Confederation Life (MI)
Payout Annuity Block Closed
The date for the closing of the $2 billion Payout Annuity Block reinsurance with Pacific Life was accelerated. The closing occurred on July 15, rather than August 31. After the closing, the Separate Account will be terminated.
Payments from the Liquidator to the 51 participating guaranty associations of their approximately $21 million aggregate contributions to the Separate Account are expected by September 30. The guaranty associations will receive interest of up to three percent until the date of that payment. Arthur Andersen and NOLHGA will be working over the next few weeks to confirm the payment amounts with the guaranty associations.
"Spillover" from the Pacific Life transaction is expected to produce enough money to completely repay the guaranty associations that participated in the GIC Block disposition. Those amounts are approximately $50 million and will be paid later this year.
Task Force Chair - Chuck LaShelle; Staff Contact - Kentucky Central Life (KY)Litigation Update
As reported in the March 26 Wire, NOLHGA has been named as a party defendant, along with the Kentucky Central Life (KCL) Liquidator and Jefferson-Pilot, in an action to collect proceeds under a life insurance policy issued by KCL in 1984 insuring the life of Julianna M. Schubert. The complaint identifies NOLHGA as a party defendant and goes on to erroneously allege that NOLHGA is an insurance company licensed and doing business in the state of Washington.
Based on facts available to date, it appears that a claim was initially made under this policy and denied by the KCL estate because the claimant was unable to provide evidence of death or establish whether the death occurred before or after KCL was declared insolvent. New evidence has emerged out of a civil wrongful death proceeding in which a jury has found that the insured's probable date of death was June 30, 1989; i.e., prior to KCL's insolvency. The jury went on to conclude, however, that the insured was slain by her husband, who happens also to be her primary beneficiary under the policy. Accordingly, an issue has arisen as to who the proper legal beneficiaries and/or contingent beneficiaries may be. An appeal is pending in the civil case.
NOLHGA has not been served and has not entered any appearance in this case, though demand has been made that NOLHGA be dismissed as an improper party to this litigation. Thus far, defense counsel has taken no action with respect to NOLHGA's demand that it be dismissed. On June 24, 1999, the KCL Receiver and Jefferson-Pilot filed a joint answer to the complaint, including a counterclaim for interpleader and joinder of third party defendants asking that the court permit them to deposit the policy proceeds of $257,500 plus interest with the court pending final determination of the legal beneficiaries. Under the circumstances, we are hopeful that the case will be resolved quickly and dismissed from the Court's docket.
Task Force Chair - John Colpean; Staff Contact - Joni Forsythe Executive Life (CA)NOLHGA to Support Appeal of Gersenson Decision
The Pennsylvania Life and Health Insurance Guaranty Association ("PLHIGA"), has asked that NOLHGA consider filing a statement in support of its petition for review by the Pennsylvania Supreme Court in the Gersenson case. The Gersenson case involves a successful class action challenge to the ELIC Enhancement Agreement and the release of the participating guaranty associations thereunder. The judgment against PLHIGA was in excess of $16.5 million.
The issues in this case were first tried before the Philadelphia Court of Common Pleas. That court ruled that PLHIGA's participation in the plan did not satisfy its statutory obligations to Pennsylvania policyholders, and that the receivership court's approval of the plan was not entitled to full faith and credit because due process was not satisfied because the notice to policyholders soliciting opt-ins was found to be defective. The court entered a monetary judgment against the Pennsylvania Association in the amount of $16,647,974, plus per diem interest of $2,395, representing additional benefits to Pennsylvania policyholders to make up for the reductions in values of their policies.
The Association then appealed the decision to the Pennsylvania Superior Court. At the request of PLHIGA, NOLHGA filed an amicus brief on the merits with the Superior Court. By order dated April 8, 1999, the Superior Court affirmed the trial court's judgment. PLHIGA's request for reconsideration was thereafter denied by order dated June 16, 1999. PLHIGA has since announced its intention to file a "Petition for Allocator" seeking review of the Superior Court decision by the Pennsylvania Supreme Court, and has asked that NOLHGA file a brief statement in support of the petition in order to underscore the national importance of the issues and increase their chances of success on the Petition. After careful consideration, the amicus subgroup of NOLHGA's Legal Committee concluded that NOLHGA should weigh in with a brief filing in support of PLHIGA's petition, and has accordingly granted PLHIGA's request. The deadline for filing in this case is July 16, 1999.
Task Force Chair - Art Dummer; Staff Contact - Consolidated National Life (DE)Final Accounting Filed
Sally McCarty, Indiana Insurance Commissioner and Consolidated National Life Receiver, filed a Liquidator's Final Accounting with the Marion Circuit Court. As of May 31, 1999, the remaining known assets of the estate totaled $527,421. According to the final accounting, only Class 1 and Class 2 claimants will receive payment. There are not enough assets to pay claimants in Class 3 and lower classes. The affected guaranty associations (Alabama, Florida, Indiana, Illinois, Iowa, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Ohio, Washington, and Wisconsin) are expected to receive about $457,453 when the final distribution is made.
Task Force Chair - Christopher Wilcox;ETC.
August 25-27 MPC Meeting
The deadline for registering for the August 25-27 MPC Meeting is Monday, July 19. Please fax your registration to NOLHGA's Kristen Howell at 703.481.5209. The deadline for reserving a hotel room is also July 19. Please contact the Coeur d'Alene Hotel directly at 800.688.5253 to make arrangements. If you need additional information, contact Kristen Howell at 703.787.4114.
CALENDAR/CONFERENCE CALLS
July 23 MPC Executive Committee Conference Call, 11 a.m. EDT
August 6 Fidelity Bankers Task Force Meeting, O'Hare Marriott, Chicago
August 25-27 NOLHGA MPC Meeting, The Coeur d'Alene, Coeur d'Alene, ID