Tuesday, February 2, 2021

No. 408: A Recent Change in the Federal Income Tax Law Designed to Benefit Wealthy Life Insurance Policyholders

On January 10, 2021, The Wall Street Journal posted online an article by reporter Leslie Scism entitled "A Small Tax Change Is a Boon for Permanent Life Insurance." The next day, the print edition of the Journal carried on page B8 a revised version entitled "Tax Change Aids Life Insurance." Here are the first few sentences of the latter article:
Federal lawmakers' big year-end spending package includes a little-noticed revision of the tax code that is likely to boost sales of life insurance, particularly for wealthy Americans. The law lowers a minimum interest rate used to determine whether combination savings and death benefit policies known as permanent life insurance are too much like investments to qualify for tax advantages granted to insurance. The interest-rate floor was put in place in 1984 to weed out policies that were mostly investment vehicles with a thin layer of life insurance. Lowering the rate allows owners to put more in the savings portion.
Here I discuss in more detail the federal income tax advantages of cash-value life insurance. I also provide further background on the history of the federal income tax definition of cash-value life insurance.

Federal Income Taxation of Life Insurance
To understand the implications of the recent change, it is necessary to understand the history of the 1984 change in the tax code. That was a time of high market interest rates, far different from today's low market interest rates. Also, it is necessary to understand two extremely important income tax advantages of cash-value life insurance: (1) the "inside interest" in a cash-value life insurance policy is income-tax deferred, and (2) upon the death of the insured person, the death benefit paid to the beneficiary is income-tax exempt.

The Minimum Deposit Plan
One of my early encounters with clever marketers of cash-value life insurance involved the "minimum deposit plan." It was also called "minnie dee" or "minnie dip." To illustrate, Jones bought a favorably priced $100,000 participating whole life policy in 1950 at age 35. He used the minimum deposit plan; that is, each year he paid as little as possible to keep the policy in force. He paid the annual premium, deducted any dividend, borrowed as much as possible under the automatic premium loan clause, paid interest on the policy loan, and on his income tax returns he took a deduction for the policy loan interest he paid. Thus he essentially converted the policy from a level premium, level death benefit, whole life policy with nondeductible premiums into a term policy with a decreasing death benefit and deductible premiums. Or so he thought.

At the end of 1972, after 22 years, Jones decided to end the policy by allowing it to lapse. At that point, the cash value and the amount of the loan were each around $40,000. His income tax return filed in 1973 for the 1972 tax year showed a large deduction for the policy loan interest he had paid in 1972 and had deducted on his tax return for 1972. However, his tax return for 1973 filed in 1974 showed no deduction for policy loan interest paid in 1973. That triggered an Internal Revenue Service audit, which resulted in a whopping tax bill with penalties, as though he had surrendered an old participating whole life policy, which was exactly what he had done.

The Emergence of Universal Life
During the 1960s and 1970s, I often wrote about the need for rigorous disclosure of the price of the life insurance protection component of cash-value life insurance policies, and the need for rigorous disclosure of the rate of return on the savings component of those policies. In my writings, I viewed cash-value life insurance as a combination of a protection component and a savings component. It is a major understatement to say that the life insurance industry was not happy with my writings.

In the late 1970s, market interest rates were high and rising, and universal life insurance—which was also referred to as flexible-premium life insurance—burst on the scene. I will never forget a letter I received in 1979 from an official of one of the companies promoting universal life. He said: "Joe, I hope you're satisfied." The reason for his comment was that one of the claimed advantages of universal life was so-called transparency; that is, the separation of the protection and savings components. Unfortunately, while transparency sounded good, it did not provide adequate disclosure of the price of the protection component and the rate of return on the savings component. Instead, it created a new family of deceptive sales practices.

An Example of Universal Life Deception
In the May 1984 issue of my monthly newsletter, The Insurance Forum, I wrote an article entitled "How Not to Advertise Universal Life." The article focused on a deceptive newspaper advertisement by Indianapolis-based Golden Rule Insurance Company. The article, including a replica of the advertisement, is in the complimentary package offered at the end of this post.

The 1984 Change in the Tax Law
I asked representatives of the American Council of Life Insurers (ACLI), which had lobbied for the 2021 change in the tax law, whether they could provide me with material about the 1984 change. They said they could not locate any such material. Therefore, I will describe what happened, based on my memory.

As market interest rose in the 1970s, clever promoters of life insurance often sold their wealthy clients on the idea of buying a small universal life policy and pouring a large amount of money into the policy in order to benefit from the income-tax deferred inside interest and the income-tax exempt death benefit. That abuse of the income tax system became too much for the Internal Revenue Service and Congress to tolerate. Thus a change was made in the tax code in 1984 to define life insurance in such a way as to prevent the abuse. The tax law was amended to make such an arrangement subject to taxation as an ordinary investment rather than as a life insurance policy.

The 2021 Change in the Tax Law
Today, however, low market interest rates have threatened the viability and the very survival of cash-value life insurance. Thus the life insurance industry, through the ACLI, lobbied Congress to change the definition of life insurance in the tax code in such a way as to preserve cash-value life insurance as a viable financial instrument.

The definition in the new tax provision requires a policy to pass at least one of two tests in order to qualify as life insurance for tax purposes: a cash-value accumulation test (CVAT), or a guideline-premium test (GPT). If a policy fails both tests, the policy is called a modified endowment contract (MEC), and is taxed as an investment vehicle rather than as a life insurance policy. A statement by the ACLI about the 2021 change is in the complimentary package at the end of this post, along with a statement by Bobby Samuelson, editor of The Life Product Review and a nationally-recognized expert on policy design.

General Observations
The January 2021 change in the income tax law, as lobbied for by the ACLI, is an important development in the history of the life insurance business. In this post, I do not attempt to explain the complex changes in the income tax law. However, I urge readers to request the complimentary 14-page package offered below.

Available Material
I am offering a complimentary 14-page PDF consisting of the May 1984 Forum article (2 pages), the ACLI statement on the 2021 tax changes (3 pages), and the Samuelson statement on those changes (9 pages). Email jmbelth@gmail.com and ask for the February 2021 package about the changes in the income tax law relating to cash-value life insurance. 

