American Medical Life Insurance Company (New York)

Claims Distribution Approved

This week, the Receivership Court in New York approved a claims distribution to the guaranty associations in the amount of $60,000 for administrative expenses incurred in connection with American Medical Life Insurance Company (AMLI). The approval was part of a settlement with the New York Liquidation Bureau to resolve a long-standing dispute involving guaranty association administrative expense incurred in AMLI. The Order approving the distribution was signed on November 15. The task force is in communication with the Liquidation Bureau concerning the timing of the distribution.

Task Force Chair - Andrea Bowers;   Staff Contact - Joni Forsythe Senior American Insurance Company (Pennsylvania)

Early Access Distribution Received

The task force is pleased to announce receipt of an early access distribution in connection with the Senior American estate. The Early Access Agreement in this case was approved by the MPC in August. The Liquidator’s Early Access Petition was filed shortly thereafter on September 28, 2021, seeking approval to distribute funds in the amount of $6 million (including statutory deposits) to the affected guaranty associations participating in the Early Access Agreement. The order approving the distribution was signed by the court on November 8. Following entry of the order, the Pennsylvania Insurance Department made a transfer to NOLHGA in the amount of $5,228,348 for the benefit of the participating guaranty associations.

The Florida and New Mexico guaranty associations are working with the Pennsylvania Insurance Department and their local regulatory authorities to secure release of their statutory deposits. As soon as the deposits are released, we will update the allocation spreadsheet to reflect the deposit proceeds, review that allocation with the department and the affected guaranty associations, and then distribute the funds to the individual associations. We do not have a date certain for that distribution, but we hope to get the deposits resolved before year-end. In the meantime, the funds are being held in an interest-bearing account.

Task Force Chair - Bart Boles;   Staff Contact - Joni Forsythe

2021 Insolvency Cost Information Report Now Available

NOLHGA has issued its annual Insolvency Cost Information Report, which assists member companies in establishing accruals for life, annuity, and health guaranty association assessments pursuant to Statement of Statutory Accounting Principle No. 35R - Revised Guaranty Fund and Other Assessments (finalized March 2000, revised October 2010) and Accounting Standards Codification 405-30, Insurance-Related Assessments (ASC 405-30) (previously known as SOP 97-3 - Accounting by Insurance and Other Enterprises for Guaranty Fund and Certain Other Insurance-Related Assessments (released December 1997 by the AICPA)). The report contains information regarding the cost of insolvencies, assessable premium by state, and summaries of each state’s general assessment and premium tax offset provisions.

These reports have been issued by NOLHGA annually since 1992. This year’s report is available for download from NOLHGA’s website in the Facts & Figures--Insolvency Cost Files section. The report contains the following data files:

Insolvency Costs Workbook: An Excel workbook with individual insolvency cost information along with various summary schedules and premium information by state.

Insolvency Costs Report: A PDF file that includes commentary on various insolvencies along with the schedules from the Costs file. Also included are general assessment and premium tax offset state provisions along with premiums by state.

In addition, there are special attachments dealing with the Penn Treaty/ANIC (see 2017 section) and Lincoln Memorial cost estimates.

Summary assessment information (called and refunded) as of year-end 2020 has been included on each insolvency case for use by member companies in their accrual process as they deem necessary. This information is compiled from the annual assessment submissions of each guaranty association. It is not audited by NOLHGA; therefore, NOLHGA will not be able to address any questions that member companies may have on the accuracy or completeness of the information. Those inquiries should be directed to the appropriate guaranty association.

New in this year’s report is the segregation of costs associated with long-term care (LTC) as a result of amendments to the NAIC’s GA Model Act made in 2017, which included a new method for allocating LTC assessments beginning with cases occurring in 2018 or later. The new method allocates assessments associated with LTC business 50/50 between life/annuity and health insurance member companies (as defined in the new Model Act amendment), assuming the state adopted the 50/50 ratio in the new Model Act.

While LTC business had previously been assessed solely under the health account, assessments will now be allocated among all applicable accounts (life, allocated and unallocated annuity, and health) according to the formula spelled out in the state’s guaranty association statute. For states that have adopted the new allocation method, LTC costs have been segregated from other health business. When accruing for LTC costs, companies will have to use the premiums from all their accounts to determine their market share to apply to the cost estimate. Senior American Insurance Company is the only case included in the report that is impacted by the new provisions to date.

Please note that some of the financial schedules will print in very small text and may be difficult to read. If the text is too small, it might help to set those pages to legal size and print them separately from the rest of the report.

  Staff Contact - Paul Peterson

Nichols Receives Alonzo Herndon Award

Former NOLHGA Chair George Nichols, President and CEO of The American College of Financial Services and a speaker at NOLHGA’s 2021 Legal Seminar, was named the inaugural winner of the Alonzo Herndon Award during the Business Insurance Diversity and Inclusion Institute’s leadership conference in late October 2021. The award, which is sponsored by the Atlanta Life Insurance Company, is named in honor of the founder of Atlanta Life and is meant to “recognize an individual who exemplifies Mr. Herndon’s courage, leadership and extraordinary goodwill toward others, bolstering their progress and success.”

For more about the award, click here.

  Staff Contact - Sean McKenna