FEATURED ARTICLES1 President’s Message

3 The Perfect Receiver - No. 11: Welcome To The BazaarBy Patrick Cantilo, CIR-ML

5 View from WashingtonBy James Tsai

7 In Memorium: Wanda LaPrath

8 Welcome IAIR’s Newest Members!

9 IAIR Bulletin Board

10 Board Talk: Evan BennettBy Michelle Avery

13 IAIR and AIRROC HostJoint Issues Forum at theDecember NAIC MeetingBy Carolyn Fahey

19 Insolvency Workshop Recap:Shortening the ReceivershipRoad TripBy Alan N. Gamse

23 Publication of Notice by OIC Runoff

Association Manager:Nancy Margolis, Esq.International Association of Insurance Receivers 610 Freedom Business Center Suite 110King of Prussia, PA 19406 610.992.0015 | Fax: 610.992.0021E-mail: nancy@iair.org

The Oxford Dictionary of Sports Science definespsychological momentum as “the positive or negativechange in the cognition, affect, physiology, and behavior causedby an event or series of events that affects either the perceptionsof the competitors or, perhaps, the quality of performance andthe outcome of the competition.” The advantage created forthose currently enjoying its positive favor can besignificant, but difficult to sustain. For those on thenegative side of momentum, it can be even harder toovercome. This sometimes fleeting psychological andperceptual edge must be carefully managed andregularly exercised for it can be difficult to reacquire once

it has been lost. I contend that it’s not just applicable in sporting events but has a rolein every aspect of life, including IAIR’s activities and events. I can’t help but feel thatthe favorable side of momentum has been obtained by IAIR.But does IAIR really have positive momentum or is this just lip service? Whetherpositive momentum is occurring is, of course, an individual’s subjectiveperception. However, this viewpoint can be supported with objective measures.Over the last several years, IAIR has taken numerous steps to foster significantmomentum by continuing to place IAIR in the role as the premier resource forreceivership knowledge and expertise. These steps were taken by leveraging thetalents, skills and experience of IAIR’s members through a number of activities.I’ll summarize a few activities that demonstrate how IAIR is basking inmomentum’s limelight. Most of these have been the subject of detailed articles inprior issues of The Insurance Receiver that can be found under the Publicationssection under the Resources tab on the IAIR website.• Educational Workshops and Programs – Chris Maisel and Dennis LaGory

co-chaired the 2013 Insolvency Workshop held in January 2013 in Savannah,

Spring 2014 Volume 23, Number 1

GA that included a challenging participatoryexercise for attendees. IAIR used its members’unique experiences to develop and present twoseparate professional development programsfor financial regulators focusing on earlywarning signs and red flags identified withintroubled insurance companies. In June,Michelle Avery and Phil Curley co-chaired thefourth Technical Development Series thatfocused on all aspects of receivership litigation.Finally, the 2014 Insolvency Workshop co-chaired by Doug Hartz and Bruce Gilbert wasjust held in Tempe, AZ to discuss and review thevarious administrative, claims and legalelements of receiverships that can cause theproceedings to extend for many years.

• Memoranda of Understanding – Thanks to theconsiderable efforts of Mary Veed and DougHertlein, memoranda of understanding wereexecuted between IAIR and the Tort and InsurancePractice Section (“TIPS”) of the American BarAssociation and the Association of Insurance andReinsurance Run-Off Companies (“AIRROC”).These affiliations provide the pri mary benefit ofcross-sponsorship and registration discounts foreducational programs between IAIR and the twoentities. Both of these relationships have alreadyborne fruit with two jointly sponsored programsduring the December NAIC meeting inWashington D.C.: a CLE pro gram with FORC andan Issues Forum with AIRROC. Addi tional eventsof mutual sharing of information beneficial to allentities’ members can be anticipated.

• Responses to Requests for Comments –During 2013, IAIR provided responses to tworequests for comments from the NAIC. The firstprovided IAIR’s perspective on the FederalHome Loan Bank proposed legislation toprovide exemption to the FHLBanks from thestay and voidable preference provisions withinstate insurance receivership proceedings. Thesecond involved specific comments regardingthe Financial Stability Board’s proposedConsultative Document on the Application of theKey Attributes of Effective Resolution Regimes forFinancial Institutions to non-bank financialinstitutions. Both of these responses werepublished by IAIR in The Insurance Receiver.

• Website Redesign – Throughout 2013, IAIR’sWebsite Committee, co-chaired by Jennie Jeffersand Dale Stephenson, worked diligently to re -design IAIR’s website. This involved the develop -ment and distribution of a Request for Proposals,

identification and contracting with the selectedfirm, MemberClicks, and the discussions of thedesign details. The new website went live inNovember and featured a new look plus reliablecoordination of membership records, enhance -ments to the timeliness, accuracy and security offinancial transactions, reorganized event calen -dars, and the ability for greater communicationsbetween committees and IAIR members. Thepopulation of the website has only just begun.Continue to regularly visit it to see newinformation on upcoming events and activities.

• Restructuring and Reformation of Com -mittees/Subcommittees – In late 2012, the Boardof Directors identified a lack of trans parency andinadequate communication between IAIR’scommittees and subcommittees and the IAIRmembership. Throughout 2013, several versionsof possible restructurings were shared with themembership for comment, including a Town Hallmeeting for the open discussion and deliberationof the restructuring. The final result approved bythe Board of Directors was presented to themembership through amendments to the Bylawsat the 2013 December Annual Member shipmeeting. The ten standing committee structurewas approved and is up and running. A list of thecommittees and the chairs/co-chairs can be foundon the IAIR website.

