TORONTO – The trial has begun here in which about 8 000 Barbadians are suing a leading Canadian insurance company for allegedly bilking them of money they should have received when the insurer became a public company, according to media reports here.
The trial to determine the outcome of the class-action lawsuit against Manulife Financial Corp., Canada’s second largest insurer by stock market value, began here on Monday after lawyers assembled five boxes stacked with about 1 500 documents.
Both Manulife chief executive officer Don Guloien and former CEO Dominic D’Alessandro were expected to testify as lawmakers address the key issue at play, which are the ownership rights that policy holders have in mutual insurance companies when they “demutualize”.
Mutual insurers are essentially owned by their participating policyholders. In a demutualization, their ownership is converted into shares.
Before going to trial, class-action suits must go through many preliminary processes, including certification, and here is generally a long wait for a judge.
The suit alleges that Manulife knew back in 1994, when it hired D’Alessandro away from his post as CEO of Laurentian Bank, that it would likely be demutualizing, yet took no steps to protect the Barbadian policyholders’ rights.
It also alleges that, when Manulife sold its operations in Barbados, its executives took “deliberate actions” that prevented participating policy holders in that country from receiving payouts.
“There is no doubt that there was some internal debate within Manulife on this point,” Linda Rothstein, one of the lawyers for the class, told the judge.
A lawyer for Manulife countered that the class members had no right to demutualization benefits because they were no longer holding policies with Manulife when it announced it was demutualizing.
Manulife paid out CAN$8.3 billion in cash and shares to participating policy holders around the world, primarily in Canada, when it demutualized in 1999 – about three years after selling its operations in Barbados. (CMC/GG)
