Tuesday, June 18, 2019

No. 318: Factoring Companies—A California Lawsuit and a Texas Order Focus Attention on the Sale of Income Streams

A recent state court lawsuit in California and a recent disciplinary order in Texas have refocused attention on the questionable business of factoring companies, which acquire and resell income streams from pensions and annuities. Here I discuss the lawsuit and the order, and present the views of securities regulators on the subject.

The California Lawsuit
DRB Capital is a Delaware LLC based in Florida. Its website (www.drbcapital.com) provides some information. DRB offers cash for structured settlements, annuities, and "pre-settlement funding." The site does not disclose the names of the DRB officers. However, it is clear that DRB is a factoring company in the business of reselling, perhaps to clients of insurance agents and financial advisers, streams of income that DRB acquires through assignments from payees of structured settlement annuities and retirement annuities.

On November 13, 2018, DRB filed a lawsuit against Robert Perez (a California resident), New York Life Insurance Company, and New York Life Insurance and Annuity Corporation (NYLIAC). Perez is the payee of an individual retirement annuity (IRA) he inherited. Under a proposed assignment, Perez was to receive from DRB a lump sum in exchange for assigning to DRB 89 monthly IRA payments of $683.57 each beginning January 22, 2020 and ending May 22, 2027. The payments amount to a simple total of $60,837.73.

The complaint did not include a a copy of the IRA.  Nor did it include a copy of the proposed assignment agreement between DRB and Perez. The complaint named both New York Life and NYLIAC as defendants, but NYLIAC issued the IRA. The complaint did not disclose the size of the lump sum DRB was to pay Perez in exchange for the assignment of the 89 IRA payments. Therefore, when the lump sum is viewed as a loan by DRB to Perez (which is precisely what it is), it is impossible to calculate the annual interest rate on the loan. DRB said NYLIAC will not honor the assignment of the payments without a court order. Thus DRB sought a court order declaring the assignment valid and enforceable.

On January 23, 2019, NYLIAC responded to the DRB complaint in a "demurrer." NYLIAC said New York Life was not the issuer of the IRA and therefore was not a proper party in the case. NYLIAC said "the express anti-assignment language in the annuity contract ... bars the relief requested by DRB in the Complaint." NYLIAC said "the relief requested by DRB in the Complaint is barred because it would contravene Section 408 of the Internal Revenue Code and materially increase the burdens and risks of both Mr. Perez and NYLIAC." NYLIAC asked the court to sustain the demurrer without leave to amend.

On May 31, 2019, California Superior Court Judge Kenneth J. Medel issued an order sustaining NYLIAC's demurrer without leave to amend. He also ordered New York Life removed from the case. The DRB complaint, the NYLIAC demurrer, and the court order are in the complimentary package offered at the end of this post. (See DRB v. Perez, Superior Court of California, County of San Diego, Case No. 37-2018-00057432-CU-MC-CTL.)

The Texas Disciplinary Order
On June 6, 2019, Texas Securities Commissioner Travis J. Iles issued a disciplinary order directed at an individual and a firm in Dallas who had sold stream-of-income investments to clients. Commissioner Iles reprimanded the individual and the firm. He also directed them to pay almost $89,000 (twice the commissions they had received) to certain clients. The Texas order is in the complimentary package offered at the end of this post.

The Warnings from Securities Regulators
In May 2013, the Office of Investor Education and Advocacy of the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) jointly issued an "Investor Bulletin" entitled "Pension or Settlement Streams." The bulletin is mandatory reading for anyone considering a sale of or an investment in a pension stream. Here are the first two paragraphs of the bulletin:
Do you receive a monthly pension from a former employer? Are you getting regular distributions from a settlement following a personal injury lawsuit? If so, you may be targeted by salespeople offering you a lump sum today to buy the rights to some or all of the payments you would otherwise receive in the future. Retired government employees and retired members of the military are among those being approached with such offers. Typically the lump sum offered will be less—sometimes much less—than the total of the periodic payments you would otherwise receive.
After acquiring the rights to a future income stream (such as a retiree's pension payments), these pension purchasing or structured settlement companies, sometimes called "factoring companies," may turn around and sell these income streams to retail investors, often through a financial adviser, broker or insurance agent. These products go by various names—pension loans, pension income programs, mirrored pensions, factored structured settlements or secondary-market annuities. They may be pitched to investors with words like "guaranteed" and "safe"—and may tout robust returns that outpace more traditionally conservative investments such as CDs or money market accounts. The advertised returns may sound enticing, but investors should be aware that these investments can be risky and complex. FINRA and the SEC's Office of Investor Education and Advocacy are issuing this Investor Alert to inform anyone considering selling their rights to an income stream—or investing in someone else's income stream—of the risks involved and to urge investors to proceed with caution.
The North American Securities Administrators Association (NASAA) is an organization of state, district, and territory securities regulators in the U.S. and Mexico, and provincial securities regulators in Canada. On April 4, 2016, NASAA issued an "Informed Investor Advisory: Pension Advance Scams." The advisory explains how the "scam" works. The "bottom line" says: "Before making any decisions with your money, ask questions, do your homework and contact your state or provincial securities regulator."

On April 5, 2016, the day after NASAA issued its advisory, the Texas State Securities Board issued an "Investor Alert." It is entitled "Pitfalls of Pension Advance Schemes." The SEC/FINRA bulletin, the NASAA advisory, and the Texas alert are in the complimentary package offered at the end of this post.

My Writings About Factoring Companies
I wrote articles about factoring companies in the August 2011 and October 2011 issues of The Insurance Forum, my monthly newsletter. There I discussed the activities of such companies in detail, including the high annual interest rates associated with factoring transactions. The articles are in the complimentary package offered at the end of this post.

I also posted two blog items on the subject: No. 115 (September 11, 2015) and No. 190 (November 28, 2016). More recently, I posted No. 293 (November 1, 2018) about a tragic situation in which one element of the case involved the assignment of a portion of the proceeds from a structured settlement annuity.

General Observations
In the October 2011 Forum article mentioned above, I expressed the opinion that regulation of the secondary market for structured settlement annuities and retirement annuities did not exist. I referred to the situation as a "regulatory vacuum." What federal, state, and provincial securities regulators have been doing more recently is encouraging, but I think regulatory attention in this area remains inadequate.

Available Material
I am offering a complimentary 40-page PDF consisting of the DRB complaint (3 pages), the NYLIAC demurrer (13 pages), the California court order (2 pages), the Texas disciplinary order (9 pages), the SEC/FINRA bulletin (4 pages), the NASAA advisory (2 pages), the Texas alert (2 pages), and the two Forum articles (5 pages). Email jmbelth@gmail.com and ask for the June 2019 package about factoring companies.


Thursday, June 13, 2019

No. 317: Stranger Originated Life Insurance and the New Jersey Supreme Court

On June 4, 2019, the New Jersey Supreme Court handed down a 6 to 0 opinion that represents a major setback for stranger originated life insurance (STOLI). The opinion is "on certification of questions of law from the U.S. Court of Appeals for the Third Circuit," and draws on facts from the opinions of the Third Circuit and the U.S. District Court for the District of New Jersey. Chief Justice Stuart Rabner wrote the opinion. Justices Jaynee LaVecchia, Anne M. Patterson, Faustino J. Fernandez-Vina, Lee A. Solomon, and Walter F. Timpone joined in the opinion. Justice Barry T. Albin did not participate. The "syllabus" and the full opinion are in the complimentary package offered at the end of this post. (See Sun Life of Canada v. Wells Fargo Bank, Supreme Court of New Jersey, A-49 September Term 2017, 080669.)

Facts of the Case
The facts of the case resemble those of many cases issued during the heyday of STOLI. The application was for a $5 million policy. The application vastly overstated the insured's income and assets, and a phony inspection report verified the false information. Also, the application substantially understated the amount of life insurance already in force on the insured's life. The application named a trust as the sole owner and beneficiary of the policy. The insured's grandson signed the application as trustee. Sun Life issued the policy in July 2007. Five weeks later, the grandson resigned as trustee and appointed certain "investors," or what I call "speculators in human life," as successor co-trustees. The trust agreement was amended so that most of the benefits would go to the investors, who were also empowered to sell the policy. More than two years later, after expiration of the two-year period of contestability, the trust sold the policy. The investors received nearly all the proceeds from the sale. Wells Fargo Bank eventually acquired the policy in a bankruptcy settlement and continued to pay the premiums.

The insured died in 2014. Wells Fargo sought to collect the death benefit. Sun Life investigated, discovered the fraud, refused to pay, and sought a declaratory judgment that the policy was void ab initio (from the beginning). Wells Fargo counterclaimed for breach of contract and, if the court voided the policy, sought a refund of the premiums it had paid.

Federal District Court Ruling
The federal district court in New Jersey found that New Jersey law applied, that it was a STOLI transaction lacking insurable interest in violation of the state's public policy, and declared the policy void ab initio. The court also granted Wells Fargo a refund of the premiums it had paid, reasoning that Wells Fargo was not to blame for the fraud, and that allowing Sun Life to retain the premiums would provide a windfall to Sun Life.

Third Circuit Ruling
Both parties appealed to the federal Third Circuit. Finding no dispositive New Jersey case law, the Third Circuit certified two questions of law to the New Jersey Supreme Court. Here are the questions:
  1. Does a life insurance policy that is procured with the intent to benefit persons without an insurable interest in the life of the insured violate the public policy of New Jersey, and if so, is that policy void ab initio?
  2. If such a policy is void ab initio, is a later purchaser of the policy, who was not involved in the illegal conduct, entitled to a refund of any premium payments that they made on the policy?
New Jersey Supreme Court Ruling
The New Jersey Supreme Court answered yes to both parts of the first certified question. In other words, a life insurance policy procured with the intent to benefit persons who do not have an insurable interest in the life of the insured violates the public policy of New Jersey, and such a policy is void ab initio.

