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American Life Assurance Corporation (Ala.)

Motion for Protective Order Granted

A hearing on the receiver's petition for approval of final settlement of claims and to close the estate is scheduled for June 1, 2004, at 10:00 a.m. In anticipation of that final hearing, and in furtherance of ongoing objections to closure of this estate, New South Investment Corporation ("New South"), ALAC's former 100 percent shareholder, issued broad-scale requests for production of documents and requests for depositions of NOLHGA staff and Alabama Insurance Department personnel. Although the requests were not limited to any specific facts or issues, it appears that discovery was sought to further newly filed objections to the court's 1997 order for liquidation and finding of insolvency.

NOLHGA filed a motion for protective order asking that the court terminate discovery and proceed with the closing hearing on June 1. Following hearing on April 29, NOLHGA's motion for protective order was granted. New South has stated an intent to file a petition for mandamus to the Alabama Supreme Court seeking reversal of the protective order. No such petition has yet been filed, and the closing hearing is still pending on the court's docket for June 1.

Task Force Chair - Mike Marchman; Staff Contact - Joni Forsythe Kentucky Central Life Insurance Company (Ky.)

Kentucky Court Grants Summary Judgment on Remaining Claims in Bank of Louisville Litigation

Judge Crittendon granted summary judgment on the claims and counter claims between the KCL liquidator and the Webbs that remained after the Bank of Louisville settled with the liquidator by paying the KCL estate $27 million nearly two years ago. The litigation involved a complex financing arrangement where KCL guaranteed loans to the Webbs from the Bank of Louisville and agreed to buy the real estate pledged to the bank by the Webbs. Judge Crittendon found that neither KCL nor the Webbs had any claims remaining arising out of the loan transactions.

The Webbs' lawyer was quoted in the Lexington press as declaring a victory for the Webbs that would yield them between $30 to $70 million. The liquidator responded in an article in the same paper a few days later saying the Webbs put "a damn fine spin" on what the court ruled and that the ruling would not cost the KCL estate "one cent."

Judge Crittendon's summary judgment does not address other pending litigation in which the liquidator is seeking to enforce $90 million in personal guarantees to KCL from the Webbs.

Task Force Chair - John Colpean; Staff Contact - Joni Forsythe

May MPC Meeting Briefing Book Now Available

The briefing book for the next MPC meeting, which will be held May 25-26, 2004, at the Hyatt Regency Reston in Reston, Va., has been posted on the MPC meeting Web page, which can be found here. Due to the confidential nature of the briefing materials, only NOLHGA Board members, guaranty association administrators, members of guaranty association boards, and other association representatives who will attend the meeting as the designated voting guaranty association representative can access the briefing book (users will need to log in after clicking on the link to access the file, which can be found in the "Meeting Resources" section). Other guaranty system representatives who require a copy of the meeting agenda or a particular insolvency status report should contact the appropriate NOLHGA staff contact.

The briefing book includes meeting and agenda schedules, the attendee list, status reports for the upcoming meeting, and other meeting materials. It is in PDF format, and users will need Adobe Acrobat Reader to view and print the materials. Acrobat Reader is available free from Adobe at this link.

If you have any trouble accessing the MPC meeting Web page or briefing book, please contact Dan Hicks at [email protected] or 703.787.4112. If you have any questions about the meeting, contact Sean McKenna at [email protected] or 703.787.4106.

Staff Contact - Sean McKenna

Litigation Update --Request for Information

NOLHGA periodically publishes a Litigation Update providing NOLHGA members with a summary of guaranty association coverage litigation as well as other significant litigation involving guaranty associations. The last edition of the Update was published and distributed to the members in June 2003. We expect to publish an updated edition this summer, provided there is sufficient material to warrant publication.

To help us ensure that the Update is as complete as possible, we ask that you please notify us of (A) any new litigation that your state guaranty association has become involved with since May 2003 and (B) any significant developments in preexisting cases since May 2003. We encourage you to include information regarding any guaranty association litigation that you feel would be of general interest to the membership.

The original deadline for submissions has been extended to Friday, May 21. Responses should be sent to the attention of Joni Forsythe by fax (703.481.5209) or mail (13873 Park Center Road, Suite 329, Herndon, VA 20171).

Please do not hesitate to call Ms. Forsythe directly at 703.787.4103 with any questions. Many thanks to all once again for your input and contributions!

Staff Contact - Joni Forsythe

NAIC Solicits Comments on Rehabilitation and Liquidation Model

The NAIC's Model Act Revisions Working Group is soliciting comments on a newly released exposure draft of the NAIC Model Rehabilitation and Liquidation Act. This draft is the product of a multi-year effort to update the receivership model and is expected to be presented for review and section-by-section vote at the June NAIC meeting in San Francisco. NOLHGA has submitted written comments on many of the issues addressed in the draft and will continue to participate in the review and discussions. A copy of the exposure draft is available on the NAIC Web site in the Receivership and Insolvency Task Force section. You may also request a copy by contacting Aimee Frye at 703.787.4115.

Staff Contact - Joni Forsythe

Passings

Albina M. O'Loughlin, mother of Frank O'Loughlin (Rothgerber, Johnson & Lyons) passed away on May 11, 2004. She was 90. According to the obituary in the Great Falls Tribune, memorials may be made to the Peace Hospice in Great Falls, Mont., or the donor's choice.

Expressions of sympathy can be sent to Frank at One Tabor Center, 1200 Seventeenth Street, Suite 3000, Denver, CO 80202. All of us at NOLHGA wish to express our deepest sympathies to Frank and his family.