Executive Life Insurance Company (CA)
Appeals Court Denies Claim Against Guaranty Association
The Wisconsin Court of Appeals on April 30 affirmed the circuit court's decision in the mattter of Fuhrmann v. The Wisconsin Insurance Security Fund, denying a claim Fuhrmann had filed with the guaranty association. Ms. Fuhrmann had opted into the ELIC Enhancement Plan and then filed suit challenging the plan and asserting that she received less than 100 percent of her policy benefits. She claimed she was entitled to additional benefits from the Wisconsin guaranty association based on statutory coverage limits under the law in that state, as opposed to the limits under the law in California, the relevant state for computing her benefits in accordance with the plan.
The appeals court held that Ms. Fuhrmann, by opting into the plan, submitted to the jurisdiction of the California Liquidation Court and that the liquidation court's decision approving the plan was entitled to full faith and credit. The appeals court concluded that the guaranty association acted within its statutory authority when it entered into the participation agreement and that it had satisfied its funding obligations under the plan.
Ms. Fuhrmann further argued that her election to opt into the plan was induced by fraud because her attorney purportedly was advised by someone in the California insurance commissioner's office to submit the election form with a letter challenging the selection of California, rather than Wisconsin, as the relevant state for determination of the claimant's benefits under the plan. Because she failed to raise the fraud allegation in proceedings before the Wisconsin association's board, the appeals court declined to address this issue. Notwithstanding her efforts to preserve additional rights against the guaranty association outside of the plan, the court concluded that she had released the association from further obligations by opting into the plan, and that she was bound by her election.
Task Force Chair -- Art Dummer; Staff Contact - Executive Life Insurance Company (CA)California Appeals Court Says Guaranty Association Not Liable For GICs
The California Court of Appeals on April 12 decided that the California guaranty association did not provide coverage for certain guaranteed investment contracts (GICs) issued by Executive Life Insurance Company to 401(k) plans sponsored by Unisys Corp. The opinion in Unisys Corp. v. California Life and Health Insurance Guarantee Association (No. A072015) provided that the "clear statutory language compels the conclusion that the legislature intended to exclude all GICs from coverage under the act."
The court's decision affirmed the 1995 judgment of the California Superior Court for San Mateo County that the GICs were excluded. In reaching their decision, the panel of three judges discussed Unisys' various statutory construction theories; the court did not reach the issue on whether the contracts in question were excluded as not unallocated by reason of not being issued to and owned by an individual. NOLHGA filed an amicus brief with the appeals court in support of the guaranty association's position that it did not cover the GICs. Unisys has the right either to petition the court for rehearing of appeal the decision to the Supreme Court.
To obtain a hard copy of the opinion in either the Fuhrmann or Unisys case, please contact Angela Franklin at NOLHGA. Both opinions will be available on NOLHGANet's Litigation Database - Fuhrmann at WI0014, and Unisys at CA0063 - on May 5.
Task Force Chair -- Art Dummer; Staff Contact - Kentucky Central Life Insurance Co. (KY)Company Offers Two Mixed-Use Properties For Sale
Kentucky Central Life Insurance Company announced on April 22 the offering of two mixed-use properties. Bluebonnet Centre in Baton Rouge, La., consists of approximately 175,000 square feet of office, retail, hotel and flex space. Three land tracts (4.4 acres) ready for development are included in the Bluebonnet property offering. The center is 98 percent leased. McAllen Place Center in McAllen, Texas, has approximately 170,000 square feet of retail, theater and flex space. McAllen Place Center is 76 percent leased.
Kentucky Central will sell the properties in a sealed bid auction, the rules and timetable for which will be available to interested investors in a confidential offering summary. To request a confidentiality agreement and investor information, please contact Carolyn Hauter or Sara Art at Creamer Realty Consultants, asset manager and disposition advisor for Kentucky Central, at 606/253-5700.
Task Force Chair -- John Colpean; Staff Contact - Joni Forsythe Unison International Life Insurance Company (OK)THE RECEIVER REQUESTS that affected guaranty associations resubmit and update their proof of claims. Those who no longer have the proof of claim forms instead may submit a letter. Administrators are reminded to separate administrative expenses into the following categories: accounting/audit; employee/contractor; furniture and equipment; insurance; interest; legal; meeting/travel; office supplies and office expenses; rent and utilities; and "other" (explain).
Proof of claims may be sent to Bob Clift at the Oklahoma Assistant Receivership Office, P.O. Box 18637, Oklahoma City, OK 73154-0637. Please send a copy to Dana Carroll at NOLHGA.
Task Force Chair -- Bart Boles; Staff Contact - Bill O'Sullivan Pacific Standard Life Insurance CompanyREMINDER: IN ANTICIPATION OF the May 11 Liquidation Trust Dissolution, funds are due May 1 if paying by check or May 5 if paying by wire.
Task Force Chair -- Bart Boles; Staff Contact - Paul Peterson Summit National Life Insurance CompanyTHE PENNSYLVANIA LIQUIDATOR recently mailed a notice to creditors, including guaranty associations, announcing the filing of a petition with the Pennsylvania court requesting approval of the $35 million settlement with the law firm Morgan, Lewis & Bockius LLP. No action is required of the associations. Administrators who may not have received a copy may obtain one by calling Krista Plumhoff at 703/787-4121.
Task Force Chair -- Tad Rhodes; Staff Contact - Paul PetersonETC.
Harry Garber, MBLLAC Director, Dies
Harry Garber, a director of MBL Life Assurance Corporation, died April 28 at his home in Winter Park, Fla., following a protracted battle with cancer. Mr. Garber, former vice chairman of The Equitable Life Assurance Society, was appointed by the NOLHGA Board in 1994 to the MBLLAC board. His knowledge and experience proved invaluable to both the board and management of MBLLAC. The ease with which he approached the most complex business, financial and investment issues instilled confidence in those with whom he worked. The NOLHGA family will miss his counsel and advice. In lieu of flowers, contributions may be made in Mr. Garber’s name to Memorial Sloan Kettering Cancer Center in New York City, Yale University in New Haven, Conn., or The Metropolitan Opera in New York City.
NOLHGA Board of Directors
The NOLHGA Board of Directors met April 23 in Milwaukee. An edition of “In the Loop,” to be published the week of May 4, will provide guaranty association administrators and their boards with information about the meeting. Approved minutes from the February Board meeting in San Diego also will be distributed the week of May 4.
Last Call for MPC Portraits
Those planning to have their photograph taken in conjunction with the June MPC meeting but who HAVE NOT returned a photo form to NOLHGA are asked to call Krista Plumhoff immediately at 703/787-4121.
CALENDAR
May 5 Pacific Standard payments due May 10 Deadline for June MPC hotel reservations May 11 Deadline to opt out of FEC Litigation Trust distribution May 12 Joint NOLHGA/NCIGF Legal Committee, St. Louis May 13 NOLHGA Legal Committee, St. Louis May 14-15 Protocols Working Group, Chicago
Staff Contact - Sean McKennaCONFERENCE CALLS
May 5 MPC Protocols Working Group, 10 am EDT May 6 MPC Protocols Working Group, 11 am EDT May 7 American Standard Task Force, 10 am EDT May 7 MPC Protocols Working Group, 11 am EDT
Staff Contact - Sean McKenna