A settlement has been reached with the last remaining defendant in a 16-year-old lawsuit brought by the California Department of Insurance that arose out of the 1991 liquidation of Executive Life Insurance Co.
The French company Artemis S.A. has agreed to pay $200 million in addition to $110 million it paid previously bringing the total recovery against all defendants to over $930 million. The National Organization of Life and Health Guaranty Associations and the California Life and Health Insurance Guarantee Association also joined in the settlement.
“This settlement agreement closes the last chapter in the long dispute between the Department of Insurance and Artemis S.A., one of the purchasers of the Executive Life Insurance Co.,” Califronia Insurance Commissioner Dave Jones said in a statement. “As a result of the Department of Insurance’s efforts with this settlement agreement the total recovery in the Executive Life Insurance litigation against all defendants is over $930 million.”
California-based Executive Life Insurance Co. became insolvent in 1991. The California insurance commissioner at the time, John Garamendi, solicited bidders to buy its assets, including its multibillion dollar portfolio of junk bonds as well as the insurer’s life insurance policies and annuities. In a competitive bidding process, the commissioner selected a joint bid from a consortium of French companies that included Altus S.A., a subsidiary of Credit Lyonnais, which was owned by the French government.
In winning the bid, Altus bought Executive Life’s junk bonds and its consortium partners ostensibly set up and owned a new California insurance company that took over Executive Life’s policies.
California law prohibited a foreign government from owning a California insurance company, which meant Altus, as a subsidiary of a French government-owned bank, could not legally own the new California insurer. Despite this legal prohibition Altus entered into a conspiracy and agreements with its consortium partners in which Altus owned the new insurance company, according to the Department of Insurance. The conspirators allegedly concealed Altus’ ownership and lied about it to the California Department of Insurance and the Federal Reserve Bank of New York. Artemis joined the conspiracy later.
The Department of Insurance discovered the conspiracy and sued all conspirators, which began a lengthy legal fight.
Topics Lawsuits California
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