Wednesday, September 30, 2020

No. 391: AXA Equitable Life—Two Individual Lawsuits about the Reinstatement of Universal Life Policies

Malcolm H. Wiener (Wiener), a resident of Connecticut, filed two individual lawsuits against AXA Equitable Life Insurance Company (AXA) about his efforts to reinstate three universal life insurance policies that had lapsed. One of the cases, referred to in this post as "the New York case," began in 2015 and remains ongoing. The other case, referred to in this post as "the North Carolina case," began in 2018, went to trial in 2020, and post-trial motions are pending. (See Wiener v. AXA, U.S. District Court, Southern District of New York, Case No. 1:16-cv-4019; and Wiener v. AXA, U.S. District Court, Western District of North Carolina, Case No. 3:18-cv-106.)

The New York Case
Wiener filed the New York case in a state court in Connecticut. AXA removed the case to a federal court in New York, where AXA is based. The case has dragged on ever since. The most recent docket item, a declaration in support of a motion for summary judgment, was filed on August 25, 2020.

Wiener filed a third amended complaint in 2016. The defendants are three AXA companies and David Hungerford, Wiener's AXA agent. Wiener was born in 1935. In 1986 and 1987, at the age of 51, he bought three AXA universal life insurance policies. The polices were for $9 million, $9 million, and $2 million. Shortly thereafter he reduced them to $7.2 million, $7.2 million, and $1.6 million.

In 2013, when Wiener was aged 78, he received by regular mail a policy termination notice and an application for reinstatement. He promptly submitted the application for reinstatement, together with the necessary medical evidence of insurability. Three months later, AXA denied the application for reinstatement.

The third amended complaint describes the matter in detail and includes eight counts of alleged wrongdoing. The complaint and AXA's answer to the complaint are in the complimentary package offered at the end of this post.

The North Carolina Case
Wiener filed the North Carolina case in a state court in North Carolina, where AXA has a major service office. AXA removed the case to federal court in North Carolina. The case recently went to trial, and the jury rendered its verdict on September 10, 2020. The verdict form contained three questions:
  1. Was Plaintiff Malcolm Wiener injured by the negligence of Defendant AXA Equitable Life Insurance Company?
  2. What amount is Plaintiff Malcolm Wiener entitled to recover from Defendant AXA Equitable Life Insurance Company?
  3. By what amount, if any, should Plaintiff Malcolm Wiener's actual damages be reduced because of his unreasonable failure to avoid or minimize his injuries?
The jury's answers to the questions were: (1) Yes, (2) $16,000,000, and (3) $8,000,000. On the same day, the clerk of the court entered judgment in accordance with the verdict. Also on the same day, the judge issued an order providing the parties with ten days to file post-trial motions. Wiener's complaint, AXA's answer to the complaint, and the jury verdict form are in the complimentary package offered at the end of this post.

General Observations
I believe, but am not certain, that the answer to the second question on the jury verdict form (the $16 million of damages) is the sum of $7.2 million, $7.2 million, and $1.6 million, which are the reduced death benefits of the three policies. I do not know how the jury arrived at the answer to the third question on the verdict form (the $8 million reduction in the damages). I tried, without success, to contact an attorney for Wiener in the North Carolina case to see whether he can confirm my belief about how the jury arrived at the $16 million in damages, and to help me understand how the jury arrived at the $8 million reduction in damages. I plan to post a follow-up when and if I learn anything further.

Available Material
I am offering a complimentary 76-page package consisting of Wiener's third amended complaint (without exhibits) in the New York case  (31 pages), AXA's answer to the third amended complaint (19 pages), Wiener's complaint (without exhibits) in the North Carolina case (12 pages), AXA's answer to the complaint (12 pages), and the jury verdict form (2 pages). Email jmbelth@gmail.com and ask for the September 2020 package about Wiener v. AXA.

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Wednesday, September 9, 2020

No. 390: Philip Falcone and a Series of Amazing Developments

In No. 389 (August 26, 2020), I wrote about the termination of Philip A. Falcone, who had been chairman, president, and chief executive officer of HC2 Holdings, Inc. (NYSE:HCHC) from 2014 to 2020. I said my interest in Falcone arose from his involvement with a block of long-term care (LTC) insurance policies originally issued by Kanawha Insurance Company. I also said that, because Falcone was no longer connected with that block, I did not plan to write further about him. However, shortly after No. 389 was posted, I learned of a series of amazing developments that prompted me to prepare this further update.