On the second certified question, the court ruled that a party may be entitled to a refund of premiums it paid on the policy, "depending on the circumstances." To decide the appropriate remedy, the court ruled that trial courts should develop a record and balance the relevant equitable factors, such as a party's level of culpability, its participation in or knowledge of the fraud, and its failure to notice red flags. A party may be entitled to a refund of premiums it paid, particularly a later purchaser who was not involved in the fraudulent conduct. The court noted that the district court had considered equitable principles and had fashioned a compromise award, but had not commented on the award.

Earlier STOLI Cases
My first article about the secondary market for life insurance was in the March 1989 issue of The Insurance Forum. My second article was in the March 1999 issue of the Forum, and was prompted by my first evidence of what later became known as STOLI. The articles are in the complimentary package offered at the end of this post.

I have also written extensively about STOLI on my blog. Four such posts, in chronological order, are No. 131 (12/9/15), No. 166 (6/15/16), No. 167 (6/20/16), and No. 228 (8/1/17).

General Observations
I think major life insurance companies have instituted sufficient safeguards to prevent significant amounts of new STOLI business from being initiated. The problem now is the handling of the huge volume of STOLI business that was initiated during the heyday of STOLI and is now moving around among a shrinking number of investors. I think the STOLI business will continue to generate litigation for many years.

Available Material
I am offering a complimentary 69-page PDF consisting of the syllabus and full New Jersey Supreme Court opinion (53 pages), and the articles about the secondary market in the March 1989 and March 1999 issues of the Forum (16 pages). Email jmbelth@gmail.com and ask for the June 2019 package about STOLI.


Monday, June 10, 2019

No. 316: John F. X. Mannion—A Memorial Tribute

John F. X. Mannion
John F. X. "Jack" Mannion, of Syracuse, New York, died on May 25, 2019, at age 86. He served for many years as Chairman and Chief Executive Officer of Unity Mutual Life Insurance Company, which was based in Syracuse.

Jack was born in the Bronx on December 6, 1932, during the Great Depression. He graduated at the top of his class at All Hollows High School. He then attended the University of Notre Dame, where he enrolled in the Air Force ROTC program. He was a lifelong supporter of both All Hollows and Notre Dame. He served in the U.S. Air Force during the Korean War. After his discharge with the rank of captain, he started his insurance career as an agent. Jack's wife, Stephanie Miner, served as Mayor of Syracuse from 2010 to 2018.

Although Jack and I were fellow Syracusans, we never met face to face. I left Syracuse in 1958 and returned only for personal family visits and later for the 50th reunion of my high school class. However, Jack and I became good friends not long after I started publishing The Insurance Forum, my monthly newsletter. Whenever he saw an article there that intrigued him, he would write or call to talk about it. I always enjoyed our discussions because they helped me understand the viewpoint of a prominent practitioner in the business.

My favorite personal story about Jack was a letter from him not long after we became acquainted. He told me that, whenever he received an envelope showing my return address, he would open it with trepidation. He explained he was fearful that I was considering an article critical of his company. I assured him that, if I ever considered an article about his company, critical or not, he would hear about it from me in advance and by telephone rather than by letter.

Our final exchange was less than a year ago, when Jack sent me an email commending me on a particular item I had just posted on my blog.  I thanked him and said his kind words meant a lot to me.

Jack was a wonderful person, a strong supporter of my work, and a good friend. I will miss him greatly.


Monday, June 3, 2019

No. 315: Long-Term Care Insurance —A Lawsuit Relating to the Calculation of Inflation Benefits

On May 17, 2018, Gerald Issokson (Gerald), executor of the estate of his mother, Pearl Issokson (Pearl), filed a class action lawsuit against Connecticut General Corporation and three other firms. Pearl owned long-term care (LTC) insurance coverage under a group LTC policy. The policy included home health care benefits up to a lifetime maximum benefit of $10,000, and an inflation provision. Pearl's coverage was provided through a certificate effective November 1, 1988. (See Issokson v. Connecticut General, U.S. District Court, District of Massachusetts, Case No. 3:18-cv-30070.)

The Complaint
Pearl died April 20, 2015. At the time of her death she was aged 92 and had been receiving home health care since 1990 due to physical and cognitive impairments. She was eligible for home health care benefits from 1990 through 2013, but neither she nor her family collected those benefits. Gerald asked the company to look into the matter.

The company sent Gerald a check for $16,130 representing the sum of the $10,000 lifetime maximum benefit and $6,130 for the impact of the inflation provision. Gerald alleges in the complaint that the company calculated the impact of the inflation provision using simple interest, although the insurance certificate seems to require that the impact of the inflation provision should be calculated using compound interest.

The Inflation Provision
The inflation provision in Pearl's insurance certificate consists of one sentence. It reads:
The benefits will automatically be increased by the lesser of the percent of increase in the Consumer Price Index during the prior calendar year or 5 percent.
When Gerald requested an explanation of the inflation calculation, a company spokesperson responded in a letter dated February 4, 2016. The letter shows the yearly percentage increases in the Consumer Price Index (CPI) for the years 1990 through 2013. The simple total of the yearly percentage increases in the CPI is indeed 61.3 percent. According to my calculation, however, the total of the yearly percentage increases in the CPI, compounded annually,  is 82.98 percent. Thus the check should have included $8,298 rather than $6,130 for the impact of the inflation provision. The reason why the discrepancy was only $2,168 was that the yearly percentage increases in the CPI were small during the time period in this case. Gerald's complaint and the spokesperson's letter are in the complimentary package offered at the end of this post.

The Classes
Gerald seeks to represent four classes. They are: (1) a "damages class" consisting of all current and future policyholders, nationwide, of any of the defendants whose certificates of insurance contain the language quoted above, or similar language, (2) an "injunctive class" consisting of all current policyholders, nationwide, of any of the defendants whose certificates of insurance contain the language quoted above, or similar language, (3) a "Massachusetts damages class," and (4) a "Massachusetts injunctive class."

The Counts
The complaint consists of five counts. They are: (1) breach of contract, (2) violations of the Connecticut Unfair Insurance Practices Act, (3) declaratory relief, (4) bad faith breach of duty of good faith and fair dealing, and (5) violations of certain Massachusetts laws.

Progress of the Case
The defendants have not filed an answer to the complaint. However, on July 16, 2018, the plaintiff and the defendants filed a joint stipulation containing three items:
  1. This Court lacks personal jurisdiction over the claims of non-Massachusetts putative class members and all claims against Connecticut General Corporation.
  2. Plaintiff lacks standing to assert class action claims under the Connecticut Unfair Insurance Practices Act against Connecticut General Corporation.
  3. Plaintiff lacks Article III standing to seek declaratory relief.
On July 20, 2018, the judge commented on the joint stipulation. He said in part:
The court adopts the parties' proposal set forth in the Stipulation. Therefore, the court will treat the Stipulation as a fully briefed and opposed partial motion to dismiss, incorporating the identical arguments made in the briefing and oral argument regarding the partial motion to dismiss in Rain v. Connecticut General Corp., 17-cv-30115....
It is important to note that the subject of the Rain case is not related to the subject of the Issokson case. The judge has not yet ruled on the partial motion to dismiss in either the Rain case or the Issokson case.

General Observations
The underlying issue in the Issokson case is whether the impact of the inflation provision in Pearl's certificate should be calculated on a simple basis or on a compound basis. The defendants have not yet said a word about that underlying issue.

Based on my reading of the wording of the inflation provision in Pearl's certificate, I think the company should have used the compound calculation rather than the simple calculation. Even if one believes the opposite, the language in the certificate is certainly ambiguous on the subject, and an ambiguous provision is supposed to be interpreted against the party that drafted the provision.

Available Material
I am offering a complimentary 29-page PDF consisting of the Issokson complaint (22 pages), the company spokesperson's letter (2 pages), and the joint stipulation (5 pages). Send an email to jmbelth@gmail.com and ask for the June 2019 package about the Issokson LTC insurance case.


Wednesday, May 29, 2019

No. 314: Indexed Universal Life Policies—The Views of Two Prominent Professionals About the Risks for Buyers

During the years of The Insurance Forum, and more recently on my blog, I have never written an article about indexed universal life (IUL) policies. I have been asked by many readers to write on the subject, but have not done so. The reason is simple. I have obtained and looked closely at samples of IUL policies. However, I have not understood them well enough to feel comfortable writing about them, and I have always avoided writing on topics I do not understand. Promoters of IUL policies have occasionally said I am too stupid to recognize a good thing when I see it. My response to such promoters is that they are welcome to their opinions.

Recently I have seen articles by two professionals for whom I have the highest regard: Lawrence Rybka and Richard Weber. I have obtained permission from them to share the articles with my readers. Here I introduce the authors briefly. I also show executive summaries and in one instance a few comments from the article. The full articles are in the complimentary package offered at the end of this post.

Lawrence Rybka
Lawrence J. Rybka, JD, CFP, is Chairman and Chief Executive Officer of Valmark Financial Group, which includes a broker dealer, an investment advisor, and Executive Insurance Agency (the nation's first producer group). Valmark serves 120 premier independently-owned and independently-run wealth management/transfer firms in 31 states and has helped place over $60 billion of life insurance death benefits while managing insurance policies with a cumulative cash value of over $8 billion. Valmark's affiliated Registered Investment Advisor, Valmark Advisors, has over $6 billion in assets under management, including about $3 billion in variable sub-account assets within its TOPS funds. He earned his Bachelor's degree with honors in Finance from the University of Akron, and his Juris Doctorate from Wake Forest University.

Richard Weber
Richard Weber, MBA, CLU, AEP, is President and primary consultant for The Ethical Edge, Inc., providing fee-only insurance analytics and consulting services to family offices and high net worth individuals. He holds an MBA from the Haas School of Business at the University of California at Berkeley with a specialty in Insurance and Finance. He served for 11 years as an Instructor of Insurance at the University of California at Berkeley's Program in Personal Financial Planning. From 1993 through 1998, he served as Adjunct Professor of Ethics at The American College. He currently serves as Senior Adjunct Professor of Risk and Insurance in California Lutheran University's MBA program and is on the faculty of Texas Tech University's Personal Financial Planning degree program.

