Athene dismisses lawsuit claims
Long-term reinsurer Athene has dismissed a class-action lawsuit brought by retirees against pharmaceutical giant Bristol-Myers Squibb over a $2 billion pension risk transfer deal as baseless.
The lawsuit, which names Bristol-Myers Squibb and State Street Global Advisors Trust Co as defendants but not Athene as defendants, alleges that Bristol-Myers Squibb violated its fiduciary responsibilities when it executed the pension risk transfer deal five years ago.
The lawsuit, filed on Sept. 4 in the US District Court for the Southern District of New York, alleges that the transfer of their pension benefits removed the protections provided under the Employee Retirement Income Security Act of 1974 (ERISA), leaving them vulnerable to unpaid pensions.
The complaint alleges that Bristol-Myers, despite being valued at over $100 billion, chose to transfer its retirees' pension obligations to an insurance company with a Bermuda-based subsidiary. The plaintiffs argue that this move jeopardised their retirement benefits.
The lawsuit claims that Bristol-Myers and State Street profited significantly from the deal, while retirees were left at risk. It further asserts that the transaction exposed retirees to potential non-payment of pensions in the future, as their benefits are no longer protected under federal law.
Bristol-Myers transferred its pension obligations through the purchase of group annuity contracts from Athene’s units, Athene Annuity and Life Company and Athene Annuity & Life Assurance Co of New York.
While ERISA allows pension obligations to be transferred to insurance companies, it also requires employers to select the safest available annuity provider, a standard the lawsuit alleges was not met by Bristol-Myers and State Street.
After the transfer, the responsibility for the retirees' pension payments shifted away from Bristol-Myers, and those payments are no longer guaranteed by the Pension Benefit Guaranty Corporation (PBGC), according to the lawsuit. The plaintiffs also describe Athene as a “risk-taking” insurer involved in shadow banking activities.
The lawsuit highlights concerns that retirees are now solely dependent on Athene’s financial stability to ensure their pension payments.
A representative from Athene, in a written statement, described the lawsuit as a baseless attempt by class action attorneys to benefit financially. The statement said that Athene has always honored its pension obligations, stating that every participant covered by a pension group annuity has received and will continue to receive their promised benefits.
The representative said that Athene is properly capitalized and has gone through rigorous reviews by fiduciaries and independent advisers who specialize in assessing the financial safety of insurers.
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