November 4, 2004

MPC Meets in Las Vegas

The Members' Participation Council (MPC) met in Las Vegas, Nev., on October 25, 2004. The following are summaries of task force insolvency reports presented during the meeting:

  Staff Contact - Sean McKenna Coastal States Life Insurance Company (Ga.)

MPC Chair Jack Falkenbach (Delaware) reported that an order to close the estate and distribute the remaining assets was issued on September 20, 2004. The guaranty associations are expected to receive approximately $3 million in a final distribution.

Task Force Chair - Jack Falkenbach;   Staff Contact - Consumers United Insurance Company (Del.)

MPC Chair Jack Falkenbach (Delaware) updated attendees on the sale of the estate's largest remaining asset, a parcel of real estate known as Parkside. The estate netted approximately $6.2 million on the sale, and guaranty associations should receive a distribution of $4 million by the end of the year.

Task Force Chair - Peggy Parker;   Staff Contact - London Pacific Life & Annuity Company (N.C.)

Task Force Chair Frank Gartland (Ohio) updated attendees on the status of the agreements concerning the universal life, payout annuities, and deferred annuities blocks of business. The first two are assumption agreements and will not have guaranty association involvement. The deferred annuity exchange agreement with Hartford Life closed on October 12, 2004, and 12 percent of policyholders elected to continue the covered portion of their contracts with the guaranty associations. The associations have entered into a TPA agreement with Philadelphia American to administer the "stay back" policies. Welcome letters from Philadelphia American to policyholders will be mailed on or about November 1.

Task Force Chair - Frank Gartland;   Staff Contact - Paul Peterson Metropolitan Mortgage Companies

Task Force Chair Art Dummer (Utah) and NOLHGA President Peter Gallanis briefed attendees on the status of the three insurance subsidiaries of Metropolitan Mortgage--Western United Life Assurance Company (Washington), Old Standard Life Insurance Company (Idaho), and Old West Annuity & Life Insurance Company (Arizona). All three companies are in rehabilitation, and the insurance commissioners from the domiciliary states are currently discussing the best way to manage these rehabilitations. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) provided an overview of several key issues, including the financial viability of the companies and their relationships with reinsurers.

Task Force Chair - Art Dummer;   Staff Contact - The Thunor Trust Companies

Task Force Legal Counsel Charlie Richardson (Baker & Daniels) updated attendees on the progress of several litigation and asset recovery efforts relating to the Thunor Trust companies. The receivers are pursuing discovery in a number of key cases, and the Mississippi receiver recently released $5 million in early access distributions. In addition, three criminal sentences were recently handed down. Martin Frankel is expected to be sentenced in mid-December.

Task Force Chair - John Colpean;   Staff Contact -

Other MPC Meeting News

In addition to the task force reports above, the Executive Life Insurance Company (California) and Life & Health Insurance Company of Pennsylvania task forces met in the round (the ELIC meeting was in closed session).

MPC Chair Jack Falkenbach (Delaware) provided an update on the NOLHGA Board's August 2004 meeting, which covered topics such as the July 2004 Legal Summit report, a report on NAIC activities, NOLHGA's preliminary 2005 operating budget, and an update on the joint ACLI/NOLHGA separate account working group. He also updated attendees on the most recent meeting of the MPC Executive Committee, which featured reports from the Operational Audit and Plan of Operation Subgroups as well as discussion of an update of the MPC Task Force Guidelines to be headed by Art Dummer (Utah) and Bill O'Sullivan (NOLHGA).

  Staff Contact - Sean McKenna Guarantee Security Life Insurance Company (Fla.)

GRC Trust to Distribute Funds to Affected GAs

The GRC Trust (the successor to Guaranty Reassurance Corporation) is in the process of distributing the bulk of the remaining funds held in connection with GSLIC. In October 2004, the GRC Trust distributed about $8.1 million for the benefit of the former individual policyholders of GSLIC. By mid-November, the GRC Trust expects to distribute $11.5 million to the affected guaranty associations. Following the distribution to guaranty associations, the trust will continue to hold about $500,000 as an operating reserve to cover the costs of resolving remaining issues and closing out the trust.

Task Force Chair - Frank Gartland;   Staff Contact - Bill O'Sullivan

NOLHGA E-mail Down Friday Afternoon

On November 5, 2004, NOLHGA's Systems Department will perform server upgrades that will temporarily shut down NOLHGA's e-mail server. NOLHGA staff will be unable to send or receive e-mails from 3:00 p.m. Friday till approximately noon on Saturday, November 6. All e-mails sent to the NOLHGA office during this period will be saved and made available to the appropriate staff members once the e-mail server upgrades are complete. Upon completion, normal e-mail communications will resume.

We apologize for any inconvenience these upgrades may cause. If you have any questions, please contact Kenny Bullock at [email protected] or 703.787.4107.

  Staff Contact -