* Executive Life Insurance Co of NY to be liquidated
* Some payees will not recover full amounts
* Insurer had been seized in 1991
By Nick Brown
NEW YORK, April 16 A New York judge on Monday
approved a plan to liquidate the long-insolvent Executive Life
Insurance Co of New York and pay out most of the money owed to
beneficiaries under the company's life insurance policies.
The plan proposed by Benjamin Lawsky, New York's
superintendent of financial services, would pay out the
remainder of about $900 million in Executive Life's estate, as
well as another $730 million in contributions from state life
insurance guaranty associations. Insurers also agreed to chip in
about $70 million.
Lawsky's plan won approval by Nassau County Supreme Court
Justice John Galasso, over the objection of a variety of
Executive Life payees.
Galasso said it would allow for about 85 percent of the
roughly 10,000 payees to receive full payouts on the present
value of their annuity benefits.
"The court cannot apologize for applying the law as it
pertains to everyone involved," Galasso wrote. "Their
individual, understandable frustrations cannot be resolved in
Lawsky's office could not immediately be reached for
Beneficiaries whose claims are larger than maximum recovery
rates in certain states may still be under water.
Those people will be able to apply for additional
reimbursement from a $100 million "hardship fund" paid for by
members of the life insurance industry, James Wrynn, who had
been New York's insurance superintendent at the time, said in
"Simply put, Executive Life does not have enough assets to
meet all its obligations," Wrynn said at the time. "We have
devised a plan that will maximize payments and ensure the
fairest possible outcome for everyone."
New York's insurance and banking departments merged in
October into the Department of Financial Services, which Lawsky
Executive Life was seized by New York insurance regulators
in 1991, a casualty of the recent junk bond market crash. Its
California-based parent filed for bankruptcy protection the same
The insurer initially was to be rehabilitated, with
policyholders receiving full payouts over time.
But the recent economic downturn led regulators to scrap the
Galasso said the liquidation plan that replaced it was the
best possible outcome for policyholders, but acknowledged some
of them will still have to cope with a "diminished financial
The case is In re: Rehabilitation of Executive Life
Insurance Co of New York, New York State Supreme Court, Nassau
County, No. 8023/1991.