James Corcoran
James P. Corcoran served as Superintendent of Insurance in what was then New York State's Department of Insurance from March 9, 1983 to January 26, 1990. I have known Corcoran since that time, although not well, and have always considered him above reproach.

Falcone hired Corcoran in 2015 to serve as executive chairman of Continental Insurance Group Limited (CIGL) to provide state insurance regulators, who were concerned about Falcone's admission of wrongdoing in a 2013 settlement with the Securities and Exchange Commission, with assurance that Falcone and HC2 would have no involvement in the day-to-day operations of any insurance companies HC2 might own or acquire. On April 2, 2020, HC2 terminated Corcoran without cause.

CIGL's Complaint
On May 22, 2020, CIGL and two affiliates, one of which is Continental General Insurance Company (CGIC), filed a lawsuit against Corcoran in a Texas state court. Here is the first paragraph in the "Nature of the Action" section of the complaint:
Continental brings this action against its former Executive Chairman, James P. Corcoran, for breaches of his fiduciary and contractual duties arising out of a secretive scheme to wrest control over Continental from its current sole shareholder, HC2 Holdings Inc. ("HC2"), through a campaign of subterfuge and lies. Mr. Corcoran, a longtime insurance executive, was hired by HC2 in 2015 to run its newly acquired Continental family of insurance companies. By 2019, however, Mr. Corcoran had abandoned his allegiances to both HC2 and the Continental companies he had been hired to lead and instead embarked on a campaign to line his own pockets at their expense.
The complaint includes four counts: breach of duty of loyalty, breach of fiduciary duty, breach of contract seeking damages, and breach of contract seeking injunctive relief. The full complaint is in the complimentary package offered at the end of this post. (See CIGL v. Corcoran, 395th Judicial District, Williamson County, Texas, Cause No. 20-0754-C395.)

Corcoran's Answer
On June 22, Corcoran filed an answer to the CIGL complaint. Here is part of the first paragraph in "The Facts" section of the answer (the full answer is in the complimentary package offered at the end of this post):
This lawsuit is nothing more than an ill-advised, transparent strike suit by Plaintiffs in an effort to diffuse the fact that they unlawfully terminated a whistleblower for reporting improper conduct. Corcoran was hired by CIGL in 2015 for the express purpose of providing assurance to insurance regulators that CIGL's parent company, HC2 Holdings, and its chairman, Phil Falcone, would have no involvement in the day-to-day operations of any of the insurance companies HC2 was looking to acquire... [O]ne of Corcoran's primary roles ... was to ensure that CGIC did not run afoul of any regulatory requirements by permitting Falcone improperly to become involved with and influence CGIC's operations, which conduct would subject CGIC to significant penalties, including the revocation of its certificate of authority to operate. But when Corcoran on multiple occasions raised legitimate concerns with Falcone and HC2's general counsel ... regarding Falcone's attempts to improperly influence CGIC and its officers, which concerns Falcone ignored and instead continued his improper influence, Corcoran was compelled to report such conduct to CGIC's regulator, the Texas Department of Insurance. And when Corcoran reported these facts to HC2's board of directors ... [they] forced CIGL to terminate Corcoran in retaliation. In their blatantly disingenuous effort to recharacterize their retaliatory discharge as somehow a justified business decision, Plaintiffs literally make up facts about an alleged "shadow" scheme in order to defame Corcoran and justify his termination, notwithstanding the fact that their falsehoods have gotten the better of them, since their current claims contradict CIGL's prior admission that its termination of Corcoran was "without cause."
Corcoran's Motion to Compel Arbitration
As mentioned earlier, HC2 terminated Corcoran on April 2, 2020. However, his employment agreement provides that disputes
shall be resolved exclusively and finally by arbitration in New York County, New York, in accordance with the Employment Arbitration Rules and Mediation Procedure of the American Arbitration Association.
On July 6, Corcoran filed in the Texas state court a motion to compel arbitration and for a stay of discovery and further proceedings. The briefing on the motion to compel has not yet been completed.

