Download PDF - Goodmans

name GICs. The court also rejected Unisys’ argument that pension plan
participants were the beneficial owners of the contracts.
Messagephone, Inc., et al v. Texas Life, Accident, Health & Hospital Serv. Ins.
Guar. Ass’n, 966 S.W.2d 133 (Tex. Ct. App. 1998). Messagephone Inc. (“MPI”)
purchased unallocated annuity contracts from insurer, and assigned those
annuity contracts to a trust using them as collateral for several non‐recourse
loans. MPI filed a proof of claim after insurer was placed in receivership in 1989,
but did not disclose the existence of the trust. The Guaranty Association, having
elected to handle insurer’s claims, denied coverage for the annuity contracts
based on exclusions in 1991 amendments. Statutory amendments can be
retroactively applied without constitutional defect unless vested rights are
destroyed or impaired. There is no vested right to guaranty fund coverage.
Moreover, the annuity contracts were GICs containing no mortality guarantees,
and would have excluded form coverage under the 1989 statute.
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.
Unlicensed Insurer
Illinois Dynamic Systems, Inc. v. Boozell, No. 95‐CH‐10657 (Ill. App. Ct. May 27, 1997).
Virginia 401K plan sought coverage under Illinois law for three pension GICs
issued by Illinois insurer. The Illinois association having denied the claims, the
plan appealed to the Illinois Department of Insurance. The Director held that
the Illinois association was liable, but only as to plan participants residing in
Maryland, where the issuer was not licensed. In subsequent proceedings, the
Circuit Court determined that the GICs were unallocated annuity contracts and
were not covered by Illinois law. The court also upheld the Director’s denial of
coverage for plan participants residing in Virginia or another state where the
issuer was licensed.
Assessments
Construction
Minnesota Minnesota Life & Health Ins. Guar. Ass'n v. Department of Commerce, 400
N.W.2d 769 (Minn. Ct. App. 1987). In the context of assessing its member
insurers based upon premiums collected, the Minnesota association greatly
reduced the assessment base by excluding GICs and DACs as uncovered annuity
contracts under the Minnesota Act. The court, however, used the Act’s liberal
construction language to find coverage for unallocated annuities and ordered
the association to recalculate assessments for all member insurers.
Attorney’s Fees
Nebraska Nebraska Life & Health Ins. Guar. Ass'n v. Dobias, 247 Neb. 900, 531 N.W.2d 217
(1995). Despite a liberal interpretation of the Act, guaranty association is not