First National Life (AL)
Court Says Receiver Need Not Pay Reserve Deficiency
On August 8, the First National Life receivership court (Circuit Court for Montgomery County, Alabama) ruled that the Receiver was not obligated to pay to American Pioneer the amount of a reserve deficiency found by American Pioneer after the reinsurance and assumption agreement had closed. The court also ordered American Pioneer pay to the Receiver overpayments that American Pioneer had received on behalf of the Receiver, but had held to offset its claim against the Receiver for expense reimbursements.
As reported in the May 28, Weekly Wire, the Receiver had filed a petition for instructions with the receivership court on May 6, on these issues. In entering a final judgment in favor of the Receiver, the court found that the reinsurance and assumption agreement was clear, should be enforced in accordance with its terms, and that the agreement did not provide for any adjustments. With regard to American Pioneer's claim for setoff, the court found there was no right of setoff, as the Receiver was neither contractually obligated to American Pioneer for the expenses, nor indebted to American Pioneer for the expenses.
Task Force Chair - Mike Marchman; Staff Contact - Joni Forsythe Executive Life (CA)Court Holds That GICs Are Unallocated Annuities
On August 3, the Michigan Court of Appeals upheld a lower court decision that the Michigan association is not liable for Executive Life GICs held by Unisys Corp. The association does provide coverage under its statute for unallocated annuities, but only for resident owners of those annuities. The appeals court found that the contracts fell squarely within the Michigan Act's definition of unallocated annuity contracts, and that the contract holders were not Michigan residents, and thus not covered by the association.
The decision was based on language in the Michigan statute, and noted that the prospectus issued by Unisys to plan participants described the contracts as GICs. The court also found that the contracts did not fit the exception found in the statutory definition of unallocated annuities: contracts which are "not issued to and owned by an individual, except to the extent of an annuity benefit guaranteed to an individual by an insurer under the contract." The court noted that the exception clause applies only when annuity benefits have been withdrawn from the fund, at the direction of the plan trustee, and allocated for the purchase of a separate individual annuity contract, stating: "The exception language of 7705(n) merely indicates an acknowledgment by the Legislature that a group annuity contract may incorporate certain aspects of individual control and benefit, yet remain unallocated."
Task Force Chair - Art Dummer; Staff Contact -Members' Participation Council
August 25-27, 1999
The Couer d'Alene
Couer d'Alene, Idaho
General Session Agenda
August 26 Casco Bay
Noon - Luncheon
Guest Speaker: Mary Hartung, Idaho Director of Insurance
1:45 pm - Call To Order
Approval of Minutes - Ms. Parker, Chairman
MPC Executive Committee Report
2:00 pm - Reports on Impairments and Insolvencies
Fidelity Bankers Life Insurance Co. (VA) - Mr. Colpean, Michigan
Kentucky Central Life Ins. Co. (KY) - Mr. Colpean, Michigan
Universe Life Insurance Co. (ID) - Mr. Rhodes, Oklahoma
Thunor Trust Companies (AR, MO, MS, OK, TN) - Mr. LaShelle, Texas
Settlers Life Insurance Co. (VA) - Mr. Marchman, Georgia
4:00 pm - Adjourn
6:30 pm - Reception - Pool Deck
August 27 Casco Bay
7:00 am - Breakfast
8:00 am - Administrators' Education Steering Committee Topic - Ms. Langill, New Hampshire
Director Orientation
8:30 am - Year 2000 Contingency Planning Committee - Mr. Falkenbach, Delaware
8:45 am - Reports on Impairments and Insolvencies
National Affiliated Life (LA) - Mr. Gullickson, South Dakota
Mid-Continent Life Ins. Co. (OK) - Ms. Ekart, Nebraska
American Standard Life Ins. Co. (OK) - Ms. Bowers, South Carolina
Confederation Life Insurance Co. (CN) - Mr. LaShelle, Texas
10:00 am - Break
10:15 am - Executive Life Insurance Co. (CA) - Mr. Dummer, Utah
Centennial Life Insurance Co. (KS) - Mr. Femal, Wisconsin
11:30 am - Adjourn