Corcoran's Whistleblower Complaint
The Sarbanes-Oxley Act of 2002 (SOX), which was enacted in the wake of accounting scandals such as those at Enron and WorldCom, provides for the filing of whistleblower complaints with the U.S. Department of Labor. On August 27, Corcoran filed such a complaint against HC2. Here is the first paragraph of the complaint (the full complaint is in the complimentary package offered at the end of this post):
As counsel of record, we submit this SOX whistleblower complaint on behalf of James Corcoran, who was terminated after complaining to senior management and ultimately the board of directors about material misstatements made by a publicly traded company which failed to correct those statements but instead fired him, as explained below.
CGIC's Statutory Financial Statements
During the preparation of this post, I reviewed the three most recent statutory financial statements that CGIC submitted to state insurance regulators: (1) the annual statement for the year ended December 31, 2019, and dated February 28, 2020; (2) the quarterly statement for the quarter ended March 31, 2020, and dated May 15, 2020; and (3) the quarterly statement for the quarter ended June 30, 2020, and dated August 14, 2020.

The first statement above showed Corcoran as one of the directors, but did not otherwise mention him. However, in the "Notes to Financial Statements," on page 19.18, under "Note 22 - Events Subsequent," the following statement appears:
On January 2, 2020, the Company received notification from the Texas Department of Insurance that a limited scope exam would be conducted as of December 19, 2019. The scope of the examination would focus on company operations including but not limited to corporate governance, related party activities, affiliated agreements and investment activities. The Company has complied with all request [sic] at this time.
The second and third financial statements above make no reference to Corcoran. Also, they do not appear to contain anything relevant to the subject matter of this post.

MG Capital's Report on HC2
MG Capital (MGC) describes itself as "a privately-held investment firm based in New York City that focuses on investing in complex, event-driven opportunities." MGC is a major shareholder in HC2. On April 13, 2020, MGC issued a 97-page, single-spaced report entitled "Time for a Better Board and Vision." The report is harshly critical of the HC2 board, including Falcone, and offers a replacement slate of directors. The MGC report may be found here.

General Observations
I think the CIGL Texas state court lawsuit against Corcoran is outrageous. At this time, however, I have no further comments because there are several related and important matters that are currently pending. Among them are the motion to compel arbitration, the SOX whistleblower complaint, and the ongoing investigation by the Texas Department of Insurance. I plan to follow and report on future developments.

Available Material
I am offering a complimentary 80-page package consisting of the CIGL complaint against Corcoran (25 pages), Corcoran's answer to the complaint including exhibits (49 pages), and Corcoran's SOX whistleblower complaint (6 pages). Email jmbelth@gmail.com and ask for the September 2020 package about Falcone.

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Wednesday, August 26, 2020

No. 389: Philip Falcone's Departure from His Public Company

Falcone and Kanawha
My first post mentioning Philip A. Falcone (CRD#1442413) was No. 242 (November 20, 2017). There I said a block of long-term care (LTC) insurance policies, originally issued by South Carolina-domiciled Kanawha Insurance Company, was being acquired by Continental General Insurance Company (CGIC), a subsidiary of HC2 Holdings Inc. (NYSE:HCHC). The Kanawha LTC block had been acquired earlier by Humana, but Falcone announced in late 2017 that CGIC was acquiring Kanawha's LTC block.

On July 12, 2018, the South Carolina director of insurance issued an order approving the merger of Kanawha into Texas-domiciled CGIC, and the redomestication of Kanawha from South Carolina to Texas. The order included a "continuing obligation of CGIC" that "Falcone shall not have any role in the day-to-day operations of Kanawha or CGIC pre- or post-merger." The order also included a requirement that HC2 maintain a certain risk-based capital ratio for CGIC.

Falcone and the SEC
In No. 244 (December 11, 2017), I discussed Falcone's settlements with the Securities and Exchange Commission (SEC). On August 16, 2013, Falcone and Harbinger Capital Holdings LLC, his New York hedge fund, settled two SEC complaints, admitted wrongdoing, and paid civil penalties of more than $18 million. Falcone agreed to be barred from the securities industry for at least five years, but he was not barred from serving as an officer or director of a public company. In 2014, Falcone became chairman, president, and chief executive officer of HC2. In HC2's filings with the SEC, there was no disclosure of Falcone's settlements with the SEC. Also, in CGIC's statutory filings with state insurance regulators, there was no disclosure of Falcone's settlements with the SEC; indeed, there was no mention of Falcone's name.

