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Note: A class of consumers (Class) purchased life insurance from AXA Equitable (Insurer) and Met Life Insurance Co. (Insurer). Following the financial crash of 2008, Insurers appeared to be in a situation where in the event of a crisis they may be unable to satisfy all potential claims under their policies with Class. The method by which the insurers would have cash on hand to pay out these claims would be through reinsurance LCs. The Class claimed that a financial crisis could put pressure on bank lenders not to extend LCs and to pressure Insurers not to draw down on LCs to pay out claims. Class sued for damages during the period, alleging Insurers made misleading representations in the sale of insurance products. The United States District Court for the Southern District of New York, Furman, J., dismissed the suit under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction. On appeal, The United States Court of Appeals for the Second Circuit, affirmed.

In Summary Order, the Appellate Court rejected claims put forth in the Trial Court, ruling that there was no evidence presented to suggest that the misrepresentations were harmful and thus, (1) the alleged injuries were too speculative, and (2) at no point was evidence presented which would suggest that given full information, Class would have not bought the insurance products anyway.

[ARB]

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The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of the ICC or Coastline Solutions.