Transamerica settles universal life litigation

Transamerica settles universal life litigation

1 minute read

Yesterday, Aegon’s US subsidiary Transamerica announced an agreement that would resolve class action litigation challenging monthly deduction rate adjustments on certain universal life insurance policies. This settlement for approximately USD 88 million removes the uncertainty of this ongoing litigation for the company and its customers.

Transamerica's universal life insurance policies permit the company to adjust monthly deduction rates up to a contractually guaranteed maximum, subject to certain conditions. The plaintiffs in this case challenged increases to monthly deduction rates that were enacted in 2017 and 2018 on approximately 8,000 universal life policies. Transamerica implemented these adjustments, necessitated by low long-term interest rates, changes in expectations as to future mortality experience, and other factors, and in accordance with the policies' contractual terms. The monthly deduction rate increases enacted in 2017 and 2018 are separate and distinct from the monthly deduction rate increases involved in a prior class action settlement announced by Aegon in October 2018.

The capital and pre-tax IFRS impacts are expected to be moderately less than the gross settlement amount.