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Monday, January 25, 2021

No. 407: Security Life of Denver Is the Defendant in an Ongoing 2018 Cost-of-Insurance Class Action Lawsuit

The July 2018 Complaint
On July 26, 2018, Advance Trust & Life Escrow Services (Advance Trust) filed a cost-of-insurance class action lawsuit against Security Life of Denver Insurance Company (Security Life), a subsidiary of Voya Financial, Inc. (Voya). The complaint contains a single count of breach of contract. The complaint is in the complimentary package offered at the end of this post. On August 28, 2018, Security Life answered the complaint. (See Advance Trust v. Security Life, U.S. District Court, District of Colorado, Case No. 1-18-cv-1897.)

The Judge
The case is in the hands of U.S. District Court Judge Daniel D. Domenico. President Trump nominated him in January 2019. The Senate confirmed him in April 2019 by a vote of 55-42 along party lines.

Advance Trust's Motion to Certify a Class
On August 23, 2019, Advance Trust filed a motion to certify a class. On April 13, 2020, after extensive briefing, the judge denied without prejudice Advance Trust's motion to certify a class.

Security Life's Motion for Summary Judgment
On July 22, 2020, Security Life filed a motion for summary judgment. Interestingly, Security Life said in its motion that Advance Trust is a securities intermediary for Life Partners Position Holders Trust (Trust), which owns five universal life insurance policies originally issued by Security Life, and that the Trust is a successor owner, through bankruptcy, of a company that purchased the policies from the original policyholders in the secondary market. Brian Pardo's Life Partners Holdings, Inc. filed for bankruptcy protection on January 20, 2015. See, for example, No. 81 (January 22, 2015). Security Life's motion for summary judgment is in the complimentary package offered at the end of this post.

The Judge's Order
On January 6, 2021, after extensive briefing, the judge granted Security Life's motion for summary judgment in part, denied the motion in part, and preliminarily certified a class of policyholders. The judge's order, which prompted me to prepare this post, is in the complimentary package offered at the end of this post.

General Observations
Despite the fact that this case is in its 18th month, it still has a long way to go. Fairly soon we should learn what the members of the class will be told when they are notified of the existence of the lawsuit. Farther down the road, we will probably learn what type of settlement may be reached. I plan to follow developments in the case.

Available Material
I am offering a complimentary 71-page PDF consisting of the July 2018 complaint (26 pages), Security Life's motion for summary judgment (21 pages), and the judge's January 2021 order (24 pages). Email jmbelth@gmail.com and ask for the January 2021 package relating to the case of Advance Trust v. Security Life.

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Friday, January 8, 2021

No. 406: Genworth and Oceanwide—Recent Developments

The January 4 Genworth/Oceanwide Update
On October 21, 2016, Genworth Financial Inc, (Genworth) entered into a merger agreement with China Oceanwide (Oceanwide). Since then, the parties have entered into "waiver agreements," under which the parties extended the "end date" in the merger agreement. On October 1, 2020, Genworth said the parties had entered into a 16th waiver agreement under which they extended the end date to December 31, 2020. On January 4, 2021, Genworth and Oceanwide issued an update in which they said in part (the full update is in the complimentary package offered at the end of this post):
Given uncertainty around the completion and timing of the remaining steps required to close the transaction, Genworth and Oceanwide have not extended the current December 31, 2020 "end date" under the merger agreement. Oceanwide has indicated that the factors contributing to the delay since the parties agreed to their most recent extension of the merger agreement on November 30, 2020, were: (a) the finalization of the Hony Capital financing terms; and (b) the COVID-19 pandemic and associated restrictions. However, the merger agreement remains in effect, although either party is able to terminate the merger agreement at any time. Genworth has shared that it will continue to work towards closing the transaction, and Genworth remains open to completing the transaction if Oceanwide completes the remaining steps.
The January 4 Genworth News Release
On January 4, Genworth issued a news release announcing it will hold a special topics call with Genworth's CEO on January 5 at 8:00 a.m. to discuss the recent update relating to Oceanwide. Genworth said a replay of the call will be available until January 19 at (888) 203-1112 (U.S.) or (719) 457-0820 (outside the U.S.) The conference ID is # 3039080. The webcast will also be archived on the company's website for one year.

The January 4 Genworth 8-K Report
On January 4, Genworth filed an 8-K (significant event) report with the Securities and Exchange Commission. Among other things, the above mentioned January 4 Genworth/Oceanwide Update was included.

Available Material
I am offering a complimentary 8-page PDF consisting of the January 4 Genworth/Oceanwide Update (6 pages) and the January 4 Genworth News Release (2 pages). Email jmbelth@gmail.com and ask for the January 2021 package relating to Genworth and Oceanwide.

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Wednesday, January 6, 2021

No. 405: American National and Lincoln Benefit Are the Defendants in Two Similar Class Action Lawsuits

American National Insurance Company (ANIC) and Lincoln Benefit Life Company (LBL) are the defendants in two similar class action lawsuits. The cases were filed in December 2020 by the same plaintiffs' attorneys, and in the Central and Eastern federal district courts in California. The cases are discussed briefly in this post.

The Complaint Against ANIC
The complaint against ANIC was filed on December 10. The named plaintiffs are Myra Steen and Janet Williams. Here are portions of the "Nature of the Case" section of the complaint:
Since January 1, 2013, ANIC and other related entities have systematically and purposely failed to provide certain classes of policy owners, insureds, assignees and others, proper notices of pending lapse or termination. ANIC has failed to notify thousands of policy owners of their right to designate someone to receive critical notices and information regarding life insurance despite being required to do so on an annual basis. All of these important safeguards are required by, among other sources, California Insurance Code Sections 10113.71 and 10113.72. California law requires strict compliance with these safeguards and ANIC refuses to comply.
As a result, ANIC has failed to properly administer policies, evaluate the status of payments due under policies and pay claims to beneficiaries for policies improperly lapsed or terminated. Indeed, thousands of policy owners and beneficiaries have lost, and continue to lose, the benefit, value and security of their life insurance; have been, and continue to be, forced into unnecessary reinstatements; and in many instances have lost all reasonable access to any insurance at all.
The complaint against ANIC includes four counts: two counts seeking declaratory judgment relief, one count for breach of contract, and one count of unfair competition under California law. The full complaint against ANIC is in the complimentary package offered at the end of this post. (See Steen v. ANIC, U.S. District Court, Central District of California, Case No. 2:20-cv-11226.)

