AMS Life Insurance Company (Ariz.)

Court Approves Early Access Distribution

In the April 26 issue of the NOLHGA Wire, it was reported that the receiver for AMS Life had agreed to make a partial distribution to the guaranty associations from available estate assets. Specifically, the receiver proposed a distribution of $6,000,137, which, when paid, would increase total distributions to date to just under $66 million (approximately 65 percent of the total guaranty association claims against the estate).

The petition for approval of the proposed distribution was filed on April 18 and was approved by the court at hearing on May 7. The receiver advised that distribution payments would be sent directly to the affected state guaranty associations on or about May 14 by either check or wire transfer.

Further distributions to the guaranty associations are anticipated following exhaustion of a pending appeal with respect to the receiver’s $19 million judgment against certain former accountants and actuaries of AMS Life.

Task Force Chair - Luther Hill;   Staff Contact - Joni Forsythe Executive Life Insurance Company (Calif.)

Courts Say Commissioner Has Exclusive Right To Sue

Recently, two final orders were issued in connection with cases related to the Altus litigation. On April 29, the Ninth Circuit Court of Appeals affirmed U.S. District Judge Matz's dismissal of Sergio Carranza-Hernandez v. Altus Finance Corp. ("Carranza I"). The plaintiff in the case, a structured settlement annuitant, had alleged that the defendants violated California's Cartwright Act through a series of secret agreements and conspiracies. In affirming Judge Matz's ruling, the Ninth Circuit wrote: "The district court correctly concluded that the California Insurance Commissioner has exclusive standing under California law to bring the claims asserted in Carranza's action."

Similarly, on May 8, Judge Matz dismissed the California Attorney General's (AG's) action, State of California ex rel RoNo LLC v. Altus Finance. The case was originally filed in 1999 by whistleblower and qui tam plaintiff RoNo. Last summer, the AG intervened in the matter and assumed prosecution of the case, which alleges that the defendants fraudulently acquired assets of the ELIC estate in violation of the California False Claims Act, the California Unfair Competition Law, and federal RICO statutes. Again finding that the case concerned the disposition of ELIC assets, Judge Matz ruled that under California law, the commissioner has exclusive jurisdiction to pursue the claims raised by the AG and dismissed the matter with prejudice.

Two related cases remain before Judge Matz: the commissioner's case, Low v. Altus Finance, and a case brought by one of the bidders for the Executive Life business, Sierra National Insurance Holdings, Inc. v. Credit Lyonnais, S.A. The matters remaining before the Ninth Circuit Court of Appeals are Sergio Carranza-Hernandez v. Artemis S.A. ("Carranza II"), an interlocutory appeal in the Sierra case, and NOLHGA's appeal of the decision denying its Motion to Intervene in the Low case. Oral argument on NOLHGA’s appeal is expected this summer.

Task Force Chair - Art Dummer;   Staff Contact - First National Life Insurance Company (Ala.)

Fund Transfers to Affected GAs Begin

NOLHGA has begun distributing the funds from the $2.4 million early access distribution received from the First National Life receiver (see the May 3 issue of the NOLHGA Wire). The distributions are being made by wire transfer or check. Guaranty associations with questions about the distributions should contact Paul Peterson.

Task Force Chair - Mike Marchman;   Staff Contact - Paul Peterson

MPC Schedules Revised

There have been a few revisions to the task force meeting schedule and general session agenda for the upcoming MPC meeting, which will be held May 20-22, 2002, at the Hilton Columbus in Columbus, Ohio.

On Tuesday, May 21, the Reliance and ELIC roundtable meetings have switched time slots. The ELIC meeting will now be held from 9:40 a.m. to 11:25 a.m., and the Reliance meeting will run from 11:45 a.m. to 1:15 p.m. Both meetings will be in the Easton A room, as originally scheduled, and lunch will be served at the Reliance meeting rather than the ELIC meeting.

The Legion and Villanova Task Force meeting, which is scheduled for 2:30 p.m. to 5:00 p.m. on May 21, will be a roundtable meeting. Therefore, there will be no presentation to the MPC general session on May 22. All affected guaranty associations are encouraged to attend the May 21 roundtable meeting.

The schedule and briefing book PDF files on the meeting Web page have been updated to reflect these changes. Please contact Sean McKenna (703.787.4106 or [email protected]) or Karen Early (703.787.4101 or [email protected]) with any questions.

  Staff Contact - Sean McKenna