Kentucky Central Life (KY)

Summary Judgment Hearing Scheduled

On May 24, NOLHGA received notice that the Central Bank & Trust Company has scheduled hearing on its motion for summary judgment for September 28, 1999 in the matter of Central Bank & Trust Company v. Mid-Central Investment Co, Inc.

This civil litigation was initiated in the Circuit Court for Franklin County by Central Bank & Trust Company, as trustee for certain shareholders of Mid-Central Investment Company, Inc., a subsidiary of KCL. The shareholders in this action are continuing their pursuit of approximately $12 million against the assets of Mid-Central, from which they argue they are entitled to be paid as Mid-Central's preferred shareholders. The Liquidator has taken the position that the assets of Mid Central should be consolidated into the Kentucky Central estate. In mid 1998, the Liquidator asked NOLHGA to intervene in the action for the purpose of supporting transfer of the case to the liquidation court and, ultimately, substantive consolidation of Mid-Central assets into the KCL estate. On June 5, 1998, NOLHGA, the Illinois and Texas guaranty associations and the Kentucky Public Employees Retirement Fund filed a motion to intervene in the action and to transfer same to the liquidation court. Their motion was granted on June 11, 1998.

The motion for summary judgment now scheduled for hearing in September was filed with the Circuit Court more than a year ago, but hearing on the motion has been deferred as a result of third party interventions and transfer of the case. In their motion for summary judgment, the shareholders have asked the court to determine, as a matter of law, that their rights to Mid-Central assets have priority over any rights of the KCL estate.

Task Force Chair - John Colpean;   Staff Contact - Joni Forsythe American Standard Life (OK)

Escrow Account Distribution

On May 14, NOLHGA distributed the remaining funds in the ASL escrow account by issuing checks to the following guaranty associations: Alaska; Arizona; Arkansas; Florida; Hawaii; Indiana; Kansas; Mississippi; Missouri; Nebraska; Nevada; New Mexico; North Carolina; Ohio; Oklahoma; Oregon, South Carolina; Texas; Washington; and Wyoming. If any of the above associations have not yet received an ASL refund check, please contact Hazel Manclark at 703.787.4110.

Task Force Chair - Andrea Bowers;   Staff Contact - Bill O'Sullivan First National Life (AL)

Receiver Petitions for Instructions

On May 6, the Receiver in First National Life Insurance Company filed a petition for instructions with the receivership court (Circuit Court for Montgomery County, Alabama) asking the court to instruct the Receiver and American Pioneer (AP) in their dispute regarding a policy reserve deficiency related to the assumption of the business, overpayments made to American Pioneer, and a small expense claim.

The petition states that under the Reinsurance and Assumption agreement completed in 1996, the statutory reserves with respect to the assigned policies were thought to be $1.4 million. In 1998, AP discovered a deficiency of nearly $200,000, however, and filed a claim with the Receiver seeking the deficiency amount, plus interest. The Receiver denied the claim. The receiver recently discovered that AP received overpayments on FNLIC policy claims of a little over $100,000 through March 1 of this year. The Receiver, asserting that the overpayments were made by mistake, sought reimbursement from AP. AP claimed it was entitled to offset the overpayments for administrative expenses incurred on behalf of FNLIC and the Receiver. AP further claimed it should be reimbursed approximately $3,500 plus interest for certain expenses.

The questions before the court are whether the Receiver must pay AP the policy reserve deficiency, whether AP must pay the Receiver the claims overpayments, whether AP may offset the claims overpayments by AP's claim for administrative expenses, and whether the Receiver must pay the telecommunication expense claim.

Task Force Chair - Mike Marchman;   Staff Contact - Joni Forsythe

Year 2000 Insolvency Contingency Plan Committee

The committee is beginning a process to identify potential resources for use on an Early Response Team ("ERT"). The concept behind the ERT is to create a pool of resources that an insolvency task force may utilize to retrieve and maintain data that may be compromised as a result of the Y2K problem and identified as essential for guaranty associations in fulfilling their statutory obligations with respect to an insolvent insurer. Specialists in the areas of benefits and policy service operations, along with data retrieval and processing are being sought. Guaranty association administrators who may have used, or are aware of, third party administrators, insurance companies or systems consultants that may be interested in being included in the pool of resources should forward their names to Paul Peterson via e-mail at [email protected].

