Kentucky Central Life Insurance Company (Ky.)

Estate Distribution to Be Paid This Week

On August 11, 2006, the Kentucky Central estate will transfer to NOLHGA, on behalf of the affected guaranty associations, funds totaling $16,585,574. This distribution, which was approved by the liquidation court on June 12, will reimburse the guaranty associations for post-closing policyholder benefits funded by the associations throughout the course of the five-year plan. NOLHGA's task force consultants at PricewaterhouseCoopers are providing accounting support for the allocation of the distribution among the participating associations. The funds will be paid over to the guaranty associations as soon as the allocation is confirmed.

Upon receipt of this distribution, the participating associations will have been repaid in full for all amounts paid by the associations to support policy benefits to Kentucky Central policyholders. Guaranty association expense claims were previously repaid pursuant to an Expense Settlement Agreement approved by the court in July 2004.

The estate is expected to remain open at least through the end of the year, and the liquidator has retained assets sufficient to cover the costs of winding down the affairs of the estate, including reimbursement for additional expenses owed to NOLHGA in accordance with the Expense Settlement Agreement.

Task Force Chair - John Colpean;   Staff Contact - Joni Forsythe

MPC Meets in Baltimore

The Members' Participation Council (MPC) met in Baltimore, Md., on August 2, 2006. The following are summaries of task force insolvency reports presented during the meeting:

  Staff Contact - Sean McKenna American Chambers Life Insurance Company (Ohio)

Task Force Chair Chuck Gullickson (South Dakota) reported that the liquidator is optimistic about selling the Riverbend parcel of real estate sometime this year. The liquidator is also reluctant to distribute any estate funds because the estate is still dealing with pending creditor disputes.

Task Force Chair - Chuck Gullickson;   Staff Contact - Executive Life Insurance Company (Calif.)

The Executive Life MPC met in closed session.

Task Force Chair - Art Dummer;   Staff Contact - Bill O'Sullivan Kentucky Central Life Insurance Company (Ky.)

Task Force Chair John Colpean (Michigan) reviewed key events in the insolvency and provided an update concerning recent developments, including ongoing preparation for a final distribution to guaranty associations totaling approximately $16.5 million, which will satisfy the balance of guaranty association claims. This estate will also be making distributions in payment of general creditor claims and will likely remain open at least through year-end.

Task Force Chair - John Colpean;   Staff Contact - Joni Forsythe Life & Health Insurance Company of America (Pa.)

Task Force Chair Linda Becker (Kansas) reviewed the four completed reinsurance commutation agreements and noted that a fifth agreement, with ERC, is still outstanding. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) reviewed the ongoing discussions the task force has had with the liquidator on the liquidation/distribution plan.

Task Force Chair - Linda Becker;   Staff Contact - National Heritage Life Insurance Company (Del.)

Task Force Chair Dan Orth (Illinois) reported that five of the affected guaranty associations, at the special deputy receiver's request, had purchased an asset from the estate to provide funds for continuing litigation. He also indicated that the task force is preparing a memo for affected associations concerning discussions with the special deputy receiver on statutory deposits and early access distributions. Task Force Legal Counsel Frank O'Loughlin (Rothgerber, Johnson & Lyons) reviewed the status of current litigation.

Task Force Chair - Dan Orth;   Staff Contact - Reliance Insurance Company (Pa.)

Task Force Chair Tad Rhodes (Oklahoma) reported that task force expenses had increased slightly due to the work needed to answer information requests from the liquidator.

Task Force Chair - Tad Rhodes;   Staff Contact - States General Life Insurance Company (Tex.)

Task Force Chair Tad Rhodes (Oklahoma) provided an update regarding ongoing accounting and audit work, as well as recent developments with respect to litigation. He also reported a recent early access distribution of approximately $1 million, which will be paid to the associations upon completion of allocation accounting. The estate is not expected to close in 2006.

Task Force Chair - Tad Rhodes;   Staff Contact - Joni Forsythe

Modernization & Financial Services Updates Highlight General Session

In addition to the task force reports, the general session also featured an update on the progress made by the Guaranty System Modernization Task Force's Assessment Subgroup from Subgroup Chair Bart Boles (Texas). NOLHGA President Peter Gallanis updated attendees on recent developments concerning financial services modernization on Capitol Hill and in state regulation, and MPC Chair Jack Falkenbach (Delaware) reported on the recent MPC Executive Committee meeting and the activities of the Guaranty System Modernization Task Force. The session also featured a closed session on privacy issues.

  Staff Contact - Sean McKenna

Guaranty Association Law Summaries Updated

NOLHGA has updated its state guaranty association law summary reports to reflect legislative changes that took effect between January 1, 2006, and June 30, 2006. Most significantly, Indiana adopted several provisions based on the current NAIC Model Life and Health Insurance Guaranty Association Act; its new guaranty association law became effective on March 28.The state guaranty association law summaries are available under "Facts & Figures" on the homepage of NOLHGA's Web site in addition to being accessible under the "Member Resources" section of the password-protected extranet. Users can generate individual state reports by choosing from the "Law Summaries by State" drop-down menu. Alternatively, the summaries can be viewed and printed by selecting a specific report from the "Law Summaries by Provision" drop-down menu, which lists all states by topic. Finally, the Guaranty Association Laws page provides users with state guaranty association contact information as well as links, where applicable, to the state guaranty association's Web site and the corresponding state insurance department's Web site. Changes or corrections should be submitted to Meg Melusen at [email protected].

  Staff Contact -