The Revolt
In No. 357 (February 25, 2020) I said Falcone was facing a shareholder revolt. On January 27, 2020, several disgruntled HC2 shareholders filed with the SEC some proxy material that included a letter to shareholders announcing a plan to file a preliminary proxy statement in which the disgruntled shareholders would solicit votes for the election of their own slate of directors. Here is the final section of the letter:
Time for a Change: Management's unsuitability, consistent under performance and self-dealing patently disqualify them from continuing to manage the Company. This is why we intend to run our own slate for the Company's board at the next meeting of shareholders as a matter of first priority. Management has wasted six years destroying shareholder value. It's time for a fresh approach.
A Glaring Omission
On February 11, 2020, HC2 filed with the SEC an 8-K (significant event) report. A press release was attached to the 8-K. The 8-K and the press release announced the appointment of an additional member to the board of directors, increasing the size of the board from five to six. However, the 8-K also included these comments, which inexplicably were omitted from the press release:
The Compensation Committee of the Board ... has determined that Philip A. Falcone ... will not receive any bonus or other incentive compensation in respect of 2019, whether under the HC2 Executive Bonus Plan ... or otherwise.... Additional information regarding these matters will be provided in the 2020 Proxy Statement.
Falcone's Compensation
On May 27, 2020, HC2 filed with the SEC some proxy material that included the 2019 summary compensation table. The table shows that for 2019 Falcone received $600,000 of salary and no other compensation. The same table shows that for 2018 he received $600,000 of salary and $10,935,545 of other compensation (stock awards, option awards, and non-equity executive plan compensation), for a total of $11,535,545. The report accompanying the summary compensation table includes an extensive discussion of Falcone's compensation.

Falcone's Departure
On July 6, 2020, HC2 issued a press release. It said, among other things:
The Company additionally announced that, in light of the recent change in the Company's executive management, Philip A. Falcone will not be included on the Company's slate of director nominees for the Annual Meeting [scheduled for July 30, 2020].
General Observations
I originally wrote about Falcone because of his involvement with Kanawha's LTC insurance block. Now that he is no longer connected in any way with that block, I do not plan to write further about him.

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Monday, August 24, 2020

No. 388: Greg Lindberg Heads to Prison

Background
No. 309 (April 17, 2019) was my first post about a federal criminal lawsuit against Greg E. Lindberg (Durham, North Carolina) and three associates. I provided updates in No. 320 (July 1, 2019), No. 338 (October 24, 2019), No. 355 (February 13, 2020), No. 361 (March 25, 2020), and No. 387 (August 13, 2020).

Lindberg is the founder and chairman of Eli Global LLC, an investment company, and the owner of Global Bankers Insurance Group, a managing company for numerous insurance and reinsurance companies. The other defendants 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.

The defendants were charged with conspiracy to commit honest services wire fraud, bribery concerning programs receiving federal funds, and aiding and abetting. Hayes was also charged with making false statements. The case is in federal court in Charlotte under U.S. District Judge Max O. Cogburn Jr. (See U.S.A. v. Lindberg, U.S. District Court, Western District of North Carolina, Case No. 5:19-cr-22.)

Recent Developments
On February 18, 2020, the trial began. The defendants in the trial were Lindberg, Gray, and Palermo. Hayes had pleaded guilty before the trial. On March 5, 2020, the jury found Lindberg and Gray guilty. The jury found Palermo not guilty.

Lindberg and Gray filed motions for a new trial; the judge denied the motions. The government filed a motion for forfeiture of property as to Lindberg and Gray; the judge granted the motion. The government filed a sentencing memorandum on Hayes, and requested probation.

On August 12, the government filed a sentencing memorandum on Lindberg and Gray. For Lindberg, the government asked for a sentence of 168 months in prison, followed by three years of supervised release, and a fine of $250,000. For Gray, the government asked for a sentence of 121 months in prison, followed by three years of supervised release, and a fine of $35,000.

On August 12, Lindberg filed a response to the government's sentencing memorandum. He asked for a sentence of 12 to 24 months.

