Insolvencies

  • Commissioner Hager discussed the resolution, prepared by the Securities and Insurance Regulation (EX) Task Force, which was adopted by the NAIC in December 1987 encouraging reciprocal treatment of assets in cases of insurer insolvency.
  • He proposed that a letter from the Task Force be sent to the states which have not adopted the NAIC BookEntry
    System Model Act and Book-Entry System Regulation, encouraging them to do so. He also suggested that the
    Task Force monitor ongoing reciprocal treatment among states in the event of insolvencies in line with the resolution which was adopted in December.

Financial Services and Insurance Regulati-On (EX) Task Force

1988-2, NAIC Proceedings - March 14, 1988

  • Significantly, until the 1980s, no major life insurance company had failed during the working lifetime of most actuaries then in practice.
  • But as with so many aspects of the life and health insurance business, the last decade was, in many respects, a watershed.
  • Most of us have witnessed a revolution in the kind of products we offer, the way they are marketed, the investments made to match the liabilities they create, and the levels of profitability they generate.
  • As we have seen, the failure of such institutions as Baldwin United, and more recently Executive Life, First Capital and Mutual Benefit, have made us cogently aware of this issue.

--  MICHAEL J. COWELL

1991 - SOA - MANDATED RISK-BASED SURPLUS

  • 2015 - U.S. and Japan Life Insurers Insolvencies Case Studies: Lessons learned from resolutions, A Geneva Association research Report, Edited by Etti Baranoff - 52p
    • APPENDIX - Insolvencies 2008-2012 by country - p45
  • 2018 - A Review of Root Cause in Insurer Insolvencies and Impairments,  by Dave Heppen and Veronika Cooper, Society of Actuaries - 6p

 

Between January 1975 and December 1990, 170 life insurance companies failed--40 percent during 1989 and 1990.

  • Most of these failed insurance companies were small.
  • In April 1991, however, the California Insurance Commissioner placed the Executive Life Insurance Company in conservatorship.
  • If this company eventually fails, it will be the largest U.S. insurance company ever to do so.
  • Recently, a few other life insurance companies have been placed in conservatorship.  (p1)

1991 - GAO - Insurance Company Failures Threaten Retirement Income -Testimony,T-HRD-91-41 - 24p

2. Insolvencies involving insurance companies have risen in recent years, The amount of money assessed by state guaranty funds to pay for insolvencies has increased as well.

  • Historically, life company failures and guaranty fund
    assessments have been low.

    • For example, from 1975 to 1982, those assessments averaged $6.2 million a year.
  • Recently, however, life company failures have increased significantly.
    • For example, life guaranty fund assessments tripled from $154.8 million in 1990 to $469.7 million in 1991.
  • The problem of insolvency of life companies is not limited to small companies.
    • In April 1991, the California Department of Insurance seized Executive Life Insurance Company of California.
    • Assessments for Executive Life of California could reach $400 million per year over five years.  (p1)

1992 - California GOV - State Solvency Regulation of Property-Casualty and Life Insurance Companies - 144p

PROPOSED NEW INSURANCE LAW

  • Acting upon the suggestion by Superintendent Hotchkiss, Governor Hughes sent to the legislature last week a message, asking for the enactment of a law conferring created the necessity for some such law, it will be noted that upon the Superintendent power to deal summarily with insolvent insurance companies, or when their affairs are so managed as to render their continuance in business hazardous to the public.
  • The necessity of some such authority being commended in the head of the Insurance Department was demonstrated most emphatically in the recent entanglements most emphatically in the recent entanglements connected with the attempt to transfer the Washington Life to a Pittsburg company and remove its assets from the jurisdiction of the State of New York, which attempt was frustrated by the prompt action of the Attorney General.

1909 0318 - The Spectator, VOL. LXXXII