The Complaint Against LBL
The complaint against LBL was filed on December 16. The named plaintiff is Deana Farley. Much of the language in the complaint against LBL is similar or identical to the language in the complaint against ANIC. The full complaint against LBL is in the complimentary package offered at the end of this post. (See Farley v. LBL, U.S. District Court, Eastern District of California, Case No. 2:20-cv-2485.)

My Email to Craig Nicholas
Craig M. Nicholas of the San Diego firm of Nicholas & Tomasevic is one of the plaintiffs' attorneys who signed the complaints in the ANIC and LBL cases. On December 28, I sent Nicholas an email. After identifying myself, I asked two questions: first, whether he is aware of other similar lawsuits filed against insurance companies, and, if so, to identify them; and second, whether he anticipates further similar cases, and, if so, to identify them when they are filed. I gave him my telephone number if he wished to speak with me. I asked him to respond to my email by 5:00 pm Eastern time on January 4. I received no reply.

General Observations
The ANIC and LBL cases are similar or identical to one another in many respects. Also, the cases contain serious allegations of wrongdoing. Finally, it is interesting that the cases were filed only a few days apart in different federal district courts in California. I perused lists of cases in the other two California districts—the Northern and Southern districts—to see if I could spot any other similar cases. I did not see any other similar cases. I plan to write further about these cases.

Available Material
I am offering a complimentary 52-page PDF consisting of the complaint in the ANIC case (28 pages) and the complaint in the LBL case (24 pages). Email jmbelth@gmail.com and ask for the January 2021 package about the ANIC and LBL cases.

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Wednesday, December 23, 2020

No. 404: Executive Compensation in the Insurance Industry—2019 Data from the Nebraska Department of Insurance

Background
Beginning in 1975, in many issues of The Insurance Forum, I provided tabulations of executive compensation data in the insurance industry. The final tabulation was in the July 2013 issue, because the Forum ended with the December 2013 issue. From time to time since then, I have posted some executive compensation data on my blog. Recent tabulations include No. 335 (October 3, 2019), where I showed 2018 data from my three sources of information: the Securities and Exchange Commission (SEC), the New York State Department of Financial Services (DFS), and the Nebraska Department of Insurance (NDI). In No. 381 (July 13, 2020), I showed 2019 data from the SEC. In No. 385 (August 7, 2020), I showed 2019 data from the DFS. Here I show 2019 data from the NDI.

NDI Data for 2019
NDI data are in a "Supplemental Compensation Exhibit" (Exhibit) filed by each insurance company doing business in Nebraska. Each Exhibit normally shows figures for the ten top company officials. The figure I show for each individual is the "total." Components of the "total" are "salary," "bonus," "stock awards," "option awards," "sign-on payments," "severance payments," and "all other compensation." NDI provides all the Exhibits on a CD to any member of the public for $80.

In the tabulation below, I show data for individuals who received at least $5 million in 2019. Where two or more individuals in a company are shown, they are listed in descending order of compensation.

The Allocation Problem and a Modification
Where companies are members of a holding company group, some companies show the total amount received by each individual from all companies in the holding company group. Some companies, however, allocate each individual's compensation to each company in the holding company group.

For companies that allocate, the difficulty in locating all companies doing business in Nebraska that are part of a holding company group has become increasingly prohibitive. For that reason, I have modified the tabulation shown below from past years in that this year I did not attempt to assemble the group data. I have instead shown the figures for the company with the largest dollar amounts for each group.

For some individuals listed below, because of the modification, the compensation figure shown is smaller, and in some instances probably much smaller, than the individual's total compensation from all members of the holding company group. Also, because of the modification, some companies probably are not listed because no individual had at least $5 million of compensation from a single company in their group.

