Executive Life Insurance Company of New York (“ELNY”) is a life insurance company that was established in New York City in 1935. ELNY sold annuity contracts and other insurance policies across the United States. Many of the annuity contracts were issued to fund structured settlement agreements resolving physical injury claims, such as medical malpractice, product liability and workplace injury claims. Payees under these annuity contracts may include injury claimants and members of their families.
In the early 1990s, ELNY began to experience a financial shortfall jeopardizing its ability to pay contract owners, payees and beneficiaries largely because of serious financial difficulties encountered by its California parent company. In 1991, the New York State Superintendent of Insurance (now known as the Superintendent of Financial Services) acted to protect ELNY contract owners, payees and beneficiaries by placing the company into what is known as rehabilitation, a process that is used to help restore financially impaired insurance companies to financial health.
Under the rehabilitation process, the Superintendent was appointed by the New York State Supreme Court to act as the Receiver of ELNY (“Receiver”). This allowed the Superintendent to place ELNY into Receivership, enabling the company to continue to make payments to contract owners, payees and beneficiaries. While in Receivership, ELNY has been functioning under the direction of the New York Liquidation Bureau (“NYLB”), an entity that carries out the responsibilities of the Superintendent as Receiver and acts on the Superintendent’s behalf in discharging his statutory duties. Furthermore, the NYLB is responsible for conducting the day-to-day affairs of insurance companies placed into rehabilitation or liquidation. While operating in Receivership, ELNY has continued to make 100% of all annuity payments to all of its annuity contract owners, payees and other beneficiaries.
The rehabilitation of ELNY has been negatively impacted by sustained periods of adverse economic conditions, including low interest rate environments and unfavorable equity markets. In addition, the stock market collapse of 2008 worsened ELNY’s already fragile financial condition. As a result of these adverse economic conditions, ELNY’s assets are no longer adequate to continue to support the payment of 100% of the benefits ELNY annuity contract owners and other payees and beneficiaries expect to receive into the future.
CURRENT STATUS
As of December 31, 2010, ELNY had $905,945,201 in admitted assets, and $2,474,317,343 in liabilities, for a deficit of $1,568,372,142.
In view of the diminished value of the assets of ELNY, the New York State Superintendent of Financial Services asked for court action declaring ELNY insolvent and converting the rehabilitation proceeding of ELNY to a liquidation proceeding. Liquidation is a process that involves the conversion of an insolvent organization’s assets into cash in order to pay contract owner, payee and beneficiary claims and creditors. This action occurs after it is determined that rehabilitation efforts cannot be successful. When placed into liquidation, an insurer's business is dissolved and remaining assets are used to pay contract owner, payee and beneficiary claims and other creditors.
As part of his request to declare the insolvency and liquidation of ELNY, the Superintendent asked the court to approve a restructuring plan. This plan will allow the transfer of ELNY’s remaining assets to a newly created not-for-profit captive insurance company, Guaranty Association Benefits Company (GABC). GABC will be responsible for managing ELNY’s remaining assets and making payments to beneficiaries. GABC is referred to as “NEWCO” in the restructuring plan.
The placement of ELNY into liquidation will enable GABC to obtain funding from state insurance guaranty associations which were created to protect state residents who are contract owners, payees and beneficiaries of policies issued by life or health insurance companies that have gone out of business. This funding, together with ELNY's remaining estate assets, will be used to make payments to contract owners, payees and beneficiaries into the future.
On April 16, 2012, the Court granted the Superintendent’s requests, finding ELNY to be insolvent and directing the Superintendent to liquidate ELNY’s business and affairs in accordance with New York Insurance Law and in substantially the manner provided in the restructuring plan proposed by the Superintendent, which was also approved by the Court. The approved restructuring plan will be referred to herein as the “Restructuring Agreement”. The effective date of ELNY’s liquidation (also known as the Liquidation Date) will be the closing date of the Restructuring Agreement.
ADDITIONAL BACKGROUND
What is an annuity?
An annuity is a contract that pays periodic income benefits for a specific period of time or over the course of an annuity contract owner’s lifetime.
What is a structured settlement agreement?
A structured settlement agreement is an arrangement under which an individual settles a physical injury claim in exchange for agreed-upon damage payments, all or part of which are to be paid periodically over a fixed time period or for the recipient’s lifetime. Structured settlement agreements typically are funded by annuity contracts.
For answers to questions not addressed on this website, you may write to:
ELNY Restructuring Plan Support Center
PO Box 2556
Faribault, MN 55021-9556
Or call
1-888-398-8213