REPORT OF KPMG INC., THE LIQUIDATOR OF CONFEDERATION LIFE INSURANCE COMPANY

Transcription

1 Commercial List Court File No. 97-BK ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C. W-11, AS AMENDED B E T W E E N: THE ATTORNEY GENERAL OF CANADA Applicant - and - CONFEDERATION LIFE INSURANCE COMPANY Respondent REPORT OF KPMG INC., THE LIQUIDATOR OF CONFEDERATION LIFE INSURANCE COMPANY (Motion Returnable November 29, 2000) November 24, 2000

2 TABLE OF CONTENTS I. NATURE OF THE MOTION... 3 II. BACKGROUND... 4 III. CONFED RETIREES... 5 A. Retiree Benefits Claim... 5 B. Modification of the Allowance Process... 7 IV. THE FIRST SUPPLEMENTAL DIVIDEND SHEET... 8 V. RELIEF SOUGHT... 11

3 Commercial List Court File No. 97-BK ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C. W-11, AS AMENDED B E T W E E N: THE ATTORNEY GENERAL OF CANADA Applicant - and - CONFEDERATION LIFE INSURANCE COMPANY Respondent REPORT OF KPMG INC., THE LIQUIDATOR OF CONFEDERATION LIFE INSURANCE COMPANY (Motion Returnable November 29, 2000) NOVEMBER 24, 2000 I. NATURE OF THE MOTION 1. This Report is filed in support of a motion by KPMG Inc., the liquidator (the Liquidator ) of Confederation Life Insurance Company ( Confed ), for an Order: (a) approving the first supplemental dividend sheet in the form attached as Schedule A hereto (the First Supplemental Dividend Sheet ) and authorizing the

4 - 4 - Liquidator to make distributions from time to time to the holders of allowed claims set out on the First Supplemental Dividend Sheet; and (b) abridging the time for service of notice of this Motion. II. BACKGROUND 2. On August 15, 1994, this Court ordered that Confed be wound-up pursuant to the Winding-up Act (now the Winding-up and Restructuring Act). By further order of the same date, the Court appointed the Superintendent of Financial Institutions (the Superintendent ) provisional liquidator of Confed. The Superintendent appointed KPMG Inc. as his agent to assist in the administration of the liquidation. The liquidation was deemed to commence August 12, On September 10, 1997, this Court discharged the Superintendent as provisional liquidator of Confed and appointed KPMG Inc. as permanent liquidator. 4. The Liquidator called for claims from ordinary creditors other than those holding subordinated debt (the Ordinary Creditors ) and policyholders asserting additional policyholder claims. February 15, 2000 was fixed as the last day on or before which proofs of claim were to be filed with the Liquidator. 5. The process for disallowing and admitting Ordinary Creditor claims to the estate was approved by this Court by Orders dated May 5, 2000 and June 20, 2000, copies of which are attached as Schedules B and C, respectively. The process for admitting claims will be referred to as the Allowance Process. The Liquidator has commenced but not completed the Allowance Process. A number of claims are still under consideration and others have been disallowed.

5 On September 5, 2000, this Court approved and authorized a first interim distribution by the Liquidator from the estate of Confed to Confederation Treasury Services Limited and to the Ordinary Creditors in the total amount of $260 million. This Court also approved a dividend sheet (the Dividend Sheet ) and authorized the Liquidator to make distributions from time to time to the holders of allowed claims set out on the Dividend Sheet. A copy of the Order of this Court dated September 5, 2000 is attached hereto as Schedule D. 7. The Liquidator has paid a first dividend to the holders of allowed claims set out on the Dividend Sheet equivalent to cents on the dollar. III. CONFED RETIREES A. Retiree Benefits Claim 8. As part of its employee compensation package, Confed provided its retired employees (the Confed Retirees ), their spouses and dependent children with group medical and dental benefits and group life insurance benefits (the Retiree Benefits ). The Retiree Benefits were to continue for the lifetime of the Confed Retirees. 9. Early in the liquidation, the Liquidator sought the advice and directions of this Court with respect to, among other things, the issue of whether the claims of the retirees of Confed s Canadian operations (the Canadian Operations Retirees ) for Retiree Benefits were entitled to priority in the estate of Confed. Pending a determination of that issue, the Liquidator continued the Retiree Benefits for the Canadian Operations Retirees. 10. In a decision dated July 4, 1995, this Court held that the Canadian Operations Retirees claims for Retiree Benefits ranked as ordinary creditor claims and were not entitled to priority in the estate. The Liquidator, therefore, discontinued the payment of Retiree Benefits to the Canadian Operations Retirees effective August 31, 1995.

6 There are 689 Confed Retirees, many of whom are elderly and living on a fixed income. As the Retiree Benefits were to continue for the lifetime of the Confed Retirees, the amount of each Confed Retiree s claim is dependent on the age of the Confed Retiree and applicable mortality assumptions. Given all of the circumstances, the Liquidator was concerned that individual Confed Retirees might have difficulty in preparing and proving their claims. 12. Accordingly, as part of the call for claims process, the Liquidator sought the appointment of Susan Rowland as representative counsel (the Representative Counsel ) to help the Confed Retirees prepare and prove their claims. A copy of the Order dated October 7, 1999 appointing the Representative Counsel is attached hereto as Schedule E. 13. The October 7, 1999 Order of this Court also authorized the Representative Counsel to retain actuarial advice. The Representative Counsel retained Eckler Partners to assist with the calculation of the quantum of the Retiree Benefits claim. The Representative Counsel filed one omnibus proof of claim on behalf of the Confed Retirees. 14. Eckler Partners calculated the Retiree Benefits claim in accordance with generally accepted actuarial principles. Each claim was determined as the present value of the foregone benefits as at August 31, 1995 (being the date on which the Liquidator ceased paying claims for Retiree Benefits). The present value of the medical and dental benefits was based on the expected future payout for each individual using an average annual health care cost determined on the basis of past claims experience of the Confed Retirees as a group. The present value of the group life benefit was based on the expected future payout for each individual using their actual amounts of term life insurance coverage reflecting future reductions in such coverage, if applicable.

