Thurnor Trust Companies
Possible Theft of Assets Leads to 7 Insolvencies
NOLHGA learned this week that seven insurance companies, affiliated with the Thunor Trust, have been placed in rehabilitation. While NOLHGA's information is preliminary at this point, it appears that the misappropriation of company assets may be the reason for the insolvencies. The Thunor Trust is listed as the owner of the seven companies.
Three of the seven companies, First National Life of America, Franklin Protective Life, and Family Guaranty Life are domiciled in Mississippi. Family Guaranty is licensed solely in Mississippi, while First National is licensed in 31 states and Franklin Protective in eight. Franklin American Life is domiciled in Tennessee and is licensed in 14 states and Farmers and Ranchers Life is domiciled and licensed only in Oklahoma. Additionally, International Financial Services Life is domiciled in Missouri and is licensed in 40 states and Old Southwest Life is domiciled and licensed solely in Arkansas.
Total policyholder obligations for all companies amount to nearly $400 million with the bulk in life insurance and annuities. A substantial amount of the deferred annuity business is in International Financial Life and was acquired by assumption reinsurance agreement. There is a small amount of health insurance business, primarily in First National Life, as well.
Diamond Benefits Life (AZ)/LACOP (PA)Litigation Settlement Report Mailed
A report detailing the litigation settlement efforts of the Diamond Benefits receiver was mailed to affected guaranty associations on May 11. The report provides details of the settlement agreement, along with distribution priorities of potential funds. The receiver is required to obtain the consent of guaranty associations to the agreement prior to its closing. The settlement transfers certain cash and properties from two companies in federal bankruptcy protection to the Diamond Benefits estate in exchange for dismissal of claims and counterclaims. Guaranty associations are asked to execute and return the consent form to Paul Peterson by June 11.
Staff Contact - Paul Peterson Mutual Security Life (IN)Final Proof of Claim Requested
The Liquidator has requested that all affected guaranty associations file a final Proof of Claim for administrative expenses and policyholder benefit payments, particularly payments made directly to policyholders of which the Liquidator might not be aware. Even if there is nothing to report, the Liquidator requests that GAs confirm their last filed Proof of Claim. The filing deadline is June 30. Final Proof of Claim should be sent to the Indiana Insolvency Office, Attention: Fred Greve, 311 W. Washington St., Suite 200, Indianapolis, IN 46204.
Task Force Chair - Luther Hill; Staff Contact - Bill O'SullivanMississippi Supreme Court Refuses to Rehear Decision
On April 29th, the Mississippi Supreme Court denied the Mississippi Guaranty Association's motion to rehear the Bank of Mississippi vs. Mississippi Life and Health Ins. Guar. Assn. case. The court had ruled in October that guaranty association coverage is determined by the law in effect at the time a contract was purchased, not at the time of liquidation. The court had also refused to apply the Mississippi Act's exclusion for unallocated annuities protected by the PBGC because the pension plan in question was terminated and no PBGC benefits were paid.
The guaranty association asked the court to reconsider its October decision, pointing out that application of Mississippi law in effect at the time a contract was purchased, rather than the time of liquidation, restricts the coverage of the guaranty association because it excludes all Mississippi policyholders who purchased policies prior to 1985, when the Mississippi Act originally went into effect. In addition, the association argued that failure to apply the Mississippi Act's exclusion for unallocated annuities protected by the PBGC contradicts the public policy of protecting individual policyholders by increasing costs and adding a layer of guaranty association coverage to large, sophisticated institutional investors with retirement plans already protected by the PBGC.
Staff Contact -State Insolvency Law Amendments
In Mississippi, legislation has passed which amends the state guaranty association laws to bring the Mississippi Life and Health Insurance Guaranty Association Act into conformity with the NAIC Model. Mississippi House Bill 1151 has been approved by Governor Fordice, and became effective on March 15, 1999. The new Act applies only to insurers that become insolvent or unable to fulfill their contractual obligations after the March 15 effective date.
Also, the Missouri General Assembly has been considering a proposal to amend Missouri's receivership laws. At the request of the Missouri Association, NOLHGA has provided technical comments with respect to certain aspects of the proposed legislation. NOLHGA's comments were focused primarily upon strengthening the early access provisions for life and health insurance guaranty associations.
The proposed legislation was approved by the Missouri House and Senate on May 10, 1999 and will now be submitted to Governor Carnahan for approval. This legislation, like many of the pending initiatives to amend state receivership laws, has received a lot of attention from the state insurance department and guaranty association, as well as industry representatives. It also appears that, notwithstanding the passage of legislation this year, legislators in Missouri may seriously consider additional URL-based amendments next year.
Staff Contact - Joni ForsytheYear 2000 Insolvency Contingency Plan Committee
The Committee is scheduled to meet on May 19 from 3:30 to 5:20 pm at the Westin Hotel in Washington, DC during the MPC meeting. Guaranty association administrators and any others interested are encouraged to attend and provide comments or thoughts regarding year 2000 and related issues. The Committee's efforts will be focused on available Y2K resources, communications, and the early response team concept. The Committee would greatly appreciate additional input.
Also, in the Committee's continuing role of assisting guaranty associations in their own Y2K efforts, the following websites may contain information useful to administrators:
www.state.ky.us/year2000/index.htmCreated by the Commonwealth of Kentucky, this site provides information about year 2000 issues within the state government along with a forum for sharing information with citizens of Kentucky.
www.pcy2000.orgThis website was created by an alliance of PC hardware manufacturers, software companies and other technology companies. Information on the site deals primarily with testing hardware for year 2000 compliance. The site contains testing criteria and links to member companies.
Task Force Chair - Jack Falkenbach; Staff Contact - Paul PetersonCALENDAR/CONFERENCE CALLS
May 19-21 Members' Participation Council Meeting, The Westin Grand Hotel, Washington, DC