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eferred to numerous exhibits, including the plan’s IRS 5500 tax forms, which
demonstrated that the nonresident plan trustee was the contract holder.
Texas Unisys Corp. v. Texas Life, Accident, Health & Hospital Serv. Ins. Guar. Ass’n, 943
S.W.2d 133 (TX. Ct. App. 1997). Executive Life GICs were “unallocated annuity
contracts” as defined in the Texas Guaranty Association Act based on Model Act
definition. Because the contracts at issue were issued to and owned by bank
pension trustees rather than individuals, they met the definition of unallocated
annuity contract. Because none of the contracts were held by a Texas resident
they were not covered by the Association. The court rejected Unisys’ argument
for coverage based on the fact that the statutory exclusion did not specifically
name GICs. The court also rejected Unisys’ argument that pension plan
participants were the beneficial owners of the contracts.
Washington Unisys Corp. v. Senn, 99 Wash. App. 391, 994 P.2d 244 (2000). Plan
administrator and trustee filed suit against the Washington insurance
commissioner and the Washington Life and Disability Insurance Guaranty
Association seeking participant level coverage for the portions of the plan which
were invested in four group annuity contracts. Plaintiffs assert that their
resident plan participants are the owners of, or beneficiaries, assignees or
payees of annuity contracts under the Washington act. The association
prevailed on summary judgment, arguing that the statute of limitation for
Unisys claim had expired. Unallocated annuities are covered under the
Washington Life and Disability Insurance Guaranty Association Act, but only if
the contract owner is a Washington resident.
Retroactive Application of Amendments
Eighth Circuit
Liberty State Bank v. Minnesota Life & Health Guar. Ass’n, 149 F.3d 832 (8th Cir.
1998). Amendment to Minnesota’s Act expressly excluded municipal GICs from
the Act’s coverage. Retroactive application of the amendment to plaintiff’s
claim was constitutionally permissible because the amendment was an
appropriate curative measure to clarify coverage of an unanticipated product
and, as a purely statutory right, payment under the Act can be retroactively
modified or eliminated unless it is vested.
Honeywell, Inc. v. Minnesota Life & Health Ins. Guar. Ass'n, 110 F.3d 547 (8th Cir.
1997) (en banc). The retroactive application of amendment which limited
guaranty association coverage for unallocated annuities to state residents did
not violate the contract or due process clauses of the U.S. Constitution. Rights
against guaranty associations are statutory in nature, not contractual. The
contract clause is thus not involved. The amendment did not violate due
process because it was rationally related to the legitimate state interest of
“regulating the insurance industry, easing the economic burden on its own
residents, and insuring the economic life of an association created by its statute
to protect its residents.”
Michigan
Henry L. Meyers Moving & Storage v. Michigan Life & Health Ins. Guar. Ass'n,
222 Mich. App. 675, 566 N.W.2d 632 (1997). Michigan court ruled that a
coverage exclusion in the Michigan Guaranty Association Act which excluded
GICs issued to employee benefit plans protected by the PBGC, was applicable to
a plan for which PBGC coverage had not been triggered. Because PBGC
coverage was available to the plaintiff’s pension plan upon termination, the plan
came under the exclusion even though the plan had not been terminated.
Application of the amendment containing the exclusion to contracts which
predated the statutory effective date was not retroactive because the
provisions in effect at the time of the insurer’s insolvency govern the
Association’s liability, and the plaintiffs had no vested right in guaranty
association protection prior to the insurer’s insolvency.