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ISSUED 09/02/2011 FOR IMMEDIATE RELEASE

NEW YORK LIQUIDATION BUREAU FILES LIQUIDATION PLAN FOR EXECUTIVE LIFE INSURANCE COMPANY OF NEW YORK

NEW YORK, NY (09/02/2011)(readMedia)-- Benjamin M. Lawsky, Superintendent of the Department of Financial Services, and James J. Wrynn, who serves as court-appointed Receiver of Executive Life Insurance Company of New York (ELNY), announced today the filing of legal papers to liquidate ELNY. The liquidation plan doubles Executive Life's assets, which should fully protect approximately 84 percent of those who currently benefit from Executive Life payments. In addition, the life insurance industry has voluntarily agreed to create an additional $100 million hardship fund to help those whose payments may potentially be reduced. Executive Life of New York was put into rehabilitation in 1991 when its parent company went under.

"Simply put, Executive Life does not have enough assets to meet all its obligations, a fact made far worse by the recent financial crisis. Protecting the people who depend on payments from the company was challenging, but working with the guaranty associations and the life insurance industry, we have devised a plan that will maximize payments and ensure the fairest possible outcome for everyone," Superintendent Lawsky said. "I want to thank the life insurance industry for voluntarily agreeing to create an additional hardship fund to make sure ELNY beneficiaries are treated fairly."

The overall plan consists of two components. The first is a Restructuring Agreement proposed to the Supreme Court in Nassau County that includes:

  • ELNY's remaining assets of approximately $900 million.
  • An estimated $730 million in contributions from state life insurance guaranty associations.
  • Approximately $40 million from life insurance companies for enhanced benefits for contract owners, payees and beneficiaries who are
  • not covered by any state guaranty association to provide coverage up to $100,000.
  • Approximately $25 million from life insurance companies for a further "top-up" benefit to increase the coverage up to $250,000 for beneficiaries who are not covered by any state guaranty association, or whose maximum state guaranty association coverage is below $250,000.

Additionally, as part of the overall plan but outside the Restructuring Agreement, there are:

  • A hardship fund that the life insurance industry has voluntarily agreed to provide totaling approximately $100 million in contributions in order to supplement payments that may have to be reduced.
  • Potential additional benefits from some of the owners of the contracts, including property-casualty insurance companies that bought the structured settlements from Executive Life and which may remain obligated for portions of the payments.

Under the plan, all beneficiaries are protected up to a present value of at least $250,000. In states with a higher maximum such as New York, where the maximum is $500,000, they are protected up to the maximum in that state. Contracts with a present value below the maximum will have no reduction in future payments. Contracts with a present value above the maximum may have a reduction. Anyone who will potentially see a reduction in their annual payments can apply to the hardship fund created for that purpose.

Under the proposed Restructuring Agreement, a new not-for-profit special purpose insurance carrier will be created to assume responsibility for making payments to beneficiaries. Ultimately, it is anticipated that approximately 84% of beneficiaries will not have any changes to the payments they currently receive. The precise amounts of the reductions and the affected contracts will not be known until mid-October after state guaranty funds finalize the amount of their contributions. Thus, the exact impact on each payee will not be known until mid-October. At that time, letters will be sent to each beneficiary describing what their payments will be once the Restructuring Agreement is approved.

Contract owners and beneficiaries who have questions can call a special call center at 1-888-398-8213. However, they should keep in mind that specific information about the exact amounts to be received by individuals will not be available until mid-October, so the call center will only be able to answer general questions until then.

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