Executive Life Insurance Company (Calif.)
Request for Defeasance Computation Due by Year-End
As in prior years, any participating guaranty association (PGA) contemplating the possibility of defeasance in 2003 must make a request for a defeasance computation in writing to Aurora before year-end 2002. 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 May 30, 2003, 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 -Additional Monies from FEC Litigation Trust on Hold
As previously reported, NOLHGA has asked the California Liquidation Office to place the distribution of FEC Litigation Trust funds earmarked for certain GICs on hold pending our demonstration of guaranty association subrogation rights to the funds. NOLHGA will be confirming with Honeywell the calculations submitted by two guaranty associations. Once confirmed, the $1.6 million allocable to the Honeywell GICs will be released. If any additional guaranty associations have subrogation rights under settlements with Honeywell, please contact Meg Melusen (703.787.4130 or [email protected]) immediately to be included in the subrogation calculations.
Task Force Chair - Art Dummer; Staff Contact - First National Life Insurance Company (Ala.)Receiver Seeks Approval of Final Distribution
On December 6, the receiver for FNLIC filed a Petition for Approval of Final Settlement of the FNLIC Receivership and Discharge of the Receiver. The petition seeks the court’s approval of a proposed final distribution totaling $288,707.57, of which approximately $21,845.08 is proposed for distribution to the guaranty associations. Earlier this year, the guaranty associations received estate distributions totaling 100 percent of their policy claims ($1,978,001.80) and 79 percent of their expense claims ($373,541.50). If approved, the proposed final distribution would increase guaranty association recoveries on their expense claims to approximately 83 percent. No hearing has yet been scheduled.
Task Force Chair - Mike Marchman; Staff Contact - Joni ForsytheOhio Supreme Court to Determine Priority of Reinsurance Claims
On November 22, 2002, the Ohio Supreme Court provided notice that oral argument has been scheduled in the Ohio General case. This case involves a question as to whether claims arising under reinsurance contracts constitute “claims under policies” within the meaning of the Ohio priority statute and are therefore entitled to treatment as Class 2 policyholder-level claims.
This litigation arose out of the Ohio General Insurance Company insolvency and was initiated by a reinsurance creditor seeking to challenge the liquidator’s classification of its reinsurance claims as Class 5 (general creditor) claims under Ohio’s priority statute. The trial court affirmed the liquidator’s classification, finding legislative intent to afford direct policyholders priority over reinsurance claims. The Court of Appeals reversed, however, concluding instead that the term “policies” is broad enough to include all contracts of insurance. In reaching its conclusions, the Court of Appeals rejected arguments based on legislative intent and similarly rejected the reasoning set forth in case law from other states finding reinsurance claims to be ineligible for policy-level treatment based on public policy grounds.
The liquidator filed a request for review of the Court of Appeals decision by the Ohio Supreme Court. NOLHGA, the NAIC, and the NCIGF each filed amicus briefs in support of the liquidator’s request for review. In February, the Ohio Supreme Court ruled in favor of allowing the appeal, notwithstanding formal opposition by the reinsurer. The liquidator’s opening brief on the merits was filed in April, and NOLHGA, the NAIC, and the NCIGF each filed amicus briefs in support of the liquidator’s position on the merits. Briefing in this case is now complete, and oral argument has been scheduled for 9:00 a.m. on January 7, 2003.
If you have any questions about this matter, please contact Joni Forsythe at 703.787.4103 or [email protected].
Staff Contact - Joni ForsytheGuaranty Association Law Summaries Updated
NOLHGA’s law summary reports for state guaranty associations were updated on December 13 and are available at the “State Information” section of the NOLHGA Web site. The summaries can be viewed and printed by selecting a specific report from the “State Guaranty Laws and Provisions” drop-down menu, which lists the reports by topic. Users can also generate individual state reports by choosing a state from the “State Guaranty Association Pages” drop-down menu. In addition to summaries of state guaranty laws, the “State Information” section provides users with state guaranty association contact information, and each state guaranty association page contains a link to the corresponding state insurance department. If you have any questions about the law summaries, please contact Meg Melusen at 703.787.4130 or [email protected].
Staff Contact -