Bankers Commercial Life Insurance Co. (Texas)
NOLHGA Disburses $500,000 in Premium Collections
On Dec. 5, NOLHGA disbursed the remaining $500,000 of premium collections made by United Teacher Associates ("UTA") that had been held in escrow. Originally, $1 million of premium collections was held back to help fund TPA expenses paid through NOLHGA, with half of this amount being paid out in August.
This payment completes the disbursement of amounts collected through UTA and the BCL estate, other than for miscellaneous items received by UTA and outstanding checks. NOLHGA staff is in the process of reconciling these remaining items with UTA and anticipates completing the process during the first quarter of 2002.
Task Force Chair - William Falck; Staff Contact - Paul Peterson Executive Life Insurance Co. (Calif.)Request for Defeasance Computation
As in prior years, any participating guaranty association (PGA) contemplating the possibility of defeasance in 2002 must make a request for a defeasance computation in writing to Aurora before year-end 2001. According to the Enhancement Agreement, Aurora then has 60 days after year-end to calculate the PGA's defeasance amount, and the PGA has until the 150th day after the preceding Dec. 31 (i.e., May 30, 2002) to decide whether or not to defease. NOLHGA distributed a notice with additional information on this subject to the PGAs this week.
Task Force Chair - Art Dummer; Staff Contact - Inter-American Life Insurance Co. (Ill.)Distribution Checks to Be Mailed Next Week
As previously reported, the receiver for Inter-American Life Insurance Co. will be making a distribution to the affected state guaranty associations and to uncovered policyholders out of the Inter-American estate. Collectively, the guaranty associations will receive $2,977,680; distribution checks will be sent directly to each guaranty association. According to OSD representatives, the checks will be mailed Dec. 10 or 11. If your association does not receive its check, please contact NOLHGA so that we can follow up with the OSD. In the meantime, please do not hesitate to call if you have any questions.
Task Force Chair- William Falck; Staff Contact - Joni Forsythe Thunor Trust Cos.Second Circuit Rejects Creditors' Motion to Intervene in Forfeiture Actions
On Nov. 20, the U.S. Court of Appeals for the Second Circuit affirmed a lower court's rejection of a motion filed by creditors of First National Life Insurance Company of America (FNLIC) seeking to intervene in the government's civil forfeiture proceedings against Martin Frankel. The forfeiture proceedings were filed by the federal government in 1999 seeking forfeiture of property believed to be connected to a money-laundering scheme. Receivers for several of the insolvent Thunor Trust insurance companies, including the receiver for FNLIC, filed claims in the forfeiture proceedings seeking recovery from the proceeds of those actions on behalf of the insolvent insurers.
Thereafter, two of FNLIC's creditors--Peoples Benefit Life Insurance Co. and Veterans Life Insurance Co.--sought to intervene in those proceedings, claiming an interest in the Frankel property as proceeds of a constructive trust arising out of a failed assumption reinsurance agreement with FNLIC. They also filed proofs of claim against the FNLIC estate.
In support of their motion to intervene, Peoples Benefit and Veterans Life alleged that they entered into assumption reinsurance agreements with FNLIC pursuant to which they were to transfer various blocks of business to FNLIC along with $14.7 million in reserves for that business. FNLIC, in turn, was required to return any portion of the insurance business that was not ultimately approved for transfer, along with the reserves for that business. The companies further alleged that the agreements were never finalized and approved, and that Frankel absconded with the $14.7 million reserve fund. According to Peoples Benefit and Veterans Life, the reserve fund was held by FNLIC in constructive trust for their benefit pending closing and final approval of the agreements. The existence of this trust, they argued, creates a direct interest in Frankel's property sufficient to permit intervention in the forfeiture proceedings.
The court disagreed, explaining that the proceeds of the reserve fund held in trust by FNLIC are not directly traceable to any of the subject property or proceeds of the forfeiture actions and that the creditors' interest in the Frankel property was therefore too speculative to support intervention as of right in the forfeiture proceedings. The court further reasoned that if the money in the reserve fund was stolen, it was stolen from FNLIC, and that the FNLIC receiver was the proper party to pursue the claims against any proceeds of the forfeiture proceedings. Permitting these creditors to intervene in the forfeiture proceedings, the court said, would allow them to circumvent the state receivership proceedings and potentially gain an advantage over policyholders and other creditors of FNLIC. Accordingly, permissive intervention was similarly denied.
Task Force Chair - John Colpean; Staff Contact -MPC Meeting Information Available Next Week
Hotel information for the next meeting of the Members' Participation Council, which will be held Jan. 29-31, 2002, at the Westin Savannah Harbor Resort in Savannah, Ga., should be sent out to MPC members next week. Preliminary schedules for task force meetings and the general session will also be included.
Members wishing to make their reservations now can contact the Westin at 800.937.8461 or 912.201.2023. Please mention NOLHGA to receive the discounted room rate of $179 a night. The cut-off date for reservations is Jan. 7.
Currently, there is limited room availability on Jan. 28 and no availability on Jan. 31. However, the preliminary schedule has only afternoon meetings occurring on Jan. 29, giving most members the opportunity to arrive that morning. In addition, it is anticipated that rooms for Jan. 31 will become available after Dec. 26, when a large block of rooms being held by another group meeting at the hotel will be opened to other guests.
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