MPC Meets in Chicago

The Members' Participation Council (MPC) met in Chicago on October 10, 2011. The General Session featured an update on financial services modernization and regulatory activity by NOLHGA President Peter Gallanis and a presentation on the members-only section of the NOLHGA Web site by Dan Hicks and Sean McKenna (NOLHGA staff).

The following task force insolvency reports were presented during the MPC General Session:

  Staff Contact - Sean McKenna Executive Life Insurance Company (California)

Task Force Chair Art Dummer (Utah) reminded participating guaranty associations that they must submit a defeasance calculation request to Aurora by year-end in order to retain the right to defease in 2012. In light of prevailing interest rates being substantially less than the discount rate used for calculating the defeasance payment, Mr. Dummer urged all participating guaranty associations to submit the request to Aurora so they would have the opportunity to carefully consider the potential benefits of defeasance. He mentioned that NOLHGA would be sending out a reminder to the participating associations later in the fall regarding the need to submit the defeasance calculation request along with a suggested form for making the request. Finally, Mr. Dummer noted the task force would provide further materials to member associations to support discussions on defeasance by their respective Boards of Directors. Task Force Legal Counsel Frank O'Loughlin (Rothgerber Johnson & Lyons) provided a brief update on the Artemis litigation. No trial date has been set.

Task Force Chair - Art Dummer;   Staff Contact - Golden State Mutual Life Insurance Company (California)

Task Force Chair Lowell Miller (North Carolina) reported on the progress being made on the assumption reinsurance agreement with Madison National Life Insurance Company, and Legal Counsel Frank O'Loughlin (Rothgerber Johnson & Lyons) provided an overview of the court schedule for the case.

Task Force Chair - Lowell Miller;   Staff Contact - Bill O'Sullivan Imerica Life & Health Insurance Company (Arkansas)

Task Force Chair Andrea Bowers (South Carolina) reviewed the financial status of the estate and the Expense Settlement Agreement entered into with the liquidator. The task force plans to continue policy and claims administration, monitor estate financials, update the Omnibus Proof of Claim as needed, and support the liquidator's efforts to wind down the estate.

Task Force Chair - Andrea Bowers;   Staff Contact - Joni Forsythe Lincoln Memorial/Memorial Service Life Insurance Companies (Texas)

Task Force Chair Tad Rhodes (Oklahoma) reviewed a timeline of key events in this liquidation as well as the costs to the guaranty associations. He also announced that Donna Garrett, the Special Deputy Receiver, will retire in November 2011. The Texas Department of Insurance is currently undertaking an RPF process for a successor.

Task Force Chair - Tad Rhodes;   Staff Contact - Paul Peterson Medical Savings Insurance Company (Indiana)

Task Force Chair Dan Orth (Illinois) provided a brief status overview for this zero asset estate, noting that there are insufficient assets for the liquidator to pay all Class 1 expense claims. Task Force Legal Counsel Joel Glover (Rothgerber Johnson & Lyons) then provided an overview of outstanding litigation and disputed claims, as well as the status of operations under the Claims Settlement Agreement. Many of the hospital-related suits have been settled, and settlement talks continue on the remaining matters. The mutual goal of the task force and the receiver is to prepare the estate for closing by the end of February 2012.

Task Force Chair - Dan Orth;   Staff Contact - Joni Forsythe National States Insurance Company (Missouri)

Task Force Chair Randy Blumer (Wisconsin) announced that the task force continues to negotiate an assumption reinsurance agreement with Family Life for the life block of business. One of the reinsurers involved in the life block, Northstar, plans to transfer its reinsurance treaty with National States to another reinsurer (RGA), and the National States MPC unanimously passed a resolution authorizing the task force to agree to the replacement of Northstar with RGA in the indemnity reinsurance agreement. The resolution calls for an opt-out process to be undertaken with a deadline date of no later than October 31.

Task Force Chair - Randy Blumer;   Staff Contact - Paul Peterson Penn Treaty Network America/American Network Insurance Companies (Pennsylvania)

Task Force Chair Charles Gullickson (South Dakota) provided a brief overview of the status of the estate. Bart Boles (Texas) updated attendees on the work of the Administration Subgroup, which is working to develop the policy and claims administration process in Allentown should this become the responsibility of the guaranty associations. Specific projects include a review of all policy benefits and product forms and their application to coverage benefit limits, residency determination, and development of post-liquidation reporting needs. Actuarial Consultant Vince Bodnar (DaVinci Consulting) reported on the financial status of the estate and on its projected future liabilities.

Task Force Chair - Charles Gullickson;   Staff Contact - Shenandoah Life Insurance Company (Virginia)

Task Force Legal Counsel Charles Richardson (Baker & Daniels) reported that the Virginia State Corporation Commission would meet in mid-October to review the receiver's plan to convert Shenandoah from a mutual company to a stock company and sell all its stock to another company. The Corporation Commission did meet on October 11; if the plan is approved, no guaranty association triggering or involvement is anticipated.

Task Force Chair - William Falck;   Staff Contact - Bill O'Sullivan Universal Life/Booker T. Washington Insurance Companies (Alabama)

Task Force Legal Counsel Joel Glover (Rothgerber Johnson & Lyons) reported that virtually all premium-paying policies had been transferred to North Carolina Mutual before the liquidation date, though some states have not approved the assumption certificates. Approximately 135,000 paid-up policies remain, with the vast majority of policy exposure resting with the Alabama association. The task force plans to evaluate the possibility of an RFP for the remaining business and will also explore the possibility of long-term administration of the business by the affected guaranty associations.

Task Force Chair - Rusty Haydel;   Staff Contact -

Randy Cox Passes Away

T. Randolph (Randy) Cox, Legal Counsel for the West Virginia Life & Health Insurance Guaranty Association, passed away suddenly on October 19, 2011. He was 62.

Cox, a frequent attendee of NOLHGA meetings for years, was an attorney at Spilman Thomas & Battle in Charleston, West Virginia. He was also a member of the Board of Directors of the West Virginia Chamber of Commerce and served in then-Gov. Jay Rockefeller's administration as Counsel to the West Virginia Coal Development Authority.

Cox is survived by his wife, Ann Bradley, and his two adult children. The NOLHGA staff expresses our deepest sympathies to his family and friends.

  Staff Contact - Sean McKenna

Percy Marchman Passes Away

Percy Marchman, father of Mike Marchman, the Executive Director of the Georgia guaranty association and the MPC Chair, passed away on October 17, 2011. He was 89.

Percy Marchman served in the United States Army in World War II. He worked for 35 years at Cotton States Insurance Companies, retiring as Senior Vice President. He also served as Executive Director of the Georgia Insurers Insolvency Pool and the Georgia Life & Health Insurance Guaranty Association for 14 years, retiring in 1996. He is survived by his wife of 64 years, Vicki Marchman, and a large and loving family.

The family has requested that in lieu of flowers, donations will be appreciated and can be made to the "Percy Marchman Endowed Scholarship at Berry College," P.O. Box 490069, Mount Berry, GA 30149.

The NOLHGA staff expresses our deepest sympathies to the Marchman family on their loss.

  Staff Contact - Sean McKenna