• Reformation of Membership Fees – In responseto concerns expressed by a number of members,Pat Hughes, Dick Darling, Donna Wilson and Iwere appointed as an ad hoc committee to explorethe IAIR two-tier annual membership fee structure(profit and not-for-profit) with the intent ofmaking it more reflective of the composition of themembers while not significantly impairing IAIR’svital revenue. The committee’s proposal of a three-category dues structure, comprised of (1)regulatory members, (2) small firm members/non-profit members and (3) corporate/large firmmembers, was reviewed and adopted by theBoard of Directors. It was implemented for the2014 dues. The categories will also be used whenestablishing member registration fees for IAIReducational events.

• A Bottom Line in the Black – With someaggressive monitoring by Treasurer DonnaWilson, considerable, proactive belt-tighteningand intense promotion of events, IAIR finished2013 with a bottom line that was not only in theblack, but it had grown. This fiscal managementmust continue in order to bring increased

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President’s Message (continued)

(continued on page 4)

My ambitious goal here is to provide you helpfulguidance in a few paragraphs and in readilydigestible form. I address not so much the art ofnegotiating, but basic principles that will helpavoid major mistakes and may well lead tobetter results. Presumptuously, I will articulatethem as simple rules, in no particular order.1. BE PREPARED. Establish

your goals and formulate aplan for achieving thembefore you ever reach thetable. If you are in a team ofmore than one, respectiveroles should be wellunderstood among you sothat you do not undermineeach other.

2. BE INFORMED. Unlessyou are extraordinarilylucky (in which case I need your lotterynumbers), it will be exceedingly difficult foryou to negotiate a good outcome unless youknow all you need to know about yourposition and that of your counter-party.Know the strengths of your position well butits weaknesses even better, so you can feintattacks focused on them and mirror that forthe positions of the other party.

3. BE ASTUTE. Very frequently, negotiatorsdisregard possible win-win opportunitiesbecause they did not take the time to look forthem and spot them. Understand your counter-party’s goals. I illustrate: mom settled a bitterfight between two brothers over an apple bygiving each half. The first promptly peeled his,discarded the peel, and ate his half while thesecond also peeled his but used the peel in anexperiment and discarded the apple.

4. BE CREDIBLE. Refrain from adoptingextreme or unreasonable positions because

they will only cost you credibility andencourage the other party to strive for unfairadvantage or abandon the process altogether.

5. BE REASONABLE. Set realistic goals. If youare negotiating from a patently inferiorposition, bluster is unlikely to convince theother party of the contrary. No one likes to“leave money on the table” and everyonestrives for a reasonable deal.

6. BE PATIENT. The negotiating process ispartly one of education. You mustsystematically inform the other party of thoseof your strengths and weaknesses that youare prepared to disclose and of the range ofyour expectations. This educating process hasto be organized and structured astutely, andmust involve a candid exchange of views. Donot pretend not to have weaknesses becausethat will cost you credibility.

7. BE PREPARED TO TRY THE CASE. Inmatters of litigation, never prepare the case witha successful negotiation as the ultimate goal.That will produce inferior results. Be manifestlyprepared to go to trial. This will enable you to bemore confident and flexible in negotiations andmay lead the other party to conclude that it mustwork harder and concede more to get a deal.

8. BE PREPARED TO STOP. Nothing is moreencouraging to the other party than visibledesperation on your part. If the negotiation isobviously not going in an acceptable way, beprepared to discontinue it and be circumspectabout your willingness to resume it in theabsence of necessary changes.

9. CHECK YOUR EGO. With rare exception, youare likely to be negotiating on someone else’sbehalf. Do not let perceived slights or insultsdeter you from your goal. Frequently they are anegotiating ploy. Remain professional anddispassionate throughout the entire process.

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The Perfect Receiver - No. 11: Welcome To The BazaarBy Patrick Cantilo, CIR-ML

10. DOUBLE CHECK YOUR EGO. Neverassume that you are smarter or betterprepared than your counter-party. Assumeprecisely the opposite and you will avoidcostly surprises and achieve better results.

11. BE COURTEOUS. At your age, I shouldn’thave to tell you this but the overwhelmingmajority of the population is much more likelyto willingly make concessions to someone theylike and respect and, conversely, is much morelikely to dig in rather than help a jerk.

12. TAKE TIME TO REVIEW. Take breaks andreflect on what the other side hascommunicated and how they have respondedto your positions. Those reflections mayreveal important opportunities.

13. DON’T PICK UNNECESSARY FIGHTS.You can’t win every issue. Prioritize yourgoals and save your ammo for those that arereally important.

14. SHUT UP AND LISTEN. Allow the otherside to say as much as it is willing and you’ll besurprised about how much it will reveal.Humans detest silence in a conversation andwill hasten to fill the gap. Make that your tool.

15. PLAN. Conversely, plan what you’ll say and

say only what you planned. Don’t let the toolbe used against you.

16. BE GENEROUS BUT NOT SILLY. If youknow you’ll have to make concessions, for themost part offer them at strategic points and don’tlet them be forced out of you. But that is not tosay that you should make all your concessionsup-front without extracting some value.

17. INK THE DEAL. Once an agreement isreached, promptly reduce its essential termsto a signed writing. This will avoid ambiguityand the need for re-negotiation. The passageof any time will lead to memory lapses aboutconcessions that were made.

My suggestions are neither secret nor magical.But experience teaches that adherenceto these basic principles will result ina better deal. And do not beworried that youropponent may knowthem as well. If bothparties negotiate inthis manner, a reasonabledeal is much moreprobable. Unreasonabledeals are almost always unattainable goals.

The Perfect Receiver – Part 11 (continued)

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membership dues value to IAIR’s members in theform of additional resources, more networkingopportunities, and meaningful, yet possiblycheaper, continuing education programs.

