by Structured Settlement Watchdog
Can Structured Settlement Annuity Issuer change structured settlement payment dates for its own convenience?
The above question stems from a class action lawsuit complaint filed in the District of Connecticut in November 2024, which was voluntarily withdrawn without prejudice the following month. What Does Dismissed Without Prejudice Mean in Legal Terms? – LegalClarity
An November 19, 2024 article by Allison Bell in Think Advisor discussed the Anthony Ortez-Diaz case shortly after it was filed. In short, she says that an administrator now processes all payments at the end of the month instead of being paid on the 3rd of the month. The plaintiff said that violates his contract.
A preliminary matter to address is Allison Bell’s analysis of a lawsuit brought by a highly competent Stamford, CT law firm on behalf of a structured settlement payment recipient and others similarly situated. The case pertains to an alleged administrative action by Wilton Re following its 2021 acquisition of Allstate Life Insurance Company of New York. Bell’s assertion, made in the context of the reported case, that “Life and annuity issuers are realizing that millions of heavily customized life insurance policies and long-term care policies sold in the 1960s through the mid-1990s, before modern computer systems were in use, are starting to pay benefits” is highly implausible. The idea that these companies are only now becoming aware of this is absurd. With 42 years of experience in the insurance industry, including over 30 specializing in structured settlements, I find this claim irrelevant to structured settlements or the specific allegations against Wilton Re. If Bell suggests that Wilton Re lacks expertise or erred in its pre-acquisition cost-benefit analysis, relevant evidence should be presented to substantiate such a claim.
The most relevant question being addressed here is the one posed at the beginning of this post: “Can a Structured Settlement Annuity Issuer Change Structured Settlement Payment Dates for its Own Convenience?”
Background
Allstate was a prominent and innovative issuer of structured settlement annuities until early 2013. Structured settlement annuities were issued in 49 states using Allstate Life Insurance Company as the structured settlement annuity issuer and using Allstate LIfe Insurance Company of New York when the settlement was concluded in a New York matter. In November 2021, the entities were spun off in two separate directions. Read the details in the following two links.
Allstate Life Insurance Company—> entities managed by Blackstone (insurer renamed Everlake)
Allstate Life Structured Settlements | What You Need To Know
Allstate Life Insurance Company of New York———> Wilton Re
Allstate – Business Wire Press Release – Wilton Re
What was at issue?
Lead Plaintiff : Anthony Ortiz-Diaz
Origin of Structured Settlement: Settlement with National Rail Passenger Corporation (“Amtrak”) Amtrak | FRA
The Gist of Allegations
- The plaintiff had been receiving monthly structured settlement annuity payments on the third day of the month for years.
- In 2024, an administrator began processing the payments for all structured annuities at the end of the month.
- The plaintiff says the new payment schedule violates the annuity contract terms.
See Annuity Beneficiary Sues Reinsurer Over Payment Timing
The Bigger Picture
- Is this permissible?
- Is this happening to others? If so, how often is it happening?
How is a structured settlement established?
Note that the Payee/former plaintiff doesn’t own the annuity contract. The annuity contract is a qualified funding asset used to fund an obligation to make future periodic payments. in the Anthony Ortiz-Diaz case the settlement agreement with Amtrak would have included:
- an obligation to make periodic payments as part of the consideration for the settlement (Step1)
- a qualified assignment (Step 2)
- the purchase of any annuity contract(s) by the qualified assignment company as a qualified funding asset, which would occur only following the qualified assignment. (Step 3) Only under rare circumstances would a Defendant buy the annuity and hold it.
A plaintiff would not be eligible to purchase a structured settlement annuity contract themselves.
What was odd about the Policy Exhibit to the Complaint?
The application attached as exhibit to the Complaint shows the $1,500 per month for life, with 360 months (30 years certain) certain, but the policy does not.
Allstate had a unique and peculiar way of issuing annuity contracts. All of the guaranteed and certain payments were typically on one contract (let’s call it the A contract) and any lifetime payments were on the B contract with the same contract number.
When Allstate stopped writing business, this A/B peculiarity led to some odd occurences. Following are links to my two April 16, 2015 blogs which discuss this topic
Allstate Life Structured Settlements | What You Need To Know (4structures.com) November 4, 2024 update
Are Delays Related to Third Party Payment Servicers?
Since 2023, Wilton Re has been using Alliance One Services for structured settlement payment servicing. Alliance One Services, Inc. is a company that provides various services, including third-party administration for insurance products and debt collection. It is a subsidiary of DXC Technology, a Fortune 500 global IT services leader. In addition to Wilton Re, Alliance One also provides payment servicing to Genworth.
Here is a 2024 blog I authored about the Alliance One experience of a Long Island annuitant in relation to another of Wilton Re’s acquisitions. Mystery Surrounds Late EFT Payment to Long Island Structured Settlement Payee and Response – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews September 15, 2024