DIRECTOR'S APPROVAL OF ALHIGA'S
SETTLEMENT AGREEMENT WITH THE STATE OF ALASKA
September 24, 1998
By letter of September 8, 1998, the Alaska Life and Health
Insurance Guaranty Association (ALHIGA) requested the approval
of the Director of the Division of Insurance of a settlement
entered between ALHIGA and the State of Alaska (State) as
to a claim asserted by the State arising from the insolvency
of the Executive Life Insurance Company (ELIC). In response
to that request, the Director finds as follows.
1. ELIC is a "member insurer" of ALHIGA as defined
in AS 21.79.90(6). ELIC was licensed to sell annuities in
the State of Alaska under Certificate of Authority No. 928,
issued February 1, 1971. That certificate was suspended by
order of the Director dated May 13, 1991 and later revoked
by order of the Director dated May 10, 1994.
2. By order dated April 11, 1991, Superior Court for the
State of California, in Case No. BS-006912, issued a rehabilitation
order placing ELIC into rehabilitation. On December 6, 1991,
as a result of ELICís deteriorating financial condition, a
final order of liquidation was entered by the Superior Court
3. Because of the ELIC insolvency, the State, as trustee
of the State of Alaska Supplemental Annuity Plan and contract
holder of group limited premium deposit
pension contracts issued by ELIC, asserted a claim for benefits
from ALHIGA. This claim has been the subject of litigation
in a case entitled Alaska Life and Disability Insurance
Guaranty Association v. State of Alaska, No. 3 AN-94-6680,
Superior Court for the State of Alaska, Third Judicial District
4. Under AS 21.79.060(d)(3), ALHIGA may satisfy its obligations
to insureds of an insolvent member by "provid(ing) money,
pledges, notes, guarantees or other means necessary to discharge
the insurer's duties. . . ."
5. ALHIGA proposes to meet any statutory obligation that
it may owe to the State arising from the aforementioned ELIC
contracts by a lump sum payment to the State in exchange for
a release of all claims by the State. The amount to be paid
was negotiated by the State (without involvement of the Director
of the Division of Insurance) and ALHIGA, was memorialized
in a Settlement Agreement dated July 30, 1998, and was approved
by the Attorney General for the State.
THE DIRECTOR HEREBY ORDERS:
ALHIGA's request to meet its obligation to the State of Alaska
arising out of the ELIC insolvency through ALHIGA's payment
to the State of the monies specified in the July 30, 1998
Settlement Agreement is approved.
This order is effective September 24, 1998.