PLEASE TAKE NOTICE THAT ON THE 26TH DAY OF SEPTEMBER, 2003, at the hour of 8:30 a.m., OR AS SOON THEREAFTER AS THE MATTER MAY BE HEARD, John Garamendi, Insurance Commissioner of the State of California, in his capacity as Trustee of the Mission Insurance Company Trust, the Mission National Insurance Company Trust and the Enterprise Insurance Company Trust will move the Department 50 of the Los Angeles County Superior Court, located at 111 North Hill Street, Los Angeles, California, for an order which sets the last date by which policyholder class unliquidated and contingent claims must be liquidated at December 31, 2003. In accordance with California Insurance Code Section 1025, the order will, if granted, have the effect of denying any policyholder class claim not liquidated within the meaning of California Insurance Code Section 1025 by December 31, 2003 the right to share in any distribution as to the unliquidated or contingent portion of the claim. The order requested shall not deal with reinsureds or general creditor class claimants, who may be dealt with by subsequent motion. This motion shall not prevent approval of a policyholder class proof of claim as to damages liquidated by December 31, 2003, even if the approval happens subsequent to December 31, 2003. Instead, this motion requests the Court to set a final deadline for liquidation of claims within the meaning of Section 1025 of the California Insurance Code. The motion shall be based on California Insurance Code Section 1025, the prior orders of this Court, the Declaration of Mohsen Sultan and the Request for Judicial Notice,, filed with this motion, and the accompanying memorandum of points and authorities. The Insurance Commissioner shall also rely upon the pleadings and papers on file in this matter, and all matters within the Court's judicial notice.

Wherefore, premises considered, this Court is requested to set the Section 1025 date at December 31, 2003, or at such other time as the Court may determine, and to further order such other just and equitable relief to which the Insurance Commissioner may be entitled.

Respectfully submitted,

The Insurance Commissioner files this motion to take another step in the Amended Liquidation Dividend Plan. Mission Insurance Company, Enterprise Insurance Company and Mission National Insurance Company have been in liquidation since February 24, 1987. During the intervening sixteen years, policyholder class claimants have been afforded the opportunity to liquidate their contingent and undetermined proof(s) of claim, and many have done so.

The Court asked the Insurance Commissioner to develop a case plan during 2002 that would permit closure of the Mission cases. The Insurance Commissioner developed a case plan that targeted December 31, 2004 for Mission Insurance Company and Mission National Insurance Company, and December 31, 2003 for Enterprise Insurance Company. The instant motion seeks to effectuate the case plan by providing a final date for liquidation of the proofs of claim against these companies.

Mission Insurance Company, Mission National Insurance Company and Enterprise Insurance Company wrote property and casualty liability insurance in a number of states (Sultan Declaration, paragraph 2). Each entered liquidation on February 24, 1987. (Sultan Declaration, paragraph 2). The initial bar date for proofs of claim was set for September 12, 1987. (Sultan Declaration, paragraph 3). The Mission records show that over 300,000 proof of claim forms were sent out, and over 170,000 returned. (Sultan Declaration, paragraph 4). Interim distributions have been made, with court approval, to policyholder class claimants with approved claims, ranging from 49% for Enterprise Insurance Company claimants to 75% for Mission National Insurance Company claimants ( Sultan Declaration, paragraph 4).

The Mission claimants include numerous insureds with "long tail" exposures. These claimants purchased occurrence policies which, in some cases, provide coverage for occurrences which tend to be reported over decades, such as toxic tort matters. (Sultan Declaration, paragraph 5). If the liquidations remained open until the last claim were liquidated, the liquidations could last for additional decades. (Sultan Declaration, paragraph 5).

The Insurance Commissioner has therefore determined to "strike a balance" between the claims of long-tail insureds, and the necessity to close the estates. The vast majority of the reinsurance assets of the liquidation estates, over one billion dollars' worth, has been collected. The Insurance Commissioner allowed the claimants from 1987 through 2003 to liquidate their claims. The Insurance Commissioner requests that the Court set December 31, 2003 as the last date for liquidation of contingent and undetermined claims. (Sultan Declaration, paragraph 6).

In connection with this motion, the Insurance Commissioner has had to perform a balancing of equities. On the one hand, if the "tail" on policies is "cut" the Insurance Commissioner may collect less investment income and reinsurance recoverables than if the policies are allowed to "run off" indefinitely. On the other hand, insureds and third party claimants at policyholder class wish to obtain their final distributions. The Insurance Commissioner's interim distributions have provided substantial recoveries to approved claimants. The setting of a Section 1025 date as to policyholder class claims is appropriate at this time in order to ensure that the liquidation trusts are wound up. (Sultan Declaration, paragraph 7).

One result of the determination to set a Section 1025 date is that some claimants' claims which are not liquidated as of the "cut-off" will not be entitled to share in the distribution as to these unliquidated portion of their claims (Sultan Declaration, paragraph 8). It is possible that other policyholders (and perhaps general creditors, if sufficient funds exist to pay all existing policyholders) might get increased distributions, while unliquidated policyholders' valuation would exclude future development. (Sultan Declaration, paragraph 8).

No similar date is sought at this time as to reinsureds and general creditors. Until each policyholder is paid in full--which may or may not happen, general creditors shall receive only their share of Danielson shares at the end of the day. A Section 1025 date might merely truncate the recoverable retrocessional reinsurance without a corresponding benefit in estate closure. A subsequent motion may be filed on this issue.