NDI Data for 2019
Acuity, A Mutual Ins Co
Benjamin M Salzmann
$16,347,333
Aetna Life Ins Co
Richard M Jelinek
9,658,380
Karen S Lynch
8,673,924
AFLAC Inc
Daniel P Amos
14,744,603
Frederick J Crawford
5,505,399
Allianz Life Ins North America
Walter R White
6,746,838
Allstate Ins Co
Thomas J Wilson
16,261,339
Steven E Shebik
5,915,393
AMBAC Assurance Corp
Claude LeBlanc
5,289,234
American Family Ins Co
Jack C Salzwedel
11,251,032
American General Life Ins Co
Kevin Hogan
9,411,779
American United Life Ins Co
James S Davison
6,064,438
Amguard Ins Co
Sy Foguel
5,299,791
Assured Guaranty Corp
Dominic Frederico
12,736,290
Assurity Life Ins Co
Thomas E Henning
7,814,132
Athene Annuity & Life Assur Co
James Belardi
5,007,098
Atlantic Specialty Ins
Timothy M Miller
5,036,019
AXA Equitable Life Ins Co
Mark Pearson
6,295,387
BCS Ins Co
Howard F Beacham III
21,435,850
Brighthouse Life Ins Co
Eric T Steigerwalt
8,229,713
Care Improvement Plus of Texas
Janice Clayton Zigler
5,428,024
Chicago Title Ins Co
Raymond Randall Quirk
14,579,836
Roger Scott Jewkes
8,729,398
Michael Joseph Nolan
7,157,620
Anthny John Park
5,344,120
Chubb Indemnity Ins Co
John J Lupica
6,030,000
Paul J Krump
5,003,500
Continental Casualty Co
Dina Robusto
9,135,270
Employers Assurance Co
Douglas Dean Dirks
5,315,872
Essent Guaranty Inc
Mark Casale
7,636,915
Everest Reinsurance Co
Dominic J Addesso
10,759,779
Juan C Andrade
10,481,729
Farmers Ins Exchange
Jeffrey J Dailey
7,853,208
First American Title Ins Co
Dennis Gilmore
8,588,389
GEICO Casualty Co
Olza Minor Nicely
15,452,510
William Evan Roberts
7,789,401
Genworth Life Ins Co
Thomas McInerney
9,115,260
Globe Life & Accident Ins Co
Frank M Svoboda
9,359,904
William M Pressley
6,474,615
Bill E Leavell
5,400,498
Great American Ins Co
Carl H Lindner III
10,284,610
Great-West Life Assur Co (US)
Robert Shaw
7,638,745
Andra S Bolotin
5,902,744
Edmund F Murphy
5,215,422
Guardian Life Ins Co of America
Deanna Mulligan
8,606,700
Tracy L Rich
6,418,359
Hartford Fire Ins Co
Christopher Swift
6,175,641
Health Care Service Corp
Paula Steiner
31,013,500
Eric Feldstein
7,471,886
David Lesar
6,038,111
Horace Mann Ins Co
Marita Zuraitis
7,429,404
Humana Ins Co
Bruce D Broussard
24,635,360
Illinois Ins Co
Steven Menzies
10,657,018
Insurance Co of the West
Kevin Prior
13,694,265
Ernest Rady
5,861,143
Jackson National Life Ins Co
Paul C Myers
7,008,073
John Hancock Life Ins Co USA
Daniel Janis III
6,692,374
Emory Sanders Jr
5,765,776
Christopher Conkey
5,264,701
Liberty Mutual Ins Co
David H Long
12,701,326
Timothy Sweeney
5,341,983
Lincoln National Life Ins Co
Dennis R Glass
28,328,586
Randal J Freitag
7,747,826
Wilford H Fuller
7,332,269
Ellen G Cooper
6,073,150
Lisa M Buckingham
5,169,731
Massachusetts Mutual Life Ins Co
Roger Crandall
17,808,738
Elizabeth Chicares
6,933,041
Michael Fanning
6,420,327
Melvin T Corbett
6,337,670
Metropolitan Life Ins Co
Michel Khalaf
6,505,805
Steven J Goulart
6,338,392
Mortgage Guaranty Ins Corp
Patrick Sinks
7,389,088
National Western Life Ins Co
Ross R Moody
6,831,982
National Life Ins Co
Mehran Assadi
7,788,000
New York Life Ins Co
Theodore A Mathas
24,007,290
Craig L DeSanto
5,452,283
Anthony R Malloy
5,246,200
Northwestern Mutual Life Ins Co
John E Schlifske
13,692,772
Ohio National Life Ins Co
Gary Thomas Huffman
8,955,246
Pacific Life Ins Co
James T Morris
8,290,370
Penn Mutual Life Ins Co
Eileen McDonnell
5,596,160
Philadelphia Indemnity Ins Co
Robert D O'Leary
5,146,147
Principal Life Ins Co
Karl W Nolin
7,113,249
Daniel J Houston
7,000,237
Mustafa Sagun
5,232,118
Protective Life Ins Co
John Johns
11,046,696
Richard Bielen
6,749,265
Prudential Ins Co of America
Mark Brown Grier
7,633,867
Charles F Lowrey
6,854,886
Robert Michael Falzon
5,296,179
Stephen Pelletier
5,220,842
QCC Ins Co
Daniel J Hilferty
5,718,026
Radian Guaranty Inc
Richard Thornberry
9,040,149
Sagicor Life Ins Co
Dodridge Miller
12,468,464
Scor Reinsurance Co
Mark Kociancic
6,918,899
Selective Ins Co of America
Gregory Murphy
5,330,094
Standard Ins Co
John Gregory Ness
9,161,498
Starr Indemnity & Liability Co
Maurice R Greenberg
10,802,945
State Farm Mutual
Michael Leon Tipsord
10,271,892
Teachers Ins & Annuity Assn
Ronald Pressman
8,546,026
Roger Ferguson
6,252,325
Thrivent Financial for Lutherans
Bradford L Hewitt
7,013,638
Transatlantic Reinsurance Co
Michael C Sapnar
6,884,413
Kenneth Apfel
5,607,047
Travelers Casualty Co
Alan D Schnitzer
15,303,458
Willaim H Heyman
6,389,000
Avrohom J Kess
6,067,301
Jay S Benet
5,023,442
United of Omaha Life Ins Co
James T Blackledge
5,093,821
United States Liability Ins Co
Thomas P Nemey
21,417,692
Voya Retirement Ins & Annuity
Charles Patrick Nelson
5,427,368
Western & Southern Life Ins Co
John Barrett
9,499,300

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Thursday, December 17, 2020

No. 403: General Electric Enters into a $200 Million Settlement with the Securities and Exchange Commission

In No. 395 (October 26, 2020), I said General Electric Company (GE) had received a Wells notice on September 30, 2020 from the staff of the Securities and Exchange Commission (SEC). The notice related to an SEC investigation of, among other things, GE's inadequate reserves for its legacy long-term care (LTC) insurance business. On December 9, 2020, GE filed an 8-K (significant event) report disclosing that GE and the SEC had entered into a $200 million settlement to end the previously disclosed SEC investigation.

The GE 8-K
In the 8-K, GE said it had reached a settlement in connection with the SEC investigation. GE went on to say (the relevant section of the 8-K is in the complimentary package offered at the end of this post):
Consistent with common SEC practice, GE neither admits nor denies the findings in the administrative order that the SEC issued today. Under the terms of the settlement, GE consented to the entry of an order requiring it to pay a civil penalty of $200 million and to cease and desist from violations of specified provisions of the federal securities laws and rules promulgated thereunder.
The SEC Order
A paragraph near the beginning of the SEC Order Instituting Cease-and-Desist Proceedings reads as follows (the full Order is in the complimentary package offered at the end of this post):
In anticipation of the institution of these proceedings, Respondent [GE] has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over it and the subject matter of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, as set forth below.
No Admission of Wrongdoing
The "neither admits nor denies" language is an important part of the GE/SEC settlement. In No. 244 (December 11, 2017), I wrote about an SEC settlement in August 2013 with Philip A. Falcone and companies associated with him. There I quoted at some length from a January 2014 speech by then SEC Chair Mary Jo White. Here is a brief, edited description of what she said:
For many years, the SEC, like virtually every other civil law enforcement agency, typically did not require entities or individuals to admit wrongdoing in order to enter into a settlement. This no admit/no deny settlement protocol makes sense and has served the public interest well. She cited such things as more and quicker settlements and avoidance of litigation risk. So why modify the no admit/no deny protocol? She cited such things as a greater measure of public accountability and the need for public confidence in the strength and credibility of law enforcement. She said that, as a U.S. Attorney, she had required an admission of wrongdoing in a 1994 case, and she brought that mind set when she became SEC Chair in 2013.
General Observations
One knowledgeable reader with whom I spoke about the settlement thought the dollar amount of the settlement was a pittance. However, I am not in a position to express an opinion on that matter.

