American Life Assurance Corporation (Ala.)
Former Shareholder's Appeal Pending
As noted in the October 15, 2004, NOLHGA Wire, ALAC's former shareholder, R. K. Hunter, has filed an appeal challenging the trial court's June 18 order approving final distributions, dissolution of the company, and closing of the ALAC estate. The basis for the appeal is Mr. Hunter's ongoing objection to the trial court's denial of broad-scale discovery in advance of the closing hearing. Mr. Hunter previously challenged the trial court's denial of discovery by filing petitions with the Civil Court of Appeals and the Alabama Supreme Court just days before the final hearing on the petition to close the estate. Both courts denied Mr. Hunter's petitions.
Notwithstanding these rulings, Mr. Hunter has brought the issue once again on appeal, and the matter is pending on the docket of the Alabama Supreme Court. Following multiple extensions, Mr. Hunter's opening brief was filed on December 22 (a copy is available on NOLHGA's IRC). Mr. Hunter asserts in his opening brief that the trial court's denial of broad-scale discovery on the eve of trial was an abuse of discretion and asks that the Alabama Supreme Court reverse the trial court's judgment below and remand for further discovery and a de novo hearing. Mr. Hunter further argues that there are additional witnesses whose testimony he would like to obtain. Mr. Hunter offers no explanation for his failure to subpoena those witnesses for trial, but rather appears to be seeking a second opportunity to do so. The receiver's response brief is due filed on or about January 12, 2005. We will continue to monitor developments in this case.
Task Force Chair - Mike Marchman; Staff Contact - Joni Forsythe Coastal States Life Insurance Company (Ga.)Estate Makes Final Distribution
On December 29, 2004, NOLHGA distributed $3,383,543 to the guaranty associations affected by the Coastal States insolvency. Thanks to the efforts of the task force working closely with the receiver's office, a number of administrative hurdles and accounting issues were resolved, and the estate is now closed. This final distribution to the guaranty associations was based on the expenses approved by the receiver, which included administrative expenses and the Class 3 claims based on the assumption transaction true-up. On September 17, the receivership court in Georgia approved the receiver's petition to close the estate. The receiver filed a certificate of compliance as to distribution and final financial accounting with the court on December 16.
Task Force Chair - Jack Falkenbach; Staff Contact - Consumers United Insurance Company (Del.)Early Access Distribution Made
On December 21, 2004, NOLHGA forwarded checks in the amount of $3 million to the guaranty associations affected by the Consumers United Insurance Company insolvency. The checks--sent to NOLHGA by the receiver's office--are an early access distribution against policyholder-level claims. Affected states not receiving checks have statutory deposits still being held by their state insurance departments. An additional $1 million for administrative claims will be distributed in early January 2005.
The total $4 million distribution was made possible by the sale of the "Parkside" real estate, which was one of the last remaining assets in the Consumers United estate. After being the subject of litigation over the last few years, the property sold for $11.1 million pursuant to a court-approved bidding agreement in September, and closing took place in October. The estate netted just over $6 million after the transfer tax, broker's fees, legal fees, and other closing costs. Some funds are being retained by the estate for the cost of winding up the estate's affairs.
Task Force Chair - Peggy Parker; Staff Contact -