Escolar Documentos
Profissional Documentos
Cultura Documentos
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Introduction and Background
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Introduction and Background
(cont’d.)
2. Interplay of holding company bankruptcy and insurance
company receivership.
• Separate tracks, but substantial practical overlap.
3. AIG as an example.
• Many non-insurance operations (including AIG Financial
Products)
• Numerous U.S. life insurance companies
• 16 U.S. commercial property and casualty insurance
companies
4
What Happens When an
Insurance Company Fails?
1. An insurance company in trouble
2. Role of the state insurance commissioner
• Exclusive role
• No third parties can institute proceedings (including
policyholders)
3. Receivership proceedings and triggers
• Corrective orders/supervision
• Rehabilitation
• Liquidation
4. Timelines for receiverships
5
What Happens When an
Insurance Company Fails?
(cont’d.)
5. State insurance guaranty associations
• Typical statutory limits
- $300,000 death benefits
- $100,000 cash surrender value
- $100,000 annuity withdrawal
• Funded by member insurance companies (2% of
written premium)
• Potential maximum annual assessments $8 billion
• Sales and transfers of books of business
6. Role of National Organization of Life & Health Insurance
Guaranty Association (NOLHGA) www.nolhga.com
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Examples of Large
Life Insurance Company Receiverships
1. Executive Life Insurance Company (CA)
• 1991 – Rehabilitation
• Cause of financial difficulty (Junk Bonds)
• The French drama
2. Mutual Benefit Life Insurance Company (NJ)
• 1993 – Rehabilitation
• Cause of financial difficulty (Real Estate)
• Time can solve problems
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Practical Considerations for
Life Insurance Company Receiverships
1. Contrast of life insurance vs. property and casualty
insurance
2. Transfers of books of business to healthy companies
• Provides coverage for policies greater than statutory
limits
• Avoids payouts and guarantees by state insurance
guaranty associations
• >90% of policyholder benefits covered in full
3. Appointment of NOLHGA Task Force for insurance
company receivership
• Multi-state insolvencies (greater than 3 states)
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Issues Facing the
U.S. Life Insurance Industry
1. Mergers and acquisitions
2. Receipt of TARP money
3. Surplus and regulatory developments
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Unique Features of
Mutual Life Insurance Companies
1. Stock vs. mutual life insurance companies
• Differences
• Complexities
2. Demutualization and “re-mutualization”
3. Mutual holding companies
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