The Rybka Article
The Rybka article is entitled "How to Retire in the Magical Retirement Income Castle in the Clouds," and subtitled "What looks too good to be true, usually is." Here is the executive summary, followed by the first paragraph of the article:
Executive summary: This article examines the use of premium financed Indexed Universal Life (IUL) policies to provide retirement income for clients. It explores the major assumptions in the IUL policies and in the bank loans used to finance them. Most importantly, it reveals undisclosed risks often taken by clients in these transactions.
I recently attended a top meeting in the U.S. life insurance industry. During it, I experienced no less than three sessions where insurance agents shared presentations of major sales they claimed to have made during the year, each of which generated hundreds of thousands of dollars in commissions. All three presentations were variations on the recommendation that clients borrow significant sums to finance the premiums on IUL policies. The proposals showed that the loans would be paid back using projected policy cash values and have plenty remaining in the policy to provide a lifetime income of hundreds of thousands of dollars a year to the policyholder and a multi-million-dollar death benefit at the end. The presentations proposed the clients borrow money from major commercial banks who were willing to lend $2 to $3.5 million to each client over five to seven years to purchase these policies. These proposals are not outliers but part of massive sales efforts by some insurance companies and banks to push products that may be good for them, but carry significant risk for the client.
The Weber Article
The Weber article is entitled "Are You in Good Hands?" It was published as a newsletter on May 14, 2019 by Leimberg Information Services, Inc. The article discusses not only risk tolerance questions in IUL policies, but also risk tolerance questions in whole life policies, guaranteed death benefit universal life policies, universal life policies, and variable universal life policies. The technical editor of the article is Ben G. Baldwin, Jr., CLU, ChFC, CFP. Here is the executive summary:
Long associated within the financial practitioner community for addressing and attempting to overcome policy illustration abuse, Dick Weber began his decades-long exploration of these issues when assuming the Chair of the Society of Financial Service Professionals (FSP)'s Illustration Questionnaire (IQ) Committee. IQ emphasizes that the "illustration is not the policy," and educates its members about the responsible use of policy illustrations. Yet Indexed Universal Life (IUL) products have created new challenges for professionals seeking to apply a customer-focused standard of care to their recommendations for policies designed for a lifetime. IUL is most often characterized as giving owners the best of both worlds by offering investment upside potential, a minimum guaranteed growth feature and underlying life insurance protection. These features, along with the (largely incorrect) slogan "Zero is the Hero" has made IUL the fastest growing permanent life insurance product of the past decade.
Recent regulations intended to moderate the calculation and display of non-guaranteed benefits projected in IUL policy illustrations have largely backfired, inspiring what objectively appear as unachievable promises of future performance. How should insurance and non-insurance professionals react and respond? This newsletter goes beyond just the potential for misusing policy illustrations and delves into the suitability and fiduciary issues of serving a client's best interest.
Available Material
I am offering a complimentary 37-page PDF consisting of the full Rybka article (12 pages) and the full Weber article (25 pages). Email jmbelth@gmail.com and ask for the May 2019 package about IUL policies.

Monday, May 20, 2019

No. 313: Long-Term Care Insurance and More on the Upcoming Hearing before the Virginia Bureau of Insurance

In No. 310 (April 22, 2019), I wrote about the May 21 public hearing to be held by the Virginia Bureau of Insurance (Bureau) on the subject of long-term care (LTC) insurance premium increase requests filed by many companies. April 22 was the deadline for filing public comments in advance of the hearing. On that date, I filed No. 310 as my comment. The Bureau posted on its website all the comments it received from the public, as well as information about the LTC insurance premium increase requests filed by many companies. This follow-up post is based on my review of the material posted on the Bureau's website.

Recent Bureau Approvals
The Bureau recently approved some substantial premium increase requests affecting substantial numbers of policyholders. Here are the companies and, in parentheses, the approved average premium increases expressed as percentages and the numbers of policyholders affected by the increases: American Fidelity Assurance (3%, 92), Jackson National Life (15%, 47), Kanawah Insurance (two plans) (48% and 44%, 1,204), Lincoln Benefit Life (35%, 257), Lincoln National Life (60%, 74), Mutual of Omaha (27%, 1,551), Northwestern Long Term Care (two plans) (28% and 27%, 2,710), Provident Life & Accident (102%, 734), RiverSource Life (35%, 1,305), Senior Health Insurance of Pennsylvania (25.0%, 633), and Virginia Insurance Guaranty Association (32%, 4,121).

Number of Comments
My tabulation suggests the Bureau received 177 comments from the public. I think the ten obscure public notices printed in newspapers around Virginia did not generate such a large number of comments. However, several articles about the hearing appeared in Virginia newspapers, and I think those articles prompted the large number of comments. One example is an excellent article entitled "Insurers now seeking huge increases in Virginians' premiums for long term care." The article, by reporter Dave Ress, appeared in the March 17, 2019 issue of the Daily Press (Newport News, VA).

Nature of the Comments
Many of the comments focused on the financial problems consumers are confronting because of increasing LTC insurance premiums. Many said that, when they purchased the insurance, they were not told the premiums would increase. Many said they were told that, if there were premium increases, the increases would be small and infrequent. Many expressed displeasure about being forced to absorb increases that were not their fault, but rather were caused by the companies' pricing errors. A few comments were from insurance agents who were upset because they had misled policyholders who trusted them.

Companies Identified
Seventy of the public comments did not identify the company with which the writer of the letter is or was a policyholder. Here are the 13 companies identified in 107 of the public comments, with the number of comments in parentheses: CNA Financial (2), CUNA Mutual (3), General Electric Capital (4), Genworth (36), John Hancock (44), Kanawha Insurance (3), Lincoln Benefit Life (1), Massachusetts Mutual (5), MetLife (3), Penn Treaty (2), TPM Life (1), Trustmark (1), and Unum (2).

Among the public comments, several of those who identified John Hancock as their company said they have coverage offered through the group LTC insurance program for federal government employees. I think many of the others who identified John Hancock without mentioning the group plan also have their coverage through the group plan.

There were two public comments that identified the company as the Virginia Life, Accident, and Sickness Insurance Guaranty Association. Those comments were references to Penn Treaty, where a court-ordered liquidation brought the Virginia Insurance Guaranty Association into the picture.

Most of the comments appear to have been from consumers. However, there were a few from agents, groups of agents, and other individuals writing on behalf of policyholders.

The ACLI/AHIP Letter
There were no comments from insurance companies. Instead, as usual, the companies hid behind their trade associations.

The American Council of Life Insurers (ACLI) is a trade association with approximately 290 member companies. America's Health Insurance Plans (AHIP) is a national association whose members provide coverage for health care and related services. ACLI and AHIP filed a joint six-page letter for the hearing record. The letter is over the signatures of Chuck Piacentini of ACLI and Amanda Matthiesen of AHIP. The letter is in the complimentary package offered at the end of this post. Here are the "Recommendation" and "Conclusion" paragraphs of the letter:
To ensure a stable regulatory environment that provides Virginia consumers with choice, transparency and protections for LTC insurance, we encourage the Commission to approve pending actuarially justified rate increases. Additionally, we encourage the Department of Insurance to adopt the most recent changes to the NAIC [National Association of Insurance Commissioners] LTC Insurance Model Regulation (NAIC Model), as well as issue the NAIC LTC Insurance Rate Increase Model Bulletin on Alternative Filing Requirements for LTC Premium Rate Increases (NAIC Bulletin).
We appreciate the opportunity to provide this statement and look forward to working with the State Corporation Commission and the Department of Insurance on creating a regulatory environment that ensures a robust private LTC insurance market that provides consumers with a choice of solid and dependable coverage for their LTC needs. We are committed to ensuring that consumers continue to enjoy the greater piece of mind that comes with knowing their coverage will be there when and for as long as they need it.
General Observations
It is not surprising that ACLI and AHIP "encourage the Commission to approve pending actuarially justified rate increases." The associations represent the companies, and would not be expected to encourage the Commission to deny or reduce the size of the requested premium increases.

The words "actuarially justified" should have been omitted from the "Recommendation" paragraph in the ACLI/AHIP letter.  Those words falsely imply that some premium increase requests are not actuarially justified.  Because company actuaries sign off on all premium increase requests, there is no such thing as a request that is not actuarially justified.  However, it is possible that a Bureau actuary might disagree with a company actuary.

As indicated in No. 310, for many years I have expressed the belief that the problem of financing the LTC exposure cannot be solved through the mechanism of private insurance. I explained in detail the reasoning behind that belief in an article in the July 2008 issue of The Insurance Forum. The article is in the complimentary package offered at the end of this post.

Now LTC insurance companies and their regulators are trying to figure out how to address the intractable problems they have created. I believe that nothing significant will emerge from the latest NAIC task force. I think it will "kick the can down the road," as several task force predecessors have done.

Available Material
I am offering a complimentary 11-page PDF consisting of the ACLI/AHIP letter to the Bureau (6 pages) and the July 2008 Forum article (5 pages). Email jmbelth@gmail.com and ask for the May 2019 LTC insurance package.


Wednesday, May 15, 2019

No. 312: Robert Caro's Magnificent Small Book

Robert A. Caro is one of my favorite authors. For his work he has received two Pulitzer Prizes and other major awards too numerous to count. His first book was his 1,246-page master work, The Power Broker: Robert Moses and the Fall of New York, published in 1974. For it he received his first Pulitzer Prize.

