MPC Meets in Park City
The Members' Participation Council (MPC) met in Park City, Utah, on August 17, 2005. 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 (South Carolina) reported that the receiver for ASL would like to assign a $6 million judgment against the company's former owner to the guaranty associations. The task force recommended that the associations accept the judgment, and an opt-out agreement will soon be mailed to affected associations.
Task Force Chair - Andrea Bowers; Staff Contact - Bill O'Sullivan Executive Life Insurance Company (Calif.)The Executive Life MPC met in closed session.
Task Force Chair - Art Dummer; Staff Contact - Guarantee Security Life Insurance Company (Fla.)Task Force Chair Frank Gartland (Ohio) reported that the estate is closed. The GRC Trust is scheduled to close in September 2005, with distribution checks to be mailed to affected guaranty associations along with the auditor's report and other estate-closing documents. The remaining records from the estate will be housed with the Ohio guaranty association.
Task Force Chair - Frank Gartland; Staff Contact - Bill O'Sullivan Investment Life Insurance Company of America (N.C.)Task Force Chair Frank Gartland (Ohio) briefed attendees on the status of the estate, which could close by year-end. There is approximately $1.7 million in assets remaining in the estate, and the guaranty associations should receive most of these assets when the estate closes. A judgment against the former owner of the company will be assigned to the associations, although it is unlikely that they will be able to collect on the judgment.
Task Force Chair - Frank Gartland; Staff Contact - Paul Peterson Life & Health Insurance Company of America (Pa.)Task Force Chair Linda Becker (Kansas) reported that the assumption reinsurance agreement with Philadelphia American Life Insurance Company has closed. The task force has initiated the request for proposal process for the long-term care block and is working with the liquidator on asset recovery efforts, early access distributions, and other matters.
Task Force Chair - Linda Becker; Staff Contact - London Pacific Life & Annuity Company (N.C.)Task Force Chair Frank Gartland (Ohio) reported that the assumption of the life business by Hartford Life has closed and that no policies were left behind. Administration of the "stayback" business is continuing; as of the end of June 2005, approximately 50% of the business remains in force.
Task Force Chair - Frank Gartland; Staff Contact - Paul Peterson Reliance Insurance Company (Pa.)Task Force Chair Tad Rhodes (Oklahoma) reviewed the status of the Reliance estate and reported that after an audit of the "truckers policies," the task force decided to proceed with the assumption agreement with Madison National Life Insurance Company; the assumption was effective September 1, 2005. The task force has also come to an agreement with the liquidator concerning the payment of uncovered stop-loss claims early in the insolvency, and a letter documenting the agreement will be distributed to all affected guaranty associations in the near future.
Task Force Chair - Tad Rhodes; Staff Contact - States General Life Insurance Company (Tex.)The States General MPC met in closed session.
Task Force Chair - Tad Rhodes; Staff Contact - Joni Forsythe The Thunor Trust CompaniesTask Force Chair John Colpean (Michigan) reviewed the financial status of the five main companies involved in the Thunor Trust liquidations and explained the share each company will receive from any litigation recoveries. Task Force Legal Counsel Charlie Richardson (Baker & Daniels) briefed attendees on the numerous litigation efforts being pursued by the liquidators, noting that the only significant prospects for significantly increasing distributable assets in the Thunor company estates are recoveries from these efforts. He also reviewed the status of the Peoples/Veterans/Settlers claims against the Thunor estate. After a May 2005 Mississippi Supreme Court ruling reversing the Mississippi liquidation court's favorable Peoples/Veterans/Settlers decision, there has been renewed activity in Connecticut federal court and Mississippi liquidation court.
