June 24, 2010 - Los Angeles Superior Court Approves Insurance Commissioner's Rehabilition Plan And Assumption Reinsurance Transaction For Golden State Mutual Life Insurance Company
The Conservator of Golden State Mutual Life Insurance Company today announced that the Los Angeles Superior Court approved his comprehensive rehabilitation plan and assumption reinsurance agreements for Golden State Mutual Life Insurance Company ("Golden State Mutual") with IA American Life Insurance Company ("IA American"). The rehabilitation plan and assumption reinsurance transaction will preserve and maintain the value, continuous coverage and contractual benefits for the holders of in-force life, health and disability insurance policies and annuity contracts issued by Golden State Mutual.
The rehabilitation plan and agreements forming the plan provide that holders of Golden State Mutual's in-force life, health and disability policies and annuity contracts will become policy and annuity contract holders of IA American under an express assumption of their policies and annuity contracts as modified by an Assumption Endorsement. As a result of this assumption, all claims for contractual life, health and disability insurance policy and annuity contract benefits will be deemed satisfied by the assumption and IA American will be solely responsible to pay all claims on the policies and contracts.
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EDMUND G. BROWN JR.
Attorney General of California
FELIX LEATHERWOOD
W. DEAN FREEMAN
Supervising Deputy Attorneys General
MARTA L. SMITH
Deputy Attorney General
State Bar No. 101955
Attorneys for Applicant
Insurance Commissioner of the State of California
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
INSURANCE COMMISSIONER OF THE
STATE OF CALIFORNIA,
Applicant,
v.
GOLDEN STATE MUTUAL LIFE
INSURANCE COMPANY, a California
corporation,
Respondent.
Case No. BS123005 Assigned to Hon. David P. Yaffe, Dept. 86
ORDER APPROVING THE
CONSERVATOR'S REHABILITATION
PLAN FOR GOLDEN STATE MUTUAL
LIFE INSURANCE COMPANY AND
AUTHORIZING CONSERVATOR TO
ENTER INTO RELATED
AGREEMENTS WITH IA AMERICAN
LIFE INSURANCE COMPANY:
(1)
AGREEMENT AND PLAN OF
REHABILITATION;
(2)
ASSUMPTION REINSURANCE
AGREEMENT;
(3)
SERVICE AGREEMENT; AND
(4)
NOVATION AGREEMENT
Date:
June 24, 2010
Time:
9:30 a.m.
Dept:
Dept 86
Judge:
Honorable David P. Yaffe
On June 24, 2010, in Department 86 of the above-entitled Court, the Honorable David P. Yaffe, Judge Presiding (the "Court"), the Court held the hearing on its Order To Show Cause dated May 12, 2010 and the Application Re: Order To Show Cause And For Orders Approving Rehabilitation Plan Of Golden State Mutual Life Insurance Company And Authorizing Conservator To Enter Into Related Agreements With IA American Life Insurance Company ("Application") filed by Applicant Steve Poizner, Insurance Commissioner of the State of California, in his capacity as Conservator ("Conservator") of Golden State Mutua] Life Insurance Company in Conservation ("Golden State"). Deputy Attorney General Marta L. Smith and attorney Michael R. Weiss appeared on behalf of the Conservator. Other appearances, if any, are noted in the record.
