurance Co. and Great-West Life Assurance Co. failed to meet their legal obligations when $220 million was removed from policyholders accounts in 1997, according to lawyers in a class-action lawsuit.
Two former actuaries of London Life and the former owner of a local camera store are suing the companies now controlled by the powerful Desmarais family of Montreal.
They are attempting to recover as much as $1 billion for nearly 1.8 million policyholders, alleging their money was transferred illegally and without consultation to the benefit of company shareholders. They argue this deprived the policyholders of a stake in 25 years of projected efficiency savings, as well as an investment return on their money.
The holding company for Great-West Life had bought the holding company for London Life, outbidding Royal Bank of Canada with a $2.95 billion offer.
The new owners then immediately installed their own directors, who approved the removal of funds from policyholder accounts.
Lawyers Paul Bates and Jonathan Foreman told Justice Johanne Morissette at the outset of what could be a 10-week trial that policyholders had paid extra for their whole life policies.
They were promised they might recover a portion of their premiums if operating costs declined, as well as share in future company profits.
Foreman noted that London Life had alerted policyholders that they would benefit from efficiency gains following the purchase of the Canadian operations of the Prudential Insurance Company of America.
Bates also promised to present evidence and arguments that the directors were negligent for not seeking advice from independent lawyers or accountants to be sure they complied with the law.
Hal Jackman, the former lieutenant governor of Ontario who controls Empire Life Insurance Co. in Kingston, confirmed yesterday that he complained to federal regulators as soon as he learned about the use of London Life policyholders funds
Jackman has been an investor in life insurance companies since 1957. He is to be called as a witness at the trial.
The representative plaintiffs in the case are actuaries DAlton (Bill) Rudd, 79, James (Jay) Jeffery, 64, a nephew of former owners of London Life, and retired camera store owner John Douglas McKittrick.
For more information please contact:
Jonathan Foreman
Phone: (618)692-0028
Fax: (618)692-0269
WebSite: http://www.lawyers.com/thomsonlaw
