American Chambers Life Insurance Company (Ohio)
Claims Processing Winds Down
In November 2001, the toll-free phone line and the West Virginia post office box used for American Chambers claims were closed. Phone calls and mail were forwarded to the LaShelle, Coffman & Boles (LCB) toll-free phone line and mailbox. Since that time, LCB has researched claims receipts and forwarded its findings to the affected guaranty associations. Although claims calls and mail are still being received by LCB, the volume has significantly diminished. Based on this decreased claims inquiry volume and the fact that the American Chambers policies protected by the guaranty associations terminated two years ago, LCB will close the toll-free phone line and mailbox at the end of January 2003. Claims mail received prior to that date will be forwarded to the appropriate guaranty associations; mail received afterward will be returned as undeliverable.
In August 2002, LCB distributed to the guaranty associations compact discs containing eligibility data for the American Chambers policies in their states. LCB has recently assembled a database of the payment and zero-pay American Chambers claims that were processed by Antares Management Solutions and funded by the guaranty associations. The LCB memorandum regarding use of the eligibility data and the Microsoft Access files of the eligibility and claims data have been added to the NOLHGA Web site, and guaranty association administrators can download these files to research future claims inquires. For assistance downloading these files from the NOLHGA site, contact Aimee Frye (703.787.4115 or [email protected]). Questions regarding use of the data should be directed to Bart Boles at 512.481.3000.
Task Force Chair - Chuck Gullickson; Staff Contact -Court of Appeals Reverses Judgment
In November 2002, the Ohio Court of Appeals reversed a decision by the liquidation court allowing the American Chambers estate to retain $2 million sought by a ceding company creditor. The creditor, Protective Life, argued that the $2 million at issue actually comprises premiums that should have been returned to it and not left in the estate. In the same opinion, the Court of Appeals again reversed the liquidation court by ruling in favor of the liquidator on a second set of issues, saying that the other disputes between Protective Life and the liquidator, which grew out of a complex group of administrative and reinsurance agreements, should not be arbitrated, but instead decided by the liquidation court.
The liquidation court plans to hold a status conference in the future to discuss with the parties what steps should be taken on remand. For a copy of the Court of Appeals decision, please contact Aimee Frye (703.787.4115 or [email protected]).
Task Force Chair - Chuck Gullickson; Staff Contact - Centennial Life Insurance Company (Kans.)KPMG Subpoena Served on NOLHGA
On December 16, KPMG served a broad subpoena on NOLHGA for documents related to Centennial and its liquidation. That subpoena came in connection with the liquidator’s suit against KPMG in the liquidation court for alleged negligence and breach of contract growing out of KPMG’s service to Centennial prior to liquidation. The liquidator has also sued a reinsurance broker for alleged breach of fiduciary duty. The Centennial Task Force’s litigation subgroup will be reviewing the subpoena with legal counsel and making an appropriate response.
Task Force Chair - Mark Femal; Staff Contact - First National Life Insurance Company (Ala.)Hearing on Petition for Approval of Final Distribution
On December 17, the receivership court conducted a hearing with respect to the receiver’s Petition for Approval of Final Settlement of the FNLIC Receivership and Discharge of the Receiver.
At the close of the hearing, the court granted the petition and entered an order approving the final settlement and discharge of the receiver. The order provides for the receiver to make a final distribution of $142,349.26 to general creditors, of which $21,845.08 is to be paid to the guaranty associations on their expense claims. 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). The final distribution would increase guaranty association recoveries on their expense claims to approximately 83 percent.
The order also directs that the receiver retain a holdback of $146,358.31 to pay the 2002 receivership expenses itemized in the receiver’s petition and incorporated as Exhibit A to the order. To the extent any funds remain after payment of those expenses, the order provides for distribution of those funds to general creditors on a pro-rata basis.
With respect to closing the estate, the order authorizes the receiver to file final tax returns and to dissolve the corporation as soon as practical after December 31, 2002. The books and records of the estate are to be retained for a period of three years from the filing of the final tax returns. All other stored records no longer necessary for the administration of the estate may be destroyed 60 days after entry of the order, i.e., on or after February 15, 2003.
Task Force Chair - Mike Marchman; Staff Contact - Joni Forsythe National Heritage Life Insurance Company (Del.)GA Expense Data Being Collected
NOLHGA is collecting financial information as it relates to claims and expenses paid in connection with the NHL insolvency incurred from inception through September 30, 2002. This week, each affected guaranty association received a memorandum by e-mail requesting that claims and expense data be submitted to NOLHGA on-line at this link by January 15, 2003. The memorandum provides detailed instructions regarding navigation of the proof of claims section of the Web site and also requests that guaranty associations with nothing to report contact NOLHGA to so indicate. If there are any questions, please contact Meg Melusen (703.787.4130 or [email protected]) or Gus Estrada (703.787.4131 or [email protected]).
Task Force Chair - Dan Orth; Staff Contact - Reliance Insurance Companies (Pa.)Omnibus Proof of Claim Slated for Early 2003
The task force will be filing an omnibus proof of claim for all guaranty associations in early 2003. Therefore, it is not necessary for associations to file an individual proof of claim.
Task Force Chair - Tad Rhodes; Staff Contact -Insolvency Financial Reports Posted On-line
The 2002 edition of the two-volume Insolvency Financial Reports, which were mailed to guaranty associations in past years, has been posted on NOLHGA’s Web site in the password-protected extranet, in the “Publications—Special Reports” section. These reports, which cover all the insolvencies NOLHGA has been involved with, contain general background information, guaranty association obligations, expenses, and other financial information. The reports list this information by both state and individual insolvency.
Please note that only guaranty association administrators can access these reports. Also, as in 2001, the reports will not be mailed; they are available only as PDF files on the NOLHGA Web site.
Should you have any problems accessing the files, please contact Paul Peterson (703.787.4119 or [email protected]) or Bryan Owen (703.787.4112 or [email protected]).
Staff Contact - Paul PetersonConseco Files for Bankruptcy Protection
On December 17, Carmel, Ind.–based Conseco Inc. filed for Chapter 11 bankruptcy protection in Chicago after reaching tentative agreements with banks and bondholders on a financial restructuring plan to reduce the company’s debt; holders of preferred securities did not reach any agreement with the company. The filing, which has been described by some sources as the third-largest bankruptcy in U.S. history, does not include any of Conseco’s insurance subsidiaries. Conseco has stated that its insurance subsidiaries are financially stable, and the Associated Press reported that insurance regulators monitoring the companies agree.
According to the AP, Conseco has $1.5 billion in bank debt and owes bondholders approximately $2.5 billion. As part of its restructuring plan, the company would sell one of its subsidiaries, Conseco Finance Corporation, to CFN Investment Holdings LLC. The proposed sale price for the company, which oversees Conseco’s portfolio of mobile-home loans, is equal to the company’s secured debt.
In a company press release concerning the bankruptcy filing, Conseco President and CEO William J. Shea stated that the agreements with the banks and bondholders will “reduce the company’s leverage to a level that, together with our targeted operating performance, will support the efforts by the company’s insurance subsidiaries to reclaim an ‘excellent’ financial strength rating from A.M. Best following the restructuring.”
Staff Contact -No Wire Next Week
There will be no NOLHGA Wire next week (December 27). Also, the NOLHGA office will be closing at 1:00 p.m. on December 24 and will be closed December 25 for the Christmas holiday.
Staff Contact - Sean McKenna