7 The Liquidator worked closely with the Representative Counsel and Eckler Partners. The Liquidator sought and obtained a favourable ruling from Canada Customs and Revenue Agency with respect to the Canadian Operations Retirees. 16. The Liquidator and the Representative Counsel agreed on the approach to the valuation of the claims of Canadian Operations Retirees and the quantum of each claim of the Canadian Operations Retirees (the Agreed Claim ). There are 655 Canadian Operations Retirees. 17. At this time, the tax issues surrounding the claims of the 34 retirees of Confed s U.S. operations have not been resolved. Accordingly, the Agreed Claim does not include the claims of those Confed Retirees. B. Modification of the Allowance Process 18. By Order dated September 26, 2000, this Court approved the modification of the Allowance Process with respect to the claims of the Canadian Operations Retirees. A copy of the Order of this Court dated September 26, 2000 is attached hereto as Schedule F. 19. In accordance with the modified Allowance Process, the Representative Counsel mailed a letter to each Canadian Operations Retiree setting out the amount of the individual s Agreed Claim. Attached hereto as Schedule G is a copy of an Affidavit of Service confirming such mailing. 20. Pursuant to the modified Allowance Process, any Canadian Operations Retiree who wished to object to the amount of his or her claim was required to serve his or her written objection by pre-paid ordinary mail, facsimile or courier on the Representative Counsel within twenty-one days of the letter referred to above. The time for objecting expired on October 31,

8 The Representative Counsel confirms that as at October 31, 2000, there were no outstanding objections to the valuation of the Retirees benefits claims. IV. THE FIRST SUPPLEMENTAL DIVIDEND SHEET 21. In accordance with the Allowance Process, as modified with respect to the Canadian Operations Retirees, the Liquidator mailed a list of claims it proposed to allow on November 2, 2000 (the November Allowed Claims ). A copy of the list is attached hereto as Schedule H. The November Allowed Claims consist of: (a) the Canadian Operations Retirees claim, in the amount $16,728, This amount does not include the claims of two Canadian Operations Retirees whose entitlement the Liquidator is still considering and one former employee who died before the liquidation but had not been removed from Confed s retiree register; (b) claims of two commercial paper holders in the approximate amount of $330,000 representing the balance of the principal amounts shown on the Dividend Sheet; (c) a claim under a lease in the United Kingdom in the amount of $678, The Liquidator has received an opinion from its counsel in the United Kingdom that the claim is valid and should be allowed; (d) claims for costs and prejudgment interest relating to actions brought by policyholders for the payment of disability payments which had originally been denied by Confed, in the approximate amount of $230,000. These amounts were all fixed in judgments obtained by the policyholders. The amount of the claim relating to the disability benefits was paid as a policyholder claim at the time of judgment. Claims for interest and costs awards are not provided for under the terms of the policies and are therefore Ordinary Creditor claims; and

9 - 9 - (e) miscellaneous claims in the approximate amount of $800,000 being trade creditors. The Liquidator has reviewed these claims, which are consistent with Confed s books and records. Claims in Pounds Sterling and U.S. dollars have been converted to Canadian dollars pursuant to the June 20, 2000 Order of this Court. 22. The period for objection expires on November 27, The Liquidator has received no objections to the November Allowed Claims as of the date of this report. The Liquidator will provide a supplementary report to the Court confirming the status as at November 28, The First Supplemental Dividend Sheet includes all of the November Allowed Claims, subject to two amendments: (a) one claim for interest and costs relating to a disputed disability payment was incorrectly shown in the amount of $190,000; the correct amount is $55,600; and (b) one claim in the amount of $ was incorrectly included. 24. The Liquidator proposes to pay a first interim dividend to the Ordinary Creditors listed on the First Supplemental Dividend Sheet when approved. 25. The Liquidator is continuing to review the balance of the claims. The Liquidator will make dividend payments to additional Ordinary Creditors as their claims are allowed and will adjust payments to reflect the higher percentage available when material claims are disallowed or withdrawn. 26. The Liquidator wanted to make distributions in respect of the November Allowed Claims before the Christmas holidays, subject to this Court s approval. Accordingly, although

10 the time for objections had not yet expired, the Liquidator sent a letter to the parties on the service list in this matter on November 10, 2000, advising them that this motion would be brought on November 29, 2000 and circulating the list of November Allowed Claims. A copy of that letter is attached hereto as Schedule I. The Liquidator is therefore seeking the approval of this Court to serve of this Report on an abridged basis.

