Confederation Life was Canada's fourth largest insurance company, with $19-billion in assets, when it was seized by regulators in August 1994. While Mr. McQueen, a seasoned business journalist with the Financial Post, calls his tale a whodunnit, the killer's identity is never in doubt. The author blames everybody involved for the company's failure. "Confed went under," he says on page five, "because there wasn't a single director, officer, regulator, auditor, politician, or industry honcho who completely fulfilled his or her job."
Later, he compares the murder of Confederation Life to an Agatha Christie thriller, in which a wealthy dowager dies after being given small amounts of arsenic over a long period of time by family, friends, physicians, and police: "the very people who should have been dedicated to her care and protection." He's angry that Ottawa, the regulators, and the accounting profession didn't hold an inquiry into the insurer's death, accusing them of trying to cover up their own cowardice, incompetence, and disregard for a financial services sector they were prepared to abandon.
Mr. McQueen tells in painstaking detail-sometimes too much detail for the lay reader-who did what to whom and when. There is so much villainy, greed, and just plain stupidity in this tale that one's head starts to swim. But the author has a serious purpose here. He believes the company didn't have to fail and, in an appendix, he provides twenty recommendations for companies, boards, auditors, and regulators, to prevent future disasters.
It's obvious from the early pages that Confederation Life was managed badly and headed on a collision course with reality. Later, it's clear that the company was insolvent well before Ottawa pulled the plug. Only after a host of mismanaged salvage attempts did the regulators finally decide there were no alternatives to bankruptcy. The question a skeptical reader might ask is why the author thinks it was necessary to shore up a weakling. What was wrong with letting Confed collapse? Isn't that how the marketplace works?
Mr. McQueen argues that the failure caused anxiety to the employees (4,400) and the individual policy- and annuity-holders (300,000 in Canada, another 450,000 worldwide). But most of the employees will find other jobs and most of the policy-holders will be protected under the industry's compensation plan. Also, noting that the financial services sector is all about trust, he says: "The collapse of Confed has so damaged public confidence that the entire industry will never recover." That's a huge, hard-to-prove claim. And if customers lack confidence in insurance companies, they may take more care to check out whom they are dealing with and how solid the firm is. Not a bad outcome.
At the end, Mr. McQueen throws in another argument why Confed should not have been allowed to fail. Because the strong companies could not rescue a crippled rival, he says the industry's executives ceded their place in the financial firmament. "Politicians seeking strong financial-services players will eventually allow the powerful banks into the insurance business and those companies now enjoying the last gasp of protectionism will fade from view." Again, what is so bad? Who needs protectionism? There's no reason why insurance industry lobbying should keep banks out of this lucrative business and prevent them from selling insurance products in their branches. Once the banks are allowed in, costs will undoubtedly come down and the array of low-priced choices will increase. To achieve that high rate of growth, the company plunged into uncharted areas-real estate, leasing, and the trust business. In 1989, it started construction on a huge (456,616 square feet) head office in Toronto at a cost of $90 million. The timing could not have been worse, since real estate values were beginning to slide in Canada and the United States. "Confed had built its house on sand, and the foundation was beginning to blow away," Mr. McQueen says in his sometimes overheated prose. By 1989, 73.8 per cent of Confed's assets were invested in real estate or mortgages, the peak level reached by the company.
Enter Paul Cantor, the former banker who took over the company in 1992 and tried to straighten it out. While Confed needed a saviour, it needed someone who understood insurance. This was not the right man for the job. "Perhaps Cantor did not even know the right questions to ask," says Mr. McQueen. "The cause hardly mattered. What did matter was that the amount of helpful information exchanged was minimal. As a result, his learning curve became a flat line." In late 1993, Confed began negotiating a strategic alliance with Great-West Life, the third-largest insurance company in Canada. As one Confed executive said at the time, "It's Great-West or bust."
Great-West Life took seven months to decide that, since more capital was required, it would pull out. The deal-making then fell to a high-powered industry coalition, which couldn't agree on anything. On August 15th, 1994, the regulators acted and the 123-year-old company was no more. Among those affected were the two executives who acted as architects of Confed's reckless expansion. In 1981, they had decided to defer some of their future compensation until after retirement. One man was owed $700,000, the other $500,000. They sued, but lost, and will not receive a cent.
Like many journalists, Mr. McQueen is often too glib, relies too much on anecdotes, and quotes too heavily from sources with a vested interest. This is of course not the final word on Confed's bankruptcy or on the ills of Canada's financial services sector. But his book-length account is all we have of this cataclysmic event, whose wind-up is still unfolding. And given the fact that he reveals the identity of the perpetrators at the start, the author has furnished an absorbing page-turner.

 Ellen Roseman is the business editor of the Toronto Star.