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U.S. Escapes Liability for Executive Life Annuity

As the last of the Executive Life cases seem to be winding their way through the court system, the U.S. government escaped liability in Nutt et al v. United States, No. 14-CV-282, 2015 WL 3525191 (Fed. Cl. June 4, 2015)  for a contract it purchased in settlement of a wrongful death claim in 1983, where a man was killed by an intoxicated Army employee driving an Army vehicle. Distinguishing what appeared to be strong precedent for holding the U.S. liable for its obligations under the annuity contract it purchased from Executive Life, the U.S. Federal Court of Claims found that the Massie case did not apply as that case involved the Military Claims Act, 10 U.S.C. Section 2731, et seq. rather than the Federal Claims Tort Act. Judge Braden also emphasized that the terms of the settlement language did not evidence the government’s intention to guarantee the annuity payments.

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Stone to Speak at Society of Settlement Planners Annual Conference

Edward Stone will be a guest speaker at the Society of Settlement Planners 2015 Annual Conference in Las Vegas on March 30, 2015. Mr. Stone’s presentation will focus on the risks to settlement planners in the aftermath of the Executive Life Insurance Company of New York (ELNY) failed rehabilitation and eventual liquidation.

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Once Again, “Don’t Put All Your Eggs in One Basket”

These issues keep coming up again, and again.  Are annuities safe?  Should you lock up all your money in one single annuity? As Dennis Beaver, columnist for the Hanford Sentinel, and a Bakersfield, California attorney told his readers in a recent column “determining if an annuity is right for you requires a careful financial analysis conducted by a fee only financial planner who acts as your fiduciary….”.  Edward Stone is quoted extensively in Beaver’s recent article, offering up the Executive Life Insurance Company of New York liquidation as an example of why you can’t count on guaranty associations to pick up the pieces if your insurance company fails. “While there are State Guarantee Associations which offer some protection. Coverage amounts vary from state to state and range from $100,000 to $500,000 per individual per lifetime. This means that if the doctor put his $800,000 IRA into an annuity, and that company bit the dust, he could face significant disruptions and reductions in his benefit payments.”

It just can’t hurt to say it again.  No company is too big to fail, and contrary to the assertions of some sales people out there, nothing is risk free and annuities are no exception.

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Stone Speaks at Society of Settlement Planners 2014 Annual Conference

Edward Stone spoke at the Society of Settlement Planners, 2014 Annual Conference in New Orleans on April 28th.  Mr. Stone’s presentation, “ELNY – Lessons Learned and the Impact Going Forward” was well received by those attending the conference.  For those settlement planners present who were not active in the industry over 20 years ago when the ELNY debacle first began, Mr. Stone condensed those years into a few power point slides and then expanded upon the lessons settlement planners and all participants in the structured settlement industry should learn from the ELNY debacle, and most importantly, what measures can be taken to ensure that it doesn’t happen again.  The presentation was followed by a lively question and answer session that spilled over into the cocktail hour that followed  and beyond! Further questions regarding the presentation are welcomed – please contact us at (203) 504-8425 or via email at eddie@edwardstonelaw.com.

 

ELNY Hardship Fund Decisions to be Mailed

While the ELNY liquidation was finalized in August 2013 and cuts to annuitants began immediately, the ELNY Hardship Fund that was voluntarily established by a group of life insurance companies was not prepared to make funds available at that time.  The ELNY Hardship Fund, administered by JAMS,  now reports that its “regulatory review process” is complete and decisions on applications will be mailed the week of March 17, 2014.  Unfortunately, with over $960 million in cuts to annuitants and just $100 million in the Hardship Fund, it is not possible for the Fund to meet the needs of all of the affected annuitants, some of whom saw cuts of up to 69% of their contract value.

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“The ELNY Saga” at the National Association of Settlement Purchasers 2013 Annual Conference

Edward Stone was a guest speaker at the National Association of Settlement Purchasers 2013 Annual Conference in Las Vegas in November 2013.  Instead of sweeping the ELNY debacle under the rug,  NASP and the conference participants embraced the opportunity to hear about the history of ELNY’s failed rehabilitation and its impact on both the primary and secondary structured settlement markets.

Gone, But Not Forgotten! the Remnants of ELNY

Peter Bickford’s Insight Column in the September 9th issue of the Insurance Advocate is an eloquent post mortem for the Executive Life Insurance Company  of New York, the death of which took a long, arduous twenty-two years and left many injured people to drown in its wake.  While New York seems content to sweep ELNY out of state, out of mind and under the rug forever, the impact of this botched rehabilitation and fundamentally flawed liquidation will simply not go away for the victims, some of whom lost as much as 70% of their “guaranteed” payments after suffering catastrophic injuries or the loss of a loved one. The ELNY debacle is a disgrace for the insurance industry and for the Department of Financial Services, its predecessors and agents, especially the New York Liquidation Bureau.  We can only hope that Mr. Bickford’s call for reform of the insurance insolvency process does not fall on deaf ears.

 

ELNY Cuts Went Into Effect August 8, 2013

The Restructuring Agreement approved by the liquidation court last April “closed” on August 8, 2013 and cuts to over 1500 Executive Life annuitants went into effect immediately.  The revised schedule of cuts posted on the GABC website revealed that most annuitants saw increases in their shortfalls of 3-4%.  The final schedule is expected to be published soon.

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TOO BIG TO FAIL? WILL THIS MAKE YOUR ANNUITY ANY SAFER?

Recently AIG, GE Capital and Prudential Financial disclosed that they are among the nonbank firms soon to be deemed systemically important financial institutions (SIFI), according to reports in the New York Times and The Economist.  This designation will come with higher capital requirements for these entities and may give consumers the false impression that SIFI’s are backed by some form of government guarantee. If New York’s bungling of the Executive Life Insurance Company of New York (ELNY) rehabilitation and subsquent liquidation is any indication of how insolvency proceedings for SIFI’s would work, it is probably time for the federal government to get involved.  ELNY was almost 100 times smaller than Prudential (the smallest of the big 3)  and its failure painfully highlighted the inadequacies of state regulation of the business of insurance and pushed the voluntary  guaranty associations to the brink.  It’s time to revisit McCarran -Ferguson before it is too late.

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Executive Life – Updated Schedule Available

An updated schedule detailing the benefit cuts for Executive Life Insurance Company of New York (ELNY) annuitants is available on the new GABC website.  This updated schedule indicates that most shortfall payees will see additional cuts of approximately 3-4%.  If you are an ELNY annuitant whose benefits are being cut, we can perform an analysis of your settlement documents to determine if you have any options for recovery. Please contact us at eddie@edwardstonelaw.com or (203) 504-8425.