Top executives at Union Labor Life Insurance Company say the carrier’s agreement to settle U.S. Department of Labor allegations of benefit law violations, does not mean the company agrees that the suit was justified.
The comments were a response to the Labor Department’s announcement Friday that ULLICO, Washington, had settled the suit by agreeing to pay close to $17 million to pension plans and other investors that put money into a pooled separate account plan it offers.
The Labor Department maintained the plan, known as Separate Account J, failed to meet Employee Retirement Income Security Act of 1974 requirements that compensation arrangements be disclosed to .
ULLICO agreed to settle “to avoid lengthy, expensive litigation and to eliminate any ambiguity about whether the company’s reasonable compensation arrangements were adequately and consistently disclosed under ERISA,” ULLICO says.
“This settlement is about a good-faith disagreement over whether legitimate, reasonable and customary fees were sufficiently disclosed,” ULLICO President Mark Singleton says. “We think they were; the department disagreed. To resolve this issue, we both agreed to a settlement that involved no finding of any wrongdoing. We cannot stress strongly enough that no investor was overcharged or harmed in any way.”
“Today’s announcement allows us to move forward by agreeing to disagree,” ULLICO Chairman Joe Hunt says.
Under the agreement, ULLICO will pay a total of $20 million, of which almost $17 million would be paid to investors that bought the separately managed account. The remainder would cover ERISA payments and taxes.
The company says it also will initiate a simplified fee structure for its management of Separate Account J.