American Life Assurance Corporation (Ala.)

Alabama Supreme Court Rejects Challenge to Closing Order

During the week of June 5, 2005, the Alabama Supreme Court issued an order affirming the receivership court's 2004 order approving the final accounting for the ALAC estate and authorizing the receiver to dissolve the company and close the estate. This decision brings to an end almost two years of litigation and appeals pursued by R. K. Hunter on behalf of New South Investment Corporation (NSIC), ALAC's 100% shareholder.

The receiver's petition for approval of the final accounting and to close the estate was filed in November 2003. Following multiple continuances, an objection was filed on behalf of NSIC seeking denial of the petition, reinstatement of the company, and denial of all claims against the estate. NSIC also made attempts to take broad-based discovery of insurance department personnel and NOLHGA representatives. NOLHGA filed a motion for a protective order seeking to end discovery, and that motion was granted in April 2004. NSIC subsequently challenged that discovery ruling, filing petitions for writ of mandamus first with the Alabama Court of Civil Appeals and then with the Alabama Supreme Court. Both courts denied NSIC's petitions.

Following a hearing last June, the receivership court entered an order granting the receiver's petition to close. NSIC appealed, renewing its prior objections to the denial of discovery. Again, NSIC's challenges were brought before the Court of Civil Appeals and then the Alabama Supreme Court. Briefing on this matter was completed in January 2005, and the parties have been awaiting the decision of the court. That decision came last week in the form of an order declaring the decision of the receivership court affirmed without opinion. This litigation was the final impediment to closing the ALAC estate. We expect the estate will be closed by year-end.

Task Force Chair - Michael Marchman;   Staff Contact - Joni Forsythe

NAIC Solicits Comments on Proposed New Receivership Model

At the NAIC Summer National Meeting in Boston, the NAIC's Financial Condition (E) Committee convened a special meeting to receive opening comments from interested parties concerning the proposed new model receivership act, which was adopted by the Receivership and Insolvency Task Force (RITF) on May 18, 2005. The meeting took place on June 13, and comments were presented by 13 speakers representing various industry interests. NOLHGA, the NCIGF, the RAA, PCI, AIA, NAMIC, and State Farm were among the interested parties presenting comments at this meeting.

The committee will continue to hear and address comments at an interim in-person meeting that has been tentatively scheduled for August 1-2. The first day of the meeting will be an open session for comments and discussion, and the second day is expected to be a closed session for committee deliberations. We will provide additional information confirming the date and location of the meeting as that information becomes available. In the meantime, the committee has asked that all interested parties submit in writing any further comments concerning the model that they wish to have considered by the committee no later than July 14. Comments should be directed to the attention of NAIC Managing Counsel Karen Schutter at [email protected]. A copy of the proposed receivership model is available on the NAIC Web site. You may also request a copy by contacting Aimee Frye at [email protected] or 703.787.4115.

  Staff Contact - Joni Forsythe