As for the no admit/no deny protocol, it will be interesting to see what happens when the SEC, the Department of Justice, and other federal law enforcement agencies become part of the Biden administration. I cannot predict what will happen, but I hope the no admit/no deny protocol will receive close attention.

Available Material
I am offering a complimentary 20-page PDF consisting of an excerpt from the GE 8-K (1 page) and the SEC Order (19 pages). Email jmbelth@gmail.com and ask for the December 2020 package about the GE/SEC settlement.

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Friday, December 11, 2020

No. 402: Brian Alfaro, a Former Texas Securities Broker, Goes to Federal Prison

On November 10, 2020, the U.S. Attorney in the Western District of Texas issued a press release announcing that Brian Keith Alfaro, a former Texas securities broker (CRD #4049120), was sentenced to 121 months in federal prison and ordered to pay restitution of almost $10 million for "scheming to defraud investors." I say "former" because Alfaro has been barred from the securities industry. The press release is in the complimentary package offered at the end of this post.

The Federal Indictments
On November 28, 2018, a federal grand jury in San Antonio handed down an eight-count sealed indictment against Alfaro. The indictment was unsealed a few days later, after Alfaro's arrest. He pleaded not guilty.

The case was assigned to U.S. District Judge Samuel F. Biery. President Clinton nominated him in November 1993. The Senate confirmed him in March 1994. He served as Chief Judge from June 2010 to December 2015.

On June 19, 2019, the grand jury handed down a superseding eight-count indictment. The seventh of the eight mail fraud counts in both indictments was later dismissed at the government's request. The superseding indictment is in the complimentary package offered at the end of this post.

The Federal Jury Trial
In early February 2020, the federal jury trial was held. The jury found Alfaro guilty on all seven remaining counts. The jury verdict form is in the complimentary package offered at the end of this post.

On November 20, 2020, the judge sentenced Alfaro to 121 months in federal prison, followed by three years of supervised release, no fine, a $600 special assessment, and restitution of almost $10 million. (See U.S.A. v. Alfaro, U.S. District Court, Western District of Texas, Case No. 5:18-cr-879.)

The Texas Order
On November 9, 2020, Texas Securities Commissioner Travis J. Iles issued an Emergency Cease and Desist Order directed at Alfaro, members of his family, and others associated with him. The order is in the complimentary package offered at the end of this post.

The FINRA Report
"Broker Check" is operated by the Financial Industry Regulatory Authority on its website (finra.org). I reviewed the report on Alfaro. He is described as a "previously registered broker" and as currently "barred." The report shows six "disclosure events" consisting of one "criminal" event, four "customer dispute" events, and one "investigation" event.

Available Material
I am offering a complimentary 32-page PDF consisting of the U.S. Attorney's press release (1 page), the superseding indictment (10 pages), the jury verdict form (3 pages), and the Texas emergency order (18 pages). Email jmbelth@gmail.com and ask for the December 2020 package about Alfaro.

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Friday, December 4, 2020

No. 401: Unum Life of America Takes a $2 Billion Hit to Its Long-Term Care Insurance Reserves

The MBOI Examination of ULA
On June 30, 2020, Eric A. Cioppa, the Superintendent of the Maine Bureau of Insurance (MBOI), accepted and made public the Report of Examination of Unum Life Insurance Company of America (ULA) as of December 30, 2018 (Report). On page 19 of the Report are two paragraphs disclosing that ULA suffered a $2 billion hit to the reserves for its long-term care (LTC) insurance business. Here are the two paragraphs (the full Report is in the complimentary package offered at the end of this post):
As discussed in the Summary of Significant Findings and Note 1 to the Comments on the Financial Statements of this Report, the MBOI found ULA's gross LTC reserves to be deficient by $2,085,740,649 as of December 31, 2018 as a result of this examination. On May 1, 2020, the MBOI approved a permitted practice which allows ULA to delay full recognition of the statutory reserve deficiency identified in connection with this examination that would otherwise be required under Statement of Statutory Accounting Principles (SSAP) 54 Individual and Group Accident and Health Contracts. The request was made subject to the confidential Phase in, Guardrails and Monitoring Plan for Unum Life Insurance Company of America LTC Statutory Reserve Strengthening ("Plan"). The reserve increase will be recognized over a seven-year period beginning with the statutory financial statements for the year-ended December 31, 2020 and continue until the statutory financial statement for the year-ended December 31, 2026 according to a defined schedule, as outlined in the Plan. The permitted accounting practice was approved retroactively to December 31, 2018 and December 31, 2019 such that no additional reserves would be required to be reported until year-end 2020. If this permitted practice had not been granted, it is estimated that ULA's net income and surplus at December 31, 2018 would have been reduced by approximately $2.1 billion due to the need to write off the uncollectible reinsurance recoverable and reverse the cession of the $2.1 billion of reserves to Fairwind. The MBOI will monitor ULA's compliance with the Plan during the reserve phase-in period by continuing the limited scope examination.
[ULA] paid dividends of $492,000,000 to Unum Group during 2019. [ULA] paid a dividend to Unum Group of $234,000,000 in the first quarter of 2020.
Fairwind, referred to above, is Fairwind Insurance Company. It is an affiliated captive insurance company with which ULA had entered into reinsurance arrangements. Those arrangements are discussed in the Report.

The Kansas/GE Parallel
The MBOI bailout of ULA bears a striking resemblance to the 2018 bailout of General Electric Company (GE) by the Kansas Insurance Department. I discussed the Kansas/GE matter in No. 258 (March 19, 2018).

In January 2018, GE disclosed it would contribute $15 billion of capital to Employers Reassurance Corporation (ERAC), a GE subsidiary domiciled in Kansas. ERAC requested and the Kansas department approved an arrangement allowing GE to "spread and delay" contributing the additional reserves over the next seven years.

GE also reported that the Securities and Exchange Commission (SEC) was investigating the matter. In October 2020, GE reported that it received a Wells notice from the SEC staff indicating the staff may recommend enforcement action by the SEC. I discussed the Wells notice in No. 395 (October 26, 2020).

General Observations
I do not know whether the SEC will investigate the MBOI bailout of ULA. However, such an investigation would come as no surprise, given the similarity between the MBOI/ULA bailout and the Kansas/GE bailout. In any case, I plan to report further developments relating to both bailouts.

