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August 07, 2013 at 10:11 AM
The regulatory saga of the Executive Life of New York (ELNY) is coming to an end of sorts, with the liquidation of the estate and the kick-off of the restructuring plan beginning Aug. 8, almost 22 years after it was seized — more than a day later and well more than a dollar short.
ELNY’s restructured liabilities are now being fully transferred to the not-for-profit captive insurance company, Guaranty Association Benefits Company (GABC), which is domiciled in Washington, D.C.
GABC will assume those liabilities. Further funding will come from the guaranty association contribution and voluntary contribution commitments from a number of life insurance companies.
Although ELNY is smaller than some of the life insurers that were liquidated during the 1990s, such as Confederation Life and Mutual Benefit Life, ELNY is unique due to the large size of some of the structured settlement annuities, with their high cost of living benefits; the low amount of assets left in the ELNY estate; and the voluntary contribution from the life insurance industry that will help — but not patch the gap — in assets to be paid to hard-hit annuitants.
An annual report from the New York Liquidation Bureau (NYLB) shows that the gap has been widening as ELNY stagnated for a decade in the hands of the NYLB.
As of Dec. 31, 2010, ELNY had $905,945,201 in admitted assets, and $2,474,317,343 in liabilities, for a deficit of $1,568,372,142, after about eight years of declines.
The NYLB data shows that in 2011, ELNY had only $817,436,754, in assets and in 2012, it was down to 765,423,651 with liabilities at $2,757,877,769.
The total ELNY estate capital and deficit as stated by NYLB for 2012 was $1,992,454,118 and $1,951,883,579 for 2011.
Under the restructuring plan, there is a separate $100 million special hardship fund fueled solely by major U.S. life insurers that will be run by JAMS, the largest private alternative dispute resolution provider in the world.
The disbursements — and even the creation — of the fund were dependent on the liquidation plan drawn up by New York Department of Financial Services (DFS) Superintendent Ben Lawsky, then-NYLB Chief Jonathan Bing, as well as the long-involved hand of the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). The plan was then approved by the New York State Supreme Court, Nassau County, in April 2012.
