Insurers are joining to protect the flow of benefits to 11,000 individuals receiving payments from structured settlement annuities and other annuities originally written by Executive Life Insurance Company of New York.
New York insurance regulators have hammered out an “agreement in principle” with dozens of insurers and insurance guaranty associations to cover an Executive Life of New York funding shortfall, officials say.
The agreement, which is subject to approval by a state court, would help resolve problems stemming from the 1991 collapse of Executive Life of New York’s parent, Executive Life Insurance Company, Los Angeles.
The New York Liquidation Bureau took over the New York subsidiary’s assets and obligations after the company became insolvent.
Executive Life of New York was responsible for making annual payments to individuals receiving benefits from structured settlements secured through settlements or through court cases.
The Executive Life of New York estate began suffering from a noticeable shortfall about 5 years ago, and, if officials do not take action now, projections suggest that the funds of the estate could be depleted in about 12 to 15 years, officials say.
Participating insurers and guaranty funds have agreed to pay $750 million up front and $2 billion in the future.
The proposed rescue plan should lead to annuitants receiving 100% of their benefits, officials say.
The American Council of Life Insurers, Washington, helped represent the life insurers involved in the agreement negotiations, and property-casualty insurers that bought Executive Life of New York annuities also participated, officials say.
“The Liquidation Bureau has developed a solid plan to respond to the financial challenges facing the ELNY estate in rehabilitation,” ACLI President Frank Keating says in a statement about the Executive Life of New York agreement.
Working together with guaranty association, “life insurers are prepared to help ensure ELNY annuitants continue to receive their steady streams of lifetime income,” Keating says.