Supreme Court of Canada building in Ottawa, Canada
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The Supreme Court of Canada won’t allow two hedge funds to appeal a decision that denied them and other funds from using universal life insurance policies for unlimited deposits.

Atwater Investment LP and Ituna Investment LP sought to use life insurance contracts as deposit contracts and thereby get a guaranteed rate of return.

Earlier this year, the Saskatchewan Court of Appeal upheld a ruling that universal life insurance policies can’t be used this way — a decision the funds sought to appeal.

The use of life insurance for deposits unrelated to the insurance coverage is contrary to Canada’s regulatory framework, which separates banking and insurance businesses, the Canadian Life and Health Insurance Association said in a statement on Thursday following the SCC’s dismissal of the appeal application.

“We are pleased that the Supreme Court has decided not to hear these appeals, which means this litigation is over,” CLHIA President and CEO Stephen Frank said in the statement.

Frank also noted that provinces including Ontario, Prince Edward Island, Quebec, Alberta, New Brunswick and Nova Scotia have passed legislation in recent years to clarify the separation of banking and insurance.

iA Financial Group, among the insurers facing potential litigation, also lauded Thursday’s decision.

“iA Financial Group has always maintained that the position taken by Ituna was legally unfounded and that life insurance contracts were never intended to be used as deposit accounts and for purposes unrelated to life insurance,” the insurer said in a statement.