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MPC Meets in Dana Point

The Members' Participation Council (MPC) met in Dana Point, Calif., on October 9, 2006. The following are summaries of task force insolvency reports presented during the meeting:

Staff Contact - Sean McKenna American Chambers Life Insurance Company (Ohio)

Task Force Chair Chuck Gullickson (South Dakota) updated the MPC on the estate's pending litigation, claims, and asset recovery efforts.

Task Force Chair - Chuck Gullickson; Staff Contact - American Western Life Insurance Company (Utah)

Task Force Chair Chuck Renn (Missouri) reported that copies of a motion from the receiver seeking permission to make a distribution to the guaranty associations had been sent to all affected associations.

Task Force Chair - Chuck Renn; Staff Contact - 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) updated attendees on ongoing discussions with the liquidator to develop a liquidation plan that addresses issues including claims valuation, reinsurance, and closing. She also announced that the task force is still working on an agreement to reinsure the AIL block of business. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) reviewed the ongoing discussions the task force has had with the liquidator on the liquidation/distribution plan.

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

Task Force Chair Frank Gartland (Ohio) announced that approximately 1,160 "stayback" policies remain. These policies are being administered for the guaranty associations by Philadelphia American Life Insurance Company. The task force, which has already conducted one audit of the company, plans a follow-up review later this year.

Task Force Chair - Frank Gartland; Staff Contact - Paul Peterson National Affiliated Investors Life Insurance Company (La.)

Task Force Chair Chuck Gullickson (South Dakota) reported that the estate officially closed in July 2006 and that the final distribution from the estate had been made in August.

Task Force Chair - Chuck Gullickson; Staff Contact - Paul Peterson National Heritage Life Insurance Company (Del.)

Task Force Chair Dan Orth (Illinois) reported that the task force is currently focused on the receiver's efforts to liquidate the remaining assets in the estate, pursue remaining estate litigation actions, and reach resolution with respect to statutory deposits.

Task Force Chair - Dan Orth; Staff Contact - Reliance Insurance Company (Pa.)

Task Force Chair Tad Rhodes (Oklahoma) reported that the task force has obtained expense distributions through year-end 2004. The task force plans to continue to request reimbursement for 2005 administrative expenses, work to resolve large disability claims, respond to the liquidator's audit questions, and monitor asset recovery at a very high level.

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

Task Force Chair Tad Rhodes (Oklahoma) reported on various accounting issues, including preliminary estimates for true-up accounting under the assumption agreement with New Era, the allocation of early access funds received from the estate, and the status of the TPA audit. He also briefed the members on the status of open litigation items, as well as a proposal for resolving a pending dispute concerning premium allocation. The MPC passed a resolution authorizing the task force to reach a settlement with the special deputy receiver on the premium allocation issue.

Task Force Chair - Tad Rhodes; Staff Contact - Joni Forsythe The Thunor Trust Companies

Task Force Chair John Colpean (Michigan) provided attendees with an overview of the status of the numerous lawsuits connected to the Thunor Trust estate. He also reported that the liquidators for Franklin National Life and Franklin Protective Life have filed petitions to make early access distributions to the guaranty associations.

Task Force Chair - John Colpean; Staff Contact -

Privacy Issues and NAIC Model Act Review Highlight General Session

In addition to the task force reports, the general session also featured closed-session presentations on privacy issues and new task force discussions. NOLHGA Senior Vice President and General Counsel Bill O'Sullivan updated attendees on the NAIC's planned review of the Life & Health Insurance Guaranty Association Model Act, and NOLHGA President Peter Gallanis reported on recent developments concerning financial services modernization on Capitol Hill. MPC Chair Jack Falkenbach (Delaware), who completed his third and last term as MPC chair, made some final remarks on the strength of the guaranty association system.

Staff Contact - Sean McKenna

NAIC to Consider Proposed IRMA-Based State Accreditation Standards

The NAIC's Receivership and Insolvency Task Force (RITF) has an open call scheduled for October 23, 2006, to consider a recommendation for development of new state accreditation standards based on the organization's Insurer Receivership Model Act (IRMA), which was adopted by the NAIC in December 2005.

The recommendation, which was developed and ultimately adopted by the RITF's Receivership Law and Inter-Governmental Working Group in late August, identifies approximately 20 "critical elements" that the working group believes must be present to have a functioning receivership system, or which are otherwise deemed essential for the effective management of multi-state receiverships. These elements include parenthetical citations to approximately 40 different sections of the IRMA model that cover approximately 62 pages (about two-thirds) of the total volume of IRMA text.

The recommendation has been posted for public review and comment on the NAIC Web site. If adopted by the RITF, the recommendation will be referred up to the NAIC's Financial Condition (E) Committee for consideration at the December 2006 NAIC meeting and then over to the Financial Regulation Standards and Accreditation (F) Committee for consideration at or before the March 2007 NAIC meeting. NOLHGA has submitted written comments to the RITF concerning the recommended standards and will continue to participate in the discussion of this issue.

In addition to the accreditation recommendation, the RITF's agenda for the October 23 call includes the consideration of substantive amendments to IRMA, which have been recommended by the NAIC's Model Act Revision Working Group. These amendments include, specifically, changes to the distribution priority provision and the addition of a large deductible provision to IRMA.

The October 23 call is open to all interested parties, though registration is required to obtain a dial-in number and pin code. To register, dial 800.967.4633 and ask for the NAIC's RITF call with Commissioner Flowers.

Staff Contact - Joni Forsythe

Ohio & Louisiana GAs Launch Web Sites

The Louisiana Life & Health Insurance Guaranty Association and the Ohio Life & Health Insurance Guaranty Association recently unveiled Web sites, which can be accessed at www.lalifega.org and www.olhiga.org, respectively.

This brings the total number of guaranty associations with Web sites to 48; 41 of the sites are hosted by NOLHGA, and 7 associations host their own sites. Most of the remaining associations are in the process of constructing sites. Anyone who would like more information on developing an association Web site can contact Sean McKenna at [email protected] or 703.787.4106.