Senior Counsel for House Financial Services Committee To Speak at NOLHGA Annual Meeting
Robert Gordon, a senior counsel for the United States House of Representatives Committee on Financial Services, will speak at NOLHGA’s 19th Annual Meeting. Gordon was instrumental in drafting the House Terrorism Insurance bill, the Financial Services Antifraud bill, and portions of the Gramm-Leach-Bliley financial services reform legislation; he has also worked on a number of other enacted bills on liability reform, health care, and consumer safety.
NOLHGA’s 19th Annual Meeting will be held October 31 and November 1, 2002, at the Monarch Hotel in Washington, D.C.; an MPC meeting will take place on October 30. The meeting Web page, which will provide visitors with meeting and hotel information, speaker biographies, a preliminary schedule, and links to popular activities in the Nation’s Capital, should be on-line in the next week or so. Additional information about the Annual Meeting will also appear in upcoming issues of the Wire.
Staff Contact - Sean McKenna American Chambers Life Insurance Company (Ohio)GA Expenses Requested
The American Chambers task force has asked NOLHGA to collect inception through March 31, 2002, financial information as it relates to claims and expenses paid in connection with the insolvency of American Chambers Life Insurance Company. Last week, each affected guaranty association received a memorandum by e-mail requesting that claims and expense data be submitted to NOLHGA on-line at http://www.nolhga.com/proofofclaims/home.asp by July 31, 2002. The memorandum provides detailed instructions regarding navigation of the proof of claims section of the Web site and also requests that guaranty associations with nothing to report contact NOLHGA to so indicate. If there are any questions, please contact Meg Melusen (703.787.4130) or Gus Estrada (703.787.4131).
Task Force Chair - Chuck Gullickson; Staff Contact - Executive Life Insurance Company (Calif.)Judge Rules on FEC Litigation Trust Issue
On July 5, 2002, Los Angeles Superior Court Judge Alarcon issued a ruling on First Lincoln Holdings’ (FLH’s) motion to compel payment of interest and investment income on its distribution from the FEC Litigation Trust and to obtain a trust accounting. (Judge Lewin retired in 2001, and Judge Alarcon will now hear ELIC-related matters in the conservation court.) According to the 1992 trust agreement, FLH (one of the beneficiaries) was entitled to 25 percent of “distribution proceeds” between $30 million and $102 million. FLH received a distribution of $3.5 million in 1997 according to the terms of the trust. However, FLH argued that it was also entitled to interest and investment income from the distribution and sought a full accounting of the trust’s assets. The judge found FLH’s request for an accounting to be reasonable in light of the length of the trust term and ordered the trustee (the California Insurance Commissioner) to provide an accounting within 60 days. However, the judge denied FLH’s motion for an increased distribution, finding that under the terms of the trust agreement, “distribution proceeds” did not contemplate interest or investment income.
First Executive Corporation (FEC) was a parent company of ELIC. After ELIC was seized by the California Commissioner in April 1991, FEC filed for bankruptcy in May 1991. The bankruptcy court approved a plan that reorganized FEC into FLH. The plan also established the FEC Litigation Trust to receive litigation proceeds of pending claims brought by FEC and to distribute them according to the trust agreement. In addition to FLH, NOLHGA is one of the trust beneficiaries and stands to receive approximately $25 million in a distribution of the remaining trust proceeds anticipated later this year.
Task Force Chair - Art Dummer; Staff Contact - Kentucky Central Life Insurance Company (Ky.)Liquidator Wins Appeal in Case To Enforce Personal Guarantees
The KCL liquidator received a favorable Court of Appeals decision on July 12 in the appeal of two trial court decisions rebuffing the liquidator’s efforts to enforce nearly $100 million of personal guarantees from prominent Lexington developers Donald and Dudley Webb. In one decision, the trial court sided with the Webbs and concluded that oral promises between the Webbs and KCL’s former management made the Webbs’ unconditional written guarantees of business loans KCL made to Webb businesses unenforceable. In the other decision, the trial court imposed $1 million of sanctions on the liquidator and counsel and found that the liquidator defamed the Webbs. The Kentucky Court of Appeals rejected the reasoning of the trial court on substantially all issues and concluded that secret oral promises could not protect the Webbs from liability under their written personal guarantees. Several interested organizations, including NOLHGA, filed amicus briefs in the appeal. The Court of Appeals found that “[t]he briefs of amicus curiae have demonstrated to us that the public policy [of prohibiting oral promises from altering written guarantees in bank insolvencies] is just as well-reasoned in the case of the liquidation of KCL….”
Task Force Chair - John Colpean; Staff Contact - Joni ForsytheNOLHGA Welcomes New Indiana GA Executive Director
Jan Funk has been named the new executive director of the Indiana Life & Health Insurance Guaranty Association. Funk, formerly the vice president of law and compliance and chief compliance officer with Indianapolis Life Insurance Company, began work at the association on July 15. She replaces Phil Hammond, who recently retired. Contact information for the association office remains the same.
Staff Contact -Arkansas GA Address Correction
The July 12 issue of the Wire reported that the Arkansas Life & Health Insurance Guaranty Association has a new address. The address given was actually the new address of Steve Uhrynowycz, who provides administrative services for the association. The contact information for the association’s main office remains:
Arkansas Life & Health Insurance Guaranty Association
Dover Dixon Horne PLLC
425 West Capitol Avenue, Suite 3700
Little Rock, AR 72201
Phone: 501.375.9151
Fax: 501.375.6484
GA Contact Info
The offices of the Arizona Life & Disability Insurance Guaranty Fund and the Arizona Property & Casualty Insurance Guaranty Fund will move on July 29, 2002. The funds’ new contact information will be:
1110 West Washington, Suite 270
Phoenix, AZ 85007
Phone: 602.364.3863
Fax: 602.364.3872
The staff e-mail addresses will remain the same. Both offices will be closed on July 26 because of the move.
Staff Contact -