American Medical & Life Insurance Company (New York)
Estate Makes Final Distribution
The affected guaranty associations are receiving a $60,000 final distribution on their administrative expense claims in connection with the closing of the American Medical estate. This distribution represents amounts due under a 2021 expense settlement previously approved by the court. The final distribution was delayed pending receipt of a requested federal release from the Department of Justice.
Following receipt of that release late last year, the Liquidator proceeded with filing a petition to close the estate. The closing order was signed on January 18, 2024, and the Liquidator released the final distribution for guaranty association expense claims earlier this month. NOLHGA has been working to confirm the allocation among the 40 affected guaranty associations and expects the funds to be sent out to the guaranty associations within the next several days.
Task Force Chair - Andrea Bowers; Staff Contact - Joni ForsytheUpdates on NAIC’s E Committee, LATF
The Financial Condition Committee (E Committee) exposed a revised investment framework and related work plan via email last week. Since the Fall National Meeting in December 2023, a small drafting group of regulators from seven states has been reviewing comments on the initial framework. In addition to the revised framework and work plan, the E Committee issued a corresponding memo outlining the drafting group’s position on each of the recommendations contained in the framework. Here are the highlights from each document:
- The memo emphasizes that (1) the primary objective of the framework is to ensure insurer solvency; (2) enhancing the centralized investment expertise available to regulators is a core component of the framework; and (3) coordination among E Committee workstreams is vitally important. The memo also contains a chart outlining regulators’ responses to interested parties’ comments on the framework.
- The revised framework is marked against the initial draft and contains a section outlining the framework’s goal of setting a long-term strategic direction for investment regulation and ensuring thoughtful coordination among the various initiatives. The framework suggests that ongoing work will continue without delay or pause, but it also indicates that the drafters recognize that existing workstreams and the framework are “subject to future refinement based on this iterative process of incorporating new information.” The revised draft also contains a proposed change to the concept of “Equal Capital for Equal Risk,” suggesting the following change: “Equal Capital for Equal Tail Risk.” The memo points out that drafting group members are supportive of the view of equal capital for equal risk “which includes consideration of tail risk.”
- The work plan commits to full transparency with multiple checkpoints to receive interested party input.
In other news, the Life Actuarial Task Force (LATF) continued its discussion of a proposal to require insurers to perform asset adequacy analysis on ceded reinsurance using a cash flow testing methodology. The task force included a draft Amendment Proposal Form in its meeting materials but ultimately decided against an exposure at this time. The task force plans to have a robust discussion on this proposal at the NAIC’s Spring National Meeting in Phoenix next month. Regulators likely will expose targeted questions next week and have welcomed interested party questions to include in that exposure.
In addition, the American Academy of Actuaries released an Issue Brief last week on business ceded to Bermuda reinsurers. The brief outlines why insurers pursue reinsurance with Bermuda-based reinsurers and highlights the Bermuda Monetary Authority’s robust regulatory regime (and other jurisdictions’ recognition thereof). It also provides U.S.-based actuaries with considerations related to ceded business, including for purposes of asset adequacy testing. The Academy has encouraged the LATF to use the Issue Brief as it considers whether to require asset adequacy testing of ceded business and has requested adequate time to respond to any proposal that ultimately comes out of the task force.
Staff Contact - Sean McKennaUtah GA Seeks Executive Director
Due to the upcoming retirement of Ted Lewis as Executive Director of the Utah Life & Health Insurance Guaranty Association at the end of June 2024, the Association is seeking a well-qualified candidate to fill the position of Executive Director. The anticipated start date is July 1, 2024. The position is half-time, and compensation will be commensurate with experience and qualifications.
The Utah Association facilitates the continuation of coverage and the payment of covered claims under certain insurance policies that involve the insolvency of life and health insurers licensed in Utah subject to and in accordance with its enabling act. The Executive Director of the Association is an independent contractor who reports directly to the Board of Directors. The Executive Director is responsible for carrying out the duties of the Association and maintaining appropriate resources necessary for the Association to fulfill its statutory obligations. Ability to travel and effectively coordinate activities with other state guaranty associations through the National Organization of Life & Health Insurance Guaranty Associations is essential.
The candidate must possess (1) insurance and management experience in an insurance company (or a related setting such as regulatory, legal, statutory accounting, actuarial services, or other consulting services in the life, health, and annuity business sectors); (2) organizational and administrative skills to operate the administrative functions of the Association, including financial and record-keeping functions; (3) the ability to prepare materials for Board of Director meetings and for independent audits; and (4) computer skills sufficient to administer the Association’s functions on a eCommerce basis.
In general, important responsibilities will include:
- Administration and operation of the Association according to its statutory obligations, implementing its Plan of Operation and coordinating policies and procedures with direction from the Board of Directors.
- Scheduling and organizing Board meetings, including preparation of agendas, exhibits, minutes, and resolutions.
- Managing relationships with the Association’s consultants related to the operations of the Association, including but not limited to assessments, audits, accounting, banking, and legal.
- Collaboration and coordination with Utah consumers and with representatives of NOLHGA, other state guaranty associations, regulators, and receivers regarding insurance receiverships and Association coverage.
- Maintenance of files, records, and information related to the operation of the Association and the exercise of its powers and duties under its enabling act and all related policies, procedures, and plans of the Association.