Robert Moses
Although I lived the first 25 years of my life in Syracuse, New York, I had only a vague knowledge of Robert Moses. When I read Caro's book many years ago, I came to understand the achievements of that unelected individual who had amassed enormous political power, and who, in exercising that power, had transformed not only New York City but also disrupted the lives of millions of people. Anyone who doubts that the acquisition of political power and the use of that power are Caro's lifetime focus need only note the titles of the last five of the seven major parts of The Power Broker: "The Rise to Power," The "Use of Power," "The Love of Power," "The Lust for Power," and "The Loss of Power."

Lyndon Johnson
Caro then turned to Lyndon Johnson, about whom he has written four volumes and is now working on the fifth and final volume. The 882-page first volume was The Years of Lyndon Johnson: The Path to Power, published in 1982. The 506-page second volume was The Years of Lyndon Johnson: Means of Ascent, published in 1990. The 1,167-page third volume was The Years of Lyndon Johnson: Master of the Senate, published in 2002, and for which he received his second Pulitzer Prize. The 752-page fourth volume was The Years of Lyndon Johnson: The Passage of Power, published in 2012. The fourth volume ends in the summer of 1964, during the first year of Johnson's presidency, after passage of the 1964 Civil Rights Act.

The fifth and final volume does not have a title or a publication date. Presumably it will cover Johnson's other "Great Society" achievements, including the 1965 Civil Rights Act, the 1965 Voting Rights Act, Medicare, and Medicaid. Presumably it will also cover the Vietnam War, Johnson's decision not to run for reelection, and his life after he left office.

Meanwhile, Caro has just come out with a magnificent 240-page book entitled Working: Researching, Interviewing, Writing, published in April 2019. It is a fascinating description of Caro's early life, how he got interested in Robert Moses and Lyndon Johnson, how his wife Ina serves as his principal helper, how they survived financially during the lean years when he was working on The Power Broker, how he does his research, how he conducts interviews, and how he writes. The book explains why he and Ina moved to the Hill Country of West Texas for three years, to get a feeling for the area where Johnson grew up, and to mingle with the people who knew Johnson and his family in the early years.

Theodore White's Views
In No. 307 (April 4, 2019), I quoted from a 1975 book entitled Breach of Faith: The Fall of Richard Nixon, by Theodore H. White. White died in 1986, but he remains one of my favorite authors. On the 1974 dust jacket of The Power Broker are ten strong endorsements from prominent authors and journalists. One of the endorsements was from White, who said this:
A masterpiece of American reporting. It's more than the story of a tragic figure or the exploitation of the unknown politics of our time. It's an elegantly written and enthralling work of art.
I agree with White. Caro's books are indeed works of art. Below I quote two paragraphs that appeared on page 6 of The Power Broker. They drew me in to read the entire book, and made me a Caro watcher.

The Paris Review Interview
The final section of Working is an interview with Caro entitled "The Art of Biography." It is reprinted from the Spring 2016 issue of The Paris Review. The interviewer is James Santel, whose sole function seems to have been to ask 14 brief questions and let Caro take it from there. In one of his responses, Caro quotes a portion of these two paragraphs from The Power Broker. They illustrate Caro's style and artistry:
Standing out from the map's delicate tracery of gridirons representing streets are heavy lines, lines girding the city or slashing across its expanses. These lines denote the major roads on which automobiles and trucks move, roads whose very location, moreover, does as much as any single factor to determine where and how a city's people live and work. With a single exception, the East River Drive, Robert Moses built every one of those roads. He built the Major Deegan Expressway, the Van Wyck Expressway, the Sheridan Expressway and the Bruckner Expressway. He built the Gowanus Expressway, the Prospect Expressway, the Whitestone Expressway, the Clearview Expressway and the Throgs Neck Expressway. He built the Cross-Bronx Expressway, the Brooklyn-Queens Expressway, the Nassau Expressway, the Staten Island Expressway and the Long Island Expressway. He built the Harlem River Drive and the West Side Highway.
Only one borough of New York City—the Bronx—is on the mainland of the United States, and bridges link the island boroughs that form metropolis. Since 1931, seven such bridges were built, immense structures, some of them anchored by towers as tall as seventy-story buildings, supported by cables made up of enough wire to drop a noose around the earth. Those bridges are the Triborough, the Verrazano, the Throgs Neck, the Marine, the Henry Hudson, the Cross Bay and the Bronx-Whitestone. Robert Moses built every one of those bridges.
Doing the Math
Caro watchers wonder whether Caro, now 83, will live long enough to finish the fifth and final volume on Johnson. Caro says they ask him to "do the math," and they wonder why he interrupted that effort to publish Working. He says he has done the math, there remain "several" more years of work on the fifth volume, and explains why he published Working now. Among elderly Caro watchers, there is the other math question of whether we will live long enough to read the fifth volume on Johnson.

For those who are not Caro watchers, I strongly recommend you read Working. I am confident you will find it enjoyable, and well worth the time. When you read it, you may join the ranks of Caro watchers.


Thursday, May 2, 2019

No. 311: Genworth Financial, China Oceanwide, the Delaware Department, and the Hindenburg Letter

On April 15, 2019, Genworth Financial, Inc. (Genworth) filed with the Securities and Exchange Commission (SEC) an amended 10-K report for the year ended December 31, 2018. Here I discuss the amended report and several other recent developments relating to the proposed merger agreement between Genworth and China Oceanwide.

The Amended 10-K Report
In its 2018 proxy statement, filed with the SEC on November 1, 2018, Genworth said it expected to hold its 2019 annual meeting on or about July 18, 2019. The amended 10-K report says that, because Genworth and China Oceanwide are still trying to satisfy the closing conditions under their proposed merger agreement, Genworth postponed the meeting and implied there may not be a 2019 annual meeting. If there is a 2019 annual meeting, Genworth will provide adequate notice to shareholders. The explanatory note in the amended 10-K report is in the complimentary package offered at the end of this post.

A Recent 8-K Report
On March 14, 2019, Genworth filed with the SEC an 8-K (significant event) report listing developments relating to the proposed merger with China Oceanwide. The original merger agreement was entered into on October 21, 2016. Since then, the parties entered into nine "waiver agreements" under which the parties extended the "end date" in the merger agreement. In the waiver agreements, the parties also waived the right to terminate the merger agreement and abandon the merger due to a failure to consummate the merger agreement on or before a specified date. The dates of the waiver agreements listed in the recent 8-K report are: August 21, 2017; November 29, 2017; February 23, 2018; March 27, 2018; June 28, 2018; August 14, 2018; November 30, 2018; January 30, 2019; and March 14, 2019. In the last of those waiver agreements, the parties extended the end date to April 30, 2019, and waived until that date the right to terminate the merger agreement and abandon the merger due to a failure of the merger to have been consummated on or before March 15, 2019.

Also attached to the recent 8-K report is a Genworth press release dated March 14, 2019. It discusses the last of the above waiver agreements, and says the closing of the merger agreement remains subject to the approval of regulators in Canada and China. The Genworth press release is in the complimentary package offered at the end of this post.

The Delaware Department
On November 8, 2018, the Delaware Department of Insurance (Department) issued a press release announcing a November 24 hearing to be held on China Oceanwide's application to acquire Genworth and certain affiliates. The Department said the hearing would be presided over by Stephen P. Lamb, a former Vice Chancellor of the Delaware Court of Chancery. Judge Lamb is now of counsel in the Corporate and Litigation Departments in the Wilmington, Delaware office of the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. The Department's press release is in the package offered at the end of this post.

The Hindenburg Letter
On November 28, 2018, the Department held the hearing. The transcript mentioned a 13-page letter Hindenburg Research had submitted to the Department on November 20, 2018. Hindenburg, which was founded by Nathan Anderson, CFA, CAIA, engages in financial research. Hindenburg sometimes takes either a long position or a short position on the shares of public companies it examines. Hindenburg's name stems from what the firm describes as the "epitome of a totally man-made, totally avoidable disaster" where "Almost 100 people were loaded onto a balloon filled with the most flammable element in the universe."

In the Hindenburg letter, which is included in its entirety in the complimentary package offered at the end of this post, the firm discloses its short position on Genworth shares. The firm questions the ability of China Oceanwide to carry out its responsibilities under the merger agreement. Here are some of Hindenburg's comments:
  • China Oceanwide has consistently generated negative operating performance.
  • It has plugged its performance hole with borrowings, which have reached the point of clear unsustainability.
  • Rating agencies have downgraded its key operating subsidiaries, similarly citing their debt load as "unsustainable." Meanwhile, recent media reports have shown that operating subsidiaries are scrambling to sell assets to pay off debt.
  • When factoring in questionable "current" assets, the true working capital position of the conglomerate is impaired, and there are red flags in regard to related party receivables.
  • The conglomerate has used more short-term debt and unstable equity share pledges to sustain its operations.
One witness at the Department's hearing was Thomas J. McInerney, president, chief executive officer, and a director of Genworth. Another witness was Xiaoxia Zhao, a director of Oceanwide Holding Co., Ltd., and general manager and director of Asia Pacific Global Capital. Zhao is not a native English speaker, and testified through an interpreter. Both witnesses said they were aware of the Hindenburg letter and disagreed with the findings described in it.