• Transition of Management – The day-to-daymanagement of IAIR was successfullytransitioned to Accolade Management. Theactivities and accomplishments in theseremarks could not have been achieved withoutthe considerable support and efforts of BernieHeinz, Nance Margolis and Chelsea Lenhart.

That’s quite a list. I fully understand that I’mrepeating the obvious as most of you have read aboutall of these activities in prior editions, but theinformation bears repeating through this single-source summary. Keeping the momentum requires ateam effort and that is even more pronounced whenthe team is comprised of volunteers with real day-jobs. What can you, as an IAIR member, do? Call oremail me, any of the Board of Directors, a Chair or Co-Chair of a committee with an issue for discussion, atopic for an educational event, or an intriguing articlefor The Insurance Receiver. Not your cup of tea? Then

how about attending a committee meeting oreducational event and posing a thought provokingquestion? If you’re not an IAIR member, then youshould join immediately and begin experiencing thebenefits. In essence, just get involved.I have been asked to serve in a precarious role. Notonly must I follow in the footsteps of Frankie Bliss,whose phenomenal work ethic and commitment isunparalleled, but I must keep this ball rolling.Hopefully things will continue to progress byproviding channels for open communications,ensuring willingness to participate is welcomed andutilized, and promoting IAIR’s mission at everyturn. I commit to expending any energy and effortrequired to assist in the further development andrecognition of IAIR as the receivership community’snetworking and informational resource. If I don’t, Iknow I’ll have to answer to Frankie. So I encourageall IAIR members to help in this effort to face thechallenge of “Maintaining the Mo.” I look forwardto seeing and speaking with each of you at one of the2014 IAIR events.

President’s Message (continued from page 2)

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Congress After theFall Shutdown Crisis

After the governmentshutdown crisis inSeptember of last year,Republicans seemedto have little appetitefor repeating the shut -down or havinganother faceoff withthe debt ceiling beingbreached. On January

16, 2014, an omnibus spending bill was passedensuring that the government would be fundedthrough the end of September 2014. The billrolled back many of the sequester cuts but leftsome in place, most politically noticeable, thesupplemental nutrition funds - morecommonly known as food stamps.Some may have thought that this is thebeginning of a new era of partnership and thatthe logjam on legislative action has broken, butthat remains to be seen. Washington politiciansand watchers are ramping up for midtermelections where all House seats and a third ofthe Senate are up for election. Democrats are resigned to the unlikelihood ofretaking the House, where they need to pick up17 or so seats. In the Senate, many vulnerableDemocrats are up for reelection andRepublicans are focusing on retaking thatchamber where 36 seats are up, thoughDemocrats need to keep only 16 of those 36 tomaintain control.At the time of this writing, major priorities forlawmakers are focused on the repeal andreplacement of the physicians’ payment formulafor Medicare costs, the so-called SustainableGrowth Rate (“SGR”). The $120-160 billionlegislation that finally coalesced into an agreedbill in both chambers in February still needsways to have it paid; legislators are looking atprograms to cut or save on beyond health care inorder to balance the fiscal aspect of the bill.The FIO Modernization ReportReport released December 12, 2013

The Federal Insurance Office (“FIO”) issued its

long-awaited Modernization report onDecember 12, 2014. Directed by Dodd-Frank,FIO was asked to examine what measures FIOshould take to study the existing United Statesinsurance industry and to make suggestions onimproving and modernizing it. The report ultimately makes a recom -mendation of a hybrid approach to regulation.State regulation is highly respected and leftalone, but in certain areas, the report indicatesthat either federal standards be implementedby the states or direct federal involvement isappropriate. The National Association ofRegistered Agents and Brokers Reform Act of2013 (“NARAB II”) was specifically identifiedas a recommended legislation for Congress topass and for state regulators to then implement. The report discusses the resolution of insolventinsurers. It recognizes that though the resolutionof insurance entities occurs largely under statelaw, large and complex global insurance entitiesmay fall outside of states’ resolution schemes.Consequently, the report acknowledges the roleof the Financial Stability Board (“FSB”) and theInternational Assoc iation of InsuranceSupervisors (“IAIS”) in developing internationalschemes for resolving international insuranceentities. Recom mendations were made to statesto adopt a uniform approach to address theclosing out and netting of qualified contractswith counterparties and develop requirementsfor transparent financial reporting regarding theadministration of a receivership estate.Additionally, uniform policyholder recoveryrules were recommended so that policyholdersreceive the same maximum benefits fromguaranty funds.House hearing February 4, 2014

The House Financial Services Committee’sHousing and Insurance Subcommittee held ahearing on the Modernization Report on February4, 2014. Two panels of witnesses were convenedwith FIO Director, Michael McRaith, and Con -necticut Insurance Commissioner, Tom Leonardi,on the first panel. Eight industry witnesses,including representatives from trade associationsthat ranged over all insurance lines plus brokersand agents, testified on the second panel.

