Unisys Corp. v. CALIF. LIFE & HLT. INS. GUARANTEE ASS'N

This litigation arises out of the failure of Executive Life Insurance Company (Executive Life) and resultant losses suffered by participants in two Unisys Corporation 401(k) plans that had invested in Executive Life guaranteed investment contracts. The specific question on appeal is whether the California Life and Health Insurance Guarantee Association Act [1] (the Act) excludes from its coverage all guaranteed investment contracts. Respondent California Life and Health Insurance Guarantee Association (CLHIGA) contends that it does. [2] Appellant Unisys Corporation (Unisys) asserts that the Act excludes only those guaranteed investment contracts that are "unallocated annuity contracts" within the meaning of the Act.

We hold that the Act, by its plain language, excludes all guaranteed investment contracts from coverage. We therefore affirm the grant of summary judgment in favor of CLHIGA.

A guaranteed investment contract, or GIC, is an investment device. Pursuant to the terms of the investment contract, the purchaser deposits a premium with the issuer and, in return, is paid a guaranteed rate of interest for a specified period. At the end of the contract…