Disability Law

Executive Life Of New York - 1

By Patrick Hindert

Was it merely coincidental that New York Governor Eliot Spitzer announced an "agreement in principle" for Executive Life of New York (ELNY) the same week "agreements in principle" unraveled for multiple high profile college football coaches? 

As college football fans are learning, "agreements in principle" are not always agreements in fact - and the devil is frequently in the details.

Governor Spitzer's publicly announced ELNY "agreement in principle" did not include many details:

• The proposed ELNY plan:
  • Is designed to continue paying all ELNY annuitants 100% of their benefits;
  • Provides protection for approximately 11,000 ELNY annuity recipients including structured settlement recipients;
  • Requires and anticipates future approval by the New York Nassau County State Supreme Court.
• Various insurers and guarantee associations have agreed to pay $650 to $750 million to fund approximately $2 billion of future ELNY payments;
• The insurers include several named liability (casualty) insurers.

Some of many unanswered questions:

• Exactly what are ELNY's current problems?
  
• What factors caused these problems?
• Who was aware of these problems and when?
  
• What issues will the ELNY plan address?
• Who will be the contributors?
  
• How much will they contribute?
• How many liability insurers will ultimately contribute?
• How much will they contribute?
• Why are the liability insurers contributing?
• What potential issues do the liability insurers' contributions create for:
  • Reinsurers;
  • Intermediaries;
  • Product providers;
    
  • Trade associations?   
    
• Will the total contributions be enough to pay ELNY's obligations?
• What are the key assumptions underlying future payment predictions?
  
• When will the ELNY plan be approved?
• Who are the parties in interest?
  
• What issues are involved in the plan approval process?
• How many of ELNY's annuities are structured settlement annuities?
• How many of ELNY's structured settlement annuities were assigned?
• Who were the assignees?
• How many ELNY annuities have already been transferred in the secondary market?
• Of these annuity transfers, how many involve structured settlement annuities?
• Will the ELNY plan honor annuity payment rights that have already been transferred in the secondary market?
• What limitations, if any, will the ELNY plan impose on the future transfer of ELNY annuity payment rights?
• What legal precedents will the ELNY plan establish for future insolvencies involving structured settlement annuities?
• What lessons should the structured settlement industry learn from ELNY?
• Is this the last chapter of the Executive Life structured settlement saga?

For historical background about Executive Life Insurance Company from a structured settlement perspective, see Section 3.05 of "Structured Settlements and Periodic Payment Judgments".

Full post as published by Beyond Structured Settlements on December 08, 2007 (boomark / email).