The Court, having read and considered the Conservator's Application, the Declarations of David E. Wilson, Joseph B. Holloway, Jr., Patrik Guindon and Michael R. Weiss, and all documents and evidence submitted, including without limitation the rehabilitation plan comprising the four agreements referred to as (1) Agreement and Plan of Rehabilitation, (2) Assumption Reinsurance Agreement, (3) Service Agreement and (4) Novation Agreement (collectively, the "Rehabilitation Plan,"), and having heard and considered the arguments presented to the Court, and upon good cause shown,
IT IS HEREBY ORDERED that the Conservator's Application is granted and that:
This Court has subject matter jurisdiction over this matter pursuant to California Insurance § Code 1010 et seq;
Notice of the Order to Show Cause, the Conservator's Application for approval of the Rehabilitation Plan, the agreements comprising the Rehabilitation Plan, and all other documents and evidence submitted in support of the Conservator's Application was properly provided to Golden State, its former board of directors, its approximately 120,000 policyholders and annuity contract holders, its certificate of contribution holders, its employees and all other persons and entities having a substantial, unsatisfied interest in Golden State known to the Conservator; that the mailing to the Affected Persons was properly provided; and that the notices and mailings comply with due process and with the requirements of California law;
The Conservator is authorized to enter into the Rehabilitation Plan consisting of (1) Agreement and Plan of Rehabilitation, (2) Assumption Reinsurance Agreement, (3) Service Agreement and (4) Novation Agreement in a form substantially similar to that filed with the Application;
The Rehabilitation Plan and the agreements comprising the plan are authorized and consistent with California Insurance Code § 1010 et seq., including without limitation §§ 1037, 1043 and 1057, the Conservator's discretion under those statutes, and both substantive and procedural due process;
The Rehabilitation Plan and agreements comprising the plan, when contemplated, are enforceable;
The Rehabilitation Plan and agreements comprising the plan are fair to Golden State's policyholders, annuity contract holders, creditors, and all other persons and entities having a substantial, unsatisfied interest in Golden State known to the Conservator;
The form of the Rehabilitation Plan and agreements are approved;
The policyholder and annuity contract liabilities shall be assumed and transferred to IA American Life Insurance Company ("IA American") upon closing of the Rehabilitation Plan and agreements, such that, upon closing of the agreements, Golden State's policies and annuity contracts shall be assumed by IA American and the policyholders and annuity contract holders of such policies and contracts shall have no further contractual claims against Golden State, other than any claim arising solely from equity ownership rights, if any, as mutual life insurance policyholders;
The entry into the Rehabilitation Plan and agreements provides each policyholder, annuity contract holder and creditor of Golden State with a more favorable result than the other proposals submitted to the Conservator and under an immediate liquidation of Golden State;
The Conservator is hereby authorized, in his discretion, to consummate and close the transactions and agreements contemplated by the Rehabilitation Plan and agreements; in his discretion, to make the asset and liability transfers contemplated by the Rehabilitation Plan and agreements; and, in his discretion, to enter into such further agreements, modifications and documents regarding the transfer and assumption of Golden State's policies and annuity contracts, the closing of the Rehabilitation Plan and agreements, the provision for the adjudication, defense, and payment of policy claims in the course of settlement, and the transfers of assets contemplated therein, as he deems appropriate;
The Court's September 30, 2009, Order Appointing Conservator and Restraining Order, and all stays and injunctions set forth therein, remain in full force and effect;
All policyholders, annuity contract holders, creditors, persons and entities are enjoined and restrained from commencing or further prosecuting any suit or suit against IA American seeking to impose liability upon IA American for any extra-contractual liabilities, tort liabilities, statutory liabilities or other liabilities of Golden State which arise prior to the date of IA American's assumption of Golden State's policies and annuity contracts;
All liabilities not assumed by IA American shall remain with Golden State;
All assets and liabilities of Golden State not transferred to IA American will remain with and be monetized by the Conservator, and will be subject to the claim priority and asset distribution procedures set forth in Insurance Code § 1010 et seq.;
Following the closing of the Rehabilitation Plan and agreements with IA American, the Conservator shall maintain all rights to apply for thither orders of conservation and/or liquidation concerning Golden State and to apply for a proof of claims process to be established in accordance with California Insurance Code § 1010 et seq., including a claims bar date and other procedures to distribute Golden State's retained assets in an orderly manner;
Nothing in the requested Order shall diminish the rights of the Conservator in this matter;
Upon the closing of the Rehabilitation Plan and agreements and transactions contemplated therein with IA American, the Conservator shall file with the Court a Notice of Closing of Rehabilitation Plan within thirty days of such closing. If, for any reason, the Conservator determines that a closing should not occur, then the Conservator shall file a Status Report advising the Court of same no later than thirty-days after making such a determination; and
The Conservator is authorized to take any and all action necessary to accomplish the purposes of this Order and the orders requested herein.
DATED:
JUN 24 2010
David P. Yaffe
THE HONORABLE DAVID P. YAFFE
Los Angeles Superior Court Judge