Great Republic Life (CA)
Liquidator Status Report
On January 27, 1999 the Liquidator of Great Republic Life Insurance Company filed a status conference report with the court. According to the report, estate assets include about $2.7 million of cash and equivalents and 800 units of High Equity Partner L.P. (Series 86 Limited Partnership). The report also reflects that (i) all guaranty association claims have been approved, except for five long term care claims being handled by the California Life and Health Insurance Guaranty Association and (ii) the estate should be closed once long term care claims are valued and the High Equity Partnership interests are liquidated. As a means of expediting estate closure, the Liquidator has requested court approval to value long term care claims on a present value basis using actuarial data and medical records. In addition, the Liquidator is seeking court approval to sell the partnership units at a price not less than that quoted by a specified brokerage firm. Guaranty associations affected by Great Republic include California, Idaho, Montana, Nebraska, New Mexico, North Dakota, South Dakota and Texas.
Staff Contact - Bill O'Sullivan American Standard Life (OK)Claims Submission Deadline Set
As a reminder to affected guaranty associations, the deadline for submission of proof of claims against the estate of American Standard Life is March 22, 1999. Guaranty associations should have already received a proof of claim form from the receiver. Claims submitted should include assumption reinsurance costs, direct claim payments to policyholders made on an individual case basis and incurred expenses. The Task Force will circulate a schedule showing assumption reinsurance costs for each affected association through the true-up closing.
Task Force Chair - Andrea Bowers; Staff Contact - Bill O'Sullivan Kentucky Central Life (KY)Agents Deferred Compensation Claims
Several of Kentucky Central's former agents previously filed objections to the Liquidator's classification of their deferred compensation plan claims as general creditor claims. In support of their objections, the agents argued that they were employees rather than independent contractors, and that as a result the compensation plan should have been administered in accordance with ERISA. Under this scenario, the agents argued that their claims should have been classified as class 1 costs and expenses of administration rather than general creditor claims. The agents further argued that their rights to the plan funds were vested, and therefore were not part of the KCL estate subject to the Liquidator's classification.
At the request of the Liquidator, NOLHGA and the Illinois and Texas guaranty associations joined in support of the Liquidator's classification of the claims. On January 26, the court appointed referee entered an order with proposed findings of fact and conclusions of law affirming the Liquidator's classification of the agents' claims. Specifically, the referee concluded that the agents were not employees of KCL, and that the deferred compensation plan was not a qualified plan subject to the requirements of ERISA. The special referee further concluded that the claimants did not own the funds in question since the funds were to remain KCL's property so as not to be taxable until actually paid. Having so concluded, the referee has recommended that the agents' objections be denied.
Task Force Chair - John Colpean; Staff Contact - Joni ForsytheWhite House Proposes New Taxes For 501(c)(6)'s
The Clinton Administration's 1999 Budget Proposal, published this month, contains a provision that would tax the investment income of 501(c)(6) organizations. As NOLHGA and many of its members are 501(c)(6) organizations, NOLHGA's Legal Committee will be considering possible responses to the proposal at its February 25-26 meeting.
Receivership Law Legislative Initiatives
Initiatives are underway in several states to consider modifications and/or rewrites of state receivership laws. It appears that much of the legislative activity has been triggered in response to the adoption of the model Uniform Receivership Law ("URL") by the Interstate Compact Commission last fall.
In Missouri, a URL based rewrite has been introduced as House Bill 599, and is scheduled for House and Senate Committee hearings over the course of the next week. In Oklahoma, a bill has been proposed to substitute the URL-based jurisdiction and setoff provisions in the state receivership statute. NOLHGA has been advised that URL-based legislation also is being discussed for future consideration in Rhode Island and Mississippi.
As was previously reported (See Weekly Wire, January 15, 1999), the California Liquidation Office (CLO) is seeking to enact a modified version of the URL for California. In response to an invitation from the CLO, NOLHGA attended two review sessions and provided technical comments regarding provisions affecting guaranty association interests. No final proposal has yet been introduced in California.
In light of the above developments as well as anticipated future legislative activity in this area, NOLHGA's Legal Committee has undertaken to prepare a written analysis of the key URL provisions which affect guaranty association interests. This report is targeted for completion and should be available for distribution to members by the end of May.
Staff Contact - Joni ForsytheCALENDAR/CONFERENCE CALLS
Feb.15 NOLHGA Offices Closed
Feb. 17-19 NOLHGA MPC Meeting, Tucson, AZ
Feb. 17 Legal Seminar Planning Committee Meeting, Tucson, AZ
Feb. 25-26 NOLHGA Legal Committee, Tampa, FL