A federal judge approved a $600-million settlement that the French government had reached on behalf of Credit Lyonnais with California insurance regulators over the bank’s purchase of Executive Life Insurance Co.
Under the settlement, state Insurance Commissioner John Garamendi will get $516.5 million to pay Executive Life policyholders, according to the order filed Wednesday in U.S. District Court in Los Angeles. Garamendi sued Credit Lyonnais in 1999, saying the bank used front companies to buy the failed insurance business and its junk bond portfolio in the early 1990s in violation of U.S. and California law.
“We’re pleased the settlement has been approved,” said Norman Williams, a spokesman for Garamendi’s office. “We’re hopeful this will allow us to move forward and distribute the money to the policyholders as soon as possible.”
The settlement, announced in February, left Artemis, the Paris-based holding company controlled by French billionaire Francois Pinault, as the only remaining defendant in the lawsuit.
A Los Angeles jury said in July that Artemis had to pay $700 million in punitive damages for its part in acquiring the Executive Life assets from Credit Lyonnais. U.S. DistrictJudge Howard Matz has yet to rule on that award.
As part of the settlement, $75 million will go to Sierra National Insurance Holdings Inc., a losing bidder for the Executive Life assets that also sued Credit Lyonnais.
The settlement will be paid by Consortium de Realisation, a French agency that took on Credit Lyonnais’ unprofitable assets and potential liabilities related to Executive Life before the government sold the bank in 1999. Credit Agricole, France’s largest bank, purchased Credit Lyonnais in 2003.
Last year, the French government settled a related criminal investigation of Credit Lyonnais’ purchase of Executive Life.