Members' Participation Council: 48 Associations Represented At First MPC Meeting Of The Year
Eighty-four people representing 48 guaranty associations attended the year's first Members' Participation Council meeting Feb. 24-25 in San Diego. Also in attendance in addition to administrators, staff, guests and consultants: Ron Rosen, deputy liquidator of American Western Life Insurance Company; Ray Barrios, general counsel for the Utah Liquidation Office; Scott Fleming, an attorney from the Utah Attorney General's office; Joe Dimemo, Pennsylvania director of liquidations; and Ira Silverstein, the Pennsylvania liquidator's counsel for Summit National Life and EBL.
Mssrs. Dimemo and Silverstein discussed the Pennsylvania Insurance Department's recent settlement with the law firm of Morgan, Lewis & Bockius. The firm agreed to pay $35 million to settle the insurance department's claim that the firm was partly responsible for ex-partner Allen W. Stewart's looting of the two Pennsylvania-domiciled insurers. Mr. Stewart was convicted in December in federal court in Pennsylvania on fraud, racketeering and other charges related to the 1994 collapse of two insurance companies he owned.
For the first time, three task forces held their meetings as part of the general counsel session. The Confederation Life, American Standard Life & Accident and Executive Life Task Forces participated in this new format which, over time, should enhance understanding and increase participation by affected members. Although task force meetings always are open to all members, scheduling them in conjunction with the general session - as opposed to in small, separate rooms - allows every member the opportunity to absorb the issues, participate in the discussion and ask questions.
The Administrators' Education Steering Committee facilitated a discussion on proofs of claim. As opposed to the typical presentation, this topic was presented as a roundtable, whereby attendees could jump in at any time with a question, comment, or experience. Frank Gartland (Ohio), Chuck Gullickson (South Dakota) and Chuck Renn (Missouri) moderated the discussion, which included some common questions about the proof of claim process. Members offered examples of their own experiences as they related to the questions and the moderators presented their views, shaped by their experience in the guaranty system and the life and health insurance industry. The discussion generated a number of questions from members about what should and should not be included in an omnibus proof of claim. Many Council members supported the filing by NOLHGA of an omnibus proof of claim on their behalf.
The next MPC meeting is scheduled June 1-3 in Portland, Maine, at the Sheraton Tara Hotel. A special reception, co-hosted by the Maine guaranty association and NOLHGA, is being planned.
Staff Contact - Sean McKenna Alabama Life/American Educators Life (AL)Receiver, Alabama Guaranty Association Settle With Former Owner
The Alabama receiver and representatives of the Alabama Life and Disability Insurance Guaranty Association on Feb. 20 closed a settlement agreement with the former owner of Alabama Life Insurance Company, American Educators Life Insurance Company and Consolidated National Life Insurance Company. The estate of Consolidated National is not a party to the settlement agreement, which provides for the purchase of certain mortgages and real estate by the companies' former owner, the return of certain personal property to him and the dismissal of all litigation. The Alabama guaranty association spearheaded the effort to negotiate a settlement agreement with the former owner, who had filed numerous law suits against the three estates that were hampering both the estates' asset recovery efforts and their closing. The settlement proceeds of $1.2 million will be distributed among the three estates and the affected guaranty associations.
Task Force Chair -- Chris Wilcox; Staff Contact - Paul Peterson Executive Life Insurance Company (CA)NOLHGA ON FEB. 11 FILED with the Mississippi Supreme Court an amicus curiae brief and motion for leave to file. The filing follows a request from the Mississippi Life and Health Insurance Guaranty Association and an affirmative vote by the Amicus Subgroup of NOLHGA's Legal Committee. The appeal involves the ongoing efforts of a pension plan liquidating trust to obtain guaranty association coverage for its unallocated annuity contract, notwithstanding the Pension Benefit Guaranty Corporation's exclusion in the Mississippi Life and Health Insurance Guaranty Association Act, which expressly excludes coverage for any unallocated contract issued to employee benefit plans otherwise protected by the PBGC.
The claimant, on appeal, challenges the PBGC exclusion, arguing that no PBGC payments were made in this case, that the contracts were issued prior to enactment of the PBGC exclusion in Mississippi, and that any retroactive application of the exclusion violates the contracts clause of the U.S. and Mississippi constitutions. Each of these arguments was rejected by the trial court.
In a Feb. 18 order, the Mississippi Supreme Court granted NOLHGA's motion for leave to file its amicus brief recognizing NOLHGA's interest and appearance in the case, although it denied NOLHGA's request to participate in oral argument. The claimant has been given an extension until March 12 to file its reply brief. No hearing has yet been scheduled.
In other ELIC news, the seventh installment bill will be resent March 2 to several participating guaranty associations that indicated they hadn't yet received them. Those associations are: North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming. Associations not on this list who have not received the billing statement should contact Angela Franklin at 703/787-4105.
Task Force Chair -- Art Dummer; Staff Contact - National Heritage Life Insurance Company (DE)THE ESTATE HAS filed several lawsuits against many individuals and entities responsible for the failure of National Heritage Life Insurance Company, including a federal Racketeer Influenced and Corrupt Organizations Act (RICO) case in federal district court in Orlando, Fla. The complaint includes 17 claims against 59 defendants based on RICO and state law fraud claims. During the Feb. 24 task force meeting with the deputy receiver's counsel and attorneys, the task force discussed the status of the estate's litigation cases and results to date. They also discussed the federal government's criminal cases against some of the same defendants.
In other NHL news, Fred Marro, who was acting as the deputy receiver's general counsel, has been appointed co-deputy receiver.
Task Force Chair -- Dan Orth; Staff Contact -ETC.
Assessment Surveys Due!
Guaranty associations are reminded that completed surveys on assessments were due Feb. 27. Surveys were mailed Jan. 16 to all members. Please return them to Krista Plumhoff as soon as possible. Survey questions may be directed to Dana Carroll at 703/787-4118.
Retire? Who, me?
Former NOLHGA President Jack H. Blaine has accepted an of counsel position in the Washington, D.C. law firm of Sutherland, Asbill and Brennan. The firm is located at 1275 Pennsylvania Ave., N.W., Washington, D.C. 20004-2404. Phone: 202/383-0100; fax: 202/637-3593.
MPC and ADS Assessments Due
Fourth-quarter assessments for 1997 Members' Participation Council insolvency expenses and Assessment Data Survey expenses were mailed Feb. 26 to affected guaranty associations. Prompt payment is greatly appreciated! Please direct assessment questions to Jay Jagolta at 703/787-4109.
CALENDAR
March 14-18 NAIC Spring National Meeting, Salt Lake City
Staff Contact - Sean McKennaCONFERENCE CALLS
March 3 ELIC Task Force, 4 pm EST
Staff Contact - Sean McKenna