View from WashingtonBy James Tsai

McRaith said that the regulatory question ofstate versus federal was an outdated one andthat instead the insurance industry is muchmore complex and involves an internationalcomponent that requires consideration. Heemphasized that state regulation was verygood and that as the former insurancecommissioner for Illinois, he recognized andvalued that system.Chairman Randy Neugebauer (R-TX) askedMcRaith about the Prudential SIFI designationby the Financial Stability Oversight Council(“FSOC”). Neugebauer pointed out that theFSOC members with insurance expertise allhad strong dissents. Was it troubling that FSOCwas making decisions based on a majority voteby those not experts on insurance, he queried?McRaith carefully responded that the FSOCdesignation process is a lengthy and technicalprocess that takes into account many datapoints in arriving at its final decision. Hefurther indicated that while the dissents wereof interest to the FSOC as a whole, the council,through its statutory deliberative process, didnot find the arguments “persuasive.” Meanwhile, Ranking Member Capuano (D-MA) commented that FIO and the report werereally all part of the first step towards morefederal involvement in insurance, aneventuality. He polled the industry panel as towhat would they do if given the choice torepeal or support the FIO. All industrypanelists supported keeping FIO.FSOC, FDIC Actions on Resolution

Both the FSOC and FDIC took steps in theregulatory authority surrounding their resolutionauthority of large systemic insurance companies.On January 9, 2014, the FSOC met in a closedmeeting and received a presentation fromFederal Reserve staff members on enhancedprudential standards for all systemicallyimportant financial institutions (“SIFIs"). Thehigh-level released minutes of the meetingindicate that questions after the presentationincluded queries about the applicability ofDodd-Frank sections 165 and 166, the enhancedprudential supervision to non-bank SIFIs -especially with regard to section 171 leverage,and risk-based capital requirements.

The trade press noted that it was significant thatMetLife’s designation as a SIFI was not discussedat this meeting, which many anticipate will bedesignated as such, as it proceeds through thereview and designation process by FSOC.Meanwhile, the FDIC released the public portionsof the submitted resolution plans, as requiredunder title I of Dodd-Frank, on January 10, 2014.(See http://fdic.gov/ regulations/reform/resplans/ ). The 186 plans that are available onthe website detail the process for a hypotheticalorderly wind-down in the case of insolvencyunder the United States Bankruptcy Code orother applicable windup regime. Insurancecompanies are ineligible generally to be a debtorunder the Bankruptcy Code, though theirholding companies are eligible. TRIA and Flood Insurance

In the last issue of this column, we had just leftthe House Financial Services Housing andInsurance Subcommittee, which held a TRIAreauthorization hearing on November 13, 2013.The program is set to expire at the end of 2014unless Congress acts. All witnesses at thehearing, which included academics andindustry members such as Sean McGovern ofLloyds of London, agreed that the programshould be extended though there was somedebate over the length of time for renewal, thefunding mechanisms and the triggering levelfor losses from a certified act of terrorism thatwould allow coverage (currently $100 million).If the program is not renewed, an area of concernfor many insurers and stakeholders is the effecton workers’ compensation coverage. Becauseworkers’ compensation is mandatory in all statesand may not exclude acts of terrorism, manyinsurers are scrambling to understand the effectof the loss of TRIA as a backstop. Complicatingthe situation is the practice of many insurers thatwrite multi-year policies that may start in 2014and extend beyond the program’s expiration into2015.At the end of the hearing, Subcommittee ChairRandy Neugebauer (R-TX) indicated swiftaction to consider the renewal of the matter.With the exception of a few Members duringthe hearing, everyone seemed to be inagreement for the renewal of the program. The

View from Washington (continued)

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View from Washington (continued)

James Tsai is a public policy specialist in FaegreBD Consulting'sinsurance and financial services practice group where he assistsinsurance and other financial services entities with federal legislative,regulatory, public policy, corporate, insolvency and compliance matters.James works on Capitol Hill and federal agency strategy and helpsassociations, companies and individuals navigate the post Dodd-FrankAct environment.

In Memorium: Wanda LaPrathIt is with great sadness that

IAIR reports the passing of WandaLaPrath, CFE, friend and long-time IAIR member.

Wanda was involved with the insuranceindustry for over 30 years. Afterapproximately twenty years in the private

sector, where she held positions with two largelife insurers and was directly responsible forstatutory and GAAP reporting, Wandatransitioned to the receivership arena. Since1998, Wanda participated in and supervisedexaminations, both market conduct andfinancial, for various states as a contract

examiner. She also worked on life and annuitycompanies, facilitating assumption transactionsand interfacing with various guarantyassociations. Wanda held the CIE, MCM, CFE,FLMI, and ARC designations and earned anMBA. An active member of IAIR, she was also amember of the IRES Board of Directors for fouryears, served on the SOFE Board of Governorsand was Vice President of Education on theSOFE Executive Committee since 2011.IAIR extends deepest condolences to Wanda'sfamily. She will be sorely missed by her manyfriends at IAIR.

Mark Your Calendar! – Don’t miss it! The next IAIR TechnicalDevelopment Series Program - “Seeking Equilibrium in the NewGeneration: How to Handle Reporting, Sharing andSafeguarding Information” - will be held in CHICAGO at theDoubletree. Save the date for June 5-6, 2014. Many more detailsto come soon.

Senate held a hearing in September and then asecond one on February 25, examining thereauthorization of TRIA.Meanwhile, federal flood insurance hascontinued to be a concern. The 2012 Biggert-Waters Act mandated rate hikes on policies for allpolicyholders (including homeowners/ businessproperties) with phased-in rate increases thatbegan earlier this year. Senator Robert Menendez(D-NJ) introduced S. 1610 on October 29, 2013,which would seek to delay the implementationof this timeline by a few years. On the same day,Rep. Michael Grimm (R-NY) introduced theHouse’s version of the bill, H.R. 3370, withMaxine Waters (D-CA), the original namesakesponsor of the Biggert-Waters Act. The Senate passed S. 1926, which delayedimplementation of the rate hikes for four years

on January 30, 2014. The Senate bill wraps theNARAB II legislation together, while theHouse legislation keeps the two separate. TheHouse had already passed NARAB legislationlast fall, but passed H.R. 3370, RepresentativesGrimm and Waters’ legislation, on March 4,2014. Notably, House Financial Services ChairJeb Hensarling (R-TX) and SubcommitteeChair Neugebauer did not vote for the reform,preferring alternative legislation to deal withthe rate hikes.

