Thunor Trust Companies
Final Orders of Liquidation Entered
The Chancery Court of the First Judicial District, Hinds County, Mississippi on June 29 entered final orders of liquidation and findings of insolvency for three Mississippi-domiciled companies controlled by the Thunor Trust: Franklin Protective Life Insurance Company; Family Guaranty Life Insurance Company; and First National Life Insurance Company of America. In each case the order noted that "...substantially all of the bond investments are missing...and with the missing bonds, the Company is insolvent." The December 31, 1998 annual statements of the companies reported the following (amounts in millions):
Company Total Assets Bonds Total Liabilities
Franklin Protective Life $24.1 $23.3 $21.9
Family Guaranty Life $28.9 $27.9 $26.3
First National Life of America $126.2 $110.2 $107.4
Total $179.2 $161.4 $155.6
The orders also noted that "At this time it is unknown whether all policies will be covered by Guaranty Associations. Entry of an order of liquidation and a finding of insolvency will allow the various involved Guaranty Associations to assume their statutory responsibilities with respect to covered policies and benefits ...and begin paying claims covered by the Guaranty Associations."
Also on June 29, the court granted the petitions brought by the Mississippi Life and Health Insurance Guaranty Association imposing "...a temporary moratorium on the payments of cash values and policy loans, or any other right to withdraw funds held in conjunction with policies or contracts issued by [the Company]...except as to any payments any guaranty association determines to make in accordance with the statutes creating and governing the guaranty association." The petitions argued that allowing unrestricted withdrawals of cash values, policy loans or any other right to withdraw funds would impede the ability of the liquidator and the guaranty associations to attempt to have the policyholder coverages assumed by a solvent carrier.
NOLHGA is mailing copies of the liquidation orders and moratorium petitions to all guaranty associations.
Task Force Chair - Chuck LaShelle; Staff Contact - Executive Life (CA)Whistle Blower Suit Unveiled
On June 21, a qui tam, or "whistle-blower" suit relating to the Executive Life insolvency, was made public by the California Attorney General. The complaint originally had been filed under seal in San Francisco County Superior Court by plaintiff RoNo,LLC. Named as defendants in the complaint are Altus Finance, Credit Lyonnais, CDR Enterprises, Inc., Mutuelle Assurance Artisanale de France, Aurora Life Assurance, and its holding company, New California Life.
Among other matters, the complaint alleges that the defendants concealed and misrepresented the true identities of the entities submitting the successful bid for Executive Life and its assets, making it possible for the defendants to purchase and control Executive Life's insurance business and bond portfolio for less than fair market value.
The suit seeks treble damages in excess of $1 billion; the imposition of a constructive trust with regard to the ownership interests in New California Life Holdings, Inc. and Aurora National Life Assurance Co., for the benefit of the state and the insurance commissioner; an accounting; civil penalties under the California False Claims Act, plus injunctive relief and restitution under the Unfair, Fraudulent and Unlawful Business Practices Code of California.
In other news, Executive Life Participating Guaranty Associations should have received this week a copy of the Executive Life Trust's 1998 Annual Report to Beneficiaries. Executive Life policyholders recently received this report, and may contact PGAs with questions.
A particular area of inquiry for policyholders has been the Report's statement that the Trust would terminate on July 1, 1999. That however, is no longer the case. According to the trustees, the termination date and subsequent distributions of funds have been pushed back to an unspecified date: either later in 1999, or early in 2000.
Task Force Chair - Art Dummer; Staff Contact - Statesman National Life (TX)Supplementary Closing
A supplementary closing was held on June 28. All but three of the remaining affected guaranty associations participated. Aggregate funding obligations of the three is approximately $5,000. American Capitol and Texas Imperial have granted those associations until July 23 to opt-in.
Task Force Chair - Neil Rucksdahel; Staff Contact -Legal Seminar
NOLHGA is pleased to announce that registration numbers for this year's Legal Seminar have already surpassed all prior years! Our current tally is 124!! NOLHGA will continue to accept late registrations, but asks that you please notify Karen Early at (703) 787-4101 as soon as possible if you have not yet registered. We would also be glad to assist you in finding accommodations. This year's event has been awarded an average of 10-12 Continuing Legal Education Credits, including two hours of ethics credit. Contact Karen Early for details.
Legal Seminar Planning Committee Chair - Frank O'Loughlin; Staff Contact - Joni ForsytheMark Your Calendars Now
1999 NOLHGA ANNUAL MEETING
October 21-22*
Hyatt Grand Champions
Indian Wells, California
Preparations are well underway for NOLHGA's 16th Annual Meeting which promises to bring attendees the latest in the trends that will shape the industry and guaranty association system into the new millennium.
Complete Information Will Follow Later this Month
* MPC Meeting will be held on Wednesday afternoon, October 20.