June 17, 1998
DIRECTOR’S APPROVAL OF ALHIGA’S
TO CENTENNIAL LIFE INSURANCE COMPANY INSOLVENCY
By letter of June 8, 1998, the Alaska Life
and Health Insurance Guaranty Association (ALHIGA) requested
the approval of the Director of the Division of Insurance
to pay certain covered claims to and on behalf of Alaska residents
arising from the Centennial Life Insurance Company (CLIC)
insolvency. In response to that request, the Director finds
1. CLIC is a "member insurer" of
ALHIGA, as defined in AS 21.79.900(6). CLIC was licensed to
sell health and life insurance in the State of Alaska under
Certificate of Authority #F-1198, dated February 15, 1978.
This certificate was revoked by order of the Director dated
May 29, 1998.
2. By order dated February 4, 1998, the District
Court of Shawnee County, Kansas, issued a rehabilitation order
placing CLIC into rehabilitation. On April 21, 1998, as a
result of CLIC’s deteriorating financial condition, the receiver
filed a petition for CLIC’s liquidation. On May 27, 1998,
the Final Order of Liquidation was signed by Judge Matthew
Dowd, of the District Court of Shawnee County, Kansas, Civil
3. The Director has been advised by ALHIGA
that the CLIC estate has not been able to pay covered claims
since mid-April 1998.
4. The National Organization of Life and Health
Guaranty Associations ("NOLHGA") and the Special
Deputy Liquidator are currently working to develop procedures
and time tables for paying covered health and disability claims.
NOLHGA, on behalf of participating guaranty associations,
and the Special Deputy Liquidator are currently preparing
a service agreement whereby CLIC claims personnel will continue
to process covered claims until the underlying policies are
canceled or reinsured.
5. Under AS 21.79.060(d), ALHIGA is required,
with the approval of the Director, to take one of the following
actions if a member insurer becomes insolvent:
(1) guarantee, assume, reinsure, or provide
for the guarantee, assumption, or reinsurance of the covered
policies of the insolvent insurer held by residents;
(2) assure payment to residents of the contractual
obligations of the insolvent insurer;
(3) provide money, pledges, notes, guarantees
or other means necessary to discharge the insurer’s duties
under this subsection; or
(4) with respect only to life and health
insurance policies, provide benefits and coverages required
under AS 21.179.060(e).
6. ALHIGA plans to meet its statutory obligation
to assure payment of covered claims of Alaska residents who
are CLIC policyholders by paying claims directly or through
a third party administrator or by participating in the service
agreement referenced in paragraph 4.
THE DIRECTOR HEREBY ORDERS:
ALHIGA’S request to assure payment of covered
claims of Alaska residents who are CLIC policyholders is approved.
This order is effective June 17, 1998.