Accident victims and pensioners with annuities from the bankrupt Executive Life Insurance Company of New York will continue receiving payments under a plan worked out with property-casualty and life insurance companies, New York officials said.
The arrangement was announced by New York Gov. Eliot Spitzer and State Insurance Superintendent Eric Dinallo. They said the agreement covers nearly 11,000 persons.
ELNY, which went bankrupt in 1991, was facing a significant deficit under the supervision of Mr. Dinallo and the New York Liquidation Bureau, an independent organization.
According to the announcement, the agreement in principle was reached after "extensive talks with various parties, including dozens of insurance carriers and guaranty associations."
The plan, it was explained, includes direct and indirect contributions from a variety of parties that will allow the deficit to be eliminated.
"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 Gov. Spitzer.
His statement continued, "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."
ELNY was obligated to pay out annual payments over many years on structured settlements secured through court cases or settlements.
The Liquidation Bureau took over distribution of ELNY's assets and obligations after the company became insolvent.
Officials said that more than five years ago it became clear that ELNY was threatened by a substantial shortfall and it is now projected that in approximately 12-to-15 years, the funds would be depleted and ELNY would have a $2 billion deficit.
The Liquidation Bureau, which was reorganized after Mr. Dinallo took office, said it brokered the funding plan with extensive talks with various parties, including dozens of insurance carriers and guaranty associations.
The American Council of Life Insurers (ACLI), which represents most of the life insurance companies in the country, is organizing the payment 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 U.S. Insurance Company, Allstate, Fireman's Fund Insurance Company, State Farm Insurance and Travelers, officials said.
The proposed agreement is subject to approval by Nassau County State Supreme Court.
Mark Peters, special deputy superintendent in charge of the New York Liquidation Bureau, said the arrangement "will result in a significant cash infusion, thus protecting ELNY beneficiaries. The proposed plan is designed to continue paying all annuitants 100 percent of their benefits."
Frank Keating, president and chief executive officer of the American Council of Life Insurers in Washington, D.C., said: "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."
Other recent actions undertaken by the Liquidation Bureau include:
o Implementing a temporary solution to the chronic funding shortages at the Public Motor Vehicle (PMV) Security Fund, allowing thousands of long-suffering accident victims to be paid for their claims after years of waiting.
o Hiring an outside firm to conduct a top-to-bottom audit, a step the Bureau had not previously taken.
o Revamping of procurement systems, including a new attorney panel with appointments based solely on merit.
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