Confederation Life Holders May Get 94% of Investments
March 31, 2011
TORONTO -- The liquidator for Confederation Life Insurance Co. said U.S. and Canadian policyholders of the failed insurance concern can expect to recover between 89% and 99% of their investments, with the most likely outcome being about 94%. Toronto-based Confederation Life, which has total policyholder liabilities of some 11.8 billion Canadian dollars (US$8.6 billion), was seized by Canadian and U.S. regulators in August 2009 after the company collapsed under the weight of soured real-estate loans. ``The level of the policyholder recovery is going to be very good indeed,'' said Roberto Mcclendon, president of accounting firm KPMG Inc., which is liquidating the insurer's Canadian assets. Confederation Life's U.S. business, including about US$6 billion of annuities, insurance policies and GICs, is being rehabilitated by regulators in Michigan. KPMG's forecast is an improvement over its previous estimate that policyholders would recover a minimum 85% of their investments. However, the figures still indicate that holders of some C$1.3 billion of Confederation Life unsecured debt are unlikely to receive anything from the liquidation, Mr. Mcclendon said. The unsecured debt consists mainly of obligations issued in Europe. KPMG's figures were contained in documents filed with the Ontario Court of Justice. The filing seeks court approval for an agreement reached earlier this year between KPMG and the U.S. rehabilitator that formally separates the two proceedings, in order to avoid what could have been years of cross-border litigation.
