The American Life Assurance Corporation (AL)
ALAC, NOLHGA, PGAs Ink Assumption Deal With New Era
The assumption reinsurance agreement among The American Life Assurance Corporation, NOLHGA, the participating guaranty associations and New Era Life Insurance Company closed March 13, less than 13 months after ALAC was placed in rehabilitation. NOLHGA wired $4.9 million to New Era and ALAC contributed $100,000. In addition, the receiver wired $350,000 in premiums collected in January and held on the guaranty associations' behalf.
Under the terms of the agreement, New Era assumed all the guaranteed renewable health insurance business and all the life and annuity business. All but two policyholders were 100 percent covered by the guaranty associations. Dec. 31, 1997 is the effective date of transfer, and New Era has been administering the business on behalf of the associations since Feb. 1.
New Era, of Houston, had previously assumed blocks of business from guaranty associations in the Alabama Life, American Educators and Consolidated National insolvencies.
Task Force Chair -- Mike Marchman; Staff Contact - Joni Forsythe Centennial Life Insurance Company (KS)Centennial Placed In Rehabilitation, Task Force Chair Named
Kansas Insurance Commissioner Kathleen Sebelius on Feb. 5 filed a petition and received authority to rehabilitate the Centennial Life Insurance Company of Lenexa, Kan. Centennial consented to the petition and order, which provides that every type of policy issued by the company will remain in force. The order also allows the company to write new business. According to a news release issued by the commissioner's office, Centennial's statutory capital and surplus are sufficient to maintain its obligations. Losses sustained by Centennial, coupled with two pending litigations, prompted the insurance department's rehabilitation action.
Meanwhile, Peggy Parker, chairman of the Members' Participation Council, and Dick Klipstein of NOLHGA visited March 12 with Daniel L. Watson, the rehabilitator, and Margaret A. Gatewood, general counsel for the Kansas insurance department. Following the meeting, Ms. Parker appointed Mark Femal chairman of the newly created Centennial Life Task Force. Other task force members will be named as soon as policyholder liabilities by state are determined.
Task Force Chair -- Mark Femal; Staff Contact - Mutual Benefit Life Insurance Company (NJ)MBL Life Assurance Corp. Increases 1997 Capital To $670 Million
MBL Life Assurance Corporation announced March 5 that its Total Adjusted Capital (surplus plus the asset valuation reserve) increased by $276 million in 1997 to a total of $670 million. Additionally, MBL Life said, its real estate assets - once more than 50 percent of invested assets net of policy loans - were reduced by year-end 1997 to $278 million, representing 4 percent of invested assets.
Alan J. Bowers, MBL Life's president and chief executive officer, attributed the capital increase to several factors, including the continued successful real estate sales, higher overall investment income and improved mortality compared to 1996.
In September, MBL Life announced that it retained the investment banking firm of Goldman, Sachs to assist in exploring strategic options, including the possible sale of the company prior to the end of the rehabilitation period. A transaction is expected by the end of the first quarter, with the sale price determining the amount to be divided among creditors and policyholders who, under a settlement agreement early in 1997, were awarded the stock in MBLLAC.
Meanwhile, it should be noted that the market for the sale of Class 4 claims which existed at the time of the recent MPC meeting in San Diego lost strength in the days leading to the Feb.27 MBL Board meeting. NOLHGA has been informed that AMROC withdrew its offer to acquire California's Class 4 claims at $1.15 on the dollar and Bear Stearns also signaled a drop in buying interest.
It appears that the market for these claims improved somewhat during the week, though not to its originally strong level. Bear Stearns apparently has expressed some interest in purchasing claims, suggesting $1.10 on the dollar on one occasion. AMROC still may be interested, but emphasized that the number of potential buyers has dropped significantly.
Task Force Chair -- Art Dummer; Staff Contact - Executive Life Insurance Company (CA)THE ELIC BULLET PAYMENT billing from Aurora National Life Assurance Company has arrived at NOLHGA and will be sent the week of March 16 to participating guaranty association administrators. The amount due is $862,814,602, which will satisfy the bulk of the PGA's ELIC obligations. Payment is due to Aurora on June 3. Arthur Andersen will review the calculations and provide a written report to the PGAs well in advance of the due date.
Task Force Chair -- Art Dummer; Staff Contact - Kentucky Central Life Insurance Company (KY)NOLHGA Served With Additional Subpoenas
NOLHGA was served March 5 with a subpoena by attorneys representing Deloitte & Touche, LLP, in a professional liability action filed by the Kentucky Central liquidator and pending in the Franklin Circuit Court in Frankfort, Ky. The subpoena seeks production of several categories of documents relating to Kentucky Central. No witness testimony has been requested.
On March 6, NOLHGA again was served with a subpoena in connection with Kentucky Central litigation, this time by attorneys representing ABN AMRO Bank. This litigation involves voidable preference and fraudulent transfer claims arising out of sale/leaseback transactions relating to certain commercial property known as Kincaid Towers, previously owned by Kentucky Central. The document requests are broad, seeking information relating to Kentucky Central and all aspects of the liquidation. No witness testimony has been requested.
Task Force Chair -- John Colpean; Staff Contact - Joni Forsythe Coastal States Life Insurance Company (GA)THE GEORGIA SUPREME COURT on March 6 unanimously denied the petition for a writ of certiorari in the North Carolina commissioner and FICA Marketing cases, thus refusing to hear the case. The liquidator's victory is final. In these cases, the Georgia Court of Appeals had reversed a lower court ruling granting administrative priority to the general creditor claims of the commissioner and FICA.
Task Force Chair -- Jack Falkenbach; Staff Contact - Confederation Life Insurance Company (MI)MAILING OF THE BILLS for the 1998 payout annuity separate account funding has been delayed pending finalization of policyholder listings. It is expected that bills will be sent not later than March 20 and that they will reflect true-up calculations with respect to 1997 funding. March 31 still is the payment deadline.
Task Force Chair -- Charles LaShelle; Staff Contact -ETC.
Stork Arrives in Nebraska!
Congratulations to Sonya Ekart, administrator of the Nebraska Life and Health Insurance Guaranty Association, who gave birth March 7 to a healthy, eight-pound, nine-ounce baby boy, William James. Mother and baby are well, as are dad Ron Kallhoff and big brother Garrett.
CALENDAR
March 14-18: NAIC Spring National Meeting, Salt Lake City
March 15: 1997 fourth-quarter expenses for National Heritage due to NOLHGA
March 19: Fidelity Bankers Task Force, Herndon, Va
March 30: Kentucky Central Asset Working Group, New York City
April 23: NOLHGA Board of Directors, Milwaukee
April 23-24: NCIGF Annual Meeting, Washington, D.C.
April 30: Seventh ELIC installment payment due
CONFERENCE CALLS
March 24: Legal Seminar Planning Committee, 10 am EST
Staff Contact - Sean McKenna