An Ontario judge has ordered Great-West Lifeco to pay $456-million for improperly using money from the accounts of London Life Insurance Co. policyholders to help finance the 1997 takeover of London Insurance Group.
Late Friday evening, just hours after the decision was released, Great-West issued a statement saying that it would appeal because it believes that "significant aspects of the decision...are in error."
If the decision holds, the Winnipeg-based insurer will have to make payments to the participating accounts of its subsidiaries London Life ($372-million) and Great-West Life ($84-million), amounts that include interest.
"Regardless of the ultimate outcome of this case, all of the participating policy contract terms and conditions will continue to be honoured," Great-West said in its statement.
It added that even if the decision is sustained following its appeal, it should not have a material impact on Great-West's capital levels.
"The management and boards of directors believe they have at all times acted in the best interests of their respective companies, taking into account the interests of all stakeholders, including the policyholders," Great-West said, adding that it carried out the acquisition of London Life with careful supervision, rigorous analysis, and the use of detailed third-party studies. There were also statutory reviews by the financial services regulator, it said.
"The acquisition of London Life nearly 13 years ago and its integration into the Great-West group of companies has been a marked success and the participating accounts have benefited and continue to benefit from this acquisition," the company added.