Judge Lamb's Recommendations
On December 14, 2018, Judge Lamb submitted to the Department a 44-page letter including his recommendations and a proposed order approving the merger agreement. Here are some comments he provided (shown here without citations) about the Hindenburg letter:
8. The First Email, the Second Email and the Third Email all relate to articles published by Hindenburg Investment Research. Those articles and the Hindenburg Letter purport to raise concerns primarily related to the financial stability of the Applicants and, to a lesser degree, the financial stability of Genworth and the Domestic Insurer.
9. Regarding the financial stability of the Applicants, the conclusions drawn by Hindenburg are inconsistent with the results of the due diligence conducted by Genworth and its outside financial advisors, and the sworn testimony of Mr. Zhao on behalf of the Applicants.
10. Given the analysis conducted by Genworth, the Department and their experts, there is sufficient evidence that the concerns raised by Hindenburg, insofar as such concerns relate to Section 5003(d)(1)(c) regarding the financial condition of any acquiring party being such as might jeopardize the financial stability of the insurer, or prejudice the interests of its policyholders, have been sufficiently addressed.
11. Genworth and the Department have both concluded and the evidence supports the conclusion, that the financial condition of the Applicants is not such as would jeopardize the financial stability of the Domestic Insurer or prejudice the interest of its policyholders.
17. Hindenburg states that it has a short position on shares of Genworth, essentially betting against the success of Genworth and the Proposed Acquisition. Based on this conflicting financial interest, the statements made by Hindenburg in its articles and the Hindenburg Letter should be viewed with skepticism.
The above five comments are from a subsection entitled "Public Comments" in Judge Lamb's letter. The full subsection is in the complimentary package offered at the end of this post.

The Department's Approval
On December 21, 2018, the Department issued a press release announcing Delaware Insurance Commissioner Trinidad Navarro's four-page Final Order and Decision approving the merger agreement between Genworth and China Oceanwide. The press release is in the complimentary package offered at the end of this post.

A Recent Press Release
On April 29, 2019, Genworth issued a press release announcing the parties' tenth waiver agreement. The parties extended the end date to June 30, 2019, and waived until that date the right to terminate the merger agreement and abandon the merger due to a failure of the merger to have been consummated on or before April 30, 2019. The press release is included in the complimentary package offered at the end of this post.

A Recent Article
Also on April 29, Best's Insurance News & Analysis posted an article entitled "Policyholders, Agents Allege Genworth Stripped $410 Million From Long-Term Care Unit." The article, by reporter Frank Klimko, discussed a lawsuit filed in Delaware state court, and said Genworth has filed a motion to dismiss the lawsuit.

General Observations
I have written extensively about long-term care (LTC) insurance in general and about Genworth in particular, but have never tried to evaluate the proposed merger agreement between Genworth and China Oceanwide. Thus I cannot comment about the likelihood of success for the merger. However, after reading the Hindenburg letter, I am concerned about the merger. I am also disturbed, for two reasons, by the manner in which the Department brushed off the letter.

First, I am troubled by McInerney's reference, in his testimony at the hearing, to allegations in a then-pending lawsuit filed in state court in New York against Hindenburg and others. On March 12, 2019 (3½ months after the hearing), the judge in the New York case granted the defendants' motion to dismiss the complaint. The judge ruled, among other matters, that statements the defendants made about the plaintiff were protected expressions of opinion and were not defamatory. (See Eros International v. Mangrove Partners et al., Supreme Court of the State of New York, New York County, Index No. 653096/2017.)

Second, I am troubled by Judge Lamb's assertion that "the Hindenburg Letter should be viewed with skepticism" because of a "conflicting financial interest." Judge Lamb made the statement without acknowledging that the companies' executives, attorneys, accountants, investment consultants, and other advisors have "conflicting financial interests." In due course we will see whether the merger agreement is consummated, and if so, its impact on Genworth's policyholders.

Available Material
I am offering a complimentary 28-page PDF consisting of the explanatory note in Genworth's amended 10-K report (1 page), Genworth's March 14, 2019 press release (3 pages), the Department's November 8, 2018 press release (2 pages), the Hindenburg letter (13 pages), a subsection of Judge Lamb's December 14, 2018 letter (5 pages), the Department's December 21, 2018 press release (2 pages), and Genworth's April 29, 2019 press release (2 pages). Email jmbelth@gmail.com and ask for the May 2019 Genworth package.


Monday, April 22, 2019

No. 310: Long-Term Care Insurance and the National Association of Insurance Commissioners

In No. 308 (posted April 11, 2019), I discussed the insolvency of Senior Health Insurance Company of Pennsylvania (SHIP), a long-term care (LTC) insurance company in run-off. On April 10, the National Association of Insurance Commissioners (NAIC) issued a press release entitled "NAIC Prioritizes Long-Term Care Insurance" and subtitled "State regulators form executive-level task force." The NAIC's press release is in the complimentary package offered at the end of this post.

The New Task Force
The chair of the new NAIC task force is Virginia Commissioner Scott A. White, and the vice chair is Colorado Commissioner Michael Conway. The first meeting of the task force is tentatively scheduled for Kansas City in connection with what the NAIC calls an "Insurance Summit" relating to "Where Innovation Meets Regulation." It is not surprising that insurance regulators in Florida (home of many retirees), Pennsylvania (home of Penn Treaty and SHIP), South Carolina (home of Kanawha), and Virginia (home of Genworth) are among those instrumental in forming the new task force.

On April 12, I sent No. 308 to the Virginia Bureau of Insurance and asked for confirmation of my belief that Commissioner White is chairing the new task force because Genworth is based in Virginia. In response, a spokesperson referred me to the NAIC. On April 15, I made the same request to the NAIC. An NAIC spokesperson responded, but did not answer the question I asked.

The Upcoming Virginia Hearing
On March 15, 2019, the Virginia Bureau of Insurance issued a press release announcing a public hearing to be held in Richmond on May 21. The Bureau said it is inviting public comment on recent LTC insurance premium rate increase requests the Bureau has received from numerous insurance companies. The Bureau said public comments for the hearing record may be submitted in advance by April 22. I am submitting this blog post for the hearing record. The Bureau's press release is in the complimentary package offered at the end of this post.

A Few Articles About LTC Insurance
I have been writing about LTC insurance for three decades. Several of the early articles appeared in my monthly newsletter, The Insurance Forum, which I began in 1974 and ended in 2013. Four of the Forum articles about LTC insurance are discussed briefly here, and are in the complimentary package offered at the end of this post.

My first article about LTC insurance was in the February 1988 issue of the Forum. It was in the form of an open letter to Danny Thomas, the legendary entertainer and philanthropist who founded St. Jude's Children's Research Hospital in Memphis. Thomas had endorsed an LTC insurance policy offered by Union Fidelity Life Insurance Company, but I felt the policy presented serious problems for anyone who purchased it. Thomas did not respond to my open letter, but a company officer told me the company was no longer selling the policy.

Within a few years, many companies had begun selling LTC insurance. The August 1991 issue of Consumer Reports, the magazine of Consumers Union (CU), contained a study entitled "Gotcha! The Traps in Long Term Care Insurance." CU identified some "fair" LTC insurance policies and some "poor" policies, but no "excellent" or "good" policies. I wrote about the CU study in the August 1991 issue of the Forum. I explained that an "excellent" or "good" policy could never be found, because the LTC exposure violates important insurance principles. For example, the potential loss should be of a type that is fortuitous; that is, the potential loss should be of a type that occurs by chance and should not be within the control of the insured person or family members. Another example is that the potential loss should be definite; that is, the potential loss should be of a type in which there is little room for dispute over whether a loss of the type covered by the insurance has occurred.

In the May 1997 issue of the Forum, I wrote about a promotional letter used by General Electric Capital Assurance Company in selling LTC insurance. The letter included this sentence, with the indicated underlining: "Your premiums will never increase because of your age or any changes in your health." I told a company officer that, although the sentence was technically correct, it was deceptive because the policy allowed the company to increase the premiums. The company officer explained why he thought the sentence was not deceptive. However, the company removed the sentence from its promotional letters.

In the July 2008 issue of the Forum, I expressed the opinion that the problem of financing the LTC exposure could not be solved through the mechanism of private insurance. There I expanded on what I had said earlier about the important insurance principles that LTC insurance violates. I also identified several other considerations that render private LTC insurance unworkable.

A Few Blog Posts about LTC Insurance
When I shut down the Forum, I started a blog on which I have continued to write about LTC insurance. Here I describe briefly three such blog posts, and provide links to them.

In No. 191 (posted December 9, 2016), I wrote about a looming catastrophe for the LTC insurance business. I discussed, among other matters, the financial problems at Penn Treaty, an LTC insurance company that had become insolvent in 2009. I also discussed a Congressional hearing that was prompted by sharp premium increases on LTC group insurance coverage purchased by federal government employees.

In No. 223 (posted June 23, 2017), I explained why it is wrong for state governments to help private LTC insurance companies sell the coverage to citizens of those states. I mentioned, among other matters, a mailing to residents of California over the signature of the California governor, and a similar mailing to residents of Indiana over the signature of the Indiana governor. The letters implied that LTC insurance coverage was endorsed by the respective states.

In No. 257 (posted March 12, 2018), I wrote about a major problem that had surfaced at General Electric. The company announced that, after a review of some old LTC insurance policies, the company had to increase its liabilities relating to those policies by about $15 billion. The announcement shocked the market and prompted intense discussion of the problems associated with LTC insurance.

General Observations
I believe that the problem of financing the LTC exposure cannot be solved through the mechanism of private insurance. In my view, there are only two solutions to the problem. One is through personal savings, an approach I described in the July 2008 Forum article.

The other solution is through mandatory coverage that would be part of a federal program of universal health insurance. I say mandatory, because we already have evidence that a national voluntary plan would not be workable. A national voluntary plan called "Community Living Assistance Services and Supports" ("CLASS") was part of the 2010 Patient Protection and Affordable Care Act. Experts in the Department of Health and Human Services tried, without success, to devise a workable voluntary CLASS program, but it never got off the ground and was quietly repealed.

The new NAIC task force is the most recent effort to address the problems associated with LTC insurance. I think it will meet with the same fate as earlier efforts unless it recognizes that "personal savings" and a "mandatory federal program" are the only workable solutions to the problem of financing the LTC exposure.

Available Material
I am offering a complimentary 14-page PDF consisting of the NAIC's press release (1 page), the Virginia Bureau's press release (1 page), and the four Forum articles mentioned in this post (12 pages). Email jmbelth@gmail.com and ask for the April 2019 LTC insurance package.


