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Alaska
Arizona
Indiana
Unisys Corp. v. Burke, No. 3AN‐97‐2685 (Alaska Super. Ct. June 25, 1998). Plan
administrator and trustee sued Alaska insurance commissioner and Alaska Life
and Health Insurance Guaranty Association seeking participant level coverage
for portions of plan which were invested in four ELIC group annuity contracts,
arguing that participants were beneficial owners of the ELIC contracts, and thus
satisfied the Act’s prerequisite for ownership in order to obtain coverage.
Plaintiffs also alleged the ELIC contracts represented allocated annuities
because they guaranteed annuity benefits to an individual. The Association
prevailed on summary judgment arguing alternatively a statute of limitation
defense, and that the ELIC contracts were unallocated annuity contacts for
which the contract holder failed to meet the prerequisite of being an Alaska
resident.
Arizona Life & Disability Ins. Guar. Fund v. Honeywell, Inc., 190 Ariz. 84, 945 P.2d
805 (1997). Although GICs were issued to trustees of employee retirement plan,
court found individual plan participants to be equitable owners of the GICs.
Accordingly, the GICs fell within the coverage provision for annuity contracts
issued to state residents, and the Arizona association was obligated to cover
losses to pension plan caused by GICs.
Bennett v. Indiana Life & Health Ins. Guar. Ass’n, 688 N.E.2d 171 (Ind. Ct. App.
1997). The trustee of a pension benefit plan holds the assets of the plan in trust
for the exclusive benefit of the plan participants, who are, in turn, the beneficial
or equitable owners of any contracts held in trust for their benefit. Resident
plan participants are residents to whom contractual obligations are owed under
Indiana guaranty association law. The term “life,” against which statutory
obligations and coverage limitations are measured, refers to the lives of resident
plan participants rather than the GIC contract holders who may be benefit plan
trustees.
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.
Supplemental Contracts
South Carolina
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