On August 13, Gray filed a response to the government's sentencing memorandum. Citing his advanced age, his health conditions, and COVID-19, he asked for a sentence of home confinement.

On August 19, sentencing developments occurred. However, as of 5:00 p.m. on August 21, the court docket contained no information about the sentencing developments. I learned about the sentencing developments through articles in The Wall Street Journal and the Charlotte Observer, both of which have been following the case closely.

On the night of August 19, Mark Maremont and Leslie Scism of the Journal reported that Lindberg was sentenced to seven years and three months in prison. They reported that a Lindberg attorney told the judge Lindberg plans to appeal, and asked the judge to allow Lindberg to remain free pending the appeal. They reported that the judge denied the request and ordered Lindberg to report to prison when directed by prison officials. The Observer reported that Hayes was sentenced to probation. I do not yet know what sentence has been imposed on Gray.

General Observations
Lindberg presumably will appeal to the U.S. Court of Appeals for the Fourth Circuit in Richmond. I have not yet heard anything about the results of the investigation the judge ordered after he learned that a Lindberg consultant had conducted a "post-trial juror interview." I plan to report further developments.

Available Material
I am offering a complimentary 73-page package consisting of the August 12 government sentencing memorandum (18 pages), the August 12 Lindberg response (36 pages), and the August 13 Gray response (19 pages). Email jmbelth@gmail.com and ask for the second August 2020 package about Lindberg.

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Thursday, August 13, 2020

No. 387: Greg Lindberg—An Update on the Federal Criminal Case Against Him and His Associates

In No. 309 (April 17, 2019), I first reported on a federal criminal lawsuit against Greg E. Lindberg and his associates for their efforts to bribe the North Carolina commissioner of insurance. I have provided four updates: No. 320 (July 1, 2019), No. 338 (October 24, 2019), No. 355 (February 13, 2020), and No. 361 (March 25, 2020). In the latter, I reported on a March 18 court order directed at Lindberg and others when one of his associates contacted a juror after the trial and verdict. Here I provide another update, on two August 4 court orders. (See U.S.A. v. Lindberg, U.S. District Court, Western District of North Carolina, Case No. 5-19-cr-22.)

Background
Lindberg is the founder and chairman of Eli Global, LLC, an investment company, and the owner of Global Bankers Insurance Group, a managing company for numerous insurance and reinsurance companies. In March 2019, a federal grand jury charged Lindberg and three others with criminal wrongdoing. The others were: 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. The indictment charged the defendants with conspiracy to commit honest services wire fraud, bribery concerning programs receiving federal funds, and aiding and abetting. Hayes was also charged with making false statements.

On February 18, 2020, the trial began. The defendants were Lindberg, Gray, and Palermo. Hayes had pleaded guilty and was awaiting sentencing. The trial ended after eleven trial days. On March 5, the jury found Lindberg and Gray guilty on counts 1 and 2. The jury found Palermo not guilty on counts 1 and 2. On March 13, the government filed a motion for forfeiture of property as to Lindberg and Gray.

On March 18, the judge issued an order directed at Lindberg, Gray, and others after he learned that an individual affiliated with the defendants had spoken with a juror after the trial and verdict. Information from a "post-trial juror interview" could be used by the defendants in preparing appeals. The judge referred the matter to the local U.S. Attorney for investigation, and ordered that Lindberg, Gray, their attorneys, and their consultants refrain from contacting jurors during the investigation and until further order of the court.

On April 2, Lindberg and Gray filed motions for a new trial. On May 6, the government filed, under seal, presentence investigation reports on Lindberg and Gray. On May 13, the judge held a hearing on the government's motion for forfeiture of property. On May 20, Lindberg objected to the presentence investigation report on him. On June 3, Gray objected to the presentence investigation report on him.