11 V. RELIEF SOUGHT 27. The Liquidator therefore seeks an Order: (a) approving the First Supplemental Dividend Sheet and authorizing the Liquidator to make distributions from time to time to the holders of November Allowed Claims set out on the First Supplemental Dividend Sheet; and (b) abridging the time for service of notice of this Motion. ALL OF WHICH IS RESPECTFULLY SUBMITTED KPMG INC., solely in its capacity as the Liquidator of Confederation Life Insurance Company G26\

12 SCHEDULE A IN THE MATTER OF THE LIQUIDATION OF CONFEDERATION LIFE INSURANCE CO First Supplemental Dividend Sheet Claim Amount Claim Admitted No. Creditor Cdn Dollars 0011 Diamond Taxicab Association 1, Gauley & Co. 20, Xerox Canada Ltd, Major Acc. 488, Medhurst, Marilyn 10, Robb Research Services Limited 3, Hanewich-Matheson, Sharon 12, MacPherson, William 92, Daly, Darlene 21, Adecco Cda Inc. DGS Personnel 10, Eckler Partners Ltd 51, CBA QS Limited 32, Cadofte,Josee 9, Health Care Corp of St. John s 1, A Abitibi-Consolidated Inc. 93, Carillion Construction Limited 678, Haines, Miller & Associates Inc. 30, Cda Inc. & Canamall 42, Suissa, Albert 1, Fleyfel, Marie Claude 10, A Dominion Textile Inc. 239, Susan Rowland, Rep. Retirees 16,728, DSB Refurbishment Limited (In 111, Atcheson, David 61, Stinchcombe, Roger J. 55, Total Creditors $18,808,242.34

13 SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST Commercial List Court File No. 97-BK THE HONOURABLE MR. ) FRIDAY, THE 5 TH DAY JUSTICE ROBERT A. BLAIR ) OF MAY, 2000 B E T W E E N: IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C.W-11, AS AMENDED THE ATTORNEY GENERAL OF CANADA - and - CONFEDERATION LIFE INSURANCE COMPANY Applicant Respondent O R D E R THIS MOTION, brought by KPMG Inc., the liquidator (the Liquidator ) of Confederation Life Insurance Company, was heard this day at 393 University Avenue, Toronto, Ontario. ON READING the Report of the Liquidator dated May 1, 2000, filed, and upon hearing the submissions of counsel for the Liquidator,

14 THIS COURT ORDERS that the service made of the Notice of Motion and supporting materials herein is good and sufficient notice of this motion, that this motion is properly returnable today and that any further service of the Notice of Motion and supporting materials be and the same is hereby dispensed with. 2. THIS COURT ORDERS that the Liquidator file a statement of claimants and creditors (the Statement ) with the Office of the Superintendent of Financial Institutions in accordance with Part III of the Winding-up Act as it was in force on August 15, 1994, as soon as practicable after thirty days from the last date of publication of the notices provided for in paragraph 3 of this Order. 3. THIS COURT ORDERS that the Liquidator publish a notice of the filing of the Statement, in substantially the form attached hereto as Schedule A, in the Canada Gazette, in the official gazette of each province and in the national edition of The Globe and Mail and the The National Post, all as soon as practicable. 4. THIS COURT ORDERS that the Liquidator send a notice in substantially the form attached hereto as Schedule B to those claimants or creditors having claims which are admitted by the Liquidator (the Allowed Claims ). 5. THIS COURT ORDERS that the notice advising policyholders, claimants or creditors having claims which are disputed by the Liquidator (the Disputed Claims ) that such Disputed Claims will be disallowed, be a notice of disallowance substantially in the form annexed hereto as Schedule C (the Notice of Disallowance ). 6. THIS COURT ORDERS that the Notice of Disallowance be served by prepaid registered mail or by facsimile on the policyholders, claimants or creditors having Disputed

15 - 3 - Claims at the address set out in the proof of claim filed by the policyholders, claimants or creditors, as the case may be, or, in the case where only a facsimile number has been provided in the proof of claim, to that facsimile number. 7. THIS COURT ORDERS that any policyholders, claimants or creditors wishing to appeal a Notice of Disallowance serve the Liquidator with a Notice of Appeal, substantially in the form attached hereto as Schedule D, by prepaid ordinary mail, facsimile or courier within forty-five (45) days from the date of the Notice of Disallowance. 8. THIS COURT ORDERS that the Liquidator file a dividend sheet setting out details of the Allowed Claims for approval by this Court from time to time prior to making any distributions to the holders of Allowed Claims on account thereof. G26\PAQUETTF\

16 SCHEDULE A B E T W E E N: SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C. W-11, AS AMENDED Court File No. 97-BK THE ATTORNEY GENERAL OF CANADA Applicant - and - CONFEDERATION LIFE INSURANCE COMPANY Respondent TO THE POLICYHOLDERS, CLAIMANTS AND CREDITORS OF CONFEDERATION LIFE INSURANCE COMPANY On August 15, 1994, a winding-up order was granted in the Ontario Court (General Division) against Confederation Life Insurance Company, having its head office in the City of Toronto, in the Province of Ontario. TAKE NOTICE THAT: It is intended that a Statement of Claimants and Creditors shall be filed in the Office of the Superintendent of Financial Institutions pursuant to section 168(1) of the Winding-up and Restructuring Act, R.S.C. not less than thirty (30) days after the date of this publication. KPMG Inc., the Liquidator of Confederation Life Insurance Company 800 Bay Street 8 th Floor Toronto, Ontario M5S 3A9

17 SCHEDULE B [On the Letterhead of Confederation Life Insurance Company in Liquidation] TO: (IDENTIFY POLICYHOLDER, CREDITOR, OR CLAIMANT) RE: (CLAIM) We confirm receipt of your proof of claim dated. The Liquidator has reviewed your claim and will allow your claim in the amount shown on your proof of claim. Pursuant to the Winding-up Act (now the Winding-up and Restructuring Act), the Liquidator is required to file a Statement of Claimants and Creditors with the Office of the Superintendent of Financial Institutions. You will be shown as a claimant therein for the amount claimed. You need take no further action to participate in future dividends. Please keep the Liquidator advised of any change of address. Yours very truly, G26\

18 SCHEDULE C Commercial List Court File No. 97-BK SUPERIOR COURT OF JUSTICE COMMERCIAL LIST IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C.W-11, AS AMENDED B E T W E E N: THE ATTORNEY GENERAL OF CANADA Applicant - and CONFEDERATION LIFE INSURANCE COMPANY Respondent NOTICE OF DISALLOWANCE OF CLAIM TO: (IDENTIFY POLICYHOLDER, CREDITOR, OR CLAIMANT) RE: (CLAIM) TAKE NOTICE THAT as Liquidator of Confederation Life Insurance Company ( Confed ) we have this day disallowed your claim against the estate on the following grounds: AND FURTHER TAKE NOTICE THAT the Liquidator is filing the Statement of creditors and claimants as provided in the Winding-up Act (now the Winding-up and Restructuring Act) and that your claim will be shown thereon as nil.

