Great-West Lifeco has been dealt a severe fine by an Ontario Superior Court of Justice judge who has ruled against the Canadian insurer for improperly using money from participating life insurance policyholders’ accounts.
In her ruling, Justice Leitch ordered Great-West to repay C$84m and its wholly-owned subsidiary London Life to repay C$372m to affected policyholders.
The ruling follows a class action brought against Great-West in 2008 in which plaintiffs alleged that it had breached certain requirements of the Insurance Companies Act by using money from participating life insurance policy accounts of London Life to help finance London Life’s acquisition in 1997.
Canadian insurer London Life is based in London, Ontario.
Responding to the judgment, Great-West said in a statement: “The management and boards of directors believe they have at all times acted in the best interests of their respective companies, taking into account the interests of all stakeholders, including the policyholders.
“The acquisition of London Life was carried out with careful supervision, rigorous analysis, and the use of detailed third-party studies. In addition there were statutory reviews by the financial services regulator.”
Great-West is to lodge an appeal against the ruling. The insurer noted it believes “significant aspects of the decision… are in error”.