February 22, 2001
9:00 a.m., Toronto Time
TSE: CL, NYSE: CLU
Canada Life reaches agreement on premium offset lawsuits in Canada
Toronto, Canada — The Canada Life Assurance Company and the law firms of Scarfone Hawkins LLP, Poyner Baxter Poyner, and Lauzon Belanger are pleased to announce that an agreement has been reached to resolve potential class action suits. These lawsuits were started in Ontario, British Columbia and Quebec by policyholders who own participating whole life insurance policies sold using the premium offset concept. Similar actions have been launched against a number of life insurance companies.
Premium offset is a payment option that allows a policyholder to pay for their policy using accumulated policy dividends.
Canada Life and the law firms representing the plaintiffs agree that the proposed settlement is fair and equitable. “We are satisfied that the settlement agreement properly and fairly deals with the concerns of policyholders and we are pleased that policyholders will receive significant benefits under the agreement,” said class counsel representatives.
“The proposed settlement represents a fair response to customer concerns, balances our customer service objectives with our responsibility to our shareholders, and will allow us to resolve the issue,” said Bill Acton, Executive Vice-President and Director, Canadian Division, Canada Life.
Canada Life believes that most of its policyholders were provided with sufficient information to make informed decisions about their policies at the time of sale. The proposed settlement provides an independent review process for those policyholders who feel they were given insufficient information. It also provides general benefits for all eligible policyholders across Canada, not just those in the three provinces where lawsuits have been started.
Every eligible policyholder will receive the general benefits without having to do anything. However, if they do not wish to participate, they can choose to “opt out”.
The proposed settlement applies to all owners of participating whole life insurance policies issued anywhere in Canada by Canada Life between January 1, 1980 and December 31, 1997. These policies must have been in effect on February 1, 2001 or have ended between January 1, 1992 and February 1, 2001 because they lapsed or were surrendered. This represents approximately 135,000 policyholders.
The settlement and related costs are not expected to have a material financial impact on Canada Life.
The proposed settlement is subject to court approval in Ontario, British Columbia and Quebec, through hearings expected to take place in April. After court approval, eligible policyholders will receive a personalized mailing outlining the details of the agreement and the options available to them. In the meantime, more information is available from the Canada Life web site www.canadalife.ca/en/premoffset and/or the class counsel websites: www.classactionlaw.ca, www.poynerbaxter.com, www.lauzonbelanger.qc.ca.
