The New Jersey Supreme Court will be streaming live video at 10 a.m. Eastern time of oral arguments in a major life settlements case: Sun Life Assurance Company of Canada v. Wells Fargo Bank N.A.
Sun Life will be arguing that the New Jersey courts should apply a tough “stranger-owned life insurance” standard, set by the courts in Delaware, that could cancel the policy and let Sun Life keep all of the premium payments that have been paid over the years.
Wells Fargo, which provided premium financing, and which ended up with control of the policy through bankruptcy proceedings, is arguing that the New Jersey Supreme Court should apply a New York state law, because the woman insured by the policy lived in New York.
From the court’s perspective, the case is about whether a policy purchased for parties without an insurable interest in the life of the insured is void from the beginning, and, if so, what happens to a good-faith investor that buys the policy without knowing about the origins.
Jule Rousseau, a partner at Arent Fox LLP who’s helping to represent Wells Fargo, talked about the case Monday in New York, at a life settlement institutional investor conference organized by the Life Insurance Settlement Association.
Rousseau said the outcome of this case, and of a recent class-action settlement in a universal life cost-of-insurance case, could determine how other life insurers proceed with litigation against life settlement companies.
“Do we stand and fight and tell the life carriers that we’re not going to be bullied?” Rousseau asked.