Following a prior trial and a partial appeal, the court conducted a rehearing to determine the appropriate remedy in a certified class proceeding concerning participating account transactions and an unlawful pre‑paid expense asset used by life insurance companies.
The Court of Appeal had upheld the finding of illegality but directed the trial judge to determine the monetary amounts required to unwind the transactions and restore funds to participating policyholder accounts.
The central disputes concerned the calculation of merger synergy deductions, whether historical amortization charges should be deducted when determining the benefit received by participating accounts, the interpretation of a 6.91% return provision, and the appropriate “effective date” for unwinding the transactions.
The court concluded that amortization expenses since 1997 must be deducted to reflect the “no contribution/no benefit” principle and interpreted the Court of Appeal formula as adding, not subtracting, the 6.91% return to the participating accounts.
The court fixed December 31, 2011 as the effective date and ordered that $284,675,000 be paid to the participating accounts, with cancellation of the pre‑paid expense asset and related amortization charges.
