I've Moved my Blog!!

I have moved my blog to my web site, which can be accessed at http://www.pbnylaw.com/insurance-ioi/.  Please note this new blog address in your bookmarks.  While there, also check out my updated website.  I look forward to your continued support for my musings.

The Elephant in the Courtroom

In March of this year an eleven day hearing was conducted in New York Supreme Court for Nassau County to consider the rehabilitator’s petition to liquidate Executive Life Insurance Company of New York (ELNY) and approve his proposed restructuring plan.  The court issued a decision on April 17, 2012 approving the rehabilitator’s petition, determining that ELNY is insolvent, ordering it liquidated, and approving the proposed restructuring plan. 

In an article appearing in the June 2012 issue of AIRROC Matters, the magazine of the Association of Insurance and Reinsurance Run-Off Companies, I contend that the court’s approval of the petition and plan is far from a final resolution of the long ELNY saga.  The Court’s ruling is more about the allocation of pain than a solution to the underlying problem.  My article, The Elephant in the Courtroom, examines this underlying problem -- the lack of accountability in the receivership process in New York -- an issue that that remains unaddressed by the court ruling, the order of liquidation or the restructuring plan.

The full article can be viewed online at the AIRROC websight at http://www.airroc.org/magazine.aspx.

 

A Billion Here a Billion There

It is surprising enough that the $1.6 billion deficit in the Executive Life of NY rehabilitation receives so little media attention, but most people would also be surprised to know who will ultimately bear that loss. My current Insight column in the June 4 issue of Insurance Advocate magazine explores this issue as well as the consequences of ELNY on the NY State life guaranty funds.  the column can be viewed on-line at:

http://www.insurance-advocate.com/A-Billion-Here-a-Billion-There-and-Pretty-Soon-Youre-Talking-Real-Money-c1349.html

New Column

I was asked recently by Steve Acunto, the publisher and editor of Insurance Advocate magazine to write a regular column on developing issues, particularly on the legislative and regulatory fronts.  The first installment of my column, Insight, appears in the May 21, 2012 issue of IA.  The column, which will be a regular feature of IA, can be viewed at http://www.insurance-advocate.com.  In his introduction, Steve stated:

In this issue of the Insurance Advocate Peter Bickford’s column premieres on page 12. Peter is a longtime, rather astute observer of the business, whose work we have featured with great pride over the years. We believe that, in keeping with the Insurance Advocate’s mission to observe regulation and legislation that affect the progress of insurance, as well as to look out for the livelihood of independent insurance agents and brokers, always seeking to improve the system as it now exists, we are advocates for good insuring practice on all sides. Peter Bickford has earned many stripes in this very same advocacy sphere and we welcome him to our pages.

Now all I have to do is deliver the goods . . .   regularly. . .   No pressure!

I look forward to your comments and suggestions for items of interest that you believe should be explored.

THE TROUBLE WITH ELNY

Soothsayer:  Beware the ides of March.
Caesar:  What man is that?
Brutus:  A soothsayer bids you beware the ides of March.

William Shakespeare, Julius Caesar, Act I, Scene 2

On March 15, 2012 a hearing will be held before Justice Galasso in New York Supreme Court, Nassau County, to consider a petition by the rehabilitator of Executive Life Insurance Company of New York (ELNY) to liquidate ELNY and to approve a restructuring plan of its remaining contracts. The stated reason for the rehabilitator’s action is to address a $1.5 billion shortfall that prevents the rehabilitator from continuing to pay 100% of ELNY’s contractual obligations, primarily under annuities issued in the 1980s to fund structured settlements.

Under the proposed restructuring plan, the remaining ELNY assets are to be transferred to a new entity owned and controlled by the participating state life insurance guaranty funds, which will contribute funds to the new entity in amounts based on their individual state fund laws. The ELNY contracts will be restructured to a level that can be supported by these assets, and the obligations as restructured will be assumed by the new entity.  Because most of the annuities are relatively small and fall within guaranty fund caps, the rehabilitator has estimated that roughly 84% of all annuitants will continue to receive their full periodic annuity payments.  Many annuitants, however, will see their periodic structured settlement payments reduced by up to 50% or more.

At the hearing, the Court will consider whether or not the proposed restructuring plan is in the best interests of ELNY’s policyholders, annuitants and the general public based on its current condition and existing laws.  Another but equally important consideration, however, is how the receivership process failed ELNY, its policyholders and annuitants, and in 20+ years of rehabilitation managed to take it from a solvent company to more than $1.5 billion in the hole.

In the hope of keeping this historic perspective as part of the current dialogue, I have written an article examining the circumstances of ELNY being placed into rehabilitation, the flawed rehabilitation plan and the mismanagement of the estate leading to its inevitable failure. The article is not an assessment of the proposed restructuring plan to be considered by the court on March 15; rather it is a call for a review of the flawed receivership process that brought it to this point. Here is a link to the Publications page of my website to access this article, which is titled “The Trouble with ELNY: Or How The Receivership Process Has Failed Executive Life Insurance Company Of New York, Its Policyholders And Annuitants.” 

[Note: This article, without endnotes, is also the cover article in the February 20, 2012 issue of Insurance Advocate magazine.]
 

Caesar:   [To the Soothsayer] The ides of March are come.

Soothsayer: Ay, Caesar; but not gone.

William Shakespeare, Julius Caesar, Act III, Scene 1

The Need for a US Syndicated Capital Facility for Insurance Risks

Last week AON announced it is moving its headquarters to London "to be closer to Lloyd's" among other considerations.  Today Bermuda announced a 50% increase in new insurer registrations, with the largest jump in special purpose insurers. These recent headlines underscore the value to insurance risk bearers, investors and consumers of the flexibility that a strong, well-conceived syndicated capital facility can bring to the marketplace. How sad that the US has no domestic answer to these continued defections of market makers and investors. How sad that we do not have a single existing market for syndicated insurance capital that could compete to keep our domestic business home.

A plan exists to create such a market, of course (See New York Insurance Risk Exchange Plan) but it needs the spotlight of savvy and forward-thinking regulators and industry leadership to make it a reality.  The current market tightening and the widening search for intelligent capacity should signal that the time is now as never before for such a facility.