by Structured Settlement Watchdog®
Insurance is about keeping your promises. This gist of the class action lawsuit is whether promises were kept or whether they were ditched and annuitants kept in the dark.
The class action lawsuit, filed in the United States District Court for the District of Massachusetts is styled:
John W. Griffiths, on behalf of himself and others similarly situated v Aviva London Assignment Corporation, Aviva Life Insurance Company, Aviva International Insurance Ltd, F/K/A CGU international Insurance plc, Athene Holding Ltd, Athene London Assignment Corporation and Athene Annuity and Life Company (Civil Action No. 15-cv-13022-NMG)
Counts of the Amended Complaint
- Breach of contract
- Breach of Fiduciary Duty
- Promissory Estoppel
- Unjust Enrichment
What Was the Aviva Capital Maintenance Agreement?
Aviva Life Insurance Company and its New York subsidiary, were very competitive in the marketplace until they ceased underwriting new structured settlement business in late 2008. But the company was A rated by A.M. Best, at the time it actively wrote structured settlement annuities, at a time when the majority of the structured settlement annuity market had A.M. Best ratings of A+ or better. To make its product more appealing, particularly for cases involving minors, Aviva London Assignment Corporation, a Delaware Corporation entered into a Capital Maintenance Agreement with its indirect parent, CGU International Insurance, plc (CGUII), a company incorporate under the laws of England and Wales [later Aviva International Insurance plc]. Download Sample Aviva CMA
The provisions of the Capital Maintenance Agreement as set forth in the brochures filed by Aviva with state insurance regulators [to wit see Aviva London Capital Maintenance Agreement brochure which follows], and in a notice delivered by Aviva Life with each and every Aviva contract subject to the Capital Maintenance Agreement, were as follows:
that "CGUII has, under the terms of the Agreement agreed:
1. To maintain sufficient capital in Aviva London Assignment to ensure that it has the necessary funds available to satisfy all structured settlement obligations assigned to and assumed by Aviva London Assignment and in accordance with Section 130(c) of the Internal Revenue code as amended; and
2. that the foregoing obligation shall be absolute, unconditional, present and ongoing.
The Capital Maintenance Agreement Notice deliver with each policy said "This will confirm that the above referenced annuity was assigned to Aviva London Assignment during the term of the Agreement. CGUII in making this Agreement, is not acting as a reinsurer or an insurance company".
As you can see, the financial ratings and size of CGUII were the focus of the CMA brochure and a key part of the value proposition to place business with Aviva.
Plaintiffs allege in their amended complaint, among other things, that:
"Because Defendants assert that neither CGU nor any other entity any longer guarantees the performance of the Guaranteed Annuities, the risk of default or late payment is materially higher than the risk profile Plaintiffs purchased and paid for, which reflected the CMA Guarantee or, in the alternative, either (a)that Defendants are correct that the CMA Guarantee is no longer in force, in which case Defendants have breached their promise to Plaintiffs and otherwise violated the legal rights and equitable entitlements of the Plaintiffs; or in the alternative, (b) that Athene LAC is the legal successor in interest to AVIVA LAC, and
therefore that the CMA Guarantee initially issued in favor of AVIVA LAC in fact remains in force as to Athene LAC. Because this is so, the CMA Guarantee remains in force as to all of the Guaranteed Annuities even though they are now owned by Athene LAC instead of AVIVA LAC [ Amended Complaint p 3].
"In addition, and independently, the promise made by AVIVA to the purchasers of the Guaranteed Annuities was that Defendant CGU would guarantee all payments to be made on all of the Guaranteed Annuities. This promise directly to the Plaintiffs, upon which Plaintiffs relied when they purchased the Guaranteed Annuities, is an independent contractual obligation entitling Plaintiffs to the benefit of that bargain" [Amended Complaint p 4]
"AVIVA knew the facts alleged in Paragraph 41, supra, and was well aware that a CMA guarantee from its multi-billion dollar affiliate that was “absolute, unconditional, present and continuing” would be a material fact bearing on – and materially improving – the risk profile it presented to potential customers, thereby increasing the profitability of the annuity sale for AVIVA".
"...on October 29, 2014, written on the stationary of a different company, called “Athene.” Its Vice President, Christian S. Walker advised Griffiths in that letter that, as of October 2013, “the owner of the annuity funding your periodic payment obligation is now Athene London Assignment Corporation” and that “as a result of Aviva’s sale of [AVIVA USA] and its subsidiaries, including [AVIVA LIFE] to Athene Holding Ltd, the CMA automatically terminated in accordance with its original terms.” (Emphasis added).
"AVIVA profited substantially at two levels at the expense of Griffiths and the Proposed Class -- first, from the boom in Guaranteed Annuity sales that was
triggered by its CMA Guarantee and second, from their later sale of all annuity contracts to Athene and by being relieved of the obligations imposed by the CMA. In the latter transaction Athene also profited substantially, also at the expense of Griffiths and all other members of the Proposed Class.
How much Structured Settlement Annuity Business Did Aviva Write?
One industry source, estimated that the company wrote $1 billion in structured settlement annuity premium at the time it was in operation. They were favored by plaintiff brokers for the fact that they would accept a qualified assignment from single claimant qualified settlement funds. Their underwriting was extremely competitive and they had a fantastic customer service team through the time they stopped writing new structured settlement business at the end of 2008.
If You Have an Aviva Structured Settlement or its predecessor companies (e.g. CGU, CGNU)
Sit tight, see how this class action lawsuit plays out. Athene's A.M. Best rating has increased from B++ to A- in April 2015.
Beware the approach of sleazy vultures from the structured settlement factoring industry offering to buy you out of your Aviva/Athene structured settlement by raising the level of paranoia. Keep the spotlight on them when they do. The vultures operate where there is no licensing or regulation of sales practices. The vultures stuck their beaks into American General/AIG structured settlement annuitants during the 2008-2009 financial crisis and John Hancock Life and Allstate Life annuitants after those companies simply stopped writing new structured settlement business in 2013. The common thread of the cash now vultures is that they offer you cents on the dollar as they prey on fear. None of the annuitants that kept their annuities with any of those three named companies lost money.