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Jeff CohenMr. Cohen is a Managing Director at SouthpawAsset Management LP, a distressed creditopportunity manager based in Greenwich,Connecticut. Jeff is responsible for sourcing,evaluating and purchasing a range of illiquidfinancial assets, including insolvent insuranceclaims, run-off portfolios, litigation judgments,bankruptcy claims, private notes and other hardto value assets. Prior to Southpaw, Jeff worked asa VP and Analyst for Ramius Capital, LLC andStockback, LLC.Jeff began his professional career as a bankruptcyattorney in private practice after serving as a lawclerk for the Honorable Bruce Fox of the UnitedStates Bankruptcy Court for the Eastern Districtof Pennsylvania. Jeff received his B.A. in PoliticalScience from Columbia University, and his J.D.from Temple University School of Law.

Kirk HartleySince becoming a lawyer in 1983,Mr. Hartley’s 30 years of practicehave focused on advising a widerange of corporations, associationsand individuals on tort and

commercial law issues centered around masstorts. His career includes handling asbestos andother product liability claims for defendants,representing policyholders in insurance coveragelitigation and representing creditors in mass tortChapter 11 cases. At Childress Duffy, Kirkrepresented policyholders against insurers. Kirkwas also a partner at Katten Muchin Rosenmanand Butler Rubin Saltarelli & Boyd LLP.Kirk created LSP Group LLC in 2011 to continuehis focus on mass tort and related issuesinvolving law, science and policy. Kirk receivedhis B.S. in Business from the University of Illinoisat Champaign-Urbana and his J.D. from JohnMarshall Law School in Chicago, Illinois.

Marvin KellyMr. Kelly is the Executive Director ofthe Texas Property & CasualtyInsurance Guaranty Association(“TPCIGA”) in Austin, Texas and has32 years of experience in insurance

insolvency, risk management and underwriting.Prior to becoming Executive Director of TPCIGA,Marvin was a Board Member of the National

Conference of Insurance Guaranty Funds, formerPresident/ Chairman of the Chartered PropertyCasualty Underwriting Society and a Major in theU.S. Army Reserve for over 16 years.Marvin graduated from the University ofHartford/Walden University with a B.S. andM.B.A. in Insurance & Risk Management.

Kathy MilfordMs. Milford is President of MilfordConsulting, LLC in Austin, Texas,where she provides Special DeputyReceiver consulting services in -cluding receivership admin -

istration, claim management, litigation manage -ment, asset recovery, financial analysis, reportingand forensic investigation. Kathy has worked inthe receivership industry for over 20 years andhas participated in the administration of eight lifeand health and 17 property and casualtyreceiverships, two of which were inrehabilitation. Prior to opening her own firm,Kathy also worked for Prime Tempus Inc. as aReceivership Admini stration Manager and LeadRehabilitation Specialist. Kathy received her B.A.A.S. with a concentrationin Management and Finance, from Texas StateUniversity-San Marcos and has a MarketConduct Management designation as well.

James MillsMr. Mills currently serves asAssistant General Counsel,Director of Workers’ Comp andCaptive Insurance at the OklahomaInsurance Department. Prior to

that, James served as the Assistant GeneralCounsel to the Oklahoma Insurance Department,and as Assistant to the Commissioner.James received his B.B.A. in Finance from theUniversity of Oklahoma, his J.D. from theUniversity of Oklahoma College of Law and hisM.B.A. in Corporate Finance, Investment

Welcome IAIR’s Newest Members!

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Welcome IAIR’s Newest Members! (continued)

Management and Risk Management from theUniversity of Oklahoma-Price College of Business.

Jan MoenckMs. Moenck is a partner at Risk & Regulatory Consulting, inMinneapolis, Minnesota. Jan has over25 years of experience providinginternal audit and examination

services to clients focusing primarily in the financialservices industry. For over 15 years, Jan has served asthe Lead Engagement Manager working with theMinnesota Department of Commerce, InsuranceDivision, by providing co-sourced financialexamination services. Jan assisted Minnesota in thedevelopment and deployment of its risk-focusedexamination process and has served as the Examinerin Charge on risk-focused financial examinations forover twelve years. She has also provided hands-onand classroom training on risk-based examinationtechniques to several states, the Society of FinancialExaminers and RSM McGladrey employees. Prior tojoining RSM McGladrey, Jan worked in "Big 6"internal audit and regulatory consulting practicesand in the Internal Audit Departments of threeFortune 500 banking and insurance companies.Jan graduated magna cum laude with Bachelor ofArts degrees in Accounting and Computer Sciencefrom Concordia College, Moorhead Minnesota

and holds an M.B.A. with concentration in Financefrom the University of Minnesota, Carlson Schoolof Business. She is a Certified Financial Examiner,a Certified Risk Professional, a Certified InternalAuditor and a Certified Bank Auditor.

Don RoofAs a Director at ExaminationResources, LLC in Atlanta, GA, Mr.Roof has over 24 years experiencein the field of insurance regulation.As Director of Georgia’s In surance

& Financial Oversight Division and DeputyReceiver, he was responsible for financial andmarket examinations, financial and marketanalysis, troubled company administration,receivership admini stration, mergers &acquisitions, holding company trans actions andcompany licensing. Prior to assuming his positionas Division Director, he served as Georgia’s ChiefFinancial and Market Conduct Examiner. Hisexperience also includes drafting insurancelegislation and providing testimony in legislative,admini strative and court proceedings.As a Certified Financial Examiner, Don is amember of the Society of Financial Examiners.Don received his B.B.A. in Risk Management &Insurance from the University of Georgia.

