MPC Meets in Salt Lake City

The Members' Participation Council met in Salt Lake City, Utah, on May 19-21. The following are summaries of task force insolvency reports presented during the meeting:

  Staff Contact - Sean McKenna American Chambers Life Insurance Company (Ohio)

Task Force Chair Chuck Gullickson (S.Dak.) reported that the task force's main activity is monitoring the liquidator's asset recovery efforts; the estate's assets consist of cash, a piece of real estate in Chicago, and claims against third parties. Gullickson added that litigation relating to the estate could take some time to be resolved.

Task Force Chair - Chuck Gullickson;   Staff Contact - American Standard Life & Accident Insurance Company (Okla.)

Task Force Chair Andrea Bowers (S.C.) reported that the estate could close by year-end. The estate currently has $1.8 million in assets, and a distribution of approximately $1.1 million is planned.

Task Force Chair - Andrea Bowers;   Staff Contact - Bill O'Sullivan Guarantee Security Life Insurance Company/Guaranty Reassurance Corporation (Fla.)

Task Force Chair Frank Gartland (Ohio) briefed attendees on the closing of Guaranty Reassurance Corporation in 2002 and the transfer of its assets and liabilities to a liquidating trust. He also provided an update on activity involving three escrow accounts, which should result in approximately $4 million being released to the trust in the near future.

Task Force Chair - Frank Gartland;   Staff Contact - Bill O'Sullivan Inter-American Insurance Company (Ill.)

NOLHGA staff contact Joni Forsythe reported that the OSD plans to close the Inter-American estate before year-end. To this end, the OSD has been working to resolve matters with four guaranty associations that filed objections to its most recent claims allowance determinations. At least three of those objections have now been fully resolved. In addition, significant progress has been made in resolving all remaining tax issues involving the estate. All state and federal tax returns for Inter-American and its subsidiary through the year 2001 have been filed, and the estate is awaiting a response. Distributions to the guaranty associations to date total approximately $45 million (about 29.5 percent of claims). The receiver expects to file a petition for approval of a final distribution to guaranty associations by the end of May. Although no specific figures have yet been made available, the OSD has indicated that the amount of the final distribution to the guaranty associations will be comparatively small; i.e., about 1 to 1.5 percent of their respective claims. The OSD expects to complete the final accounting and close the estate by the end of the third quarter of 2003.

Task Force Chair - William Falck;   Staff Contact - Joni Forsythe Legion/Villanova Life Insurance Companies (Pa.)

Task Force Chair Peter Leonard (Calif.) provided a brief history of the receivership (both companies are still in rehabilitation). Task Force Legal Counsel Frank O'Loughlin (Rothgerber, Johnson & Lyons) reported on the considerable legal activity in the receivership and on the recent settlement between MRM (the parent company) and the receiver concerning a commutation agreement. According to the terms of the settlement, the companies will receive approximately $100 million from MRM and MRM will withdraw its objection to the receiver's petition to liquidate the companies; however, a number of other parties have also challenged the liquidation order.

Task Force Chair - Peter Leonard;   Staff Contact - National Heritage Life Insurance Company (Del.)

Task Force Chair Dan Orth (Ill.) reported that the estate is trying to collect any remaining assets, which include real estate and litigation against third parties. A task force subgroup formed to monitor litigation met with the special deputy receiver and his legal counsel on April 30, 2003. Task Force Legal Counsel Frank O'Loughlin (Rothgerber, Johnson & Lyons) provided a breakdown of the major civil and criminal cases relating to the NHL estate. There are two large civil cases, one of which is scheduled to go to trial on September 30, 2003 (the other is still in discovery), as well as a number of smaller cases, most of which are in New York.

Task Force Chair - Dan Orth;   Staff Contact - Reliance Insurance Company (Pa.)

Task Force Chair Tad Rhodes (Okla.) reported on the recent settlement between the Reliance receiver and Reliance Group Holdings, Inc., which will evenly split the assets of the failed insurer. He also urged affected guaranty associations to file their claim information promptly and discussed the intricacies of the disability claims from the Reliance estate.

Task Force Chair - Tad Rhodes;   Staff Contact - Statesman National Life Insurance Company (Tex.)

Task Force Chair Neil Rucksdashel (Wash.) briefed attendees on the history of this insolvency and reported that affected guaranty associations can expect a distribution of approximately $2.3 million in the next few months. He also reported that the net cost of this insolvency for guaranty associations will be $3 million and that the estate is expected to close this year.

Task Force Chair - Neil Rucksdashel;   Staff Contact - Paul Peterson The Thunor Trust Companies

Task Force Chair John Colpean (Mich.) reported that the task force is focusing on asset recovery, in particular the litigation surrounding the Thunor estate. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) updated attendees on the six groups of civil actions being pursued by the Thunor receivers as well as the criminal proceedings. He noted that the receivers have obtained $20 million in settlements, some of which may be distributed to affected guaranty associations in the third quarter of 2003.

Task Force Chair - John Colpean;   Staff Contact -

Plan of Operation and Other Matters Addressed at MPC Meeting

MPC Chair William Falck (Fla.) reported on the progress of the Guaranty Association Plan of Operation Working Group, which he chairs. The group has collected the plans of operation of most guaranty associations and is reviewing the plans; once this review is complete, the group will create a NOLHGA Model Plan of Operation based on the common factors found in the states' existing plans. The group will also look at variations among the plans and include additional language in the Model Plan addressing particular variations that might prove useful to associations reviewing their current plan of operation.

Falck also reported that the MPC Chair Election Committee will consist of Candie Kinch (Idaho), Lowell Miller (N.C.), and Tom Peterson (Ky.).

Peter Leonard (Calif.), who chairs the MPC subgroup charged with devising ways to implement some of the recommendations made in the 2001 Health Insurance Issues Committee report, updated meeting attendees on the group's progress. A questionnaire concerning third-party administrators (TPAs) and the TPA approval process was recently mailed to all guaranty associations, and the group is currently evaluating the results.

NOLHGA President Peter Gallanis updated attendees on recent events in the financial services modernization arena. He noted that there have been a number of congressional hearings on insurance-related topics already this year and that the American Council of Life Insurers (ACLI), the American Bankers Insurance Association (ABIA), and the American Insurance Association (AIA), all of which have drafted optional federal chartering legislation, are working together on a consensus bill.

  Staff Contact - Sean McKenna

Steuck Appointed New South Dakota Director of Insurance

Gary L. Steuck has been appointed director of the South Dakota Division of Insurance by Secretary of Revenue and Regulation Gary Viken. Steuck has nearly 40 years of experience in the insurance industry, having worked in the sales, loss control, marketing, and manager sectors for companies in Minnesota, Montana, North Dakota, and Wyoming. He also spent six years on the board of the Montana Surplus Lines Agents Association, holding a variety of offices, including president.

Steuck's appointment became effective on May 12. He replaces Wendall Malsam, who had been serving as acting director of the Division of Insurance since January.

  Staff Contact - Sean McKenna

New Contact Info

Kevin Griffith of Baker & Daniels has a new e-mail address. He can now be reached at [email protected].

  Staff Contact -