19 - 2 - AND FURTHER TAKE NOTICE THAT if you are dissatisfied with our decision in respect of your claim, you must serve the Liquidator by ordinary mail, fax or courier at the address or fax number below with a Notice of Appeal, in the form attached hereto, within forty-five (45) days of the date hereof, with support for your claim and containing the reasons for disputing the decision of the Liquidator. Subject to the power of the Court to extend the time, no application to revise or vary the decision in disallowing your claim will be entertained after the expiration of forty-five (45) days from this date. If no Notice of Appeal is served on the Liquidator within forty-five (45) days hereof, then this Notice of Disallowance will be deemed final and conclusive and the Liquidator shall conduct the liquidation and distribute the assets of Confed or any part thereof among the persons entitled thereto without regard to your claim. dated the _day of _, This notice is being served pursuant to the Winding-up Act and to the Order of _ DATED at the City of Toronto, this day of, KPMG INC., the Liquidator of Confederation Life Insurance Company 800 Bay Street, 8 th Floor Toronto, Ontario M5S 3A9 Attention: I. George Gutfreund Fax: (416) Per: G26\

20 SCHEDULE D SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Commercial List Court File No. 97-BK IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C.W-11, AS AMENDED B E T W E E N: THE ATTORNEY GENERAL OF CANADA Applicant - and - CONFEDERATION LIFE INSURANCE COMPANY Respondent NOTICE OF APPEAL OF DISALLOWANCE OF CLAIM TO: FROM: RE: KPMG INC., LIQUIDATOR OF CONFEDERATION LIFE INSURANCE COMPANY [POLICYHOLDER, CLAIMANT OR CREDITOR] --- ADDRESS --- [CLAIM]

21 - 2 - The policyholder, claimant or creditor herein disputes the Notice of Disallowance of Claim dated the day of, REASONS FOR APPEAL FROM DISALLOWANCE OF CLAIM The policyholder, claimant or creditor disputes the Notice of Disallowance of Claim for the reasons set out on Appendix A : [You must attach an Appendix A setting out the reasons for the dispute] In support of this appeal the policyholder, claimant or creditor submits the evidence and documentation attached hereto as Appendix B. [You must attach evidence/documentation to support your claim as Appendix B ] DATED at the City of this day of, 2000 POLICYHOLDER, CLAIMANT OR CREDITOR G26\

22 THE ATTORNEY GENERAL OF CANADA and CONFEDERATION LIFE INSURANCE COMPANY Commercial List Court File No: 97-BK Applicant Respondent SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Proceeding commenced at Toronto ORDER GOODMAN PHILLIPS & VINEBERG Barristers & Solicitors 250 Yonge Street Suite 2400, Box 24 Toronto, Ontario M5B 2M6 Gale Rubenstein\LSUC # 17088E Tel: (416) Fax: (416) Solicitors for KPMG Inc., the Liquidator of Confederation Life Insurance Company G26\PAQUETTF\

23 SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST Commercial List Court File No. 97-BK THE HONOURABLE MR. ) TUESDAY, THE 20 TH DAY JUSTICE ROBERT A. BLAIR ) OF JUNE, 2000 B E T W E E N: IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C.W-11, AS AMENDED THE ATTORNEY GENERAL OF CANADA - and - CONFEDERATION LIFE INSURANCE COMPANY Applicant Respondent O R D E R THIS MOTION, brought by KPMG Inc., the liquidator (the Liquidator ) of Confederation Life Insurance Company ( Confed ), was heard this day at 393 University Avenue, Toronto, Ontario. ON READING the Report of the Liquidator dated June 15, 2000, filed, and upon hearing the submissions of counsel for the Liquidator,

24 THIS COURT ORDERS that the service made of the Notice of Motion and supporting materials herein is good and sufficient notice of this motion, that this motion is properly returnable today and that any further service of the Notice of Motion and supporting materials be and the same is hereby dispensed with. 2. THIS COURT ORDERS that the Liquidator be and it is hereby authorized to send a list setting out the claims which it has determined ought to be admitted in substantially the form attached hereto as Schedule A (the Allowed Claims Sheet ), from time to time, as it considers appropriate. 3. THIS COURT ORDERS that the Liquidator be and it is hereby authorized to mail to each person who filed a proof of claim in the estate of Confed a letter in substantially the form attached hereto as Schedule B enclosing a copy of the Allowed Claims Sheet, from time to time, as it considers appropriate. 4. THIS COURT ORDERS that any creditor or claimant wishing to object to any claim included on an Allowed Claims Sheet (an Objecting Creditor ) shall serve a written objection on the creditor or claimant whose claim is being objected to (the Subject Creditor ) including brief reasons for the objection, such service to be effected by means of prepaid registered mail, facsimile or courier and to be received by the Subject Creditor within twentyfive (25) days of the date of the letter referred to in paragraph 3 hereof. 5. THIS COURT ORDERS that any Objecting Creditor shall serve a copy of the written objection on the Liquidator, together with proof of service of same on the Subject Creditor, such service to be effected by means of prepaid registered mail, facsimile or courier and to be received by the Liquidator within twenty-five (25) days of the date of the letter referred to in paragraph 3 hereof.