Wednesday, April 17, 2019

No. 309: Greg Lindberg and Three Others Indicted by a Federal Grand Jury in North Carolina

On March 18, 2019, in a sealed indictment, a federal grand jury in North Carolina charged Greg E. Lindberg and three others with criminal wrongdoing. On April 2, a magistrate judge unsealed the indictment. On April 3, the case was assigned to U.S. District Judge Max O. Cogburn, Jr. President Obama nominated him in January 2011, and the Senate confirmed him in March 2011, (See U.S.A. v. Lindberg, U.S. District Court, Western District of North Carolina, Case No. 5-19-cr-22.)

The Defendants and the Charges
Lindberg, a resident of Durham, North Carolina, is the founder and chairman of Eli Global, LLC, a Durham-based investment company, and the owner of Global Bankers Insurance Group (GBIG), a Durham-based managing company for several insurance and reinsurance companies. The other defendants, all residents of North Carolina, are John D. Gray, a Lindberg consultant; John V. Palermo, Jr., a vice president of Eli Global; and Robert Cannon Hayes, chairman of the state Republican party in North Carolina. All four defendants were charged with one count of conspiracy to commit honest services wire fraud and one count of bribery concerning programs receiving federal funds, and aiding and abetting. Hayes was also charged with three counts of false statements.

The arrest warrants were issued in Charlotte in March. Each warrant described the offense as follows:
did knowingly combine, conspire, confederate, & agree with one another, and with others known and unknown to the Grand Jury, to devise & intend to devise a scheme and artifice to defraud and to deprive, by means of material false and fraudulent pretenses, representations, & promises, & to transmit and cause to be transmitted by means of wire communication in interstate commerce, any writings, signs, signals, pictures, & sounds for the purpose of executing the scheme & artifice to defraud & deprive, that is, to deprive North Carolina & the citizens of N.C. of their intangible right to the honest services of the COMMISSIONER, an elected State official, through bribery, in violation of 18 U.S.C. §§ 1343 & 1346
The defendants were arrested and arraigned on April 2. They pleaded not guilty, were released with conditions, and each posted an unsecured appearance bond of $100,000. Pretrial reports were filed under seal on April 3. A docket call is set for July 1. The arrest warrant for Lindberg is in the complimentary package offered at the end of this post.

The Indictment
In most states, the insurance commissioner is appointed by the governor. North Carolina is one of the minority of states in which the insurance commissioner is elected. Commissioner Mike Causey heads the North Carolina Department of Insurance (NCDOI). Paragraph 4 of the indictment reads:
GBIG managed several insurance companies across the United States and was subject to regulation by the NCDOI. Beginning in or about September 2017, and continuing through in or about February 2018, GBIG was subject to an ongoing periodic examination conducted by the NCDOI pursuant to North Carolina General Statute § 58-2-131, which provides that the NCDOI shall conduct a financial examination of every domestic insurer when "prudent for the protection of the policy holders or the public," but "not less frequently than once every five years." Following the periodic investigation, GBIG was subject to a remediation agreement it signed with the NCDOI in or about May 2018.
I asked the NCDOI for the remediation agreement. A spokesperson said it is confidential. I also asked for the examination reports. The spokesperson sent me reports for two Lindberg companies: Colorado Bankers Life Insurance Company (a report that is in the complimentary package offered at the end of this post) and Southland National Insurance Corporation. Both reports are as of December 31, 2015, and dated May 10, 2017. I found no reference to a remediation agreement in either report. Other companies mentioned in the reports are:
Colorado Benefits Administration, LLC
Colorado Benefits Administrators, LLC
Dearborn National Life Insurance Company
North Carolina Mutual Life Insurance Company
Preferred Financial Corporation, LLC
SNG Holdings & Reinsurance Company, Inc.
Southern Financial Life Insurance Company
Southland Benefit Solutions, LLC
Southland National Holdings, Inc.
Southland National Reinsurance Corporation
Paragraphs 14, 30, and 31 of the indictment are important. They read as follows:
14. The defendants corruptly gave, offered, and promised things of value to [Causey], including millions of dollars in campaign contributions and through an independent expenditure committee, in exchange for specific official action favorable to GBIG, including the removal of the Senior Deputy Commissioner of the NCDOI responsible for overseeing the regulation, including the pending periodic examination, of GBIG ("Senior Deputy Commissioner A").
30. On or about February 14, 2018, Lindberg and Gray met with [Causey] in a private conference room at the Concord Regional Airport in Concord, North Carolina. Leading up to the meeting, Gray explained that the meeting would be secret, and told [Causey] that Gray and Lindberg would enter the facility through a different door from [Causey] so that nobody would see them together.
31. During the meeting, Lindberg complained about various issues with the NCDOI, including Senior Deputy Commissioner A. Lindberg stated that she was "deliberately and intentionally and maliciously hurting my reputation with other regulators," and that she's "been lying to you to, to hurt my bad name." [Blogger's note: The end of paragraph 31 is exactly the way it reads in the indictment.]
On the website of the NCDOI, the "leadership" section includes a photograph and biographical information for Chief Deputy Commissioner Dr. Michelle Flynn Osborne. There are no other women in the NCDOI leadership. I asked NCDOI whether I am correct in my belief that "Senior Deputy Commissioner A" is Dr. Osborne. The spokesperson said "need to contact FBI." I have not done so, because I know the FBI would have no comment. The indictment is in the complimentary package offered at the end of this post.

Media Coverage
On March 1, 2019, The Wall Street Journal (WSJ) carried a 2,480-word story entitled "Insurance Tycoon Diverts $2 Billion—Greg Lindberg's business practices have little precedent and are under investigation." The reporters were Mark Maremont and Leslie Scism. Here are the opening sentences:
Soon after Greg Lindberg moved into the insurance business, the North Carolina entrepreneur went on a spending spree. He bought nearly 100 companies around the globe, an estate in the Florida Keys, an Idaho lakeside retreat, a Gulfstream jet and the most expensive mansion ever sold in Raleigh, N.C. In September 2018 he added a 214-foot yacht with room for a dozen overnight guests. He also became the largest political donor in North Carolina and lavished money on other races around the country. The cash came, at least in part, from huge sums Mr. Lindberg diverted from the group of life insurance firms he began assembling in 2014, a Wall Street Journal investigation found.
On March 3, Lindberg spokespersons responded to the WSJ story. They said the story omitted key facts and contained numerous inaccuracies.

On April 3, WSJ carried a 591-word story entitled "Financier, State GOP Chairman Indicted," by the same reporters. Here are the opening sentences:
Greg Lindberg, a North Carolina entrepreneur who lent at least $2 billion from insurers he controlled to his own enterprises, was indicted on federal criminal charges of conspiring to bribe the state regulator overseeing his insurers. The indictment rocked North Carolina's Republican Party. One of Mr. Lindberg's three co-defendants in the case is party Chairman and former Congressman Robert "Robin" Cannon Hayes, who allegedly agreed to direct $250,000 from state party coffers to the state insurance commissioner on Mr. Lindberg's behalf. Mr. Hayes, 73 years old, is also alleged to have lied about the scheme to the Federal Bureau of Investigation.
On April 5, WSJ carried an 869-word story entitled "Commissioner Helped Spot Alleged Bribery," by the same reporters. Here are a few of the opening sentences:
In the fall of 2017, Mike Causey, a Republican who had been elected North Carolina's insurance commissioner the year before, was trying to get up to speed on medical-insurance scams. He attended a seminar on the issue in Charlotte, N.C., organized by federal prosecutors. As the event was ending, Mr. Causey said in an interview Wednesday, he mentioned to one of the prosecutors that his department was struggling to understand complex transactions at a couple of life insurers. The prosecutor followed up, requesting more information on the matter. By early 2018, Mr. Causey was secretly recording conversations for the Federal Bureau of Investigation, The Wall Street Journal previously reported, citing people familiar with the matter.
On April 5, The New York Times carried a 1,468-word story entitled "G.O.P. Agenda in North Carolina Is Bruised by a Bout With Scandal." The reporters were Alan Blinder and Richard Fausset. The story included discussions of major political missteps by both political parties, but mostly by Republicans. The story referred to such scandals as the Republican-backed bill limiting the bathroom choices of transgender people, the court-rejected gerrymandering plan, and the recent harvesting of absentee ballots. The story also mentioned that the Republican National Convention in 2020 is scheduled for Charlotte.

General Observations
This is a disturbing case. The details on how the defendants are alleged to have tried to bribe Causey are presented in clinical detail in the indictment. I plan to follow the case, but it is likely to take a long time unless the defendants reach a plea agreement with the federal prosecutors.

The hero in the case is Causey, who tipped off the prosecutors about what was going on, and later cooperated in building the case. It remains to be seen what happens in the case and to Causey's political career.

Available Material
I am offering a complimentary 47-page PDF consisting of the arrest warrant for Lindberg (1 page), the indictment (24 pages), and the examination report on Colorado Bankers Life (22 pages). Email jmbelth@gmail.com and ask for the April 2019 Lindberg package.


Thursday, April 11, 2019

No. 308: Long-Term Care Insurance and the Insolvency of Senior Health Insurance Company of Pennsylvania

On April 3, 2019, I obtained the statutory annual statement of Senior Health Insurance Company of Pennsylvania (SHIP) for the year ended December 31, 2018. SHIP has been running off the long-term care (LTC) insurance business of the former Conseco Senior Health Insurance Company (CSHI) since 2008. I wrote four articles in The Insurance Forum about the transfer of CSHI's LTC insurance business to SHIP; the articles are in the complimentary package offered at the end of this post.

The Insolvency
SHIP's 2018 statement (on pages 2 and 3) shows that total liabilities of $2.66 billion exceed total admitted assets of $2.22 billion by $0.44 billion. Thus the company is insolvent. Also, the statement (on page 4) shows that the company incurred a net loss of $0.5 billion in 2018. Those pages are in the complimentary package offered at the end of this post.

