Soothsayer: Beware the ides of March.
Caesar: What man is that?
Brutus: A soothsayer bids you beware the ides of March.
William Shakespeare, Julius Caesar, Act I, Scene 2
On March 15, 2012 a hearing will be held before Justice Galasso in New York Supreme Court, Nassau County, to consider a petition by the rehabilitator of Executive Life Insurance Company of New York (ELNY) to liquidate ELNY and to approve a restructuring plan of its remaining contracts. The stated reason for the rehabilitator’s action is to address a $1.5 billion shortfall that prevents the rehabilitator from continuing to pay 100% of ELNY’s contractual obligations, primarily under annuities issued in the 1980s to fund structured settlements.
Under the proposed restructuring plan, the remaining ELNY assets are to be transferred to a new entity owned and controlled by the participating state life insurance guaranty funds, which will contribute funds to the new entity in amounts based on their individual state fund laws. The ELNY contracts will be restructured to a level that can be supported by these assets, and the obligations as restructured will be assumed by the new entity. Because most of the annuities are relatively small and fall within guaranty fund caps, the rehabilitator has estimated that roughly 84% of all annuitants will continue to receive their full periodic annuity payments. Many annuitants, however, will see their periodic structured settlement payments reduced by up to 50% or more.
At the hearing, the Court will consider whether or not the proposed restructuring plan is in the best interests of ELNY’s policyholders, annuitants and the general public based on its current condition and existing laws. Another but equally important consideration, however, is how the receivership process failed ELNY, its policyholders and annuitants, and in 20+ years of rehabilitation managed to take it from a solvent company to more than $1.5 billion in the hole.
In the hope of keeping this historic perspective as part of the current dialogue, I have written an article examining the circumstances of ELNY being placed into rehabilitation, the flawed rehabilitation plan and the mismanagement of the estate leading to its inevitable failure. The article is not an assessment of the proposed restructuring plan to be considered by the court on March 15; rather it is a call for a review of the flawed receivership process that brought it to this point. Here is a link to the Publications page of my website to access this article, which is titled “The Trouble with ELNY: Or How The Receivership Process Has Failed Executive Life Insurance Company Of New York, Its Policyholders And Annuitants.”
[Note: This article, without endnotes, is also the cover article in the February 20, 2012 issue of Insurance Advocate magazine.]
Caesar: [To the Soothsayer] The ides of March are come.
Soothsayer: Ay, Caesar; but not gone.
William Shakespeare, Julius Caesar, Act III, Scene 1