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.

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

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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.

Executive Life – Updated Schedule Available

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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.

 

Where is Your Pension?

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The corporate desire to shed pension obligations went into over-drive in 2012 with pension de-risking transactions by Ford, General Motors and Verizon.  The pension de-risking trend allowed these corporations to eliminate their obligations to their retirees by billions of dollars.  In his column published in the Hanford Sentinel on August 21, 2013 columnist Dennis Beaver answers his reader’s questions about pension de-risking and passes along Eddie Stone’s advice:   “For your readers who are covered by a pension and looking forward to a comfortable retirement, I have a warning. Employers across this country have made promises to their employees which will not be honored. Simply stated, pension liabilities dramatically exceed their assets….This is a time when all present employees and retirees need to be aware of what is happening with their pension…”

De-Risking is Risky for Millions of American Retirees

Many major corporations have begun to pursue “de-risking” strategies and retirees are the victims, losing pension benfits and ERISA protections without their consent.  In this video featuring Edward Stone and Jack Cohen, a leading retiree advocate from ProtectSeniors.org, Stone and Cohen explain the dangerous impact of these “de-risking” transactions.

Misconceptions About Executive Life (ELNY) Liquidation

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 Talks About ELNY Annuities

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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.

Annuity Industry curtails Benefits

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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.

ELNY Announces Liquidation Date

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 eddie@edwardstonelaw.com or (203) 504-8425. 

 

Life Insurers Begin to Announce ELNY Assessments

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”.