STATE OF NEW YORK
OFFICE OF THE GOVERNOR CONTACT: Errol Cockfield
LIQUIDATION BUREAU CONTACT: Erin Carney
GOVERNOR ANNOUNCES LANDMARK AGREEMENT TO PROTECT THOUSANDS RECEIVING PENSION AND INJURY PAYMENTS
Governor Eliot Spitzer today was joined by New York State Insurance Superintendent Eric Dinallo to announce an agreement in principle that will protect nearly 11,000 accident victims and other individuals receiving annual payments from structured settlements and pensions.
The New York Liquidation Bureau has successfully resolved a significant deficit from a defunct insurance company that threatened annuity payments to nearly 11,000 disabled and dependent individuals.
“This is a remarkable example of how public agencies can aggressively pursue resolutions for the public good rather than ignoring problems for future administrations to address,” said Governor Spitzer. “I thank the insurance industry for working with us in this unique effort to protect thousands of injured and dependent people whose financial security relies on payments from their structured settlements.”
Executive Life Insurance Company of New York (ELNY) was obligated to pay out annual payments over many years on structured settlements secured through court cases or settlements.
In 1991, the Liquidation Bureau took over distribution of ELNY’s assets and obligations after the company became insolvent. More than five years ago it became clear that ELNY was threatened by a substantial shortfall, but the problem went unaddressed, jeopardizing the primary financial lifeline of thousands of victims of cataclysmic injuries and pensioners.
It is projected that in approximately 12-15 years, the funds would be depleted and ELNY would have a $2 billion deficit. After Superintendent Dinallo took office, the Liquidation Bureau took quick and aggressive action to resolve the deficit before it endangered recipients.
The Liquidation Bureau brokered the plan after extensive talks with various parties, including dozens of insurance carriers and guaranty associations. The plan includes direct and indirect contributions from a variety of parties that will allow the deficit to be eliminated. The American Council of Life Insurers (ACLI), which represents most of the life insurance companies in the country, is organizing the effort in the life insurance industry. In addition, several property/casualty insurers and other companies that purchased ELNY annuities are participating, including: Allianz Global Risks US Insurance Company, Allstate, Fireman’s Fund Insurance Company, State Farm Insurance, and Travelers.
The proposed agreement is subject to approval by Nassau County State Supreme Court.
Eric Dinallo, the State Superintendent of Insurance, who also serves the head of the Liquidation Bureau, said: “This is a great day for the insurance industry, which stepped forward to make sure that vulnerable victims do not lose their financial support. This event emphasizes how important insurance is to the lives of New Yorkers. It also demonstrates the excellent job Mark Peters and his entire staff are doing in turning around the Liquidation Bureau.”
Mark Peters, Special Deputy Superintendent in charge of the New York Liquidation Bureau, said: “It was the Liquidation Bureau’s responsibility to take action on the looming ELNY deficit. The Bureau worked intensively to craft a solution that will result in a significant cash infusion, thus protecting ELNY beneficiaries. The proposed plan is designed to continue paying all annuitants 100% of their benefits.”
Frank Keating, president and CEO of the American Council of Life Insurers (ACLI), a Washington, D.C.-based trade association, said: “The Liquidation Bureau has developed a solid plan to respond to the financial challenges facing the ELNY estate in rehabilitation. Working through the New York Life and Health Guaranty association, other individual state guaranty associations and the National Organization of Life and Health Guaranty Associations, life insurers are prepared to help ensure ELNY annuitants continue to receive their steady streams of lifetime income.”
Herb Allison, Chief Executive Office of TIAA-CREF said: “TIAA commends Superintendent Eric Dinallo and the insurance companies on their development of a responsible plan that will help protect consumers.”
The New York Liquidation Bureau is an entity, independent of the New York State Insurance Department, which carries the responsibilities of the New York State Superintendent of Insurance in his role as receiver, an acts on his behalf to discharge his statutory duties to protect the interests of policyholders and creditors of insurance companies that have been declared impaired or insolvent.
Upon taking office in April 2007, the Liquidation Bureau’s new management immediately implemented an intensive reform effort. Given the vulnerability of the thousands of individuals affected by ELNY’s deficit, the Bureau identified ELNY as a priority. Other actions undertaken by the Liquidation Bureau include: