Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Life Insurance

California Appeals Court Rules on Executive Life Sale

Your article was successfully shared with the contacts you provided.

A state appeals court in San Francisco has upheld a lower-court ruling backing actions the California insurance commissioner took in connection with Executive Life Insurance Company.

The plaintiff, Aurora S.A., sued in the Superior Court in San Francisco for a writ of mandate that would require the California commissioner to allow the sale of Aurora National Life Assurance Company, Valencia, Calif., to Reassure America Life Insurance Company, Armonk, N.Y., a unit of Swiss Re Reinsurance Company, Zurich.

Judge Charlotte Woolard, a Superior Court judge, denied the petition.

A 3-judge panel at California’s 1st District Court of Appeal affirmed Woolard’s decision earlier this month. The panel agreed with the trial court’s ruling and held that the commissioner had not abused his discretion.

Executive Life, Los Angeles, failed in 1991.

The MAAF Group, a consortium of French and Swiss insurers, and Altus S.A. acquired Executive Life’s insurance policies from the Executive Life estate, then transferred the policies to a new company, Aurora National Life, a subsidiary of New California Life Holdings.

Altus and Francois Pinault formed Artemis S.A., a company that owns Aurora S.A, Judge Barbara Jones writes in an opinion discussing the appellate court panel’s ruling.

Aurora S.A. controls New California Life Holdings, and, because Aurora S.A. controls New California Life holdings, it controls Aurora National Life, Jones says.

The appellate court case, Aurora S.A. vs. Steve Poizner, as insurance commissioner, etc. (A129971), has to do with a relationship between Aurora S.A. and Reassure America that began around 2000.

Aurora S.A. and another company agreed to sell their stakes in New California Life to Reassure America, and they also entered into a reinsurance agreement ceding 95% of Aurora National Life’s life, annuity and guaranteed investment contract business to Reassure America, Jones says.

California law prohibits entities controlled by non-U.S. governments from owning insurance companies in California. In 1999, the commissioner in office at that time, Charles Quackenbush, sued Artemis, Aurora S.A. and other defendants. He accused Artemis of failing to disclose that the Altus/MAAF venture was trying to evade restrictions on non-U.S. government-controlled entity ownership of California insurers.

Quackenbush and later California commissioners have been involved in litigation with Artemis and other defendants in federal court since that time.

In September 2008, when Steve Poizner was commissioner, Reassure America filed an application asking for permission to acquire Aurora National Life from Aurora S.A. California Department of Insurance officials said they wanted 100% of the proceeds from the sale placed in escrow, in case the California commission won a judgment in federal court, Jones says.

Aurora S.A. sued Poizner in state court in October 2009, while negotiations were still under way, then filed an amended petition after Poizner formally rejected the Reassure America application.

Representatives for Aurora S.A., Artemis S.A. and Swiss Re could not immediately be reached for comment.

The current California insurance commissioner, David Jones, says he is refusing to approve the Aurora National Life sale because it would divert money out of California to the detriment of policyholders.

Jones says the federal court lawsuit is seeking billions of dollars, and that letting the Aurora National Life deal proceed could keep Executive Life policyholders from getting hundreds of millions of dollars.

“The decision by the California Court of Appeal firmly establishes that the commissioner may take into account the effect of a proposed sale on policyholders,” Jones says in a statement. “This ruling is a victory for California consumers and former policyholders of Executive Life, and will keep assets of Aurora in California to protect their interests.”

Information was contributed to this article by Allison Bell.

Other Executive Life coverage from National Underwriter Life & Health:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.