Executive Life of New York News! On August 8, 2011 counsel for the New York Insurance Superintendent, as Rehabilitator of ELNY, sent a letter advising the Court in Nassau County that although the Rehabilitator "is not in a position to submit a consensual proposed order and plan of liquidation on or before August 10, 2011," he anticipates doing so on or about August 26. The letter indicated that if the plan is, indeed, filed on or about August 26, 2011, it will not yet have been approved by the Life and Health Insurance Guaranty Associations, according to a bulletin sent to members of the National Structured Settlements Trade Association.
It was previously reported that the deadline for submission of a proposed liquidation plan and liquidation order for Executive Life Insurance Company of New York (ELNY) had been extended from July 1 to August 10, 2011. The structured settlement watchdog observes that the can has now been kicked "coincidentally" to just before the Labor Day weekend, traditionally dead media time when people are frollicking in the surf and paying very little attention.
That being said, it is important to note that the filing of a proposed plan and liquidation order will simply be the first public step in a process that can be expected to extend into 2012. Much of what has gone on with ELNY has gone on out of the public eye. Some have been critical of the hopes raised by the "Spitzer hoopla" on ELNY in December 2007 which suggested that a major asset/liability gap had been solved. As the most recent financials show that solution did not materialize in the intervening years.
The uncertainty about Executive Life of New York estate is affecting ELNY structured settlement annuitants in a number of ways.
- While Executive Life of New York annuitants have been receiving 100% of the payments due them and those behind the scenes are purportedly working to preserve the interest of such annuitants, it is only natural that annuitants want some resolution one way or another.
- In recent weeks some ELNY structured settlement annuitants have attempted to sell structured settlement payment rights and have encountered bumps in the road with a number of purchasers reluctant to invest their capital (buy paying cash to the seller) without assurance that they will be paid. Earlier in the year some factoring companies I spoke to felt comfortable buying payments due over the next 4 years.
I would like to reiterate that the Executive Life of New York situation is unique in that it involved a company that backed its future payment obligations with junk bonds, which in the time frame in question were paying rates in the teens ( a phenomenon yet to be repeated). Falling interest rates over the years exacerbated problems created by annuity projections that were made based on unrealistic reinvestment assumptions for payment durations beyond the maturity dates of the underlying securities held by ELNY. Faced with liabilities that could not be sustained for the long term by the available investment options as the securities matured, the only logical explanation that can be deduced is that policyholders and annuitants were paid at 100% by assessing other insurers, and/or taking more undue risk and/or cannibalizing reserves.
The injury victims that could be the most affected were placed into structured settlements involving a qualified assignment to First Executive, a company "strung out" on "junk" that eventually filed Chapter 11.
Watch John Darer's video podcast with Mark Wahlstrom about Executive Life that first appeared on Sequence Media's Legal Broadcast Network in April 2011.
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