25 THIS COURT ORDERS that the Subject Creditor shall have six (6) days after receipt of an objection to answer the objection in writing and to serve such answer on the Objecting Creditor and to the Liquidator by means of prepaid registered mail, facsimile or courier. 7. THIS COURT ORDERS that an Objecting Creditor shall have three (3) days after receipt of an answer from a Subject Creditor to reply in writing and to serve such reply on the Subject Creditor and the Liquidator by means of prepaid registered mail, facsimile or courier. 8. THIS COURT ORDERS that where any time period referred to in paragraphs 4 through 7 hereof expires on a day that is a Saturday, Sunday or holiday in the jurisdiction in which the creditor required to effect service resides, service is to be effected on the next business day thereafter. 9. THIS COURT ORDERS that where an objection has been raised and the parties are unable to resolve the objection, the Liquidator may seek further directions from this Court or the creditors in question may bring a motion to have the contestation heard by this Court. 10. THIS COURT ORDERS that where, after a claim has been duly objected to and the Subject Creditor does not answer the objection, this Court may, on the application of the Objecting Creditor, make an order barring the claim or such other order with reference thereto as appears right. 11. THIS COURT ORDERS that with respect to any claims listed on an Allowed Claims Sheet to which no objection was received within twenty-five (25) days from the date of the letter referred to in paragraph 3 hereof, the Liquidator may seek the approval of this Court

26 - 4 - with respect to such claims and no further objections may be raised by any creditors or claimants. 12. THIS COURT ORDERS that the process set out in this Order shall not be required for the admission of a claim to the estate which has been the subject of a final decision of the Court. 13. THIS COURT ORDERS that any claims filed with the Liquidator after February 15, 2000 and before the date of this order shall be treated as if they were timely filed and that distributions be made in respect of those claims in the ordinary course. 14. THIS COURT ORDERS that any claims payable in foreign currency shall be converted to Canadian currency at the Bank of Canada noon spot rate of exchange for exchanging such currency to Canadian currency on August 12, G26\

27 THE ATTORNEY GENERAL OF CANADA and CONFEDERATION LIFE INSURANCE COMPANY Commercial List Court File No: 97-BK Applicant Respondent SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Proceeding commenced at Toronto ORDER GOODMAN PHILLIPS & VINEBERG Barristers & Solicitors 250 Yonge Street Suite 2400, Box 24 Toronto, Ontario M5B 2M6 Gale Rubenstein\LSUC # 17088E Tel: (416) Fax: (416) Solicitors for KPMG Inc., the Liquidator of Confederation Life Insurance Company G26\

28 SCHEDULE A LIST OF CLAIMS TO BE ADMITTED Name of Creditor Address and Fax Number Amount Claimed Amount Allowed G26\

29 SCHEDULE B [LETTERHEAD OF CONFEDERATION LIFE INSURANCE COMPANY] [Date] To All Persons who filed Claims with the Liquidator: Re: Confederation Life Insurance Company, in Liquidation The Liquidator will file a Statement of Claimants and Creditors ( the Statement ) with the Office of the Superintendent of Financial Institutions in accordance with Part III of the Winding-up Act (now the Winding-up and Restructuring Act) (the Act ). The Statement includes those persons from whom the Liquidator called for claims pursuant to the Order of the Court dated October 7, 1999 and who filed claims in response. Inclusion on the Statement with a nil amount indicates that the person s claim has either been disallowed by the Liquidator, is still in the process of being reviewed by the Liquidator or is the subject of a dispute. The Liquidator is still in the process of reviewing the claims filed. The Statement will be amended from time to time to reflect the results of the process described below. The attached listing sets out the claims that the Liquidator will recommend be approved by the Ontario Superior Court of Justice (the Court ) together with the addresses of the creditors. If your claim does not appear on the attached listing, it does not mean that your claim has been or will be disallowed. You will hear from the Liquidator when your claim has been reviewed and a determination of the merits of the claim has been made. The process described below will be followed from time to time as the Liquidator is in a position to recommend further claims be admitted. You do not need to take any further steps in the meantime. In accordance with the Act, any creditor may object to any claim filed with the Liquidator. The procedure for objecting to a claim is as follows: 1. A creditor who wishes to object to a claim (an Objecting Creditor ) must serve a written objection on the creditor whose claim is being objected to (a Subject Creditor ) including brief reasons for the objection, such service must be made by prepaid registered mail, facsimile or courier and received by the Subject Creditor within twenty-five (25) days of the date of this letter. 2. The Objecting Creditor must also serve a copy of the written objection on the Liquidator at the address set out below, together with a copy of proof of prior service of the objection on the Subject Creditor, such service must be made by prepaid registered mail, facsimile or courier and received by the Liquidator within twenty-five (25) days of the date of this letter. 3. A Subject Creditor has six (6) days after receipt of an objection to answer the objection in writing and to serve such answer on the Objecting Creditor and the Liquidator by means of

