Executive Life (CA)

Washington GA Successful in Unisys Appeal

On February 14th, the Washington State Court of Appeals upheld the summary judgment decision against Unisys in Unisys Corp. v. WLDIGA. Unisys originally filed suit against the Washington Life and Disability Insurance Guaranty Association in April, 1997, seeking coverage for resident participants in Unisys retirement plans that had invested in ELIC GICs. The trial court granted summary judgment in 1998, finding Unisys' claim was barred by the two-year statute of limitations.

On appeal, Unisys contended that the appropriate statute of limitations is the six-year statute for contract obligations rather than the two-year "catch-all" statute. Alternatively, even if the two- year statute applies, Unisys argues that the statute did not begin to run until its claim was denied by the guaranty association a month before Unisys filed suit. The court of appeals disagreed on both counts.

First, the court determined that the nature of guaranty association obligations is statutory, not contractual, and affirmed the trial court's application of the two year statute of limitations. With respect to the question of triggering the statute of limitations, the court determined that the maturity of the ELIC annuity contracts, not the GA's denial of coverage, started the clock running. Because Unisys filed suit more than two years after the contracts matured, its claims were barred by the expiration of the statute.

Task Force Chair - Art Dummer;   Staff Contact - Mid-Continent Life (OK)

Petition for Liquidation Filed

In response to the Receiver's Application to Assume Original Jurisdiction and Petition for Writs of Prohibition and Mandamus, the Oklahoma Supreme Court issued an order on February 29 denying the application. The Receiver had filed the application for the purpose of challenging the Oklahoma District Court's (the receivership court for Mid-Continent) decision to allow disappointed proposers and a policyholder certain rights in the proceeding, including the right to intervene for the purpose of challenging the Receiver's actions in formulating a plan of rehabilitation. As a consequence of the Oklahoma Supreme Court's decision, it appears the case will proceed on to discovery at the District Court level.

Task Force Chair - Sonya Ekart;   Staff Contact - Bill O'Sullivan

Financial Services Modernization Subgroup Meets

One of the projects undertaken this year by the NOLHGA Legal Committee's Federal Issues Subgroup includes the examination and analysis of federal legislation that has come to be known as the "Financial Services Modernization Act," formally known as the "Gramm-Leach-Bliley Act." This statute expressly repeals long standing federal prohibitions against bank affiliations with insurance companies and securities firms, and provides for the establishment of a financial holding company structure as a mechanism for permitting financial institutions to engage in a broader scale of financial activities, including insurance activities.

The subgroup met in Herndon on March 9 to begin its discussion and analysis of the statute, and its potential implications for the guaranty association system. Chaired by Charlie Richardson of Baker & Daniels, the subgroup includes John Colpean, Chuck Gullickson, Dick Horne, Van Mayhall, Jim Mumford, Merle Pederson and NOLHGA staff members Bill O'Sullivan and Joni Forsythe. Emerging Issues Committee Chair Dave Perry, ACLI representative Rob Sweeney and NOLHGA President Peter Gallanis also participated.

The subgroup will closely examine the provisions in the federal statute, and will also be developing and analyzing various insolvency scenarios that include bank and insurance company entities within the structure of a financial holding company for the purpose of identifying and evaluating the potential implications of the federal law for guaranty associations and insurance insolvency proceedings. The subgroup plans to complete its analysis and report in advance of NOLHGA's Annual Meeting in October.

Subgroup Chair - Charles Richardson;   Staff Contact - Joni Forsythe

ETC.

Howell To Depart NOLHGA

NOLHGA's Kristen Howell will be leaving NOLHGA on March 15th to a career in information technology. NOLHGA wishes Kristen well in her future endeavors.

CALENDAR/CONFERENCE CALLS

March 21 Legal Committee Claims Valuation Subgroup Meeting, Orlando, FL

March 30 Joint Seminar Technical Group Meeting, Chicago, IL

May 2 Compensation Committee Meeting, Tysons Corner, VA

May 2 Audit Committee Meeting, Tysons Corner, VA

May 3 Board of Directors' Meeting, Tysons Corner, VA

May 9 Legal Committee Meeting, Orlando, FL

July 20-21 NOLHGA Legal Seminar, Boston, MA