Available Material
I am offering a complimentary 24-page PDF containing the recent MBOI examination report on ULA. Email jmbelth@gmail.com and ask for the December 2020 package about the MBOI/ULA examination report.

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Tuesday, December 1, 2020

No. 400: Stranger-Originated Life Insurance—A Follow-Up to My Recent Blog Post About the Legislation in New Jersey

In No. 317 (June 13, 2019), I discussed developments that led to recent legislation in New Jersey prohibiting stranger-originated life insurance (STOLI). In No. 396 (November 2, 2020), I discussed the recent legislation in New Jersey, and said I was not aware of any other state in which STOLI is prohibited by law. In response, several readers called my attention to other states with laws prohibiting STOLI. That prompted me to investigate and prepare this further follow-up. The complimentary packages I offered in Nos. 317 and 396 remain available.

The New York State Prohibition
One reader shared with me some information about the New York State prohibition of STOLI. Effective in 2010, what are now sections 7814 and 7815 of the New York Insurance Laws prohibit STOLI. For the purposes of the prohibition, STOLI is defined as
Any act, practice or arrangement, at or prior to policy issuance, to initiate or facilitate the issuance of a policy for the intended benefit of a person who, at the time of policy origination, has no insurable interest in the life of the insured under the laws of this state.
The NAIC and NCOIL Model Laws
Another reader shared with me an article entitled "Deterring STOLI: Two New Model Life Settlement Acts." The article was in the July 2008 issue of the magazine Estate Planning. The authors were Kenneth W. Kingma and Stephan R. Leimberg.

The article discussed the adoption of model laws by the National Association of Insurance Commissioners (NAIC) in 2006, and the National Conference of Insurance Legislators (NCOIL) in 2007. As I went over the article, I had the impression that the NAIC model law frowns upon STOLI but does not include an outright prohibition of the practice. At the same time, I had the impression that the NCOIL model law not only frowns upon STOLI but also includes an outright prohibition of the practice. The article is in the complimentary package offered at the end of this post.

The Minnesota and Nevada Prohibitions
After reading the Kingma-Leimberg article, I wrote to some state insurance departments asking whether they impose statutory prohibitions on STOLI. Spokespersons representing Minnesota and Nevada responded to my inquiry.

The Minnesota spokesperson said the state prohibits STOLI and cited section 60A0783 of the 2012 Minnesota Statutes requiring an insurable interest. The Nevada spokesperson said the state prohibits STOLI and cited section 687B040 of the Nevada Revised Statutes requiring an insurable interest. Neither spokesperson was able to say whether their statutes were enacted in the wake of the NCOIL model law, but I think they were.

The Illinois Consumer Alert
In the course of preparing this follow-up, I stumbled across a "Consumer Alert" that was issued in January 2008 by what is now the Illinois Department of Insurance. The alert advised "consumers to proceed with caution when considering participation in a STOLI arrangement." The Department said that it "does not sanction or approve" such arrangements, and that "These transactions and parties to these transactions may be subject to the Illinois Insurance Code and other applicable laws in the State of Illinois." The alert also described the nature of STOLI arrangements. The alert is in the complimentary package offered at the end of this post.

Available Material
I am offering a complimentary 19-page PDF containing the Kingma-Leimberg article about "Deterring STOLI" (18 pages) and the Illinois Consumer Alert on STOLI (1 page). Email jmbelth@gmail.com and ask for the December 2020 package about STOLI.

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Friday, November 20, 2020

No. 399: John Hancock Defends a Class Action Lawsuit Over Huge Cost-of-Insurance Increases on Universal Life Policies

On June 5, 2018, Jeffrey Leonard (Leonard) and others filed a class action lawsuit against John Hancock Life Insurance Company of New York (John Hancock) and others relating to huge cost-of-insurance (COI) increases on certain universal life insurance policies. On August 22, 2018, John Hancock answered the complaint. On April 9, 2020, Leonard filed a first amended complaint. On May 4, 2020, John Hancock answered the first amended complaint. (See Leonard v. John Hancock, U.S. District Court, Southern District of New York, Case No. 1:18-cv-4994.)

The case was assigned to Senior U.S. District Judge Alvin K. Hellerstein. President Clinton nominated him in May 1998. The Senate confirmed him in October 1998. He took senior status in January 2011.

Thrust of the Case
The "Nature of the Action" section of the first amended complaint consists of 20 paragraphs, and includes a few redactions. Here are some lightly edited excerpts from that section:
1. Plaintiffs seek to represent a class of policyholders who have been subjected to unlawful and excessive COI increases in violation of their insurance policies.
2. The policies at issue are Performance Universal Life policies issued between 2003 and 2010.
3. In February 2018, John Hancock's parent company, Manulife Financial Corporation, which reports on behalf of John Hancock in consolidated statements, announced that it had suffered a $1.6 billion net loss in the fourth quarter of 2017.
4. In May 2018, John Hancock sent cryptic letters to policyholders informing them of a massive increase in COI rates and charges on certain Performance Universal Life policies.
6. John Hancock did not disclose that, when reviewing the proposed COI increase, the New York Department of Financial Services concluded that the assumptions John Hancock had originally used when pricing the policies were not reasonable.
8. Internally, John Hancock had long recognized that its original assumptions were no longer valid.
10. The COI increase is massive. For example, one plaintiff took out a policy on her life in 2008. After paying ten years of premiums at John Hancock's "projected" rates, John Hancock suddenly increased her COI rates by about 70% per year, causing her to have to pay about $225,000 more in premiums per year to keep her coverage. She is now aged 87.
11. Other policyholders have seen increases ranging from 17% to 75%. John Hancock did not provide policyholders with any reason for the wildly disparate COI increases.
12. The COI increase violated terms of the policies in numerous respects.
17. John Hancock did not implement the COI increase on other products it issued between 2003 and 2010.
19. In violation of the policy provision promising illustrations "upon request," John Hancock refused to provide illustrations for subject policies from January 2017 through May 2018.
20. The COI rate hike and John Hancock's actions preceding it breached the policies in at least five respects.
The "Factual Background" section of the first amended complaint consists of 53 paragraphs. Also, the first amended complaint contains the following seven claims for relief: (1) breach of contract, (2) violation of certain New York laws, (3) violation of certain other New York laws, (4) violation of certain California laws, (5) violation of certain other California laws, (6) violation of certain Texas laws, and (7) violation of certain New Jersey laws. The first amended complaint is in the complimentary package offered at the end of this post.