I have posted several items about SHIP on my blog, and have commented from time to time about the worsening financial condition of the company. My most recent prior post, based on the company's 2017 statement, is in No. 260 (April 2, 2018).

A Puzzling Sentence
SHIP's 2018 statement (on page 19.2) contains this sentence: "There is not substantial doubt about the Company's ability to continue as a going concern." I find puzzling the inclusion of such a sentence in the financial statement of an insolvent company. Page 19.2 is in the complimentary package offered at the end of this post.

The Jurat
In the SHIP statement I obtained, the jurat section at the bottom of page 1 shows the names of three officers: Barry Lee Staldine, President and Chief Executive Officer; Ginger Susan Darrough, Chief Financial Officer and Treasurer; and Kristine Tejano Rickard, Secretary. However, there were no signatures of those officers, the notary section was blank, and there was no indication of when the Pennsylvania department received the statement. I contacted the department, and a spokesperson promptly sent me a copy of page 1 showing the signatures, the notarization dated February 26, and the department's March 5 receipt stamp. Both versions of page 1 are in the complimentary package offered at the end of this post.

Directors and Affiliates
The directors listed on page 1 in SHIP's 2018 statement are Staldine, Darrough, Julianne Marie Bowler, Cecil Dale Bykerk, John Martin Morrison, Gregory Vincent Serio, and Thomas Edward Hampton.

According to page 19.12 in the 2018 statement, SHIP is affiliated with Fuzion Analytics, Inc., and both are wholly owned subsidiaries of the Senior Health Care Oversight Trust. SHIP and Fuzion have a management agreement under which SHIP paid $15.5 million to Fuzion in 2018. According to page 19.11 in the 2018 statement, SHIP, Fuzion, and the Oversight Trust file consolidated federal income tax returns. Pages 19.11 and 19.12 are in the complimentary package offered at the end of this post.

Risk-Based Capital
When I discuss risk-based capital (RBC) ratios, I refer to the ratio where the numerator is total adjusted capital and the denominator is company action level RBC, and where the RBC ratio is expressed as a percentage. According to page 22 in SHIP's 2018 statement, the company's RBC ratios were 108 in 2014 (red flag zone), 80 in 2015 (company action zone), 82 in 2016 (company action zone), and 71 in 2017 (regulatory action zone). For 2018, total adjusted capital is minus $466.8 million, authorized control level RBC is $51.3 million, and company action level RBC (twice the authorized control level RBC) is $102.6 million. Thus the RBC ratio for 2018 is minus 455 percent (minus $466.8 million divided by $102.6 million), which means the company is deep in the mandatory control zone. I described the history and nature of RBC ratios in the August 2011 issue of the Forum. Page 22 of the statement and the relevant pages from the August 2011 issue are in the complimentary package offered at the end of this post.

The Surplus Note
In 2015 SHIP issued a $50 million surplus note, which has an impact on the financial condition of the company. Without the note, the company's RBC ratios at the ends of 2015, 2016, and 2017 would have been in the mandatory control zone. SHIP has not repaid any portion of the principal of the note, and has not paid any interest on the note. At the end of 2018, according to page 19.13 in the 2018 statement, the amount of unpaid interest on the note is $11.55 million, so that the total amount of the note is now $61.55 million. I wrote about the note in No. 260. Page 19.13 is in the complimentary package offered at the end of this post.

My Requests
When an insurance company becomes insolvent, it is common practice for the insurance commissioner in the company's state of domicile (Pennsylvania in this case) to seek state court permission to assume control of the company and place it in rehabilitation. When I learned of SHIP's insolvency, I wrote to the Pennsylvania department. I said I was planning a blog post, and asked for a short statement suitable for inclusion in the post. In reply, a spokesperson said:
In terms of the financial statement, we can say we are aware of the company's financial situation from their annual statement. Beyond that, we are prohibited by law from discussing a company's financial status.
I sent a similar request to the National Organization of Life and Health Guaranty Associations (NOLHGA). In reply, a spokesperson said:
It has been reported that the Pennsylvania Insurance Department has given the Senior Health Insurance Company of Pennsylvania 90 days to submit a plan for the continued operation of the company. We continue to monitor the situation, and our member life and health insurance guaranty associations stand ready to provide protection to policyholders should the need arise.
General Observations
SHIP has been a run-off company from its inception, and therefore does not sell new policies. Also, the company's financial condition has been worsening for many years. For those reasons it is possible that the company, for all practical purposes, has been under the direct control of the Pennsylvania commissioner for many years. Thus the commissioner may have felt there was no need to ask the court's permission to formalize control. That is why I sought comments from the Pennsylvania department and from NOLHGA.

With regard to the response from NOLHGA, I do not know how SHIP can erase a deficit of almost half a billion dollars. Further, in view of the current distressed state of the LTC insurance market, I believe that any efforts to rehabilitate the company, or to sell part or all of the company, are doomed to failure. I think the Pennsylvania commissioner will seek court permission to liquidate the company.

A Late Note
Just before this item was posted, I saw a report that SHIP entered into a letter agreement in February 2018 with the Pennsylvania department regarding the company's financial condition (probably the matter referred to in NOLHGA's statement to me). The report also said the company has filed its "Management's Discussion and Analysis" (MD&A) relating to the 2018 statement. I immediately requested the letter agreement and the MD&A from the Pennsylvania department. With regard to the letter agreement, the department spokesperson said the department "does not confirm information regarding a company's financial status unless and until formal action occurs."  The spokesperson sent me the MD&A.  I have reviewed it, and have no comment on it.  However, I am including it in the complimentary package offered at the end of this post.

Available Material
I am offering a complimentary 37-page PDF consisting of the four articles in the Forum about the transfer of CSHI's LTC insurance business to SHIP (10 pages), relevant pages about RBC ratios from the August 2011 issue of the Forum (6 pages), pages of SHIP's 2018 statement from which I drew information for this post (10 pages), and the company's MD&A (11 pages). Email jmbelth@gmail.com and ask for the April 2019 SHIP package.


Thursday, April 4, 2019

No. 307: Nixon and Trump

In a blogger's note in No. 300 (December 17, 2018), I said I was taking a vacation for two or three months. What I did not mention was the reason for the vacation, which was to read extensively about the investigation of President Richard Nixon in the 1970s and the investigation of President Donald Trump during the past two years.

The Investigation of Nixon
As the investigation of Nixon progressed in the early 1970s, I followed it, but not in depth. I read about it in newspapers, read All the President's Men, saw the movie, and a couple of years later read The Final Days. I have now completed my reading about the investigation of Nixon by rereading All the President's Men, rereading The Final Days, and reading about the investigation from the viewpoints of several others associated with the investigation: prosecutors (Ben-Veniste, Frampton, Jaworski), historians (Farrell, White), journalists (Bernstein, Doyle, Woodward), and wrongdoers (Dean, Ehrlichman, Haldeman, Nixon).

I did not read all of Nixon's 1,120-page 1978 Memoirs. I was turned off by his incomplete description of the infamous 18½-minute gap on the June 20, 1972 tape recording (three days after the Watergate break-in). Although some evidence points to Nixon personally as having made the erasure, here is how he continued the cover-up on pages 631-632:
I met with Bob Haldeman twice on Tuesday [June 20, 1972]: from 11:26 A.M. until 12:45 P.M., and again from 4:35 until 5:25 in the afternoon. What was said during the morning meeting will never be known completely because the tape of that conversation is the one with the 18½-minute gap. Some of what we talked about during those 18½ minutes can be reconstructed from the notes Haldeman took. According to them, one of my first reactions to the Watergate break-in was to instruct that my EOB [Executive Office Building] office be checked regularly to make sure that I [italic in original] was not being bugged by anyone. They also indicate a concern about the political ramifications of the Watergate incident and a desire to divert its impact by mounting our own counterattack.
On the other hand, I was deeply impressed by Theodore White's 1975 book, Breach of Faith: The Fall of Richard Nixon. Many years ago I read his impressive Making of the President series, for the first of which he received the 1962 Pulitzer Prize for General Nonfiction. The style of his book about Nixon reminds me of the style of my favorite writer, Robert Caro, who received the 1975 Pulitzer Prize in Biography for The Power Broker: Robert Moses and the Fall of New York, and the 2003 Pulitzer Prize in Biography for Master of the Senate (the third volume of Caro's multi-volume biography of Lyndon Johnson).