Task Force Chair - John Colpean; Staff Contact -Health Savings Accounts & Financial Services Addressed at MPC Meeting
In addition to the task force reports described above, the August MPC meeting featured a number of presentations on other topics. Mike Surguine (Arizona) and Kevin Griffith (Baker & Daniels) made a presentation on health savings accounts that was sponsored by the Administrators' Education Steering Committee. NOLHGA President Peter Gallanis updated attendees on the latest developments in financial services modernization, including congressional consideration of the SMART Act and the NAIC's work on a new receivership model act. MPC Chair Jack Falkenbach updated attendees on the recent NOLHGA Board of Directors meeting, which addressed issues such as separate account products, insolvency activity, and a review of NOLHGA's projected budget for 2006. He also described the proceedings of the morning's MPC Executive Committee meeting, which included updates from the Asset Recovery and New Member Orientation Subgroups, a progress report from a working group charged with updating the MPC Guidelines, and a report from the MPC Chair Preference Poll Committee.
Staff Contact - Sean McKenna American Life Assurance Corporation (Ala.)Balance of Final Distribution Released
In November 2004, the ALAC receiver made a distribution to the guaranty associations totaling approximately $745,512. In consideration for receiving the distribution at that time, the affected guaranty associations agreed to treat a portion of that distribution as early access subject to recall to the extent needed to cover administrative expenses of the receiver incurred in connection with ongoing appellate litigation.
Consistent with those agreed terms, a balance of approximately $45,000 was held in NOLHGA's ALAC escrow account pending resolution of that litigation. By order dated June 15, 2005, the Alabama Supreme Court disposed of the appeal, affirming the receivership court's June 2004 order approving disbursements on claims and authorizing the receiver to close the estate. Following confirmation from the receiver that no recall of funds would be required, the balance of that escrow account was distributed to the affected guaranty associations. Checks were sent out on August 24.
In total, the guaranty associations have recovered 100% of their $725,076 expense claims and about $548,090, or 10%, of their $5.3 million policy-level claims.
A copy of the receiver's final accounting and report of disbursements is available to affected associations on NOLHGA's IRC database. You may also contact Aimee Frye at [email protected] or 703.787.4115 to request a copy.
Task Force Chair - Michael Marchman; Staff Contact - Joni Forsythe Guarantee Security Life Insurance Company (Fla.)Trustees Vote to Terminate GRC Trust
On August 23, 2005, the trustees for the Guaranty Reassurance Corporation Liquidating Trust (GRC Trust) voted to terminate the GRC Trust and distribute its remaining assets to the guaranty associations affected by the Guarantee Security Life Insurance Company (GSLIC) insolvency. The GSLIC estate was previously closed by court order effective July 29, 2005.
The GRC Trust, which was formed at the end of 2002 to assume the remaining assets and obligations of Guaranty Reassurance Corporation, completed all of its obligations, including those in connection with the GSLIC Rehabilitation Plan. On August 30, the trustees sent a final trust distribution check, together with a notice of termination and other supporting documentation, to the affected guaranty associations. Affected states with questions about this package may call Frank Gartland (614.442.6601) or Bill O'Sullivan (703.787.4104).
Task Force Chair - Frank Gartland; Staff Contact - Bill O'Sullivan States General Life Insurance Company (Tex.)Premium Account Balance for Medicare Supplement Business Distributed to GAs
An assumption reinsurance agreement with New Era Life closed on July 1, 2005, effectively transferring the States General Medicare Supplement business to New Era. The closing was funded by premiums held in NOLHGA's States General premium account at Bank of America in Florida. That account has since been closed, and the remaining premium balance has been distributed to the affected associations. The balance represents each participating association's allocated share of premiums in excess of the funding required to close the New Era transaction. Checks were sent out to the affected associations, along with an allocation detail, during the week of August 14.
Task Force Chair - Tad Rhodes; Staff Contact - Joni ForsytheNAIC Cancels Fall National Meeting
In light of the devastation caused by Hurricane Katrina, the NAIC has decided to cancel its Fall National Meeting, which was scheduled for September 10-13, 2005, in New Orleans, La. Much of the work of the NAIC committees is expected to be continued through conference calls over the course of the next few months, according to the NAIC. Registrants can either seek a refund of the registration fee or credit the fee toward registration for the NAIC's Winter National Meeting in December. That meeting is scheduled for December 3-6 in Chicago. Responses concerning each registrant's preference for refund or credit of registration fees should be directed to [email protected].
Staff Contact - Joni Forsythe