Future Developments
On July 27, 2020, Judge Hellerstein issued a scheduling order listing several pretrial deadlines. For example, the fact discovery deadline is February 22, 2021, the expert discovery deadline is June 28, 2021, and the briefing for class certification is to be completed by September 27, 2021. The scheduling order does not mention settlement, but includes a deadline for "dispositive motions." The scheduling order is in the complimentary package offered at the end of this post.

General Observations
It appears that the case has a long way to go. I plan to report on significant future developments, such as class certification and the terms of any proposed settlement.

Available Material
I am offering a complimentary 58-page PDF consisting of the plaintiffs' first amended complaint (56 pages) and the judge's recent scheduling order (2 pages). Email jmbelth@gmail.com and ask for the November 2020 package about the case of Leonard v. John Hancock.

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Friday, November 13, 2020

No. 398: Long-Term Care Insurance—Yet Another Update on the Skochin Lawsuit Against Genworth

In No. 384 (July 30, 2020), I posted my most recent update on the Skochin class action lawsuit against Genworth Financial, Inc. (Genworth) and Genworth Life Insurance Company (GLIC) relating to premium increases on long-term care (LTC) insurance policies. In that post, I provided a link to my first post on the case, and links to my first two updates. (See Skochin v. Genworth, U.S. District Court, Eastern District of Virginia, Case No. 3:19-cv-49.)

Background
On January 18, 2019, Pennsylvania residents Jerome and Susan Skochin and Maryland resident Larry Huber filed a class action lawsuit against Genworth and GLIC. The plaintiffs had purchased LTC insurance policies in 2003 and 2004 from General Electric Capital Assurance Company, a predecessor of Genworth and GLIC. On October 30, 2019, the plaintiffs filed a notice of settlement. On January 15, 2020, Senior U.S. District Judge Robert E. Payne held a hearing, granted preliminary approval of the settlement, directed that the class notice be mailed to class members, and set the final fairness hearing for July 10, 2020.

Recent Developments
On July 10 and 14, 2020, the judge heard arguments on the objections, and ordered further briefing. On September 14, he ordered further briefing.

On November 5, the judge issued a memorandum opinion and an accompanying order overruling class members' objections to the plaintiffs' motion to approve the settlement. Also on November 5, he issued a memorandum opinion and an accompanying order granting class counsel's motion for an award of attorney fees and expenses. The four November 5 documents are in the complimentary package offered at the end of this post.

An Invitation
When I posted No. 384, I said I do not intend to express an opinion about the fairness of the settlement from an actuarial standpoint because I am not an actuary and do not feel comfortable expressing such an opinion. However, I would welcome expressions of opinion from actuaries. As an aid to expressing an opinion, note that the complimentary packages offered in my five blog posts on the case are available and would provide a good starting point. If you need further documents, I can send you the current court docket and provide you with any court documents you would like to see. Should you respond to this invitation, please indicate whether you prefer your opinion to be with or without attribution, and I will honor your request.

Available Material
I am offering a complimentary 99-page PDF consisting of the judge's memorandum opinion and accompanying order granting final approval of the settlement (68 pages), and the judge's memorandum opinion and accompanying order granting approval of attorney fees and expenses (31 pages). Email jmbelth@gmail.com and ask for the November 2020 package about the case of Skochin v. Genworth.

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Monday, November 9, 2020

No. 397: The Age 100 Problem—A Further Update on the Lebbin Lawsuit Against Transamerica

I have written extensively about what I call "the age 100 problem" in general, and about the Lebbin lawsuit against Transamerica Life Insurance Company (Transamerica) in particular. The most recent update on the case is in No. 372 (May 18, 2020). That blog post contains a detailed summary of the district court case. For that reason, I am dispensing with a summary of that case and including in this further update only major developments in the appellate case. (See Lebbin v. Transamerica, U.S. Court of Appeals, Eleventh Circuit, Case No. 20-11756-EE.)

The Appellate Filings
On August 31, 2020, Transamerica filed a 78-page brief in the Eleventh Circuit. On September 8, Transamerica filed a 1,517-page, six-volume appendix. On October 30, the Lebbin-Spector Family Trust (Trust) filed a 71-page brief. Transamerica's brief and the Trust's brief are in the complimentary package offered at the end of this post.

Transamerica's brief makes five arguments: (1) plaintiffs' breach of contract claim is barred by the statute of limitations, (2) the district court erred in granting summary judgment to plaintiffs on their claim for breach of contract based on an alleged ambiguity, (3) the district court should not have excluded extrinsic evidence that established the intent of the parties, (4) the district court erred in resolving Transamerica's defenses of waiver, ratification, and estoppel without considering any evidence, and (5) the district court's ruling on damages should be reversed. Transamerica concludes:
For the foregoing reasons, Transamerica respectfully requests that this Court reverse the summary judgment orders of the district court and direct entry of judgment in Transamerica's favor.
The Trust's brief includes detailed responses to each of the five arguments in Transamerica's brief. The Trust concludes:
For the foregoing reasons, [the Trust] respectfully request[s] that this Court affirm the summary judgment orders of the district court.
General Observations
At this writing, there is no timetable for the appellate court case. I plan to report on important developments in the case.

Available Material
I am offering a complimentary 149-page package consisting of Transamerica's brief (78 pages) and the Trust's brief (71 pages). Email jmbelth@gmail.com and ask for the November 2020 package about Lebbin v. Transamerica.

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Monday, November 2, 2020

No. 396: Stranger Originated Life Insurance Is Now Illegal in New Jersey

On October 28, 2020, the law firm of Cozen O'Connor issued a three-page press release entitled "New Jersey Enacts Anti-STOLI Legislation." The press release announced that recent legislation enacted in New Jersey has rendered stranger-originated life insurance (STOLI) illegal in the state. The press release, written by Cozen attorneys Charles J. Vinicombe and Michael J. Miller, is in the complimentary November 2020 package offered at the end of this post.

