Executive Life (CA)
GAs Make Bullet Payment
Executive Life Participating Guaranty Associations met their obligation to pay the second Additional Installment Billing, which was due June 3, and totaled $3,370,845. This billing trues up last year's bullet payment totaling $862,814,602, in which participating guaranty associations funded in full, most, but not all of their remaining ELIC obligations with respect to surrenderable Declared Rate Contracts ("DRCs") and unallocated contracts.
Task Force Chair - Art Dummer; Staff Contact - National Heritage Life (DE)Trust To Make Distribution
On July 1, the NHL trust will make its fifth distribution, totaling $42,960,172, to the Trust's beneficiaries. Of that amount, $40,511,442 will be distributed to participating guaranty associations, with the remaining $2,448,730 distributed to uncovereds. This distribution will bring total distributions to a level just above the agreed-upon liquidation value. Any further distributions will be split equally between guaranty associations and uncovereds until uncovereds are paid in full.
Task Force Chair - Dan Orth; Staff Contact -MO Court Declines to Hear Case
On June 1, 1999, the Missouri Supreme Court entered an order in the matter of Quackenbush v. Missouri Life and Health Insurance Guaranty Association, retransferring the case to the Missouri Court of Appeals. This, in effect, reverses the Missouri Supreme Court's prior order granting the transfer, and puts the case back into the hands of the Court of Appeals for a final decision.
In its appeal to the Missouri Supreme Court, the Missouri Association sought reversal of the lower appellate court's sua sponte finding of coverage for certain structured settlement annuities expressly excluded under the Missouri Act. Missouri has an express statutory exclusion for allocated annuities which were not issued to or owned by an individual. Notwithstanding, the Court of Appeals relied upon the statutory "liberal construction" language, coupled with language excerpted from the definition of unallocated annuities, to expand coverage in this case. In so doing, the Court of Appeals reached beyond the legal issues presented by the parties to fashion its own relief.
In December of 1998, NOLHGA filed an amicus brief with the Missouri Supreme Court in support of the Missouri Association's motion to transfer the case. After the Supreme Court granted the transfer motion, NOLHGA submitted its brief on the merits, supporting the Missouri Association's efforts to reverse the lower court's finding of coverage. The Supreme Court heard oral argument in this matter on April 28, 1999. Thereafter, without offering any explanation or analysis of the merits of the case whatsoever, the Court entered its order transferring the case back to the Court of Appeals for final disposition. Because the issue raised by the Court of Appeal's earlier decision had not been briefed for the Court of Appeals, the Missouri Association has filed a motion asking that the Court of Appeals consider the briefs that were filed with the Supreme Court on this issue before making a final ruling in the case. The Court of Appeals has not yet ruled on the motion.
Staff Contact - Joni Forsythe First Capital Life (CA)New Mexico Association Seeks Amicus Support
The New Mexico Life Insurance Guaranty Association (NMLIGA) has asked that NOLHGA file an amicus curiae brief with the California Court of Appeals in connection with the First Capital Life insolvency supporting its pending challenge to the liquidation court's denial of its claim for reimbursement for certain policyholder payments, and the receiver's payment of general creditor claims ahead of the Association's claim.
Upon demand by the New Mexico Superintendent of Insurance, and an order from the New Mexico ancillary receivership court, NMLIGA paid almost $800,000 in statutory benefits to the New Mexico policyholders of First Capital to supplement the benefits that were provided under the plan. The California domiciliary receiver then refused to reimburse the association for these payments, notwithstanding a surplus of $16 million in the estate. The plan apparently did not expressly provide for the distribution of excess assets to policyholders ahead of general creditors. The trial court upheld the California receiver's refusal to reimburse the association finding that NMLIGA acted as a "volunteer" in making payments to the New Mexico policyholders beyond those required by the plan.
NMLIGA's request has been circulated to the Amicus Subgroup of NOLHGA's Legal Committee for review and consideration.
Staff Contact - Joni ForsytheNOLHGA Comments on Tax Proposal
NOLHGA recently distributed to member associations its comment letter to members of the House Ways and Means Committee and members of the Senate Finance Committee, in response to the Clinton Administration's proposal to amend the Internal Revenue Code to tax investment income of section 501(c)(6) tax-exempt organizations. Members may recall from related articles in the in the Spring NOLHGA Journal, and the Feb. 12 and March 5 Weekly Wires, "investment income" would include net income that associations receive from interest, dividends, rents, capital gains and royalties in excess of $10,000 for any taxable year. The provision was included in the administration's budget proposal released on February 1, and that budget proposal is now before the referenced house and senate committees.
The Administration's proposal has received a chilly reception on Capitol Hill, and current budget resolutions do not contain the provision. Making NOLHGA's position known was important, however, as the budget process is expected to be a long, unpredictable one and may continue well into summer.
Staff Contact - Bill O'SullivanLegal Seminar Reminder - July 15-16
Just a reminder to get your Legal Seminar registration forms in before the June 25th deadline! Please do not hesitate to call Karen Early at (703) 787-4101 if you would like to request additional information or registration materials.
The Silvertree will be accepting reservations under NOLHGA's room block until June 30th. To date, the hotel has already booked about three-quarters of our total room block for the event! To make reservations, call the Silvertree Hotel at 1-800-525-9402 or (970) 923-5494. Be sure to indicate that you are attending the NOLHGA Legal Seminar so that you will be included in NOLHGA's room block and afforded the special discount rate for this event ($105 per night). This rate will be honored for all NOLHGA guests for three days before and after the event.
For air travel, NOLHGA has obtained group travel discount rates for Legal Seminar attendees through United Airlines. These rates are valid from July 12th through the 19th. To obtain the group discount rate, you must make your airline reservations through Agency International at 1-800-831-6163, ext. 15. Ask for Ashley Collier. A minimum of seven days advance purchase is required.
As in past years, we expect this year's program to be fully accredited by the state Mandatory Continuing Legal Education (MCLE) Boards and to earn between nine and 11 CLE credits per state (including up to two full hours of ethics).
If you have any questions regarding this year's event, please feel free to call Joni Forsythe at (703) 787-4103. We look forward to seeing you in July!
Legal Seminar Planning Committee Chair - Frank O'Loughlin; Staff Contact - Joni ForsytheCALENDAR/CONFERENCE CALLS
June 21 Settlers Life Task Force Teleconference, 3 pm ET
June 23 ELIC Task Force Conference Call, 3 pm ET