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AMS Life Insurance Company (Ariz.)

Receiver to Make Partial Distribution

The receiver for AMS Life has agreed to make a partial distribution to the guaranty associations from available estate assets. Specifically, the receiver has proposed a distribution of $2.5 million, which, when paid, would increase total distributions to date to just under $68.5 million; i.e., approximately 67 percent of the total guaranty association claims against the estate. A petition for approval of the proposed distribution has been filed, and hearing is scheduled for June 9, 2004.

Litigation is ongoing with respect to the receiver's $19.5 million judgment against the company's former accountants and auditors, and will likely continue throughout 2004. Further distributions to the guaranty associations are expected from the proceeds of those judgments following exhaustion of all appeals.

Task Force Chair - Luther Hill; Staff Contact - Joni Forsythe

MPC Meets in Virginia

The Members' Participation Council (MPC) met in Reston, Va., on May 26, 2004. The following are summaries of task force insolvency reports presented during the meeting:

Staff Contact - Sean McKenna Kentucky Central Life Insurance Company (Ky.)

Task Force Chair John Colpean (Michigan) briefed attendees on the history of the insolvency and reported that work on the final expense claim had been slowed by the appointment of a new administration in Kentucky. He and Task Force Legal Counsel Kevin Griffith (Baker & Daniels) provided details of a recent $16 million proposal to pay the final guaranty association expenses. Details of the deal were still being finalized at the time of the presentation, but the task force is expected to recommend that the proposal be accepted by the MPC.

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

Project Manager Fred Buck updated attendees on litigation relating to the Legion/Villanova estate. He reported that a judge recently clarified a stay of the liquidation order, ruling that only a portion of the order--which does not include the finding of insolvency--was stayed. He also noted that almost all stop-loss policies have been paid. All in-force disability policies have been sent to the respective guaranty associations, and the last outstanding item is reimbursement to the estate for other A&H claims (approximately 90,000).

Task Force Chair - Peter Leonard; Staff Contact - Paul Peterson Reliance Insurance Company (Pa.)

Project Manager Fred Buck explained the lengthy procedure in place to pay claims and provided some proposals that might speed up the process. These proposals are currently being evaluated by the liquidator. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) briefed attendees on the status of litigation relating to the directors and officers liability insurance and the Deloitte & Touche case.

Task Force Chair - Tad Rhodes; Staff Contact -

Commissioner Gross, OFAC Compliance Highlight MPC Agenda

In addition to the task force reports mentioned above, the May 2004 MPC meeting featured a number of other presentations. Virginia Commissioner of Insurance Al Gross provided welcoming remarks and also spoke on the challenges of insurance regulatory reform. NOLHGA's Senior Vice President and General Counsel Bill O'Sullivan updated attendees on the progress of the Legal Committee's study of separate account variable products and the implications for possible guaranty association coverage of these products.

Jan Funk (Indiana), Frank Swain (Baker & Daniels) and Meg Melusen (NOLHGA) gave a panel presentation titled "OFAC Compliance for Guaranty Associations." The presentation, which was sponsored by the Administrators' Education Steering Committee, detailed the history of the Office of Foreign Asset Control (OFAC) and explained how a 2001 executive order from President Bush broadened the application of OFAC regulations with respect to insurance companies as well as guaranty associations. Step-by-step instructions on how to comply with OFAC regulations were also provided.

MPC Chair Jack Falkenbach (Delaware) reported on recent NOLHGA Board activities and also updated attendees on work being performed by the MPC Executive Committee. He noted that the Health Issues Subgroup expects to have a final report completed in the near future, while the Plan of Operations Subgroup hopes to have a draft Model Plan ready for review shortly.

Staff Contact - Sean McKenna

Dasher Honored at MPC Meeting

At its meeting on May 26, 2004, the MPC passed a resolution expressing its deepest sympathies to the family of Benedict J. "Ben" Dasher on his passing in January 2004 and expressing its gratitude for his many contributions to the MPC. Dasher was formerly the chair and administrator of the Nevada Life & Health Insurance Guaranty Association.