The new legislation (Assembly Bill 1263) was unanimously approved by the New Jersey Assembly and by the New Jersey Senate. It was signed into law by the governor on October 19, 2020. It supplements the New Jersey Viatical Settlements Act by outlawing STOLI, which is defined as
an act, practice, or arrangement to initiate or procure the issuance of a policy in this State for the benefit of a third party investor who, at the time of policy inception, has no insurable interest under the laws of this State in the life of the insured.
Background
In No. 317 (June 13, 2019), I discussed the developments that led to the recent legislation. It all began with a dispute between Sun Life Assurance Company of Canada and Wells Fargo Bank. A $5 million policy was issued in 2007. Wells Fargo later acquired the policy in a bankruptcy proceeding and thereafter continued to pay the premiums. The insured died in 2014, and Wells Fargo sought to collect the death benefit.

Sun Life investigated and discovered massive fraud in the original application for the policy. The elderly insured's income and assets were vastly overstated, her life insurance in force was vastly understated, and a phony inspection report verified the false information. The application named a trust as owner and beneficiary of the policy, and the insured's grandson signed the application as trustee. Five weeks later, the grandson resigned as trustee and appointed certain investors (I often refer to them as speculators in human life) as successor co-trustees. The trust agreement was amended so that most of the benefits would go to the investors. More than two years later, after the expiration of the two-year contestability period, the trust sold the policy and the investors received nearly all the proceeds.

The Courts
Sun Life refused to pay the death benefit, 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 paid.

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 granted Wells Fargo a refund of the premiums it paid, on the grounds that Wells Fargo was not responsible for the fraud.

On appeal, the federal Third Circuit found no dispositive New Jersey case law, and certified two questions of law to the New Jersey Supreme Court:
  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?
The New Jersey Supreme Court answered yes to both parts of the first question. On the second 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.

General Observations
My first article about the secondary market for life insurance policies was in the March 1989 issue of The Insurance Forum, the monthly newsletter I published from January 1974 through December 2013. My second article about the secondary market was in the March 1999 issue of the Forum, and was prompted by my first evidence of what later became known as STOLI.

From the beginning, my views about the secondary market for life insurance policies in general, and about STOLI in particular, have been strongly negative. I think life insurance companies have instituted 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 about 15 years ago. That business continues to move around among a shrinking number of investors. I think the STOLI business will continue to generate litigation for many years.

I am not aware of any state, other than New Jersey, in which STOLI is prohibited by law. However, I am aware of certain legal restrictions in Canada. I would welcome comments from readers about other legal prohibitions relating to STOLI.

Available Material
In the above mentioned No. 317, I offered a complimentary 69-page PDF containing details of the New Jersey Supreme Court ruling, and the articles in the March 1989 and March 1999 issues of the Forum. That June 2019 package remains available.

Now I am offering a three-page PDF containing the Cozen O'Connor press release. Send an email to jmbelth@gmail.com and ask for the June 2019 package and/or the November 2020 package about STOLI.

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Monday, October 26, 2020

No. 395: General Electric and Genworth—A Pair of Updates

Long-term care (LTC) insurance, General Electric Company (GE), and Genworth Financial Inc. (Genworth), which specializes in LTC insurance, have been the subjects of several of my blog posts. Recently both companies disclosed developments that prompt this update.

GE
On January 16, 2018, GE shocked the insurance world when it disclosed it will contribute about $15 billion (spread over seven years) to a reinsurance subsidiary relating to a run-off block of LTC insurance. On January 24, 2018, GE disclosed the existence of an investigation by the Securities and Exchange Commission (SEC). I wrote about these matters in No. 257 (March 12, 2018) and No. 258 (March 19, 2018).

On October 6, 2020, GE filed an 8-K (significant event) report disclosing developments relating to the SEC investigation. Here are two of the three relevant paragraphs in the 8-K (the three paragraphs are in the complimentary package offered at the end of this post):
On September 30, 2020, the SEC staff issued a "Wells notice" advising GE that it is considering recommending to the SEC that it bring a civil injunction action against GE for possible violations of the securities laws. GE has been informed that the issues the SEC staff may recommend that the SEC pursue relate to the historical premium deficiency testing for GE Capital's run-off insurance operations, as well as GE's disclosures relating to such run-off insurance operations. The staff has not made a preliminary decision whether to recommend any action with respect to the other matters under investigation.
The Wells notice is neither a formal allegation nor a finding of wrongdoing. It allows GE the opportunity to provide its perspective and to address the issues raised by the SEC staff before any decision is made by the SEC on whether to authorize the commencement of an enforcement proceeding. GE disagrees with the SEC staff with respect to this recommendation and will provide a response through the Wells notice process. If the SEC were to authorize an action against GE, it could seek an injunction against future violations of provisions of the federal securities laws, the imposition of civil monetary penalties, and other relief within the Commission's authority. The result of the Wells notice and any enforcement action are unknown at this time.
On October 7, 2020, the front page of the print edition of The Wall Street Journal carried a 931-word articled entitled "SEC Readies Civil Action in GE Accounting Inquiry." The reporters were Theo Francis and Ted Mann. Here are the first two sentences of the article:
Federal securities regulators have warned General Electric Co. of a civil-enforcement action over its accounting for a legacy insurance business, adding a fresh hurdle to efforts to turn around the once-mighty manufacturer. The industrial giant said in a securities filing Tuesday that it received the so-called Wells notice on Sept. 30 over the company's accounting for reserves related to an insurance business it has been trying to wind down for years.
Genworth
On October 21, 2016, Genworth entered into a merger agreement with China Oceanwide. Since then, the parties have entered into "waiver agreements," under which the parties extended the "end date" in the merger agreement. I wrote about these matters in No. 311 (May 2, 2019), by which time the parties had entered into nine waiver agreements.

On October 1, 2020, Genworth filed an 8-K report disclosing that the parties had entered into a sixteenth waiver agreement on September 30. The end date in the latest waiver agreement appears to be November 30, 2020. The 8-K lists the fifteen previous waiver agreements and a detailed description of the latest waiver agreement. (The 8-K is in the complimentary package offered at the end of this post.)

General Observations
I plan to report on further significant developments relating to the SEC investigation of GE. I also plan to report further on the pending Genworth merger agreement with China Oceanwide.

Available Material
I am offering a complimentary 9-page package that consists of GE's 8-K report dated October 6 (3 pages) and Genworth's 8-K report dated October 1 without exhibits (6 pages). Send an email to jmbelth@gmail.com and ask for the October 2020 package about GE and Genworth.

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