Executive Life Insurance Company (Calif.)
Request for Defeasance Computation
As in prior years, any participating guaranty association (PGA) contemplating the possibility of defeasance in 2006 must make a written request for a defeasance computation to Aurora before year-end 2005. 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 December 31 (i.e., May 30, 2006) to decide whether or not to defease. NOLHGA distributed a notice with additional information on this subject to the PGAs in early December 2005.
Task Force Chair - Art Dummer; Staff Contact - Investment Life Insurance Company of America (N.C.)Hearing on Final Order Scheduled
The motion for an order of final distribution and discharge of the liquidator was recently sent to all guaranty associations. A hearing on the motion is scheduled for December 12, 2005, in Raleigh, N.C. The order assigns the judgment against James D. Peterson to NOLHGA (on behalf of the guaranty associations), thus allowing the ILA estate to be closed. In addition, it allows for a holdback of funds to facilitate closing activities (liquidator expenses, payment of escheat amounts, etc.), approves the retention and destruction of certain records, and discharges the liquidator.
NOLHGA expects to receive approximately $1.5 million from ILA, which will be allocated to the states based on a method approved by the task force. Associations should note that as a result, the by-state allocation will be slightly different from that shown in the closing order. We anticipate receipt of the funds shortly after the approval is obtained, assuming no objections are filed.
Task Force Chair - Frank Gartland; Staff Contact - Paul Peterson London Pacific Life & Annuity Company (N.C.)TPA Review Completed
The review of the administration being performed by Philadelphia American Life Insurance Company on the London Pacific annuity policies whose owners elected to continue their policies with the guaranty associations ("stayback" policies) has been completed. The report was sent to affected guaranty associations via e-mail on December 2, 2005.
The review covered a range of items, such as verification of owner information, affected guaranty associations and their limits, recalculation of account value, and a comparison of benefits paid and guaranty association limits. The review was conducted by Bart Boles and Marvin Coffman (Texas), Peter Leonard (California), Lowell Miller (North Carolina), and Paul Peterson (NOLHGA). Mark Femal (Wisconsin) provided additional assistance in the planning of the review.
The task force hopes the report proves useful to the guaranty associations. Please feel free to contact any member of the review team should you have any questions on the report.
Task Force Chair - Frank Gartland; Staff Contact - Paul PetersonNAIC Approves New Model Receivership Act
On December 4, 2005, the NAIC's Executive (EX) Committee and Plenary formally approved and adopted a new model receivership act, subject to a technical correction requested by NOLHGA. The new receivership model, which has been designated as the Insurer's Receivership Model Act (IRMA), is the product of a multi-year effort involving much discussion, debate, and drafting by various working groups and committees within the NAIC. NOLHGA, the ACLI, NCIGF, and other industry representatives have been active participants throughout this process.
The IRMA draft submitted to Executive and Plenary was the subject of much ongoing debate and controversy among members of the insurance industry, the stakeholder community, and state regulators, particularly in light of the fact that the receivership model is intended to form the basis for new state accreditation standards. Formal comment letters were submitted by NOLHGA, the ACLI, NCIGF, PCI, AIA, the RAA, and others. Copies of these letters and the corresponding IRMA draft are available to member associations in the Publications section of NOLHGA's Web site under Special Reports, Forms & Documents (users will need their passwords to access the documents if they are not already logged in).
Two of the most controversial provisions addressed in the process of developing this model related to a proposal to enable domiciliary receivers to take over processing and administration of guaranty association-covered claims and to the handling of large-deductible reimbursements under property and casualty policies. These two provisions were ultimately excluded from the final IRMA draft, but they have been referred back to the Model Act Revisions Working Group for further analysis and study in 2006.
In addition, the Law and Intergovernmental Working Group, another subgroup of the NAIC's Receivership and Insolvency Task Force, will begin developing recommendations as to which portions of IRMA should be included as part of new state accreditation standards. The group has asked that interested parties submit written comments and recommendations by January 16, 2006, identifying the top 10 provisions they believe should be included as accreditation standards and the three provisions they believe should not be included. Recommendations should be submitted to NAIC attorney Karen Schutter at [email protected]. A call is to be scheduled toward the end of January or early February to discuss the comments and recommendations received and to develop final recommendations for submission to the NAIC's Financial Regulation Standards and Accreditation (F) Committee in conjunction with the March 2006 NAIC meeting. To participate in that call, contact Ms. Schutter with your e-mail address and a request to be included on the distribution for the call notice.
In light of the dual tracks being pursued by these working groups on the issues referenced above, and ongoing efforts to complete the review and update of the NAIC's property and casualty guaranty fund model act, work that was scheduled to begin in early 2006 on a project to review the NAIC's Life and Health Insurance Guaranty Association Model Act has been postponed until further notice. NOLHGA will continue to monitor developments with respect to each of these matters and will continue to provide updates to its members. In the meantime, please feel free to contact Joni Forsythe at 703.787.4103 if you have any questions.
Staff Contact - Joni Forsythe