30 - 3 - prepaid registered mail, facsimile or courier. If the Subject Creditor does not answer the objection, the Court may, on the application of the Objecting Creditor, make an order barring the claim. 4. The Objecting Creditor has three (3) days after receipt of an answer from a Subject Creditor to reply in writing and to serve such reply on the Subject Creditor and the Liquidator by means of prepaid registered mail, facsimile or courier. 5. Where any time period referred to in paragraphs 1 through 4 above expires on a Saturday, Sunday or holiday in the jurisdiction in which the creditor required to effect service resides, service is to be effected on the next business day thereafter. 6. Where an objection has been raised and the parties are unable to resolve the objection, the Liquidator may seek further directions from the Court or may advise the creditors in question to bring a motion to have the contestation heard by the Court. If you object to a claim and the matter is heard by the Court, you may be liable for costs. In addition, security for costs may be sought in advance of the hearing. 7. The above process will not apply to claims being adjudicated by the Court. If there are no objections to the claims set out in the attached listing within twenty-five (25) days of the date of this letter, the Liquidator will recommend the admission of those claims to the Court. Once the twenty-five day period expires, no further objections may be made. The Liquidator will seek an Order of the Court approving the admission of the claim to the estate for purpose of receiving dividends. Admitted claims will not appear on future lists circulated by the Liquidator. As noted above, the Liquidator is continuing to review the proofs of claim filed. The Liquidator will therefore circulate additional listings of claims it proposes to admit from time to time. The process of objecting to those additional claims will be as described above. The address for service on the Liquidator is as follows: KPMG Inc., Liquidator of Confederation Life Insurance Company 800 Bay Street 8 th Floor Toronto, Ontario M5S 3A9 Facsimile No. (416) Attention: I. George Gutfreund

31 - 4 - With a copy to: Goodman Phillips & Vineberg Barristers and Solicitors Suite Yonge Street Toronto, Ont. M5B 2M6 Facsimile No. (416) Attention: Gale Rubenstein Please note, the fact that you have received this letter does not mean that your claim has been admitted by the Liquidator. Yours very truly, CONFEDERATION LIFE INSURANCE COMPANY by its Liquidator, KPMG Inc. I. George Gutfreund Vice-President, KPMG Inc. G26\

32 Commercial List Court File No. 97-BK ONTARIO SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST THE HONOURABLE MR. ) TUESDAY, THE 5 TH DAY JUSTICE R.A. BLAIR ) OF SEPTEMBER, 2000 B E T W E E N: IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C.W-11, AS AMENDED THE ATTORNEY GENERAL OF CANADA - and - Applicant CONFEDERATION LIFE INSURANCE COMPANY Respondent O R D E R THIS MOTION, brought by KPMG Inc., the liquidator (the Liquidator ) of Confederation Life Insurance Company ( Confed ), was heard this day at 393 University Avenue, Toronto, Ontario. ON READING the Report of the Liquidator dated August 3, 2000 filed, and the Report of the Liquidator dated August 26, 2000 (collectively, the Reports ) and upon hearing the submissions of counsel for the Liquidator, for the Canadian Life and Health Insurance Compensation Corporation, for The Chase Manhattan Bank, for Confederation Treasury Services Limited and James H. Grout, as representative counsel, no other party appearing. 1. THIS COURT ORDERS that the service made of the Notice of Motion and supporting materials herein is good and sufficient notice of this motion, that this motion is

33 - 2 - properly returnable today and that any further service of the Notice of Motion and supporting materials be and the same is hereby dispensed with. 2. THIS COURT ORDERS that James H. Grout be appointed for the purposes of reviewing the financial statements and reporting to the Court with respect to the distribution proposed by the Liquidator and that such appointment be effective nunc pro tunc to August 18, THIS COURT ORDERS that the Liquidator be and it is hereby authorized to make an interim distribution of $260 million to be allocated between and paid to Confederation Treasury Services Limited and the ordinary creditors of Confed, as set out in detail in the Reports. For greater certainty, the portion to be allocated to the ordinary creditors of Confed shall be paid pro rata to ordinary creditors as their claims are admitted to the estate in accordance with the allowance process approved by this Court. 4. THE COURT ORDERS that the dividend sheet in the form attached hereto as Schedule A be and it is hereby approved. 5. THIS COURT ORDERS that the Liquidator be and it is hereby authorized to make distributions from time to time to the holders of allowed claims set out on the dividend sheet. G26\

34 SCHEDULE "A" IN THE MATTER OF THE LIQUIDATION OF CONFEDERATION LIFE INSURANCE CO Dividend Sheet Claim Amount Claim Admitted No. Creditor Cdn Dollars Guelph Line Holdings 78, Canada Inc. O/A 21, Altech Investigations Inc. 1, American Para Prof. Systems Inc. 1, CAD Resource Centre CANAMERIC 6, Careerpath Counselling Checker Cabs Ltd Davis Reberkenny & Abramowitz, P.C. 1, Doxey & Associates, Dr. N.C.S. 1, Gryniewski Consulting Services Inc Hamilton, Dr. Sean Hanick, Dr. Adrian 1, McKercher McKercher & Whitmore 1, Pannozzo, Dr. G.J Parlee McLaws Pinnacle Investigations Inc Dupont Canada Inc. 9,976, R.B. Ventures Ltd 100, Rustad Investments Ltd 100, Doraldick Investments Limited 1,761, Melvin, Dr. Kenneth Abramovitch, Dr. Allan Wilde & Associates, John 3, World Wide Health Services, Inc Guy Carpenter & Co., Inc. 800, Gibbons, Dr. Maureen Corporate Realty Inc. 82,133.20

35 Claim Amount Claim Admitted No. Creditor Cdn Dollars 0052 Adatif Investments Ltd 995, John A. Kane & Waterbury 4, Salit, Dr. Irving E Leduc, Leblanc 1, States of Jersey 145, H&R Block Canada Inc. 4,485, Chubb Security Canada Inc. 3,196, Town of Pickering 997, Lewis and Roca LLP 2, Bureau d'expertise Assureurs Ltee 55, Wacker Drive Associates 221, Advocate Investigation Serv. Ltd 2, Jackson Hale Distributors Ltd 3, Hooper-Holmes Canada Limited 1, Kosar, Dr. Stephen E Stewart McKelvey Stirling Scales 1, Application Enabling Inc 5, J. Beals Rehabilitation Consultants 1, Cortlaw Services Limited 3, Vexler, Dr. Ronald Canadian Imp. Bk of Commerce 7,642, Abitibi-Consolidated Inc. 2,400, Graphical Corp Castek Software Factory Inc. 28, ReliaStar Life Insurance Co 497, Mohan, Dr. Rajesh Pope, Dr. Janet Joseph N. Gelmon The Chase Manhattan Bank 82,062, Dominion Textile Inc. 3,750, RBC Dominion Securities Inc 10,792, UBS AG, Union Bank of 75,492,051.65

