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plan participants rather than the GIC contract holders who may be benefit plan
trustees.
Maryland Board of Trustees v. Life & Health Ins. Guar. Corp, 335 Md. 176, 642 A.2d 856
(1994). Utilizing liberal construction of the statute, the court held that GICs
issued by ELIC are annuities for purposes of coverage under version of the
Model Act with no reference to unallocated annuity contracts; it is a question of
fact whether the annuity features of the contract are too indefinite to be
enforced.
Michigan Unisys Corp. v. Commissioner of Ins., 236 Mich. App. 686, 601 N.W.2d 155 (1999).
Retirement plan administrator and trustee filed suit against the insurance
commissioner and the guaranty association seeking participant level coverage
under certain group annuity contracts, asserting that their resident plan
participants were the covered owners, or beneficiaries, assignees or payees of
these annuity contracts. The guaranty association denied liability on the
grounds that the contracts were unallocated annuities as defined under the
statute and that the plan trustee, as contract holder, was not a state resident.
The court entered summary judgment for the association finding that the
contracts were unallocated annuities within the plain meaning of the statute.
The court summarily rejected the plaintiffs’ beneficial ownership argument, and
referred to numerous exhibits, including the plan’s IRS 5500 tax forms, which
demonstrated that the nonresident plan trustee was the contract holder.
Oklahoma
Pennsylvania
South Carolina
Oklahoma Life & Health Ins. Guar. Ass’n v. Hilti Retirement Sav. Plan, 939 P.2d
1110 (Okla. 1997). Executive Life GICs were unallocated annuities under Model
Act definition and excluded from coverage in the Oklahoma Life and Health
Insurance Guaranty Association Act. The 1991 amendments excluding the
contracts applied to contracts issued before statutory effective date because
Executive Life’s insolvency, the operative event, occurred after amendments
became effective. Because the association acts in a similar capacity to a state
agency, its interpretation of the provisions of the guaranty association act
should be treated like that of an agency and given “highest respect” by the
courts.
Unisys Corp. v. Pennsylvania Life & Health Ins. Guar. Ass'n, 667 A.2d 1199 (Pa.
Commw. Ct. 1995), aff’d, 684 A.2d 546 (Pa. 1996). Under version of the Model
Act with no reference to unallocated annuity contracts, the GICs were held to
be covered annuity contracts. The guaranty association was only liable to the
trustee who was a state resident.
South Carolina Life and Accident and Health Ins. Guar. Ass’n v. Liberty Life Ins.
Co., 331 S.C. 268, 500 S.E.2d 193 (1998). Reserve deposit fund agreements were
not covered annuities under the South Carolina Life and Health Insurance
Guaranty Association Act because they did not specifically provide for periodic
payments to individuals. The option to purchase an annuity does not make the
funding agreements annuities, notwithstanding ten year guaranty of periodic
payment settlement option contained therein. Moreover, the reserve deposit
fund agreements are not eligible for coverage as supplemental contracts since
they are wholly independent of the life insurance policies issued.
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