January 3, 2003 Kentucky Central Life Insurance Company (Ky.)

Liquidator Settles Mid-Central Shareholder Litigation

The liquidator for Kentucky Central has settled long-pending litigation with the preferred shareholders of Mid-Central Investment Company, a non-operating subsidiary of KCL.

This litigation was initiated by the preferred shareholders seeking to recover in excess of $13 million against the assets of Mid-Central as Mid-Central's preferred shareholders; KCL was Mid-Central's sole voting shareholder. The liquidator rejected the plaintiffs' demands on the grounds that KCL and Mid-Central were operated as a single business enterprise and that the assets of Mid-Central should accordingly be consolidated into the KCL estate and distributed in accordance with the statutory priority scheme. During the course of the litigation, the shareholders asserted that statutory pre-judgment interest continued to accrue; this could have raised the total value of the claim to more than $20 million if they prevailed.

At the request of the liquidator, NOLHGA, the Illinois and Texas life and health insurance guaranty associations, and the Kentucky Public Employees Retirement Fund intervened in the proceedings to support the liquidator's motion for substantive consolidation of Mid-Central and its assets into the KCL estate. Earlier this year, the shareholders and the liquidator renewed cross motions for summary judgment. After a hearing on the motions, the liquidator reached the settlement with the shareholders under which KCL would pay them $6 million in exchange for complete releases of all claims and a dismissal of the action. The task force and the Texas and Illinois guaranty associations reviewed the proposed settlement and accepted it with some technical corrections. By order dated December 19, 2002, the settlement was approved by the liquidation court and the case was dismissed.

This settlement brings to closure one of the four major outstanding litigation matters involving the estate and removes a cloud of uncertainty over $20 million in estate assets. Based on recent discussions with the liquidator, the task force anticipates that an early access distribution could be made early in 2003.

Task Force Chair - John Colpean   Staff Contact - Joni Forsythe

MPC Meeting Information Available On-line

Hotel and registration information for the next MPC meeting, which will be held February 17-19 at the Astor Crowne Plaza - French Quarter in New Orleans, La., can be found on the meeting Web page located at www.nolhga.com/meetings/mpc/february03/link.cfm. The page can also be accessed through the "Calendar" section of the NOLHGA Web site (www.nolhga.com/calendar/main.cfm) by clicking on "Details" for the February MPC meeting listing.

The MPC meeting Web page contains general meeting information as well as contact information for the Astor Crowne Plaza (the cut-off date for hotel reservations is January 27) and on-line meeting registration.

Preliminary schedules for committee and task force meetings and the MPC general session should be posted next week. Most task force and committee meetings will take place on February 18 (with the exception of the Accounting Issues Committee meeting, which will be held at noon on February 17), and the general session will take place on the morning of February 19. There will also be a Web site and Information Resource Center (IRC) refresher seminar held on the afternoon of February 17; enrollment for the seminar will take place in the near future.

  Staff Contact - Sean McKenna

NOLHGA Conducting Web Site User Survey

A short survey has been posted on the NOLHGA Web site (www.nolhga.com) to obtain feedback on changes to the site made over the past year and to solicit suggestions for additional improvements to the site. We would appreciate it if all Wire readers take a moment to fill out the survey the next time they go to the site.

When users visit the site's home page, a pop-up window will appear asking if they would like to take the survey now or in the future. Users who decide to take the survey at a later date will be reminded to do so in a week (the next time they visit the NOLHGA Web site's home page).

  Staff Contact - Sean McKenna