Microsoft has announced new informational resources and tools to address customers' requirements as they continue to prepare for 2000. A new Y2K consumer website provides users with background information on Y2K issues and on measures for taking appropriate action to remedy any potential Y2K problems present on their computers. The site also includes information on hardware and software analysis. The consumer site will be accessible in early June. In addition, more detailed technical information about Microsoft products is available on Microsoft's Technet Y2K website. Both sites may be accessed at www.microsoft.com/y2k.

Task Force Chair - Jack Falkenbach;   Staff Contact - Paul Peterson

8th Annual NOLHGA Legal Seminar, July 15-16

The Legal Seminar Planning Committee is hard at work putting the finishing touches on the program for NOLHGA's 8th annual Legal Seminar! Brochures and seminar registration materials will be mailed within the next week. In the meantime, it is not too early to reserve your room(s). There has been a tremendous amount of interest expressed in this year's event, and we expect record breaking attendance.

As most of you know by now, the seminar is being held at the Silvertree Hotel and Conference Center in Snowmass, Colorado. The Silvertree is now accepting reservations under NOLHGA's room block. In fact, the hotel has already booked more than a third of our total room block for the event! To make reservations, call the Silvertree Hotel at 1.800.525.9402 or 970.923.5494. Be sure to indicate that you are attending the NOLHGA Legal Seminar so that you will be included in NOLHGA's room block and afforded the special discount rate for this event ($105 per night). This rate will be honored for all NOLHGA guests for 3 days before and after the event. In addition, NOLHGA has obtained group travel discount rates for Legal Seminar attendees through United Airlines. These rates are valid from July 12th through the 19th. To obtain the group discount rate, you must make your airline reservations through Agency International at 1.800.831.6163, ext. 15. Ask for Ashley Collier. A price sheet is attached which lists the discount airfare into Aspen by state.

The program is packed with exciting, fresh and timely topics, as well as several powerhouse guest speakers. You do not want to miss this year's event! As in past years, we expect this year's program to be fully accredited by the state Mandatory Continuing Legal Education (MCLE) Boards and to earn between 9 and 11 CLE credits per state (including up to 2 full hours of ethics). (This means that the lawyers among us should be bringing all of their associates along to take advantage of the CLE accreditation!).

Planning Committee Chair - Frank D. O'Laughlin;   Staff Contact - Joni Forsythe

ETC.

Tennessee Association Address Change

The Tennessee Association has a new address. Effective June 14, the new address will be 1200 First Union Tower, 150 4th Avenue North, Nashville, Tennessee, 37219-2433. The phone (615.242.8758) and fax (615.256.8197) numbers will remain the same.

CALENDAR/CONFERENCE CALLS

July 15-16 NOLHGA Legal Seminar, Snowmass, CO

NOLHGA's 8th Annual Legal Seminar

Agency International
22 Lenox Point, N.E.
Atlanta, Georgia 30324
(404) 266-2200
Fax (404) 261-1511

Contact - Reservations must be made throughAshley Collier at Agency International1-800-831-6163, ext. 15
Airline - Must fly on United Airlines
Travel Period -Discount and area fares valid for travel to/from Aspen, July 12th through 19th
Discount - 5% discount off any UNITED published excursion fare.
Additional 5% off when tickets are issued 60 days prior to travel.
- OR -
Pre-set Area fares (listed below), whichever is lower
Advance Purchase - Minimum 7 day advance purchaseFares subject to availability
Minimum Stay - For Published Fares, determined by fare rule.For Area Fares, a two day minimum stay is required

AREA FARES: These fares are a close estimate, but will vary due to fluctuations in the airport taxes from each city. Area Fares are only offered if a minimum of 25 passengers will be ticketed for this group. If Area Fares are used and the minimum is not met, a $50.00 per ticketed passenger penalty will be administered to contracted company (NOLHGA).

Fly from any United city in: Approximate Fare
DC, MA, MD, PA, VA $574
CT, DE, ME, NH, NJ,NY,RI,VT,WV,CANADA-NS,ON,PQ $574
AL,FL,GA,MS,NC,SC,TN $584
IA,IL,IN,KS,KY,MI,MN,MO,NE,OH,WI $488
AR,LA,NM,OK,TX $439
CO,MT,ND,SD,UT,WY $412
ID,OR,WA,CANADA-AB,BC $452
AZ,CA,NV $431
AK $600