36 Claim Amount Claim Admitted No. Creditor Cdn Dollars 0580 Actel Resources Inc. 30, Esmail, Dr. Salim Shepp Johnman & Associates Jules d'alcantara Fleuriste Inc Total Creditors $205,766,921.82

37 THE ATTORNEY GENERAL OF CANADA Applicant and CONFEDERATION LIFE INSURANCE COMPANY Respondent Commercial List Court File No: 97-BK ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Proceeding commenced at Toronto ORDER GOODMAN PHILLIPS & VINEBERG Barristers & Solicitors 250 Yonge Street Suite 2400, Box 24 Toronto, Ontario M5B 2M6 Gale Rubenstein\LSUC # 17088E Tel: (416) Fax: (416) Solicitors for KPMG Inc., the Liquidator of Confederatio Life Insurance Company G26\

38 SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST Commercial List Court File No. 97-BK THE HONOURABLE MR. ) THURSDAY, THE 7 th DAY JUSTICE ROBERT A. BLAIR ) OF OCTOBER, 1999 B E T W E E N: IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C.W-11, AS AMENDED THE ATTORNEY GENERAL OF CANADA - and - CONFEDERATION LIFE INSURANCE COMPANY Applicant Respondent O R D E R THIS MOTION made by KPMG Inc., the Liquidator (the Liquidator ) of Confederation Life Insurance Company ( Confed ), was heard this day at 393 University Avenue, Toronto, Ontario. ON READING the Report of the Liquidator dated September 30, 1999 (the Report ), filed, and upon hearing the submissions of counsel for the Liquidator, and Susan Rowland, the proposed representative counsel, no other party appearing, although properly served as appears from the proof of service, filed,

39 THIS COURT ORDERS that the service made of the Notice of Motion and supporting materials herein is good and sufficient notice of this motion, that this motion is properly returnable today and that any further service of the Notice of Motion and supporting materials be and the same is hereby dispensed with. 2. THIS COURT ORDERS AND DIRECTS that the Liquidator send by ordinary mail on or before October 20, 1999, a proof of claim and instruction sheet in substantially the form attached hereto as Schedule A (the Proof of Claim ) to all persons, wherever located, with debt or other claims against Confed in existence on August 12, 1994, whether certain or contingent, liquidated or unliquidated (the Ordinary Creditors ), provided that such claims are not claims under policies of insurance and are not subordinated by their terms to all other indebtedness of Confed, at their last known address as set out in the books and records of Confed. 3. THIS COURT ORDERS AND DIRECTS that the Liquidator publish a notice in substantially the form attached hereto as Schedule B on one occasion between the dates of October 13, 1999 and October 22, 1999 inclusive, in each of the newspapers and languages set out in the attached Schedule C. 4. THIS COURT ORDERS AND DIRECTS that the Liquidator send by ordinary mail or by telecopier a Proof of Claim to any person making a request, at the address or telecopier number provided by the person, within four business days of the request being received. 5. THIS COURT ORDERS AND DIRECTS that, in accordance with Section 74 of the Winding-up and Restructuring Act, December 20, 1999 be fixed as the last day on or before which Ordinary Creditors and policyholders who held Confed policies on August 12, 1994, other than policyholders whose policies were issued by the United Kingdom, Cuban or United States branches of Confed, who assert that the claims under their policies have not been fully satisfied

40 - 3 - or recognized through the assumption of their policies by another insurer or payments made by, or in the process of being made by, the Liquidator must file their Proofs of Claim with the Liquidator. 6. THIS COURT ORDERS that Susan Rowland be appointed as representative counsel (the Representative Counsel ) to represent the interests of Confed s retired employees, their spouses and dependent children who were entitled to medical benefits, dental benefits and life insurance as of August 12, 1994 for the purposes of preparing and proving their claims in respect of such benefits. 7. THIS COURT ORDERS that the Representative Counsel be and is hereby authorized to retain actuarial advice. 8. THIS COURT ORDERS that the remuneration, costs and expenses of the Representative Counsel be treated as part of the costs and expenses of the liquidation of Confed and that the Representative Counsel may be required, from time to time, to have her accounts assessed on a solicitor and client basis by the Court. G26\

41 THE ATTORNEY GENERAL OF CANADA and CONFEDERATION LIFE INSURANCE COMPANY Commercial List Court File No: 97-BK Applicant Respondent SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Proceeding commenced at Toronto ORDER GOODMAN PHILLIPS & VINEBERG Barristers & Solicitors 250 Yonge Street Suite 2400, Box 24 Toronto, Ontario M5B 2M6 Gale Rubenstein\LSUC # 17088E Graham Smith \LSUC #26377D Tel: (416) Fax: (416) Solicitors for KPMG Inc., the Liquidator of Confederation Life Insurance Company G26\

