Case: Re MetLife Insurance Limited and Challenger Life No. 2 Limited [2007] FCA 937
Outcome: related
Section 191(2) and s 193(2) and reg 9 impose requirements as to the giving notice of the Scheme and other procedural matters. On 22 June 2007 dispensation with certain requirements was granted pursuant to s 191(5) of the Act ( Re MetLife Insurance Limited and Challenger Life No. 2 Limited [2007] FCA 937). I was carefully taken through the evidence by senior counsel for each of the applicants and was satisfied that there had been compliance with all requirements. The only debatable issue concerned typographical errors in the Scheme's summary. I was also satisfied that the Scheme complies with s 190(3) and that there was no issue with the mechanics of it. 26 The requirements of the giving of notice and some other steps taken such as telephone hotlines, websites, and so on generated a modest level of inquiry and express or implied objection from a relatively small number of policy holders, including some beneficiaries of the MetLife Retirement Fund. Some objections were misconceived and can be ignored. The only objections of substance related to the position of the affected MetLife policy holders. They were summarised as follows: "1. Concern that the Standard &amp; Poor's rating is dropping from "AA " with MetLife to "A" with Challenger 2. Policyholder looking for security for a bulk of their retirement money concerned that Challenger is a third tier institution 3. Concern about the quality of the underlying instruments of Challenger. 4. Concern that the security of Challenger is not as good as that of Metlife. 5. Concern about Challenger's asset allocation being too risky. 6. Concern that unlike Metlife, Challenger invests funds in the stock market. 7. Concern that having started with the largest bank in the world (Citigroup), the policy is about to be transferred to Challenger which had a loss of $3/4 billion 3 years ago. 8. Concern that the Joint Actuarial Report only concludes that policyholders' benefit security will remain "adequate". 9. Policyholder looking to diversify placed a portion of their funds with Metlife and the remainder with Challenger. Concern that the transfer will result in the whole amount being placed with the one company. 10. Concern that Challenger may be a takeover target following newspaper speculations. 11. Concern that 5% return reflected a secure investment and policyholders are now being asked to assume a greater risk". 27 One objector appeared on the hearing. The essence of his position was as follows: "I served 45 years continuous service with the one organisation. In February 2004, upon advice from a senior Westpac financial adviser, I entered into a contract with Citicorp at the time for a capital guarantee type of investment, very low yield and very high security. I chose to accept this low yield, because that was the overriding my overriding decision was security of investment. At the time, I could have invested with Challenger at a higher yield. ... MetLife is higher rated than Challenger with the standard [claims] rating as double A minus for MetLife, and A or A plus for Challenger. Now, I don't understand the details of any of that other than one is higher rated than the other and, as an investor, that's all I need to know. It is unreasonable, in my view, and unethical that I should be forced into a lower rated financial institution. I see that as security being taken away from me. Throughout this morning, the counsels for MetLife repeatedly emphasise that there is no disadvantage to policyholders affected by this transfer. In my view, that's not correct. How can that be when there is a greater risk to policyholders' investments at no greater return? So there is a disadvantage, as I see it." He also drew attention to the fact that he could only redeem at a significant discount. It is relevant to note that some policies may be redeemed without discount.