The First August 4 Order
On August 4, the judge issued an order granting the government's motion for forfeiture of property as to Lindberg and Gray. Here is part of the concluding section of the order (the full order is in the complimentary package offered at the end of this post):
It is, therefore, ordered that the Government's motion for Preliminary Order of Forfeiture is granted, as follows:
  1. Based on the trial evidence and defendants' convictions, the United States is authorized to take and maintain possession of the following property, and that property is hereby preliminarily forfeited to the United States for disposition according to law, provided that such forfeiture is not subject to any third-party claims and interests, pending final adjudication:
    • Approximately $979,128.63 in funds seized from a Wells Fargo Bank Account ending in 0809, such account held in the name of North Carolina Growth and Prosperity Alliance, Inc.; and
    • Approximately $475,629.82 in funds seized from a Wells Fargo Bank Account ending in 0817, such account held in the name of North Carolina Growth and Prosperity Committee, Inc.
  2. The Government shall publish notice of this order....
  3. Upon adjudication of all third-party interests, this Court will enter a Final Order of Forfeiture. If no third party files a petition within the time provided by law, then this Order shall become final by operation of law.....
The Second August 4 Order
Also on August 4, the judge issued an order denying the motions of Lindberg and Gray for a new trial. Here is part of the concluding section of the order (the full order is in the complimentary package offered at the end of this post):
After a three-week trial and three days of deliberation, a properly instructed jury considered the relevant evidence and found the defendants guilty of conspiring to commit honest services fraud and of federal funds bribery, based on their offers to provide the Commissioner of the North Carolina Department of Insurance with millions of dollars in campaign contributions in exchange for removing and replacing his Senior Deputy Commissioner as the employee responsible for regulating the defendants' companies. Contrary to the defendants' assertions, the law and evidence supported that verdict. Thus, the Motions for Judgment of Acquittal and for New Trial are denied....
The Government's Sentencing Memorandum on Hayes
On August 10, the government filed, not under seal, its sentencing memorandum on Hayes. Here is the concluding paragraph (the full memorandum is in the complimentary package offered at the end of this post):
For the foregoing reasons, the government respectfully requests that the Court determine that the defendant's Guidelines offense level is 4 and his Criminal History Level is 1. The government further respectfully requests that, taking into consideration the sentencing factors set forth in section 3553(a), the Court sentence the defendant to probation.
General Observations
This case has a long way to go. For example, it is likely the defendants will appeal the verdict to the U.S. Court of Appeals for the Fourth Circuit. I plan to continue reporting on developments in the case.

The March 18 order suggests that the judge was concerned about the post-trial juror interview. I have not yet heard anything about the results of the investigation the judge requested.

Available Material
I am offering a complimentary 74-page package consisting of the first August 4 order (14 pages), the second August 4 order (55 pages), and the government's sentencing memorandum on Hayes (5 pages). Email jmbelth@gmail.com and ask for the August 2020 package about Lindberg.

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Monday, August 10, 2020

No. 386: SHIP (In Rehabilitation) Sends an Important Notice to Policyholders and Others

In No. 368 (May 1, 2020), I wrote about the proposed plan of rehabilitation of Senior Health Insurance Company of Pennsylvania (SHIP). On July 10, 2020, SHIP (In Rehabilitation) sent policyholders and other interested parties a 19-page "Important Notice to Policyholders, Agents, Creditors, and Persons Interested in the Affairs of Senior Health Insurance Company of Pennsylvania (In Rehabilitation)" ("Notice"). The Notice did not appear on the SHIP website or on the website of the Pennsylvania Department of Insurance (Department). I learned of the Notice from a SHIP policyholder. I asked the Department for a copy of the Notice, and the Department sent it to me.

The Notice
The Notice includes a table of contents, a cover letter from Special Deputy Rehabilitator Patrick H. Cantillo, a "Notice of Application for Approval of Plan of Rehabilitation," "Frequently Asked Questions and Answers," and a "Summary Description of the Plan." The Notice is here.