California Insurance Code Section 1025 provides that contingent and unliquidated claims must be liquidated by the time of the final distribution in order to share in the assets of the estate. In this case the Mission companies have been in liquidation since February 24, 1987 (See Exhibit "A" to the Request for Judicial Notice). Interim distributions have been made to policyholders with approved claims. Policyholders are permitted to file "contingent and unliquidated" claims in California.

Garamendi v. Mission, 15 Cal. App.4th 1277, 19 Cal. Rptr.2d 190 (1993). This allows them to preserve the "tail" coverage on their policies. The Insurance Commissioner originally proposed a Final Liquidation Dividend Plan which permitted the Insurance Commissioner to use actuarial coverage to value the "tail" coverage. The order approving this plan was overturned by the Court of Appeal, however, in the case of Quackenbush v. Mission Ins. Co., 46 Cal. App. 4th 458, 54 Cal. Rptr. 2d 112 (1996). The Court of Appeal held in that case that Section 1025 did not permit such valuations on unliquidated claims.

Subsequently, the Insurance Commissioner proposed the Amended Final Liquidation Dividend Plan. This plan provided for interim distributions. The plan also provided that at some point, the Insurance Commissioner would apply for an order which set the Section 1025 valuation date. This plan has been upheld by the Court of Appeal. Quackenbush v. Mission Insurance Company, 62 Cal.App.4th 797, 73 Cal. Rptr. 2d 95 (1998).

The Insurance Commissioner now makes this motion to set the final date for liquidation of claims as December 31, 2003. Because the vast majority of the reinsurance has been collected, and insureds have had sixteen years to liquidate their claims, this strikes a reasonable balance between the need to close the cases and the need to permit insureds and third party claimants to liquidate as many claims as possible. The Court applies an abuse of discretion standard to the Insurance Commissioner's actions in this regard. Low v. Golden Eagle Ins. Co., 104 Cal. App. 4th 306; 128 Cal. Rptr. 2d 423

In this case, the requested deadline is not an abuse of discretion.

The Court in this matter has a number of choices, but they all amount to either fixing a date by which all claims must be liquidated, and moving this case towards closing, or holding the case open, or some portion of the case, or some entity open, to process the remaining unliquidated and contingent claims. Although the Insurance Commissioner has not sought to "cut the tail" until now, in an effort to permit as many policyholders and policyholder class third party claimants to liquidate their claims as possible. The Insurance Commissioner and the Court, however, must balance the need to permit all claims to be liquidated with the need to achieve final closure of the estate. The Insurance Commissioner's selection of sixteen years as the time for liquidation of claims is an appropriate use of discretion.

The Court is requested to set the last date for liquidation of claims pursuant to Section 1025 at December 31, 2003, or at such other date as the Court may determine.

Respectfully submitted,

I, Mohsen Sultan, do hereby declare under penalty of perjury of the laws of the State of California as follows:

1. I am Mohsen Sultan. I am over the age of eighteen years. I am competent to be a witness. I have personal knowledge of the facts to which I attest. I acquired my personal knowledge in my role as Estate Trust Officer for Mission Insurance Company Trust, Mission National Insurance Company Trust, and Enterprise Insurance Company Trust. I rely upon records of these trusts in making my declaration.
2. Mission Insurance Company, Mission National Insurance Company and Enterprise Insurance Company wrote property and casualty liability insurance in a number of states Each entered liquidation on February 24,1987.
3. The initial bar date for proofs of claim was set for September 12, 1987.
4. The Mission records show that over 300,000 proof of claim forms were sent out, and over 170,000 returned. Interim distributions have been made, with court approval, to policyholder class claimants with approved claims, ranging from 49% for Enterprise Insurance Company claimants to 75% for Mission National Insurance Company claimants.
5. The Mission claimants include numerous insureds with "long tail" exposures. These claimants purchased occurrence policies which, in some cases, provide coverage for occurrences which tend to be reported over decades, such as toxic tort matters. If the liquidations remained open until the last claim were liquidated, the liquidations could last for additional decades.
6. The Insurance Commissioner has therefore determined to "strike a balance" between the claims of long-tail insureds, and the necessity to close the estates. The vast majority of the reinsurance assets of the liquidation estates, over one billion dollars' worth, has been collected. The Insurance Commissioner allowed the claimants from 1987 through 2003 to liquidate their claims. The Insurance Commissioner requests that the Court set December 31, 2003 as the last date for liquidation of contingent and undetermined claims.
7. In connection with this motion, the Insurance Commissioner has had to perform a balancing of equities. On the one hand, if the "tail" on policies is "cut", the Insurance Commissioner may collect less investment income and reinsurance recoverables than if the policies are allowed to "run off" indefinitely. On the other than, insureds and third party claimants at policyholder class wish to obtain their final distributions. Although the Insurance Commissioner's interim distributions have provided substantial recoveries to approved claimants, the setting of a Section 1025 date as to policyholder class claims is appropriate at this time in order to ensure that the liquidation trusts are wound up.
8. One result of the determination to set a Section 1025 date is that some claimants' claims which are not liquidated as of the "cut-off" will not be entitled to share in the distribution as to these unliquidated portion of their claims. It is possible that other policyholders (and perhaps general creditors, if sufficient fund exist to pay all existing policyholders) might get increased distributions, while unliquidated policyholders' valuation would exclude future development.
9. No similar date is sought at this time as to reinsureds and general creditors. Until each policyholder is paid in full--which may or may not happen, general creditors shall receive only their share of Danielson shares at the end of the day. A Section 1025 date might merely truncate the recoverable retrocessional reinsurance without a corresponding benefit in estate closure. A subsequent motion may be filed on this issue.

I hereby declare the foregoing to be true and correct under the penalty of perjury of the laws of the State of California on this 14^th day of July, 2003.