White, who died in 1986, would have had a field day with the investigation of Trump. To provide a glimpse of White's style, here are a few excerpts from his description of what happened in the U.S. Supreme Court on the day Chief Justice of the United States Warren Burger announced the 8 to 0 decision in U.S. v. Nixon:
Wednesday dawned with an overcast in Washington—hot, sticky, threatening to rain—July 24th, 1974. And the flag over the Supreme Court was at half-staff, in memory of Earl Warren....
Oyez, Oyez, Oyez—the words echoed out of the medieval French and the particular system of justice the Normans imposed almost a thousand years ago on conquered England, from which had developed that common law which still governs Americans and Englishmen. This system of justice holds that the law must act on evidence; to get at that evidence, all the power of the state may be mobilized. What was at issue this day was whether those close associates of Richard Nixon, President of the United States, under indictment at that moment, could be fairly judged in court without necessary facts; and the highest court in the land had been summoned to judge the President's authority to withhold those facts. Oyez, Oyez, Oyez—Give Ear, Give Ear, Give Ear. Listen! And then the Justices, eight out of nine (Justice Rehnquist had disqualified himself from hearing this case), silently materialized from behind the wine-red velvet drapes to take their seats on the bench.
The Chief Justice, Warren Burger, leaned forward in his black leather chair and spoke for a moment of his predecessor, Earl Warren, who had just died. Earl Warren had enlarged the power of the Court more than any other Justice of the twentieth century. Now, Burger was to enlarge that power yet further as he proceeded to speak to Case No. 73-1766, United States against Nixon, and the cross-petition, Case No. 73-1834, Nixon against the United States.
White described Chief Justice Burger's reading of the decision, and what happened immediately thereafter:
Silence. Then the clack of a gavel. And then the Justices swiveled in their chairs, rose and, like ghosts of an olden drama, disappeared through the burgundy drapes behind them, the thwack of the gavel still echoing. It was 11:20 in the morning in Washington, only 8:20 in San Clemente, California, where Richard Nixon had secluded himself. Eight hours later would come the next thwack of a gavel, as Peter Rodino, chairman of the Judiciary Committee of the House of Representatives, would call to order in Room 2141 of the Rayburn House Office Building those members of his committee who, for the next six days, must act to define power—theirs, the people's and the President's—in rolling, vivid and brilliant debate for all the world to see and hear.
"Fiat justitia, ruat coelum," the Roman lawmakers had said, "Let Justice be done, though the heavens fall." Justice, at every level of American power, was now under way: in two weeks a President would fall.
I had lunch within an hour of the decision with Leon Jaworski, whose authority as Special Prosecutor Chief Justice Burger had just affirmed as sovereign. But as Jaworski sat at table, breaking his custom in order to celebrate with a carafe of white wine, there was little of sovereign manner about him. He was an old man, today weary, tufts of white hair above the face of a friendly goblin, the voice firm, now precise, then again grandfatherly, and no elation in his voice about the victory....
"What happened this morning," said the tired man, "proved what we teach in schools, it proved what we teach in colleges, it proved everything we've been trying to get across—that no man is above the law." Jaworski was living now in a two-room-and-dinette suite at the Jefferson Hotel, his wife cooking for him, far from the comforts and pleasant estate of his life in Texas. But he intended to go through with this to the end, he said, he had to, not for reward nor for fame, but simply because of the young people. This case, said Jaworski, would shape what the young of America would think or say or do in this system for all of the next generation. Unless the young people believed, really believed in our institutions, the system simply would not work. He quoted Disraeli; according to his recall, Disraeli had said, "The youth of the nation are the trustees of posterity." His clients were the youth of the nation, his prosecution a defense of the system.
The Investigation of Trump
By coincidence, I completed my reading about the investigation of Nixon during the weekend of March 22-24, 2019, when Special Counsel Robert S Mueller III gave his report on the investigation of Trump to Attorney General William Barr. That same weekend Barr sent two letters to the Senate and House Committees on the Judiciary.

When Trump burst on the political scene, followed by the investigation of him, I thought the investigations of Nixon and Trump had significant similarities. I also thought they had significant differences.

The Similarities
One similarity is the "Road Map" placed under seal on March 1, 1974, and unsealed by a federal judge on October 11, 2018. (See No. 295, posted November 9, 2018.) Another similarity is that both investigations were looking into possible efforts to subvert the U.S. Constitution.

Still another similarity is that both investigations reveal the crucial importance of close associates of Nixon and Trump. After Trump's nomination and before his election, I could not imagine, if he should win, how he would be able to attract highly qualified and capable individuals to serve in his cabinet and in other important positions in his administration.

The Differences
An important difference in the two investigations is that Nixon had extensive political experience—in the House, in the Senate, and as vice president—while Trump had no political experience. Another important difference is that Nixon was an avid reader, while Trump reportedly reads nothing and obtains his information by watching television.

Origins of the Investigations
Some think the investigation of Nixon began with the Watergate break-in on the night of June 16-17, 1972. However, the seeds went much farther back—to Daniel Ellsberg's leaking of The Pentagon Papers in 1971, and even farther back to the techniques Nixon used to win election to the House in 1946 and the Senate in 1950.

As for the investigation of Trump, some think it began with the firing of FBI Director James Comey on May 9, 2017. For me, however, it goes back much farther than that. I was bewildered and angered by Trump's early claim that President Barack Obama was not eligible to hold the office. Trump's antipathy toward Obama continues unabated today.

My second major problem with Trump began with his criticism of immigrants when he began his primary campaign. I took those comments personally, because my beloved grandparents (all four of them) immigrated to our great country through Ellis Island about 120 years ago to escape persecution in eastern Europe and make a better life for their descendants.

There was another early incident that turned me against Trump. It was the horrible insult that Trump, a Vietnam War draft dodger, directed at Senator John McCain, a Vietnam War hero. To this date, months after McCain's death, Trump continues to attack McCain.

Moreover, I have had many other concerns about Trump.  A few of those are his defense of Nazis, his affinity for dictators, his remarks about women, his sexual indiscretions, his vicious attacks on the media, his nasty comments about those he perceives as his enemies, and, above all, his constant lies.

General Observations
I have been following the investigation of Trump closely through newspapers and other media outlets. During my vacation I read extensively about the investigations of Nixon and Trump. Before listing the books, I have some general observations.

For anyone interested in the investigations of Nixon and Trump, I strongly recommend Theodore White's 1975 book. It is not only a superb analysis of the investigation of Nixon, but one through which anyone with knowledge of the investigation of Trump can see important similarities and differences in the two investigations.

I consider the recent books by James Comey and Andrew McCabe mandatory reading. They describe the operations of the FBI and explain why it is vital for the FBI to maintain its independence from the White House. It is regrettable that Trump will never read them.

I am troubled by Attorney General William Barr's March 22, March 24, and March 29, 2019 letters to the House and Senate Judiciary Committees. I think they represent the beginning of a major cover-up of the results of the now completed 22-month investigation by Special Counsel Mueller.

I think the Barr letters, which Trump and his supporters are using to declare victory through the results of the Mueller report, will exacerbate the already extreme political partisanship over the Mueller report. A vivid illustration occurred at the beginning of a public hearing on March 28, 2019 before the House Permanent Select Committee on Intelligence on "Putin's Playbook: The Kremlin's Use of Oligarchs, Money and Intelligence in 2016 and Beyond." The committee consists of Chairman Adam Schiff and 12 other Democrats, and Ranking Member Devin Nunes and eight other Republicans. Following his opening statement, Schiff invited comments from Nunes, who yielded to K. Michael Conaway, who read a letter to Schiff from the nine Republicans requesting that Schiff resign as chairman of the committee. The letter is in the complimentary package offered at the end of this post.

Schiff forcefully rejected the request in a statement that I think will go down in history as important. After delivering his statement, Schiff refused to recognize anyone from the committee. Instead he recognized the first hearing witness: Michael McFaul, a former U.S.Ambassador to Russia. I was not able to locate an official transcript of Schiff's statement, which should be available later. Meanwhile,  I have included in the complimentary package offered at the end of this post my rough transcript of the statement.

The List of Books
Richard Ben-Veniste and George Frampton, Jr. Stonewall: The Real Story of the Watergate Prosecution (1977, 410 pages). They were members of the Watergate special prosecution task force.

Carl Bernstein and Bob Woodward. All the President's Men (1974, 349 pages). A new edition was published in 2012 with an "Afterword." They were The Washington Post reporters who wrote extensively about the investigation of Nixon beginning on June 17, 1972.

James R. Clapper. Facts and Fears: Hard Truths from a Life in Intelligence (2018, 424 pages). He is a retired director of national intelligence.

James Comey. A Higher Loyalty: Truth, Lies, and Leadership (2018, 290 pages). He is a former director of the FBI.

John W. Dean III. Blind Ambition: The White House Years (1976, 415 pages). He was Nixon's White House counsel.

James Doyle. Not Above the Law: The Battles of Watergate Prosecutors Cox and Jaworski (1977, 420 pages). He was the press officer for the Watergate special prosecution task force.

John Ehrlichman. Witness to Power: The Nixon Years (1982, 432 pages). He was a top Nixon assistant. He died in 1999.

John A. Farrell. Richard Nixon: The Life (2017, 737 pages). He is a prominent historian.

H. R. Haldeman. The Ends of Power (1978, 326 pages). He was Nixon's chief of staff. He died in 1993.

Michael Isikoff and David Corn. Russian Roulette: The Inside Story of Putin's War on America and the Election of Donald Trump (2018, 338 pages). They are prominent journalists.

Leon Jaworski. The Right and the Power: The Prosecution of Watergate (1976, 306 pages). He was the second Watergate special prosecutor. He died in 1982.

Andrew G. McCabe. The Threat: How the FBI Protects America in the Age of Terror and Trump (2019, 274 pages). He is a former acting director of the FBI.

Richard M. Nixon. RN: The Memoirs of Richard Nixon (1978, 1,120 pages). He was the 37th president of the United States. He died in 1994.

John J. Sirica. To Set the Record Straight: The Break-In, the Tapes, the Conspirators, and the Pardon (1979, 394 pages). He was the federal district court judge in much of the Watergate-related litigation. He died in 1992.

Theodore H. White. Breach of Faith: The Fall of Richard Nixon (1975, 373 pages). He was a prominent historian. He died in 1986.

Michael Wolff. Fire and Fury: Inside the Trump White House (2018, 321 pages). He is a prominent journalist.

Bob Woodward. Fear: Trump in the White House (2018, 420 pages).

Bob Woodward and Carl Bernstein. The Final Days (1976, 470 pages).

Bob Woodward. The Secret Man: The Story of Watergate's Deep Throat (2005, 249 pages). In 2005, W. Mark Felt, deputy director of the FBI during the Watergate days, and his family disclosed that he was "Deep Throat." Felt died later in 2005.

Available Material
I am offering a complimentary 18-page PDF consisting of Barr's letter of March 22, 2019 (1 page), his letter of March 24 (4 pages), his letter of March 29 (2 pages), the March 28 letter from the Republicans on the House Intelligence Committee requesting Schiff's resignation as chairman of the committee (2 pages), my rough transcript of Schiff's response to the Republicans' letter (2 pages), the three Articles of Impeachment adopted in 1974 by the House Judiciary Committee (4 pages), and Nixon's resignation speech (3 pages). Email jmbelth@gmail.com and ask for the April 2019 package relating to Nixon and Trump.