Regulator Sides With N.Y. Firm in Baldwin Case
The Arkansas commissioner of insurance said Wednesday that Metropolitan Life Insurance Co. should be allowed to take over $3 billion in annuities issued by Baldwin United, which filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in 1983.
Insurance Commissioner Robert Eubanks, who filed his opinion in state court in Little Rock, said in a telephone interview that his top priority in choosing New York-based Metropolitan over Sun Life Guaranty, which is operated by the insurance subsidiary of Kaufman & Broad of Los Angeles, was the safety of the investment.
Arkansas is the scene of the competition for the annuities between the two insurance companies because the policies at issue were written by three Baldwin United subsidiaries based in the state. Court hearings began April 28, and a ruling in the case is expected by the end of this month.
Backed by $76 Billion
Eubanks, in the interview, said he did not consider any legal issues, which he said were more appropriately addressed by Circuit Judge Perry V. Whitmore. Sun Guaranty has contended that Metropolitan should not be allowed to take over the annuities because it is not an Arkansas company. Sun Guaranty is an Arkansas company that has been created to handle the Baldwin United annuities.
Eubanks noted that Metropolitan has said that its policies would be backed by more than $76 billion in assets while Sun Life Guaranty has pledged to back the annuities with just $100 million initially. The Sun Life Group has $4 billion in assests.
“I think Sun Life Group is as strong as 10 pounds of garlic,” he said, “but Sun Guaranty, I don’t know.”
Eubanks said he also considered the delay that would be caused if Sun Guaranty had to obtain insurance licenses in every state. He said, however, that he asked the court to reimburse Sun Guaranty for its legal costs because the competition has forced Metropolitan to raise the amount of money that it would eventually pay policyholders by between $20 million and $50 million.
