American Life Assurance Corporation (Ala.)

Receiver to File Petition to Close Estate

This week, the receiver for American Life Assurance Corporation (ALAC), an Alabama-domiciled company, is expected to file a petition for approval of final settlement and to close the ALAC estate. ALAC was placed in liquidation by order dated May 30, 1997. Until this year, activity in this case had been on hold as a result of ongoing litigation in connection with the liquidation of its wholly owned subsidiary, FNLIC. The FNLIC receivership court entered an order approving final settlement of claims and closing the FNLIC estate on December 31, 2002. Since that time, the receiver has worked toward preparing the final accounting and recommendations on claims in preparation for closing the ALAC estate.

As of May 31, 2003, guaranty association claims against ALAC totaled approximately $6.027 million, including $725,076 in expenses and approximately $5.3 million in policy-level claims. Under the terms of the Assumption Reinsurance Agreement in this case, guaranty association expenses are entitled to administrative priority. Consistent with the terms of that agreement, the receiver's petition provides for the guaranty associations to recover 100 percent of their $725,076 expense claims and about $548,090, or 10.34 percent, of their total $5.3 million policyholder-level claims.

Hearing on the petition to close has not yet been scheduled.

Task Force Chair - Mike Marchman;   Staff Contact - Joni Forsythe

MPC Meets in Texas

The Members' Participation Council met in Irving, Tex., on October 27, 2003. The following are summaries of task force insolvency reports presented during the meeting:

  Staff Contact - Sean McKenna American Standard Life & Accident Insurance Company (Okla.)

Task Force Chair Andrea Bowers (S.C.) informed attendees that the receiver's proposed final plan for liquidation of the estate was filed in August. The court will review the plan on November 25, 2003. If the court approves the plan, a final distribution will be made by year-end, and the estate will close by year-end as well.

Task Force Chair - Andrea Bowers;   Staff Contact - Bill O'Sullivan Bankers Commercial Life Insurance Company (Tex.)

Task Force Chair William Falck (Fla.) reported that work on the BCL insolvency is nearing its end. NOLHGA Staff Contact Paul Peterson briefed attendees on the background of the insolvency and provided an update on a reinsurance recoverable payment of approximately $387,000 negotiated by the receiver and reinsurer. The MPC passed a resolution authorizing an agreement between NOLHGA and ReliaStar Life Insurance Company (the reinsurer) that releases ReliaStar from the reinsurance contract once the payment is made. The estate is expected to close by year-end.

Task Force Chair - William Falck;   Staff Contact - Paul Peterson Confederation Life Insurance Company (Mich.)

Task Force Chair Dan Orth (Ill.) briefed attendees on disciplinary action taken by the Canadian Society of Actuaries against a former actuary of Confederation Life. A decision on whether to disband the task force was held over for a later MPC meeting.

Task Force Chair - Dan Orth;   Staff Contact - Executive Life Insurance Company (Calif.)

The task force met in closed session.

Task Force Chair - Art Dummer;   Staff Contact - Kentucky Central Life Insurance Company (Ky.)

Task Force Chair John Colpean (Mich.) updated attendees on discussions the task force has had with the liquidator on a number of issues relating to the guaranty associations' expense claims, including the amount of the claims and the types of claims filed. The task force and the receiver are attempting to resolve these issues. Task Force Legal Counsel Kevin Griffith (Baker & Daniels) provided a summary perspective of total guaranty association claim figures and distributions received from the estate.

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

Task Force Chair Peter Leonard (Calif.) briefed attendees on the background of this insolvency, and Task Force Legal Counsel Frank O'Loughlin (Rothgerber, Johnson & Lyons) provided an explanation of the legal history of the liquidation, including a recent ruling by the Pennsylvania Supreme Court staying part of the liquidation order that had been appealed by the Pennsylvania Department of Insurance. Project Manager Fred Buck (Buck & Associates) reviewed the status of A&H, disability, and stop-loss policies. All A&H policies have been canceled. The disability policies are non-cancelable, and the stop-loss policies are being covered by five states (some directly and some through Legion).

Task Force Chair - Peter Leonard;   Staff Contact - Paul Peterson London Pacific Life & Annuity Company (N.C.)

The task force gave a presentation in closed session.

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

Task Force Chair Dan Orth (Ill.) reported on a lawsuit filed by the Delaware Department of Insurance against a brokerage used by NHL and one of its employees. The case was decided in favor of the defendants, and the receiver's counsel is planning to consult with the task force before deciding whether to appeal.

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

Task Force Chair Tad Rhodes (Okla.) discussed the liquidator's proposal to distribute assets and the task force's draft proof of claims, which was forwarded to the liquidator. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) briefed attendees on the methodology used to calculate the distribution, which is based on claims paid. He also noted that the distribution will require an amendment to the 2001 early access agreement the task force negotiated with the receiver. The MPC passed a resolution stating that the MPC recommends that affected guaranty associations execute the new agreement, authorizing an amendment to the 2001 early access agreement, and authorizing the task force to notify guaranty associations of these actions and of its determination that the amendment to the 2001 agreement is in an acceptable form.

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

Task Force Chair John Colpean (Mich.) reported that early access agreements have now been reached with all receiverships involved in the Thunor insolvency and that the task force has requested early access distributions. The task force is also monitoring the numerous asset recovery efforts being undertaken by the receivers, which involve litigation, forfeiture actions, foreign actions, and insurance policy/bond claims. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) updated attendees on the ongoing case involving the Peoples/Veteran/Settlers claims of more than $60 million; a ruling on the claims could be made in the fourth quarter of 2003.

Task Force Chair - John Colpean;   Staff Contact -