Legal Seminar Presentation to Consider Enterprise Risk Management

NOLHGA's 14th Annual Legal Seminar will feature a presentation by Jack L. Gibson from the Tillinghast business of Towers Perrin on the increased focus on enterprise risk management at life insurance companies and the impact this may have on regulatory oversight and the likelihood of future insurance company insolvencies. Gibson is managing principal of Tillinghast's North American Life Practice. In addition to corporate strategic planning, asset and liability management, actuarial appraisals, and product development, Gibson's expertise includes mergers and acquisitions, securitizations, mutual life insurance demutualizations/conversions, life insurance company rehabilitations, enterprise risk management, and enhanced financial modeling.

NOLHGA's 14th Annual Legal Seminar will be held on August 3 and 4, 2006, at The Renaissance Harborplace Hotel in Baltimore, Md. An MPC meeting will be held in conjunction with the seminar on August 1 and 2. Preliminary information for both meetings is available on the joint meeting Web page.

  Staff Contact -

MPC Meets in Indianapolis

The Members' Participation Council (MPC) met in Indianapolis, Ind., on May 23-24, 2006. The following are summaries of task force insolvency reports presented during the meeting:

  Staff Contact - Sean McKenna Diamond Benefits Life Insurance Company (Ariz.)/Life Assurance Company of Pennsylvania (Pa.)

The DBL/LACOP MPC met in closed session.

  Staff Contact - Paul Peterson Executive Life Insurance Company (Calif.)

The Executive Life MPC met in closed session.

Task Force Chair - Art Dummer;   Staff Contact - Bill O'Sullivan Life & Health Insurance Company of America (Pa.)

Task Force Chair Linda Becker (Kansas) reviewed recent developments in the estate, including task force meetings with the liquidator to discuss the GE/ERC commutation agreements. She also reported that the audit of the TPA being used by the guaranty associations revealed no problems with claims administration. The task force is currently holding discussions with the liquidator on establishing a claim valuation methodology for the long-term care block of business. In addition, following discussion, the MPC passed a resolution authorizing the task force to proceed with negotiation of a commutation agreement among the liquidator, GenRe, and the guaranty associations for two reinsurance treaties.

Task Force Chair - Linda Becker;   Staff Contact - Reliance Insurance Company (Pa.)

Task Force Chair Tad Rhodes (Oklahoma) reported that the task force received extensive financial reports from the receiver in February and that no additional early access distributions are expected for quite some time. The task force will continue to coordinate the unassumed truckers policies, respond to any audit inquiries, and monitor asset recovery efforts.

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

Task Force Chair Tad Rhodes (Oklahoma) reported that the assumption transfer of the outstanding States General life policies to American Founders Life closed on May 3, 2006. All other in-force business, which included major medical and Medicare Supplement lines, was previously transferred to New Era. The first true-up with New Era under the Medicare Supplement assumption agreement was completed earlier this month. Mr. Rhodes also reviewed the status of negotiations with respect to early access for the guaranty associations, including in his summary a brief discussion of procedural changes resulting from application of the new Texas liquidation act. Additional information and materials pertaining to early access issues will be provided to the affected associations in the next week or so. The receiver has agreed to make an early access distribution of about $1 million this year, and the task force will continue to work with the receiver to facilitate the distribution. Other task force activities include completion of an ongoing premium and claims audit, post-closing accounting and reconciliation items under the assumption agreements, and monitoring of estate litigation.

Task Force Chair - Tad Rhodes;   Staff Contact - Joni Forsythe Summit National Life Insurance Company (Pa.)

Task Force Chair Tad Rhodes (Oklahoma) announced that a final distribution of slightly more than $37 million has been distributed to affected guaranty associations. This distribution brings the guaranty associations' total recovery to almost 98%.

Task Force Chair - Tad Rhodes;   Staff Contact - Paul Peterson Thunor Trust Companies

Task Force Chair John Colpean (Michigan) updated attendees on the financial status of the Thunor Trust Companies and Legal Counsel Charlie Richardson (Baker & Daniels) provided a review of the various civil cases involving the estates, including the People/Veterans/Settlers case. The task force continues to monitor asset recovery efforts and seek early access distributions.

Task Force Chair - John Colpean;   Staff Contact -

Indiana Commissioner Atterholt & Others Address MPC General Session

Indiana Insurance Commissioner Jim Atterholt spoke at the MPC General Session about a number of regulatory issues, including a possible optional federal charter for the life insurance industry, the success of the NAIC's Interstate Compact, and the importance of guaranty associations forging ties with their state and federal legislators.

The MPC General Session also featured closed-session presentations on health insolvency privacy issues and new task force issues. In addition, Lowell Miller (North Carolina) of the Guaranty System Modernization Task Force's Accounting Subgroup conducted a progress report for meeting attendees; members of the task force's Guaranty Association Model Act Subgroup--Bart Boles (Texas), Jack Falkenbach (Delaware), Chuck Gullickson (South Dakota), Jean Hasch (Maine), and Dave Perry (Montana)--also provided an update on their progress. The Administrators' Education Steering Committee sponsored a presentation entitled "Disaster Recovery Plans for Guaranty Associations" conducted by Joel Glover (Rothgerber, Johnson & Lyons), Candie Kinch (Idaho), Peggy Parker (Virginia), and Chuck Renn (Missouri). NOLHGA President Peter Gallanis updated attendees on recent developments on Capitol Hill concerning optional federal chartering, and MPC Chair Jack Falkenbach (Delaware) reported on the recent MPC Executive Committee meeting, activities of the Guaranty System Modernization Task Force, and the most recent meeting of the NOLHGA Board of Directors.

  Staff Contact - Sean McKenna