42 Commercial List Court File No. 97-BK ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST THE HONOURABLE MR. ) TUESDAY, THE 26TH DAY JUSTICE R.A. BLAIR ) OF SEPTEMBER, 2000 IN THE MATTER OF CONFEDERATION LIFE INSURANCE COMPANY AND IN THE MATTER OF THE INSURANCE COMPANIES ACT, S.C. 1991, AS AMENDED AND IN THE MATTER OF THE WINDING-UP ACT, R.S.C. 1985, C.W-11, AS AMENDED B E T W E E N: THE ATTORNEY GENERAL OF CANADA Applicant - and - CONFEDERATION LIFE INSURANCE COMPANY Respondent ORDER THIS MOTION, brought by KPMG Inc., the liquidator (the Liquidator ) of Confederation Life Insurance Company ( Confed ), was heard this day at 393 University Avenue, Toronto, Ontario. ON READING the Report of the Liquidator dated September 21, 2000 filed, and upon hearing the submissions of counsel for the Liquidator, for Susan Rowland, as representative counsel (the Representative Counsel ) and for The Chase Manhattan Bank, no other party appearing,

43 THIS COURT ORDERS that the service made of the Notice of Motion and supporting materials herein is good and sufficient notice of this motion, that this motion is properly returnable today and that any further service of the Notice of Motion and supporting materials be and the same is hereby dispensed with. 2. THIS COURT ORDERS that the process for admission and disallowance of claims approved by orders of this Court dated May 5, 2000 and June 20, 2000 (the Allowance Process ) be and the same is hereby modified with respect to the claims of the retired employees of Confed s Canadian Operations (the Canadian Operations Retirees ) as follows: (a) the Representative Counsel be and she is hereby authorized to mail a letter in substantially the form attached hereto as Schedule A to each Canadian Operations Retiree setting out the amount of his or her claim; (b) any Canadian Operations Retiree who wishes to object to the amount of his or her claim shall serve a written objection on the Representative Counsel, such service to be effected by means of prepaid ordinary mail, facsimile or courier, within twenty-one (21) days of the date of the letter referred to in paragraph 2(a) hereof; (c) the list of claims circulated to creditors and the dividend sheet provided for in the Allowance Process shall not name individual retirees, but shall set out the total quantum of Agreed Claims of Canadian Operations Retirees under the creditor name, Susan Rowland, on behalf of Canadian Operations Retirees, for their retiree benefits (the Canadian Operations Retirees Claim ); and

44 - 3 - (d) Creditors objecting to the Canadian Operations Retirees' Claim will serve their objections on the Representative Counsel rather than on individual Canadian Operations Retirees. G26\

45 SCHEDULE A Via Mail Dear Confed Retiree: Re: Filing of Claims on Behalf of Retirees of Confederation Life Insurance Company, in Liquidation As you know, I was appointed by Order of the Ontario Superior Court of Justice as the representative counsel to Confed s retired employees, spouses and dependent children who are entitled to medical benefits, dental benefits and life insurance from Confed as of August 12, 1994 ( health benefits claim ). I filed a Proof of Claim with the Liquidator of Confed on your behalf in time to meet the February 15, 2000 deadline in the court Order. This claim is known as an omnibus proof of claim. Shortly thereafter, the Liquidator applied to the Canada Customs and Revenue Agency (formerly, Revenue Canada; the CCRA ) to obtain an advance income tax ruling to deal with the income tax treatment of your claim. We are pleased to report that the tax ruling was favourable, with the result that you do not have to pay Canadian income tax on any money you receive this year on account of your omnibus claim amount. You do not even have to report this money on your income tax return when you fill it out next spring unless you are resident in Quebec. If you are resident in Quebec, you may have to pay Quebec income tax. I will be in touch with you further. You may have to consult your own tax advisor. You may also have to pay tax if you are no longer resident in Canada. You should consult your own tax advisor to find out what tax laws of your new residency apply to this payment. We are enclosing a copy of your individual claim statement, which was calculated by the actuaries we retained on your behalf, Eckler Partners Limited. The Liquidator has agreed to allow your claim in this amount. If you filed your own health benefits claim and it was higher than the omnibus amount, then the Liquidator will disallow any amounts in excess of the amount we claimed for you. You should review the enclosed claim statement, and if you disagree with it in any way, you must notify me by letter no later than. You must provide me with your reasons for objecting so that I can take up your case with the Liquidator. If I do not hear from you by that date, I will assume that your

46 are in agreement with the statement and will take no further action on your behalf. Unless you wish to make such an objection, you do not need to do anything at this time. Your rights have been protected. If you have a change of address, please contact Marlyse Kis of KPMG in writing by sending a fax to (416) If you have any questions relating to this letter, please call Pierrette Harvey of Koskie Minsky at (416) ext. 280 or visit our website at for updates. Yours truly, KOSKIE MINSKY Susan Rowland SR/sb Encls.

47 INDIVIDUAL CLAIM STATEMENT IN RESPECT OF RETIREE HEALTH, DENTAL AND LIFE INSURANCE BENEFITS FROM THE CONFEDERATION LIFE INSURANCE COMPANY, IN LIQUIDATION «Name» «Street» «City»«Province» «Postal_Code» NAME: SIN: DATE OF BIRTH: SPOUSE S NAME: SPOUSE S DATE OF BIRTH: «Name» «DOB» «DOB» «Spouse» «SP_DOB» ESTIMATED VALUE OF HEALTH AND DENTAL BENEFITS: ESTIMATED VALUE OF LIFE INSURANCE BENEFITS: TOTAL CLAIM: «CV» «CV_for_share» «est_surplus» EXPLANATION: The estimated value of your retiree health, dental and life insurance benefits has been calculated as of August 12, 1994 (being the commencement of the liquidation) taking into account benefits paid to August 31, 1995 using generally accepted actuarial methods and assumptions. The calculations were prepared by Jill Flicht, F.C.I.A. of Eckler Partners, the actuarial firm retained by Susan Rowland of Koskie Minsky, your Representative Counsel. If you accept the total claim amount shown above, you need do nothing further. If you object to the total claim, please follow the process outlined by Ms. Rowland. You have until to make your objections to her. More details regarding Us process can be found in the attached letter.