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American Standard Life & Accident Insurance Company (Okla.)

Final GA Expenses Due in September

The receiver's Final Liquidation Plan for American Standard Life and Accident Insurance Company, which was filed in mid-August, imposes a 45-day deadline for the guaranty associations to provide a final update of their Class 2 administrative expenses. Therefore, guaranty associations' final expenses must be filed with the receiver by September 29, 2003.

The hearing on the plan is scheduled for November 25, 2003, at 2:00 p.m. Any objections to the plan will be heard at that time. The targeted estate closing date is December 31, 2003. A memorandum from the task force's counsel providing further details on the ASL Liquidation Plan, including a copy of the plan, is being distributed to affected guaranty associations.

Task Force Chair - Andrea Bowers; Staff Contact - Bill O'Sullivan Legion/Villanova Life Insurance Companies (Pa.)

Opt-Out Packages Sent Out

On August 26, 2003, an opt-out package was e-mailed to all guaranty associations affected by the Legion and Villanova insolvencies with respect to both a Service Agreement and Early Access Agreement. Those states affected by the Legion/Villanova insolvencies (Legion: all states except North Carolina; Villanova: all states except Kansas, Mississippi, New Hampshire, Idaho, Utah, and Puerto Rico) have until September 25, 2003, to make their opt-out decision.

The Service Agreement contemplates an arrangement with the liquidator whereby the liquidator continues the administration of policies and claims payments through existing third-party administrator relationships. Claims funding will be advanced by the liquidator as early access payments. After a defined period of time, the participating guaranty associations must reimburse the estate for such claims payments due to the estate's liquidity crisis.

Please address questions concerning these agreements to Larry Henry at [email protected] or 703.787.4120.

Task Force Chair -Peter Leonard; Staff Contact -

MPC Meets in San Francisco

The Members' Participation Council met in San Francisco, Calif., on August 19 and 20, 2003. The following are summaries of task force insolvency reports presented during the meeting:

Staff Contact - Sean McKenna American Standard Life & Accident Insurance Company (Okla.)

Task Force Chair Andrea Bowers (S.C.) reported that a distribution to the guaranty associations that participated in the early access agreement should occur in the next few months. The liquidator filed a final order with the liquidation court in mid-August, and the estate is expected to close by the end of the year (see article above).

Task Force Chair - Andrea Bowers; Staff Contact - Bill O'Sullivan Centennial Life Insurance Company (Kans.)

Task Force Chair Mark Femal (Wis.) reviewed the estate's expenses as well as its recoveries and assets, including the $5 million KPMG/Jardine settlement that occurred in May 2003. He also briefed attendees on several "clean up" items related to the estate, noting that proof of claims matters are almost completely settled.

Task Force Chair - Mark Femal; Staff Contact - Diamond Benefits Life Insurance Company (Ariz.)/Life Assurance Company of Pennsylvania (Pa.)

Tad Rhodes (Okla.), chair of the DBL/LACOP Litigation Review Task Force, reported that the LACOP receiver will make a final distribution of $3 million to the guaranty associations, although no date has been set for the distribution. The DBL receiver has agreed to a plan to make a $2.3 million distribution to the guaranty associations in the near future.

Staff Contact - Paul Peterson Guarantee Security Life Insurance Company (Fla.)

Task Force Chair Frank Gartland (Ohio) reported that money from the three escrows being held by the GRC Trust (approximately $11.7 million) has been placed back into the trust. The task force is working with the liquidator in an effort to close the estate and make a final distribution by year-end. If this occurs, some funds may be held back to cover policyholders, who are owed approximately $6 million.

Task Force Chair - Frank Gartland; Staff Contact - Bill O'Sullivan National Heritage Life Insurance Company (Del.)

Task Force Chair Dan Orth (Ill.) briefed attendees on a mock trial he attended that was designed to provide the NHL litigation team with an idea of the potential settlement value of a suit the team is pursuing. In addition, he reported that an attempted bulk sale of the estate's remaining assets was unsuccessful. Several lawsuits, including the one mentioned above, remain.

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

Task Force Chair Tad Rhodes (Okla.) reported that the task force submitted comments on early access and refunding agreements circulated by the receiver, particularly relating to the statutory deposit provisions of the agreements. He also reported that the task force hopes to receive a distribution for administrative expenses by year-end.

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

Task Force Chair Neil Rucksdashel (Wash.) informed attendees that three assets remain in the estate: stock in the assuming company, municipal bonds with the Bank of New York, and subrogation claims in ongoing litigation. The receiver plans to dispose of the assets before closing the estate and has proposed that NOLHGA acquire one or more of the assets. A resolution giving the task force authority to perform due diligence on the assets and to acquire any assets that prove to be acceptable was passed by the Members' Participation Council.

Task Force Chair - Neil Rucksdashel; Staff Contact - Universe Life Insurance Company (Idaho)

Task Force Chair Tad Rhodes (Okla.) reported that judgments in favor of the receiver had been received in lawsuits brought by group trusts. All of the suits have been or will be appealed.

Task Force Chair - Tad Rhodes; Staff Contact - Paul Peterson

Variable Products, Plan of Operation Addressed at MPC Meeting

In other meeting news, Jim Mumford (NOLHGA Board), Kevin Griffith (Baker & Daniels), and Meg Melusen (NOLHGA staff) conducted a presentation for the Legal Committee's Coverage Issues Subgroup on variable products. Also, MPC Chair William Falck (Fla.) reported on the progress of the Guaranty Association Plan of Operation Working Group, which he chairs. An analysis of the plans of operation submitted by the guaranty associations has been completed, and the group hopes to have a draft Model Plan ready by the annual meeting or by the first MPC meeting in 2004.

Peter Leonard (Calif.), chair of the TPA Project, reported that the group plans to request information from 20 of the largest health insurance carriers in the country and ask for their help in identifying TPAs large enough to handle a national insolvency. Andrea Bowers (S.C.) announced that the first two MPC meetings in 2004 would be held in Naples, Fla. (February 16-18), and Seattle, Wash. (May 24-26).

Staff Contact - Sean McKenna

Commissioner Montemayor to Provide Welcoming Remarks at Annual Meeting

Texas Insurance Commissioner José Montemayor will provide the welcoming remarks at NOLHGA's 20th Annual Meeting, which will be held on October 28 and 29, 2003, at the Four Seasons Dallas at Las Colinas. Montemayor, a former major in the United States Air Force, was appointed Texas Insurance Commissioner by former Governor George W. Bush in 1999. He was reappointed in 2001 and 2003, and his new term runs through January 2005.

NOLHGA's 20th Annual Meeting will also feature presentations from the presidents of the NAIC and ACLI as well as presentations on topics such as the impact of the capital markets on the insurance industry, the role of ratings agencies, variable annuities, detecting financial shenanigans, and more. The meeting Web page, which will offer hotel and meeting information as well as a registration form, should be available the first week in September.