Issue 2 | 1st Quarter 2013 | Back to Main | Contact Us

In 1991, New York State regulators took over Executive Life of New York (ELNY). Since then ELNY has operated under a court-approved rehabilitation plan administered by the New York Insurance Department. On September 1, 2011, the Insurance Department moved for the liquidation of ELNY, citing diminishing value of ELNY estate assets (and eventual shortfall) made worse by the financial collapse of 2008. In the spring of 2012, Judge Gallaso, Supreme Court of the State of New York (Nassau County) signed an order of liquidation and approval of the restructuring agreement.

According to the regulators, the liquidation plan will not result in benefit reductions for most payees under ELNY annuities. Approximately 15 percent of all ELNY annuity payees are expected to experience benefit reductions. A hardship fund (with Life insurer participation) has been implemented to further reduce shortfalls for payees demonstrating need.

In August 2012, an appellate brief was filed on behalf of 18 shortfall payees (objectors/appellants) who are objecting to the liquidation plan and restructuring agreement. The objecting payees allege that they were denied due process. The appeal will delay the implementation of the liquidation plan and restructuring agreement until 2013.

In the meantime, what you should know about structured settlements?

Since 1991, lawmakers and regulators have instituted a series of consumer protection laws and regulations that directly benefit annuity payees, and help to ensure that there will be no repeat Executive Life of New York’s situation. These protections include:

• Stricter rules for permitted investments
• Higher minimum surplus requirements,
• Tightened accounting rules with a special focus on investment risks
• Mandatory annual audits, independent reviews, and spontaneous audits to ensure compliance
• Increased Guaranty Association coverage limits

As a result of these and other consumer protections, structured settlements, that are issued only by life insurance companies that rank amongst the world most stable and secure financial institutions; and which operate in a regulatory environment specifically designed to prevent high risk investment strategies, remain exceptionally safe.