Stradley Ronon Insurance Practice Chair Steven B. Davischaired the inaugural Saint Joseph’s University Academy ofRisk Management & Insurance Executive of the Year AwardDinner honoring Pennsylvania Deputy InsuranceCommissioner Stephen J. Johnson on Sept. 26 at the UnionLeague in Philadelphia. Evan Greenberg, Chairman and CEOof ACE Limited, served as the keynote speaker of the sold-outevent, which attracted more than 500 insurance executives,regulators and their counsel.Steve spoke at the 26th Annual Association of InsuranceCompliance Professionals Conference in Toronto. Hepresented “Navigating Your Journey Through MarketConduct Exams” alongside Pennsylvania Deputy InsuranceCommissioner Ron Gallagher and Elizabeth Magnus of TheTravelers Companies. Their session focused on techniquesand tools to lead companies through market-conduct exams– from formal requests to the final report.

IAIR Bulletin Board

Pictured from left: Joseph A. Diangelo, Dean of the Erivan K.Haub School of Business at Saint Joseph’s University;Pennsylvania Deputy Insurance Commissioner and “Insurance Executive of the Year” honoree Stephen J.Johnson; Michael E. Angelina, Executive Director of theAcademy of Risk Management & Insurance; and Steven B.Davis, Insurance Chair of Stradley Ronon

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is never done. Itcertainly speaks to thedepth of talent andnumber of volunteerscommitted to theorganization. Each ofthe interviewees hasbrought a great depthof experience to theBoard table and isalways graciouslywilling to share theirtime with me to sit

down and discuss theircareer path, convictions about IAIR and otherinteresting personal details. This newsletter’ssubject was no different. Evan Bennett joined IAIR about seven yearsago and attended his first meeting in Tucson,Arizona. At the time, he was working in theinsurance and reinsurance area and hadbecome very interested in receivership work.Since that time, Evan has become invested inthe mission of IAIR by serving on severalcommittees, including Membership, Educationand Governance, as well as chairing the AuditCommittee. Evan is in the last year of his firstthree year term as an IAIR board member whowill be up for re-election at the end of the year. Not unlike several other board members I haveinterviewed in the past, Evan’s educationalbackground was a surprise to me. Havinggrown up in Chicago from birth to the age of15, it came as quite a shock to Evan when hisparents abruptly announced they would bemoving to Danville, a small town in CentralIllinois. Despite the cultural shift, Evan speaksfondly of his high school years in Danville,recounting the great friendships he developed,the personal growth he experienced and thehealthy appreciation and longing for all that

Chicago’s environment had to offer. Upongraduation, Evan went to Northern IllinoisUniversity for two years and then transferredto the University of Illinois for a liberal artseducation in which he focused on psychology,obtaining both an undergraduate degree andlater a graduate degree in EducationalPsychology. Who knew?After graduation, with an interest incounseling, Evan utilized his education andentrepreneurial spirit to work with a group ofothers, through the use of private funding, toform Parental Stress Services, a communityoutreach organization, for parents that dealtwith child abuse prevention. It was throughthis endeavor that Evan became interested inaccounting because of a role he was fillingwithin the organization. He went back toschool and received a graduate degree inbusiness, specifically accounting, fromRoosevelt University. It wasn’t long before hefound his way to insurance – working atCombined Insurance Company, now known asAON. It was there that a mentor introducedhim to the world of reinsurance. From there,the rest is history. Evan’s interest grew and from there decided hewanted to move into the auditing arena, takingan internal audit manager position at BorgWarner Insurance, also in Chicago. It wasn’tlong after that fate had a hand in changingEvan’s path. It was during a conference in NewYork at which Evan was speaking that Jim Hall,a former IAIR member, encouraged Evan toleave the Windy City and come to New York towork in Coopers & Lybrand’s consultingpractice. Evan spent two years living inHackensack, New Jersey, working for Cooperson arbitrations and litigations, within theinsurance/reinsurance industry specifically.Despite a lot of travel, and being away from his

Board Talk: Evan BennettBy Michelle Avery

Evan Bennett

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true home, Evan looks back on his time in theBig Apple with fondness for all the wonderfulpeople he met and the great network ofprofessionals he established.From there, Evan returned to Chicago andcontinued to pursue a career dominated byreinsurance expertise. Initially upon his return,Evan formed his own consulting practice, thenspent time at two different points, totaling tenyears, with Blackman Kallick and its predecessorfirm, a lot of which was spent doing insuranceand reinsurance auditing. For the last year, Evanhas been back on his own and is focused onaccounting and transactional expert work in thecontext of reinsurance. The work includesanalyzing and evaluating reinsurance programsthrough the interpretation of contract terms, themanner in which contracts were accounted for,evaluations of risk transfer, pricing, adequacystudies and ground up loss studies. It was apparent to me that Evan really loveswhat he does – he has an intellectual curiositythat likely serves him very well. Despite hispassion for reinsurance, he spoke most proudlyof the work he does providing reinsurancetraining – whether with the University ofWisconsin, which he has been doing for almost30 years, through in-house programs forinsurance companies or for the stateDepartments of Insurance when needed. Evantalks enthusiastically about the positiveinfluence that mentors and educators in theinsurance industry have had on him over thecourse of his 32 year career and he is mindful ofhis role to allow that cycle to continue bybringing the academic arena to the businessarena, thereby allowing professionals tocontinue to grow. Q: What is your proudest professionalaccomplishment?Evan stated that he is very content withwhere he is in his career and believes that allthings have contributed and led to where heis today. He loves helping people and clientsand it is in this role as a consultant andthrough training that he is able to do just that– be part of a solution and help. He doesn’tcite one thing as his proudest moment butrather is pleased to have it all come tofruition. “Everyone wants to do what theylove, and I get to do that every day.”