The Liquidation Issue
Two of the frequently asked questions relate to the liquidation issue. Here are those questions and answers:
Question 11. Is there a possibility that the Company will be liquidated? Yes, liquidation is possible. The Commonwealth Court of Pennsylvania could decide at some time in the future to place SHIP into liquidation.
Question 12: What would happen if the Company was liquidated? In the event that SHIP would be ordered into liquidation, it is probable that state insurance guaranty associations would continue coverage for policyholders up to applicable statutory coverage limits. Generally, guaranty associations become responsible for an insurer's obligations only if the insurer is found by the court to be insolvent and placed in liquidation. SHIP has not been found by the court to be insolvent and has not been placed in liquidation. Therefore, no guaranty association is responsible for SHIP's policy obligations at this time. That will change if SHIP is placed in liquidation. All states other than New Jersey cap the amount of guaranty association coverage available for their residents. It is also likely, based on past experience, that the guaranty associations if triggered in a liquidation of SHIP would raise the insurance rates policyholders are required to pay and offer policy modification options in lieu of rate increases. For information about state guaranty associations, please visit www.nolhga.com.
General Observations
The above discussion of liquidation, especially the answer to Question 12, is a disservice to policyholders because it is misleading. A company is solvent when its assets exceed its liabilities. A company is insolvent when its liabilities exceed its assets. While it is true that "SHIP has not been found by the court to be insolvent and has not been placed in liquidation," the reason is that the court was not asked to make such a finding.

On January 23, 2020, as discussed in No. 368, the Department applied to the court for an order placing SHIP in rehabilitation. The application showed that SHIP has been insolvent for some time. The application said SHIP's statutory financial statement for the year ended December 31, 2018 showed that SHIP's liabilities exceeded its assets by $447 million. The application also said SHIP's liabilities exceeded its assets at the end of 2019 by $916 million.

On January 29, 2020, President Judge Mary Hannah Leavitt of the Commonwealth Court of Pennsylvania approved the application because "rehabilitation has been requested by and consented to by SHIP's board of directors and the trustees of the Senior Health Care Oversight Trust." In short, it is misleading to imply or suggest that SHIP is not insolvent.

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Friday, August 7, 2020

No. 385: Executive Compensation in the Insurance Industry—2019 Data from 2020 NYDFS Filings

Background
The Insurance Forum, my monthly newsletter, began with the January 1974 issue and ended with the December 2013 issue. In 1975 I began publishing data on executive compensation in the insurance industry. Chapter 24 of my 2015 book, The Insurance Forum: A Memoir, describes the history of my executive compensation tabulations and the efforts of the insurance industry and insurance regulators to block my access to the data.

Most of the efforts to block access involved two organizations. One was the New York Department of Insurance, which is now the New York State Department of Financial Services (NYDFS). The other was the National Association of Insurance Commissioners. Some of those efforts were successful and some were not. However, I never encountered problems with access to data filed by shareholder-owned insurance companies with the Securities and Exchange Commission (SEC).

Since ending publication of the Forum, I have from time to time published executive compensation data through blog posts. In No. 335 (October 3, 2019), I published data for 2018 from my three major sources—SEC, NYDFS, and the Nebraska Department of Insurance (NDOI). No. 381 (July 13, 2020) showed data from the SEC for 2019. Here I show 2019 data from NYFDS. I plan to show 2019 data from NDOI later.

NYDFS Data
During the final seven years of the Forum, I showed data for individuals who received at least $1 million in the year covered. In the tabulation of SEC data in No. 381, I showed data for individuals who received at least $5 million in 2019. In the tabulation of NYDFS data for 2019, which is at the end of this post, I show data for individuals who received at least $5 million in 2019.

NYDFS data are filed by life insurance companies doing business in New York State, and by health insurance companies doing business there. The data are from the 2019 "Schedule G," which is in the New York Supplement to the statutory annual statement. I obtained the Schedule Gs through a request pursuant to the New York State Freedom of Information Law. The Life Bureau of NYDFS sent Schedule Gs for life insurance companies, and the Health Bureau of NYDFS sent Schedule Gs for health insurance companies. Both bureaus provided the Schedule Gs by email without charge. The Schedule Gs for life insurance companies differ significantly from the Schedule Gs for health insurance companies.

The Schedules Gs for life insurance companies show one figure for each individual. It is "the aggregate amount (any and all remuneration, including all wages, salaries, commissions, stock grants, gains from the exercise of stock options and other emoluments) received by the payee attributable to services performed for, or on behalf of, the reporting insurer, regardless of whether the payee is employed and paid by the insurer or a related or affiliated company."

Pursuant to changes made several years ago in the New York State executive compensation disclosure statute to curtail the amount of compensation data available to the public, the names of individuals are sometimes redacted, so that the Schedule Gs sometimes show only the amounts of compensation and the titles of certain individuals. In those instances, I show the individual's title and the amount of compensation.

