Malpractice at a life assurance group meant a small group of insurance brokers who had placed investment funds with it benefited at the expense of other investors, it was alleged in a High Court case that was settled yesterday.
Former Abbey Life fund manager Mr Graham O'Neill alleged that a high-performing fund within Abbey Life (Ireland) - the "Midas Fund" - had benefited 12 key insurance brokers at the expense of other policyholders. He claimed the Midas Fund was a high-performing investment due to malpractice.
Mr O'Neill was suing Canada Life Assurance (Ireland), which took over Abbey Life Ireland in 1992, and the British company Lloyds Abbey Life plc for wrongful dismissal and breach of contract. Lloyds sold Abbey Life to Canada Life for £22 million (#28 million).
The companies denied all of Mr O'Neill's claims. None of the parties would comment on the case yesterday and no details of the settlement were revealed.
Mr O'Neill alleged the high performance of Midas was an exception to a mediocre overall investment performance and was achieved by switching pricing with the benefit of hindsight from one fund to another. Midas did not invest in external shares but was invested in other Abbey Life funds which it was switched in and out of.
He alleged that complaints from the Midas group when he set switching limits resulted in the payment of £96,000 to the fund in compensation for a fall in its value. This money came from managed funds belonging to other investors and was paid into the Midas funds to subsidise Midas brokers and their investors for a market fall, he alleged.
Mr O'Neill also alleged that the apparent good performance by the Abbey Life pensions fund was achieved through manipulation.
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