MPC Meets in Boston

The Members' Participation Council (MPC) met in Boston on July 16, 2008. The following are summaries of task force insolvency reports presented during the meeting:

  Staff Contact - Sean McKenna Benicorp Insurance Company (Indiana)

Task Force Chair Frank Gartland (Ohio) provided an update of the costs of this insolvency and reported that an early access distribution of approximately $6 million should be made in August.

Task Force Chair - Frank Gartland;   Staff Contact - Paul Peterson Executive Life Insurance Company (California)

A panel featuring Task Force Chair Art Dummer (Utah), Jack Falkenbach (Delaware), Joe Horvath (Pennsylvania), Chuck Gullickson (South Dakota), and Chuck Renn (Missouri) discussed the key issues relevant to ELIC participating guaranty associations considering defeasance.

Task Force Chair - Art Dummer;   Staff Contact - Bill O'Sullivan Executive Life Insurance Company of New York (New York)

The ELNY MPC made a closed-session presentation.

Task Force Chair - Jack Falkenbach;   Staff Contact - Life & Health Insurance Company of America (Pennsylvania)

Task Force Chair Linda Becker (Kansas) reviewed the liquidation/distribution plan and reported that the final true-up payment of approximately $208,000 had been received from Philadelphia American in early July. The task force continues to pursue alternatives for the remaining long-term-care block, and the final settlement package was sent to participating guaranty associations in June.

Task Force Chair - Linda Becker;   Staff Contact - Lincoln Memorial & Memorial Service Life Insurance Companies (Texas)

The LM/MS MPC made a closed-session presentation on a proposed Liquidation Plan and Early Access/TPA Service Agreement. A resolution was approved by the membership authorizing NOLHGA to execute necessary documents and initiate a 30-day opt-out process once signed. States not electing to opt-out must submit participation certificates within 45 days.

Task Force Chair - Tad Rhodes;   Staff Contact - Paul Peterson Reliance Insurance Company (Pennsylvania)

Task Force Chair Tad Rhodes (Oklahoma) reported briefly on the large disability policy issue and added that a memo from Project Manager Fred Buck giving the status of all claims was distributed to the affected states.

Task Force Chair - Tad Rhodes;   Staff Contact - States General Life Insurance Company (Texas)

Task Force Chair Tad Rhodes (Oklahoma) reported that the estate is winding down and efforts are being made to prepare for closing. However, a recent adverse ruling in pending officer and director litigation may result in additional delays before the estate can be closed.

Task Force Chair - Tad Rhodes;   Staff Contact - Joni Forsythe The Thunor Trust Companies

Task Force Chair John Colpean (Michigan) reviewed a number of recent early access distributions from various Thunor Trust receiverships, totaling approximately $50 million. The distributions to the affected guaranty associations will have to be "trued-up" at a later date after allocation methodology issues are resolved. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) updated attendees on the asset-recovery litigation still underway.

Task Force Chair - John Colpean;   Staff Contact - Universe Life Insurance Company (Idaho)

Task Force Chair Tad Rhodes (Oklahoma) reported that settlement negotiations with the trusts that had objected to the treatment of their claims and have been pursuing litigation against the Universe Life estate have been completed successfully. The agreement releases the guaranty associations from any liability regarding the trust certificate holders and should allow for the closing of the estate.

Task Force Chair - Tad Rhodes;   Staff Contact - Paul Peterson

MPC Meeting Features Presentations on GA Model Act, Financial Services Modernization & More

The MPC general session also featured a presentation on possible changes to the NAIC Life & Health Insurance Guaranty Association Model Act by Dave Perry (Montana). NOLHGA President Peter Gallanis reported on recent developments concerning financial services modernization on Capitol Hill, and MPC Chair Bart Boles (Texas) reported on the activities of the MPC Executive Committee.

Many of the presentations from the MPC meeting are available to authorized users on the NOLHGA Web site. Users should go to the "Events" section and use the drop-down menus at the bottom of the page to select the appropriate MPC meeting. Users will have to log in the access the presentations.

  Staff Contact - Sean McKenna

Discussion Continues for NAIC's Restructuring Mechanisms for Troubled Companies Subgroup

The NAIC's Restructuring Mechanisms for Troubled Companies Subgroup (RMTC) is scheduled to meet via conference call on August 12, 2008, to continue discussion of runoff/restructuring mechanisms for troubled companies. The subgroup is reviewing alternative restructuring mechanisms for purposes of developing an NAIC Whitepaper on Restructuring Mechanisms for Troubled Companies. A draft outline for the whitepaper was released last May and includes sections that will address reasons for using restructuring mechanisms; the advantages and disadvantages of the various types of restructuring mechanisms (including solvent runoff of existing blocks, Part VII Portfolio Transfers, and UK-based schemes of arrangement); and existing statutory authority, limitations, and requirements.

The August 12 call will focus on runoff of existing blocks. The call is scheduled for 3:00 p.m. eastern time and is open to interested parties. Those interested in participating in the call should contact Chorus Call at 800.967.4633 to register. NAIC staff has advised that materials will be circulated in advance of the call.

In addition, the RMTC Subgroup plans to hold an in-person meeting in conjunction with the NAIC's Fall National Meeting, to discuss specifically the topic of UK-based schemes of arrangement. That meeting is tentatively scheduled for September 22 from 8:00 a.m. to 9:00 a.m. More details will be provided as they become available.

  Staff Contact - Joni Forsythe

GA Contact Information

Art Dummer, Administrator of the Utah Life & Health Insurance Association, has a new e-mail address. He can be reached at [email protected].

The office of the New Mexico Life Insurance Guaranty Association has been moved. The association can now be contacted at:

New Mexico Life Insurance Guaranty Association
P.O. Box 2880
Santa Fe, NM 87504-2880
505.820.7355
Fax: 505.820.7356
E-mail: [email protected]

  Staff Contact - De Gadd