J-P's Glass to Speak at Annual Meeting

Dennis Glass, president and chief executive officer of Jefferson-Pilot Corporation, will speak at NOLHGA's 22nd Annual Meeting, which will be held October 25 and 26, 2005, at the Westin Resort, Hilton Head Island in Hilton Head, S.C. He is scheduled to speak the afternoon of October 25.

In addition to his role as president and CEO, Glass is a director of Jefferson-Pilot Corporation, as well as Jefferson-Pilot Life Insurance Company, Jefferson Pilot Financial Insurance Company, Jefferson-Pilot Communications Company, and Jefferson Pilot LifeAmerica. Glass joined Jefferson-Pilot Corporation in October 1993 as executive vice president and chief financial officer. He became president and chief operating officer in November 2001 and chief executive officer in March 2004. He serves on the boards of the American Council of Life Insurers, the Insurance Marketplace Standards Association, and the Life Office Management Association.

More news about NOLHGA's 22nd Annual Meeting will appear in future issues of the NOLHGA Wire and other NOLHGA publications.

  Staff Contact - Sean McKenna Guarantee Security Life Insurance Company (Fla.)

Court Issues Closeout Order

On July 22, 2005, the court presiding over the Guarantee Security Life Insurance Company (GSLIC) receivership issued an Order Approving Discharge Accounting, Directing Final Discharge, and Authorizing the Destruction of Obsolete Records. The order, which has an effective date of July 29, 2005, approved the final report of the receiver's accountants; authorized the receiver to retain $86,066 of GSLIC estate funds as a reserve for post-closing wind-up costs; authorized GSLIC and the GRC Trust to destroy obsolete records; approved the discharge of the receiver and the closing of the GSLIC estate; authorized any post-closing recoveries or unneeded funds belonging to GSLIC to be paid over to the Florida guaranty association (which will receive funds on behalf of all affected guaranty associations); and provided that any unclaimed funds be escheated in accordance with state law requirements.

With the closing of the GSLIC estate, the trustees for the GRC Trust will be taking final steps to terminate the trust and make a final distribution to affected guaranty associations. The aggregate amount of the final trust distribution is expected to be about $450,000.

Task Force Chair - Frank Gartland;   Staff Contact - Bill O'Sullivan Legion/Villanova Life Insurance Companies (Pa.)

Pennsylvania Supreme Court Affirms Controversial Ruling

On July 20, 2005, the Supreme Court of Pennsylvania affirmed the 2003 ruling of a Pennsylvania trial court that allowed certain corporate policyholders of the insolvent Legion/Villanova insurance companies to intervene in the liquidation proceedings and to directly claim the proceeds of the reinsurance payments due to the estate. Koken v. Legion Ins. Co., 831 A.2d 1196 (Pa. Cmwlth. 2003).

Absent a "cut-through" provision in the reinsurance contract permitting direct payments from the reinsurer to the insured, the estate of an insolvent company is typically entitled to all reinsurance proceeds. But the trial court reached to distinguish the Legion/Villanova matter, finding this was not a standard liquidation case because Legion and Villanova principally operated as "fronting companies," taking little risk and issuing policies that were, for the most part, reinsured.

On a case-by-case basis, the trial court permitted each intervening policyholder the opportunity to establish an implied third-party beneficiary relationship between the intervenor and the reinsurer. Once established, the court granted the intervenors direct access to the reinsurance funds.

On appeal, the liquidator argued that Pennsylvania insurance law requires a reinsurer to pay any reinsurance proceeds into the estate of an insolvent insurer for the benefit of all insureds. The liquidator emphasized that even where a third-party beneficiary relationship is shown, Pennsylvania law requires that the contract must individually name the insured, and the intervenors in this matter were not individually named. The appellate court was not persuaded. In a one-line decision, the Pennsylvania Supreme Court affirmed the lower ruling. A dissenting statement was filed by Justice Newman and joined by Justice Castille.

Task Force Chair - Peter Leonard;   Staff Contact - Mutual Security Life Insurance Company (Ind.)

Court to Hold Hearing on Final Accounting and Closeout

The liquidator for Mutual Security Life Insurance Company (MSL) filed a Final Accounting for approval by the Receivership Court. The court has scheduled a hearing on the final accounting for July 29, 2005. The Final Accounting states that the known assets of the MSL estate are $5,211,185.40 as of April 30, 2005, and provides that a final distribution on MSL's policy-level claims will be made that will result in the total estate distributions on such claims being about 82%. The liquidator has advised that the final distribution amount to be paid to affected guaranty associations will be about $1.9 million. (The liquidator will pay that amount to NOLHGA, which will handle the distribution of the allocable amounts owed to each affected guaranty association.) Upon the payment of the final distribution, the liquidator has requested that the court discharge the liquidator and confirm that MSL is dissolved as a matter of law.

Task Force Chair - Luther Hill;   Staff Contact - Bill O'Sullivan

Guaranty Association Law Summaries Updated

During the week of July 24, 2005, NOLHGA updated its state guaranty association law summary reports to reflect legislative changes that took effect between January 1 and July 1, 2005. Most significantly, effective July 1, Idaho adopted a number of provisions of the current NAIC Model Life and Health Insurance Guaranty Association Act. In addition, the Montana legislature enacted some language corrections to the guaranty association act, and the South Dakota legislature passed legislation that authorizes the creation of MEWAs and requires that an authorized MEWA be a member of the guaranty association. Although Maine and Texas greatly revised their guaranty association statutes, their new laws will not take effect until September. Accordingly, the online summaries will reflect those changes at year-end.

The law summaries are available at the "State Information" section of the NOLHGA Web site. They can also be viewed by clicking "Law Summaries" under the "Member Resources" heading in the list of links on the left of the screen when users are logged into the site.

The summaries can be viewed and printed by selecting a specific report from the "State Guaranty Laws and Provisions" drop-down menu, which lists the reports by topic. Users can also generate individual state reports by choosing a state from the "State Guaranty Association Pages" drop-down menu. In addition to summaries of state guaranty laws, these sections of NOLHGA's Web site provide users with state guaranty association contact information as well as links, where applicable, to the state guaranty association's Web site and the corresponding state insurance department's Web site. Changes or corrections should be submitted to Meg Melusen at [email protected].

  Staff Contact -