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States General Life Insurance Company (Texas)

Premium and Expense Recoveries Received

NOLHGA's States General Task Force has recovered funds totaling approximately $304,000, representing post-liquidation premiums collected on States General business. Those funds have been received and have been placed in NOLHGA's escrow account for distribution in conjunction with the upcoming assumption true-up with New Era on the major medical lines. A schedule reflecting premium allocation by state is available to affected associations upon request.

In addition, NOLHGA has just received an expense reimbursement from the estate for direct expenses incurred in connection with audit work that was completed earlier this year. Allocation of the expense reimbursement will be done on the same basis as assessments for States General. Accordingly, the task force has requested that staff deduct the expense reimbursement from the next quarterly assessment in this case. Please contact Joni Forsythe at 703.787.4103 if you have any questions or if you would like a copy of the premium allocation schedule referenced above.

Task Force Chair - Tad Rhodes; Staff Contact - Joni Forsythe Statesman National Life Insurance Company (Texas)

Final Distribution Scheduled

NOLHGA will make the final distribution of amounts held in the NOLHGA escrow account during the week of June 24, 2007. The funds held were the result of monies received on assets in the estate (which were assigned to NOLHGA on behalf of the guaranty associations) at the time of the estate closure, along with interest earned on the account. A distribution schedule was e-mailed to affected guaranty associations on June 21.

This distribution concludes all remaining activity on this case. Please contact Gus Estrada if you do not receive your check in the near future or Paul Peterson if you have any questions on the allocation or other case activities.

Staff Contact -

NAIC's E Committee to Consider Recommendations Concerning GA Model Laws

On June 27, 2007, the NAIC's Financial Condition (E) Committee will hold an open call to discuss and consider the recommendations of the Receivership and Insolvency Task Force on the issue of whether the Life and Health Insurance Guaranty Association Model Act and Property and Casualty Insurance Guaranty Association Model Act meet the standards for NAIC model laws under the NAIC's new Model Law Development Framework, which was unveiled last month. The call is scheduled to begin at 2:30 p.m. Eastern time and is expected to last about one hour. Those interested in participating are required to pre-register with Chorus Call at 800.967.4633. Registered participants can join the call on June 27 by dialing 800.860.2442 and asking to be connected to the "NAIC Todd Sells call for the Financial Condition (E) Committee." For additional information concerning this open call, the NAIC contact is Todd Sells.

Staff Contact - Joni Forsythe

Rhode Island Considers Amendments to Voluntary Restructuring Statute

Earlier this year, a bill to amend Rhode Island's 2002 voluntary restructuring/runoff statute was introduced in the Rhode Island House and Senate. The proposed amendments would permit a Rhode Island insurer to bifurcate its business by transferring selected commercial liabilities to a runoff shell, newly formed for that purpose, and then continue writing business as usual while the shell proceeds with development and implementation of a runoff/commutation scheme to extinguish the transferred liabilities. This is a significant departure from the existing statute, which requires that an insurer cease writing business as a prerequisite to utilizing this extraordinary statutory runoff mechanism.

The amendments also contain language to the effect that any action taken by an insurer, including transfer of select liabilities to a runoff shell, shall not affect guaranty association coverage existing on that business prior to any such transfer, and notwithstanding any other action taken to restructure the business in accordance with this statute. The Reinsurance Association of America and Property Casualty Insurers Association of America have appeared in opposition to the bill. Following a brief hearing on June 14, 2007, the Senate Corporations Committee voted to hold the bill for further study. However, the bill was back on the agenda and passed out of committee on June 19; it was approved on the Senate floor on June 20.

The version of the bill approved by the Senate this week (S0367 Substitute A) included a revision that would require that assets of equivalent value be transferred to the newly formed runoff shell to support the transfer of liabilities. This revision is intended to respond to objections over the bill's lack of any express requirements concerning financial standards for such transfers. However, it does not address issues concerning the purported preemption of guaranty association laws, the enforceability of a Rhode Island restructuring plan across state lines, or any of the other concerns that have been noted in connection with this type of statutory restructuring mechanism.

Having passed the Senate, the bill will proceed before the House Corporations Committee. If approved, it would then go to the House floor for a vote. Rhode Island's legislative session ends on July 1.