National Heritage Life Insurance Company (Delaware)

NHL Estate to Receive $27.3 Million in Settlement with Bear Stearns

During the week of November 9, 2008, the Orange County (Florida) Circuit Court approved a $27.3 million settlement reached between the estate of National Heritage Life and its former investment advisor, Bear Stearns. The case, Denn v. Bear Stearns & Co., involved the estate’s claim against Bear Stearns for breach of its contractual and fiduciary duties as an investment advisor and was tried before a Florida magistrate late last year. In April, the magistrate ruled in favor of the estate and entered judgment in the amount of $26.8 million plus interest. The case was appealed, and the parties reached a settlement late last month.

A distribution to affected guaranty associations is anticipated; however, the timing is unclear pending the resolution of various issues. Any questions can be directed to Meg Melusen at [email protected].

Task Force Chair - Dan Orth;   Staff Contact -

NAIC Restructuring Mechanisms Whitepaper to Be Released for Comment

The NAIC's Restructuring Mechanisms for Troubled Companies Subgroup is scheduled to meet on December 4, 2008, in conjunction with the upcoming NAIC Winter National Meeting in Grapevine, Texas. The purpose of the meeting is to discuss and consider adoption of an NAIC whitepaper on the subject of alternative restructuring mechanisms for troubled insurers. A preliminary table of contents for the paper was released last May. Proposed topics included reasons for using restructuring mechanisms; the advantages and disadvantages of the various types of restructuring mechanisms (including solvent runoff of existing blocks, Part VII Portfolio Transfers, and U.K.-based schemes of arrangement); and existing statutory authority, limitations, and requirements.

Since that release, the subgroup has held three conference calls and two in-person meetings to gather information on various topics. No draft of any portion of the whitepaper has yet been released. NAIC staff is working on the paper and hopes to have a first draft released for comment within the week. The draft, and any interested party comments received, would then be discussed at the December 4 meeting. According to staff, if adopted by the subgroup, the whitepaper will be passed up to E Committee, which is scheduled to meet on December 8. More information will be provided as it becomes available.

  Staff Contact - Joni Forsythe