MPC Meets in Tampa

The following are summaries of insolvency status reports presented at the NOLHGA Members' Participation Council meeting, held February 24-25 in Tampa, FL. In addition, presentations for Executive Life, Fidelity Bankers Life and Mid-west Life were held in closed sessions.

American Standard Life (OK)

Task force chair Andrea Bowers updated attendees on efforts to resolve a secured claim filed by the Pennsylvania guaranty association and LACOP against the ASL estate. Bowers also noted that within the next week the task force would be requesting updated claims information.

Task Force Chair - Andrea Bowers:   Staff Contact - Bill O'Sullivan Centennial Life (KS)

Task force financial consultant Bob Tice estimated that as of June 20, 1999, the potential shortfall in the Centennial estate could be in the range of $7-8 million, or 10 percent of policyholder claims. Tice also apprised attendees of task force efforts to complete an assumption reinsurance agreement for the LTD block. The task force has opted, with the support of the Centennial Receiver, to attempt to negotiate an agreement with the existing reinsurer of the block, and the MPC approved the task force's approach.

Task force counsel Charlie Richardson provided an overview of litigation activity in the case. Centennial's litigation with Universe Life has been settled subject to approval of the Idaho and Kansas receivership courts. Among other provisions, the agreement allows the release of $11.2 million of the $36 million in proceeds from the Centennial Receiver's prior settlement with AXA. The hearing was continued by the Idaho court because of an objection filed by certain policyholders of Universe Life group policies in Idaho.

Finally, NOLHGA's Bill Howard briefed the attendees on estate distributions and told attendees that the task force has completed a "lessons learned" paper which will be distributed in mid-March.

Task Force Chair - Mark Femal:   Staff Contact - Kentucky Central Life (KY)

Task force chair John Colpean told attendees that the rehabilitation plan ends on May 31 and that a final guaranty association true-up payment will be made on that date. Colpean also noted that he expects that most of the real estate remaining in the estate will be sold by the end of the year.

Legal counsel Kevin Griffith provided an update on issues related to minimum crediting rates on certain policies that had been assumed by Jefferson Pilot.

Task Force Chair - John Colpean;   Staff Contact - Joni Forsythe Mid-Continent Life (OK)

Task force chair Sonya Ekart apprised attendees that the receiver's proposed rehabilitation plan, which would have required no guaranty association support, was placed on hold. Ekart noted that the judge overseeing the liquidation permitted intervention and an overbid process for the losing bidders in the case which will delay the resolution of the case. Ekart also said that the receiver in the case had filed a petition for a writ in the case with the Oklahoma Supreme Court requesting that the Court order the liquidation court either to accept or reject the plan without amendment. The task force will continue to monitor the proceedings.

Task Force Chair - Sonya Ekart;   Staff Contact - Bill O'Sullivan National Affiliated Investors Life (LA)

Task force chair Chuck Gullickson reported on task force efforts to transfer the policies written by National Affiliated. Gullickson noted that an initial bid received in November was ultimately rejected by the task force and by the Louisiana Department of Insurance. A second round of bidding ensued and two bids were received, with the task force expecting to negotiate an agreement by mid-March with the lead bidder. According to Gullickson, the task force expects that an initial closing of the agreement could occur by mid 2000.

Task Force Chair - Chuck Gullickson;   Staff Contact - Paul Peterson National Heritage Life (DE)

Task force chair Dan Orth told attendees that the task force was currently focused mainly on monitoring the Receiver's extensive litigation. Legal counsel Frank O'Loughlin brought attendees up to date on the status of the criminal and civil litigation in the case. On the criminal side, federal prosecutors were successful in obtaining a conviction of Sholam Weiss, an associate of NHL principals, on 78 felony counts. Weiss, who fled the jurisdiction of the court just prior to his conviction, was sentenced to a term of 845 years, the longest federal sentence in history. Another NHL principal was sentenced to 745 years.

Now that the criminal litigation has ended, O'Loughlin noted that active prosecution of civil litigation by the receiver could begin.

Task Force Chair - Dan Orth;   Staff Contact - Pacific Standard Life (CA)

Task force chair Bart Boles provided attendees with some background on the case and noted that the total cost of the insolvency to guaranty associations totaled approximately $28.4 million. Boles reported that an order closing the estate was issued in December and that the order provided that any future recoveries would be distributed to guaranty associations. Boles predicted that guaranty associations could expect to receive a total of $325,000 in final distributions from the estate by June.

Task Force Chair - Bart Boles;   Staff Contact - Paul Peterson Settlers Life (VA)

Task force chair Mike Marchman presented to the MPC a final report on the Settlers Life Insurance case. The report, which contained a request that the MPC discharge the task force, was accepted unanimously by the MPC. Affected members not present at the meeting can obtain a copy of the report from Holly Wilding at [email protected].

Task Force Chair - Mike Marchman;   Staff Contact - Thunor Trust Companies

Task force chair Chuck LaShelle reported on the recent activities of the Task Force, which have been focused largely on the completion of assumption reinsurance agreements for the Thunor companies. In the case of Franklin American, the initial company selected withdrew their proposal. This has required a second round of supplemental requests for proposals to the companies which had made proposals in November 1999. Due diligence on Franklin American ends on March 3, with proposals due by March 6.

LaShelle also noted that the task force had begun focusing its efforts on defining with receivers the task force role in monitoring the receivers' asset recovery efforts. Guaranty associations have already funded over $100 million amongst the Thunor companies and recovery of those funds will be both a high priority of the task force and a complex undertaking given the multiple domicilary states, the issues involved, and the Federal involvement in the case.

LaShelle apprised attendees that the true-up closing with Madison National for the assumptions of business from Family Guaranty Life, First National Life Insurance Company of America, Franklin Protective Life, and International Financial Services Life (IFS) had been postponed until March. Finally, the task force expects to file shortly an Omnibus Proof of Claim on behalf of all affected guaranty associations in the IFS case.

Task Force Chair - Chuck LaShelle;   Staff Contact -

CALENDAR/CONFERENCE CALLS

March 21 Claims Valuation Subgroup Meeting, Orlando, FL
May 9 Legal Committee Meeting, Orlando, FL
July 20-21 NOLHGA Legal Seminar, Boston, MA