The Schedule Gs for health insurance companies show four figures for each individual: (1) "salary paid by company and all other companies in holding company system," (2) "bonus & all other compensation deferred or paid by company and all other companies in holding company system," (3) "total amount paid by company and all other companies in holding company system," and (4) "amount paid by or amount allocated to company." I show the third of those four figures, which is the sum of the first two figures.

Available Material
The Insurance Forum: A Memoir and back issues of the Forum containing executive compensation tabulations are available for purchase from us. The final tabulation in the Forum was in the July 2013 issue. Ordering instructions are on our website at theinsuranceforum.com.

NYDFS Data for 2019
Life Insurance Companies
4 Ever Life Ins Co
Howard F Beacham III
$21,435,850
Aetna Life Ins Co
(Acquired by CVS Health)
Shawn Guertin
13,932,726
Karen S Lynch
10,378,329
Francis S Soistman
9,715,997
Rick M Jelinek
8,901,756
Gary Loveman
8,241,026
Harold L Paz
7,721,889
EVP, Ops & Technology
7,654,564
EVP Transformtn Prod&Svcs
5,226,206
American Progressive L&H NY 
Kenneth Alan Burdick
30,591,021
Andrew Lynn Asher
7,569,905
Michael Polen
5,688,238
Kelly Munson
5,681,238
AXA Equitable Life Ins Co
Mark Pearson
6,295,388
First Health Life & Health Ins Co
Richard M Jelinek
9,658,380
Karen S Lynch
8,673,924
Globe Life Ins Co of New York
Frank Martin Svoboda
9,359,904
William Michael Pressley
6,474,615
Bill E Leavell
5,400,498
Guardian Life Ins Co of America
Deanna Mulligan
8,606,700
Tracy L Rich
6,418,359
Lincoln Life Assur Co of Boston
Dennis R Glass
28,328,586
Randal J Freitag
7,747,825
Wilford H Fuller
7,332,269
Ellen G Cooper
6,073,150
Lincoln Life & Annuity Co of NY
Dennis R Glass
28,328,586
Randal J Freitag
7,747,825
Ellen G Cooper
6,073,150
Lisa M Buckingham
5,169,731
Massachusetts Mutual Life Ins Co
Roger Crandall
14,962,537
Michel Fanning
6,353,541
Metropolitan Life Ins Co
Michel Abbas Khalaf
6,505,805
President & CEO
6,505,805
EVP & Chief Inv Officer
6,338,392
National Life Ins Co
Mehran Assadi
7,788,000
New York Life Insurance Co
Theodore A Mathas
24,007,290
John T Fleurant
7,399,533
Craig L Desanto
5,452,283
Anthony R Malloy
5,246,200
Northwestern Mutual Life Ins Co
John E Schlifske
13,692,772
Penn Mutual Life Insurance Co
Eileen McDonnell
5,596,160
Principal Life Insurance Co
Karl W Nolin
7,113,249
Daniel Joseph Houston
7,000,237
Mustafa Sagun
5,232,118
Prudential Ins Co of America
Charles Lowrey
5,165,400
Teachers Ins & Annuity Assn
Roger Ferguson
6,252,325
Unimerica Life Ins Co of NY
Treasurer
5,200,218
Voya Retirement Ins & Annuity Co
Charles Patrick Nelson
5,427,369
Health Insurance Companies
Anthem Ins Cos Inc
Gail A Koziara Boudreaux
$15,140,012
Felicia Farr Norwood
7,477,529
Joseph R Swedish
5,741,268
Gloria M McCarthy
5,176,605
John E Gallina
5,145,205
Hallmark Life Insurance Co
Michael Frederic Neidorff
39,986,323
Jeffrey Alan Schwaneke
9,176,387
Jesse Nathan Hunter
8,151,558
Keith Harvey Williamson
5,372,460
Mutual of Omaha Ins Co
James T Blackledge
7,846,887
MVP Health Insurance Co
Denise Gomick
5,683,195
UnitedHealthcare Ins Co of NY
Peter Marshall Gill
5,200,218
WellCare Health Ins of NY Inc
Kenneth A Burdick
30,591,020
Andrew Lynn Asher
7,569,904
Mike Polen
5,688,239
KellyAnn Munson
5,681,239

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