Unbelievable as it may be, there are still Executive Life of New York annuitants who are going to be surprised when they are hit with the cuts which are expected to take place next month. Some annuitants believe they are going to receive a “lump sum” buyout from the newly created GABC. That is not the case. Some believe the hardship fund is going to step in and make them whole. To date, none of the annuitants have heard anything about hardship awards, and it is very clear that the $100 million in the hardship fund will not be able to cover all of the annuitants losses. The restructuring agreeement is expected to close on August 8, 2013 and the ELNY contracts will be transferred to the newly created District of Columbia captive insurance company, GABC. 1500 annuitants will receive up to 66% less than they are owed under their annuity contracts. For just the second time in the history of the life insurance industry, policyholders will not be made whole. For an industry that depends upon the trust and confidence of the policyholders, this will be a bad day. A real failure for the industry.
ABC6/Philadelphia’s Nydia Han’s piece entitled “Cautionary Tale About Annuities” aired in the Philadelphia area last night. Han’s piece emphasized the risks associated with annuities and cautioned consumers about “putting all their eggs in one basket”. One Executive Life (ELNY) annuitant was featured in this segment, whose benefits will be cut by 54% sometime in the next month under the liquidation plan approved by New York last year. The Executive Life (ELNY) failure is particularly disturbing because the company’s assets had been managed by the State of New York for more than 21 years.
In an excellent article in Life HealthPro on July 25, 2013 entitled “Another blight on the bruised annuity industry’s reputation – When will the industry clearly explain itself to the public?” life insurance news editor Michael Stanley analogizes the annuity industry’s recent attempts to renege on the generous income and death benefits they promised to the restaurant that hawks free appetizers to bring in more customers and then fails to deliver. Unfortunately for the Executive Life (ELNY) victims who face looming benefit reductions, there is a great deal more to be lost than some fried calamari. Insurers lurk in the shadows, in D.C. and the state legislatures across the country, spending lavishly to protect themselves from real regulation by hiding behind McCarran Ferguson, gutting the federal insurance oversight office and fighting the “too big to fail” designations so that they don’t have to expain things like wholly owned captive insurance companies and affiliated transactions. Michael Stanley is right when he says “Americans love repentence, we laud a good public apology”. Instead of Executive Life of New York (ELNY) standing out as a black mark on the insurance industry, it could have been one of those shining moments where the life insurance industry came togther and did the right thing for those who matter – the policyholders.
The Superintendent of Financial Services, Benjamin Lawsky has posted a liquidation notice on the Executive Life Insurance Company of New York website, www.elny.org, with a liquidation date of August 8, 2013. For more information, please contact us at firstname.lastname@example.org or (203) 504-8425.
American Equity Investment Holding Company was one of the first life insurance companies to announce a charge to cover assessments stemming from the Executive Life Insurance Company of New York (ELNY) liquidation. The American Equity press release indicated that its second quarter financial results would include a pretax charge of up to $8.5 million. American Equity Investment Holding Company is the parent company of the New York domiciled American Equity Investment Life Insurance Company of New York, rated A- by A.M. Best. As reported in Life Health Pro on July 5, 2013, “Other life insurers cannot be far behind with their news”.
Ultimate recovery of cut benefits for Executive Life (ELNY) annuitants may depend upon the underlying settlement documents from the initial lawsuits which resulted in the issuance of the Executive Life annuity contracts. Structured settlement annuity contracts resulting from the settlement of personal injury or wrongful death lawsuits differ from annuity contracts purchased for investment purposes. All Executive Life annuitants whose benefits are slated for cuts in the third quarter of this year should have their settlement documents reviewed carefully.
If you are an Executive Life (ELNY) annuitant whose benefits are slated for reduction, we can perform an analysis of your settlement documents to determine if you can recover lost benefits from third parties. If you received a December, 2011 notification of benefit reductions, please contact us at email@example.com or (203) 504-8425. Our initial consultation is available at no charge.
As reported by LifeHealthPro in May, the 1500 Executive Life (ELNY) annuitants whose benefits are slated for reduction should expect those cuts to go into effect during the third quarter of 2013. Of these 1500 annuitants slated for benefit reductions, some may be able to recover their lost benefits from third parties. If you are an Executive Life (ELNY) annuitant whose benefits are slated for reduction, we can perform an analysis of your settlement documents to determine if you can recover lost benefits from third parties. If you received a December, 2011 notification of benefit reductions, please contact us at firstname.lastname@example.org or (203) 504-8425. Our initial consultation is available at no charge.
The last annual report of the New York Superintendent of Insurance for the year 2010 was 235 pages long. The first annual report by the newly created Department of Financial Services for 2011 was just 118 pages and covered both the banking and insurance departments. The 2012 annual report, released on June 15, 2013, was just 71 pages long. The Superintendent’s report for 2012 included just 1 page for the New York Liquidation Bureau, which was responsible for the management of 64 insurance company rehabilitations and insolvencies. In this age of transparency this reduction in reporting is disappointing. Peter Bickford’s May 20, 2013 Insight column in the Insurance Advocate expands upon the need for detailed reporting for the benefit of the New York legislature and the public.
Edward Stone is quoted in this article by Gail Liberman and Alan Lavine that appeared in the Wall Street Journal’s Market Watch on May 17, 2103. ” The article points out that benefit payouts on annuities are guaranteed by state insurance guaranty associations where the coverage limits vary by state from a low of $100,000 to a high of $500,000 and that settling a claim when an insurance company fails can take many years. Edward Stone suggests choosing your annuity extra carefully and “cross out insurance companies that have significant exposure to wholly owned captive insurance companies”.
An NBC reporter for a Miami affiliate, Willard Shepard, did an in-depth interview with two Executive Life (ELNY) annuitants, or shortfall payees that aired in South Florida on May 15th. The investigative interview can be viewed online along with the companion article. The interview highlights the many issues facing those annuitants whose benefits will be cut later this year. Through no fault of their own, 1500 annuitants will see their benefits cut by as much as 66% some time later this year. As pointed out by one of the annuitants “I trusted the system and the system failed me.”