The proposed liquidation of Executive Life Insurance Company of New York (ELNY) represents the dominant 2011 structured settlement news story and also one of the most significant developments in the history of the structured settlement industry.
Although ELNY first entered rehabilitation in 1991, the public events anticipating and announcing ELNY's proposed liquidation began December 17, 2010 when Nassau County New York State Supreme Court Judge John M. Galasso ordered the Superintendent of the New York Insurance Department, as ELNY's Receiver, to present the Court with a proposed Order and Plan of Liquidation on or before July 1, 2011. Following two postponements, the Receiver petitioned the Court for an Order of Liquidation and Approval of a Restructuring Agreement on September 1, 2011.
Note: New York Governor Cuomo merged the New York State Department of Insurance with the New York State Banking Department to create the New York State Department of Financial Services (DFS or ELNY Receiver) as part of the 2011-2012 State Budget.
The DFS Superintendent, as ELNY's Receiver, filed Schedule 1.15 for the proposed ELNY Restructuring Agreement with the Court under seal on November 7, 2011. Schedule 1.15 provides extensive information about each of ELNY's remaining 9694 annuities of which 4168 are structured settlement annuities (SSAs). According to Schedule 1.15, 1459 SSAs will experience shortfalls ("uncovered amounts") as a result of ELNY's liquidation and restructuring even assuming state guaranty association contributions and enhancements.
For the 1459 ELNY SSAs with anticipated shortfalls:
- 156 SSAs are identified as having been factored - although some industry sources believe the actual number of current ELNY SSAs previously factored is considerably higher.
- 1100 SSAs have "uncovered amounts" in excess of $100,000 each on a present value (PV) basis including
- 237 SSAs which have "uncovered amounts" in excess of $1,000,000 PV each including
- 17 SSAs which have "uncovered amounts" in excess of $5,000,000 PV each.
- The largest ELNY SSA has an "uncovered amount" of $25,692,377 PV.
- Note: Schedule 1.15 now appears on the ELNY website.
The DFS Superintendent, as ELNY's Receiver, began publishing weekly notices in the New York Times and Wall Street Journal. on November 21, 2011. These notices:
- Announce a hearing on the Liquidation Petition is scheduled for March 15, 2012, before the Honorable John M. Galasso, J.S.C., at the Courthouse, 100 Supreme Court Drive, Mineola, New York, at IAS Part 37, at 9:30 a.m.
- Warn persons who wish to object to the ELNY Liquidation Petition or the Restructuring Agreement that they must serve a written statement setting forth objections with supporting documentation upon the DRS Superintendent by January 16, 2012 and must also timely submit copies with an affidavit of service to the Court.
- Note: a special thanks to one astute reader of "Beyond Structured Settlements" who:
- Points out that January 16, 2012 is Martin Luther King Day and the New York Supreme Court will be closed.
- Recommends that ELNY objections be sent certified mail, return receipt requested, to arrive no later than Thursday January 12, 2012.
- Further notes it is important to keep the mailing receipt from the time of mailing at the Post Office because the green certified postcards often fall off letters prior to delivery or the Post Office/mail deliverer may forget to obtain the signature or the signature on the green postcard may be illegible.
Acting as the Receiver's agent, the New York Liquidation Bureau (NYLB) mailed letters (payee letters) on December 7, 2011 to individual ELNY annuity payees with anticipated shortfalls notifying them about the proposed ELNY liquidation and Restructuring Agreement and the amount of their anticipated shortfalls. The ELNY payee letters also:
- Highlight that any reduction in benefit payments will not occur until implementation of the Restructuring Agreement, which is not expected before April 2012 at the earliest.
- Encourage ELNY annuity payees with anticipated shortfalls to contact their ELNY SSA annuity owner who may be responsible for supplemental payments, depending upon the terms of the structured settlement agreement, to the extent full payments are not made under the Restructuring Agreement.
- Announce an ELNY "Hardship Fund" of at least $100 million (not a component of the Restructuring Agreement) created by a consortium of life insurance companies with a toll-free information line at 1-888-809-2254.
- Identify "Guaranty Association Benefits Company" ("GABC") as the name of the new captive insurance company formed by the National Organization of Life and Health Guaranty Associations (NOLHGA) and the participating state Guaranty Associations that is referenced in the proposed ELNY Restructuring Agreement as "NEWCO".
- Warn ELNY payees "if you have transferred any part of your right to receive ELNY SSA benefits to a third party, you may not be eligible to receive benefits from CABC related to the benefits you transferred."
- Include legal notices with instructions for ELNY contract owners, payees and other claimants who wish to object to the proposed Restructuring Agreement.
- Direct ELNY SSA annuity payees to the ELNY website and toll-free information line (1-888-398-8213) for additional information.
In a subsequent blog post, S2KM will summarize other important (non-ELNY) structured settlement developments that occurred during 2011.
For S2KM's complete ELNY reporting, including an Executive Life timeline, see the structured settlement wiki. For more detailed history and analysis of ELNY and its sister company, Executive Life of California (ELIC), see Section 3.05 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).