Q: What is the last book you’ve read that youwould recommend to others?Certainly not hot off the presses, but highlyregarded without a doubt, Evan is currentlyreading Harper Lee’s Pulitzer Prize winning ToKill a Mockingbird. Not only does Evan lovereading this classic, he thoroughly enjoyed themovie adaptation with Gregory Peck.

Q: If you could have dinner with any three otherpeople in the world, dead or alive, fictional ornon-fictional, who would you choose? Why?Evan cheated a little bit on this question byfailing to narrow his guests down to justthree, but I’ll give him some leeway becauseof the interesting pairings he’s come up with.As his first selection and without anyhesitation, Evan stated, “My parents. Theyare great people and I respect them a lot.”Second, Evan chose the pair of Woody Allenand Mel Brooks and added “maybe Melcould be the waiter.” That would be anentertaining dinner – a match-up of amazingfilmmaking and comedic talent. For his last pairing, Evan selected JohnLennon and Muddy Waters, a musical duo, todine together. I didn’t know much aboutMuddy Waters, other than his considerableinfluence over blues in Chicago during the 50sand 60s. I was surprised to learn that theBeatles song “Come Together” written byLennon in which he plays rhythm guitar(more on that later) actually references Waters.

Q: What is your favorite sport? Team?Not surprising, Evan is loyal to thehometown. A big fan of all Chicago teams, hecurrently ranks the ‘Hawks number one. Heopenly admits his passion used to be theCubs but has “given up a bit” on the team,although he still loves to catch a game atWrigley when he can.

Board Talk: Evan Bennett (continued)

12

Board Talk: Evan Bennett (continued)

Q: What is your favorite leisure activity?Although he no longer plays as much as he usedto, Evan has been an avid tennis player, havingstarted when he was four or five years old. Forthose that read this column routinely, I think wemight have to propose a match-up betweenEvan and Bruce Gilbert. Tennis anyone?

Q: Where is the last placed you vacationed? The most recent vacation for Evan to NewOrleans was nice, but it doesn’t beat out hisfavorite, Disney World. He is very muchlooking forward to this month’s NAICmeeting and will absolutely be spending aday at the park. Keep your eye out for him inline for the Tower of Terror!

Q: What is your favorite NAIC/IAIRconference location?Not alone in his selection, Evan choose SanFrancisco. It really is a favorite of manyattendees. Evan loves it for the wonderfulclimate, the great food, the city’s walkabilityand the endless number of things to do.

Q: Give us one piece of information thatmost people don’t know about you? As if the educational psychology wasn’tenough of a surprise, I learned that Evanplayed rhythm guitar in high school as amember of a rock band, The Domineers. Evanchuckled as he thought back about thosedays, and I pressed on to learn that he notonly played but sang occasionally too.

He also has a few interesting ties to the bandREO Speedwagon. There was a time while at

the University ofIllinois when heworked selling jeans withthe base guitarist for theband and later he worked ina bar in Champaign wherethey occasionally played. It must be a Chicagothing. I can remember a shuttle ride home afterdinner at an Insolvency Workshop with a groupof IAIR colleagues from Chicago in whichsomeone (who may have had an extra glass ofwine or two) broke out in to some REOSpeedwagon. You sir will remain nameless onthese pages, but you know who you are.Thank you, Evan, for the insight into your careerand background. Evan concluded the interviewby thanking me and saying, what it really comesdown to is “I’ve lived a good life and love whatI do” – a great perspective to have.

Michelle Avery, CPA is an Executive VicePresident and Managing Director at VerisConsulting, Inc. within the firm’s forensicaccounting practice. Michelle has extensiveexperience assisting clients in causation anddamage assessments related to failedproperty/casualty and life and health insurancecompanies. Michelle is a Board member of IAIRand a member of the AICPA’s NAIC/AICPAWorking Group Task Force. Michelle can bereached at mavery@verisconsulting.com.

Newsletter Committee:Michelle Avery, CPA, ChairFrancesca Bliss, Kathleen McCainOfficers: Bart Boles, President, Alan Gamse, Esq., 1st Vice President, Bruce Gilbert, 2nd Vice President,Donna Wilson, CIR-ML, Treasurer, James Kennedy, Esq., Secretary, Francesca Bliss, ImmediatePast PresidentDirectors:Michelle Avery, Evan Bennett, Betty Cordial, CIR-ML, Richard Darling, CIR-ML, Joseph DeVito, AIR,Douglas Hartz, Esq., CIR-ML, Patrick Hughes, Dennis LaGory, Esq., Kathleen McCain, Esq.Legal Counsel:William Latza, Esq. and Martin Minkowitz, Esq., Stroock & Stroock & Lavan LLP

The Insurance Receiver is intended to provide readers with information on andprovide a forum for opinions and discussions of insurance insolvency topics. Theviews expressed by the authors in the Insurance Receiver are their own and notnecessarily those of the IAIR Board, Newsletter Committee or IAIR’s AssociationManager. No article or other feature should be considered as legal advice.

