Facts

In December 2000, Joe Yearby filed a class action lawsuit against American National Insurance Company (ANICO), asserting a breach of contract claim. Yearby held a universal life policy with ANICO which combined death benefits with a savings or investment component.

PLAINTIFF'S CONTENTIONS: According to plaintiff, policyholders have been forced to pay unlawful and excessive cost of insurance charges, deducted from their account values monthly that were not determined based on expectations as to future mortality experience which defendant was required to be review monthly due to the type of policy. Plaintiff contended that defendant did not reduce the cost of insurance rates as required under the policy despite well-documented reports observing that mortality expectations have improved significantly.

DEFENDANT'S CONTENTIONS: Defendant denied all material contentions.

Settlement Discussions

On February 16, 2022, the parties participated in negotiations with the assistance of retired USDC judge, Vaughn Walker. Though no resolution was had that day, further negotiations in September, and along with a final negotiation session on November 22, 2022 resulted in a settlement agreement.

Result

The case settled. The settlement provided for both a cash relief of almost $5 million to be funded for the settlement class, along with non-cash relief: 1) for five years after the court approves the settlement, defendant agreed not to raise the cost of insurance rates; and 2) defendant agreed not to take legal action seeking to void, rescind, cancel or seek to deny coverage based on certain factors.