Retirees May Get Their Executive Life Checks Late : Insurance: The state regulators who seized the shaky company say some monthly payments may not be as large as they should be, either.
Despite assurances by Insurance Commissioner John Garamendi that the monthly annuity obligations of Executive Life Insurance Co. would be paid as usual, those checks may be late--and even then could be smaller than beneficiaries are expecting, California Department of Insurance officials now acknowledge.
When regulators on Thursday seized Executive Life--the biggest such takeover in insurance history--they promised to continue making payments to an untold number of annuitants, who use the monthly stipends to supplement their retirement income.
Garamendi also said he expected to continue making medical payments under Executive’s health insurance policies and to pay death benefits, as well as grant policy surrenders to those with hardships.
“To the schoolteachers and hard hats, secretaries and doctors, hear this message loud and clear: We are going to do everything in our power to see that your money is there when you need it,” Garamendi said when Executive was seized.
It turns out, however, that the court order Garamendi obtained Thursday doesn’t let him do all that.
The order allows payments to be made only in cases of extreme hardship, said Tom Epstein, deputy insurance commissioner. It precludes regulators, who have become the company’s conservators, from making payments to those who simply need that money to live.
“The official language in the judge’s order doesn’t permit us the flexibility that we had hoped for,” Epstein said Sunday.
Regulators hope to remedy the situation quickly. “We hope to go back to court on Tuesday and get another order,” Epstein added.
Assuming a new order is obtained, it may limit the amount regulators can pay to annuitants.
“Our goal is to pay out to anyone who expects a monthly check,” Epstein said. “It is possible that the payment won’t be 100%. But, certainly, it will be a substantial portion of the total amount due.”
Once regulators are able to complete an examination of the company’s financial records, monthly payments may increase to their normal levels, Epstein said. For now, officials don’t know how many Executive annuity holders are due monthly checks or how much money is on hand to pay them.
Executive was seized after two years of record losses caused by staggering problems in the company’s investment portfolio, which is stuffed with high-risk junk bonds.
Executive--the largest subsidiary of Los Angeles-based First Executive Corp.--has more than 170,000 life insurance policies in force, along with about 75,000 annuities. The insurer has sold guaranteed investment contracts to 300 companies, which generally use them to replace standard pension plans.