Per the MOU,AIRROC and IAIRpresented their firstco-hosted programthe afternoon ofDecember 16, 2013 atNAIC Winter Meetingin Washington, DC.The planning anddevelop ment wasspearheaded by IAIRIssues Forum chair,

Kathleen McCain, and AIRROC ExecutiveDirector, Carolyn Fahey. The Ins and Outs of International Collections

International collections was the first topic ofdiscussion for a panel that included CalvinMcNulty, CEO of the McNulty-Re Group,Amine Belahbib, Vice President of theMcNulty-Re Group (MENA Region) and MikeWalker, a Partner with KPMG UK. Theytook the audience “around the world”in just an hour with their insightsand stories about their work withmany cultures around the world. A key point made by all threepanelists is that in-personinteraction is crucial! If youaren’t able to travel to meet withindividual companies, there areseveral large internationalconferences that can helpaccomplish this goal – some examplesinclude the Federation of Afro-AsianInsurers and Reinsurers (“FAIR”), Rendez-Vous de Septembre in Monte-Carlo, theGeneral Arab Insurance Federation (“GAIF”),the Singapore International ReinsuranceConference (“SIRC”) and the African InsuranceOrganization (“AIO”) Conferences. Just as with

AIRROC events in the US, attendance is a goodway to meet with representatives from multiplecompanies to further business deals.In addition to recognizing that there arecultural differences in working with othercountries, it is also important to be aware of thechanging market values of currencies.Commutations will likely be easier forcountries when their currency is strong (unless“locked-in” via original contracts) and thisshould be closely monitored. OFAC requirements involving countries/entities/individuals that are sanctioned alsoneed to be continuously reviewed for past andcurrent contract placements. In addition tocurrent OFAC regulations and all otherequivalent international governmental require -ments, contracts should be drafted to includeprovisions involving reinsurers/retro coveragewhereby those placements are made with

entities that may become sanctioned and/or“prohibited to do business with.”

Calvin offered some importantpoints to be aware of in dealingwith Latin American countries.In general, these countrieshave a long history ofreinsurance placements (manyvia the UK market) but currentand/or future political

developments must be closelymonitored to determine the

optimal time for settlement of paidsor commutations. His advice is to make

sure that you have the assistance of someonethat “knows the ropes” in dealing with acompany located in a Latin American country.Amine provided commentary and history ondealing with companies in Africa and the MiddleEast. Knowledge of the history of colonization is

13

IAIR and AIRROC Host Joint Issues Forum at the December NAIC MeetingBy Carolyn Fahey

(continued on page 15)

15

key as working in certain countries may be likeworking within the bureaucracy of the “mother”country. In many of these nations, a king eitherowns the business interests or the owners havedirect connections to the royal family. Make sureyou know who you are talking to and keep inmind that these cultures are very easily offended– and don’t easily “forgive and forget” anoutsider that has crossed the line. Calvin offeredthat the same is true in the Far East – they arequite particular about nuances and culturalnorms. Knowing the history behind deals isimportant, and they are knowledgeable aboutreinsurance and contract terms. In-person time isextremely important in these cultures. Mike Walker offered his perspective oncommutation activity in the UK, which hasreduced significantly in recent years. This islargely because the key contributing factors–Equitas and the insolvencies that occurred in the1990s – are no longer driving that activity andhave not been replaced by other drivers. Therehave been no new insolvencies since 2001, forexample, and the wave that occurred in the 1990sare winding down and paying out their assets.He also suggested that consolidation in theindustry, where about 80% of the technicalreserves that are in runoff are now concentratedwithin only eight entities, has contributed to thereduction in commutation activity.He also made reference to the increasing focuson run-off by regulators with two new reportshaving been released by the PrudentialRegulation Authority ("PRA") – one on capitalstandards and the other on schemes ofarrangement. Both are presently in thecomment period so it is too early to tell theeffect they will have on the industry, but he didopine that the effect on runoff is likely to besubstantial, particularly due to the requirementthat the PRA approve certain types oftransactions. Mike also confirmed that it hasnow been agreed that the effective date forSolvency II is January 1, 2016, and this is likelyto have an impact on commutation andtransaction activity in the near future. The View from Washington

Charlie Richardson, a partner at Faegre Baker

Daniels, followed the international panel with alively and entertaining view of the currentissues and goings on in Washington, D.C. Hetouched on many topics during hispresentation, including the Federal StabilityOversight Council’s designation of AIG andPrudential as non-bank systemically importantfinancial institutions. He spoke of thecontinuing debate related to the designationsand the involvement of the Federal Reserve asthe regulator of SIFIs. Charlie then turned to the happenings at theFederal Insurance Office (“FIO”). The FIO isinvolved in international issues and Charliepointed out that what happens abroad canwash back on U.S. regulators and their bestpractices. The FIO Advisory Committee onInsurance is turning its attention to captives,Hurricane Sandy and other hot topics. Charliethen provided his views on the long awaitedreport on insurance modernization from theFIO that was issued just days before theprogram. He touched on several of the pointsin the report, including suggestions forreceiverships and the guaranty systems. Henoted that the FIO report was generallysupported, and he outlined how the report islikely to generate discussion both on and offCapitol Hill, this year and beyond.Recent Legal Developments

Following Charlie’s commentary on theregulatory environment, two partners fromButler Rubin in Chicago took the stage.Catherine Isely and Jim Morsch provided anupdate on the latest court activity of impact toAIRROC and IAIR members. Catherinetouched first on a shift in the way that latenotice defenses to reinsurance claims are beingviewed by reinsurers following recent courtdecisions. Historically, a late notice defense wasraised by reinsurers in claim negotiations wherethe facts warranted it, but was rarely pursued asa sole defense to coverage in arbitration orlitigation because the defense was unlikely togain traction in those forums. That landscapemay change in 2014 as recent federal and statecourt decisions provide reinsurers withadditional ammunition to argue late noticedefenses and assert related bad faith claims.

IAIR and AIRROC Host Joint Issues Forum (continued)

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(continued on page 15)

IAIR and AIRROC Host Joint Issues Forum (continued)

Cedents should expect increased scrutiny byreinsurers concerning any lag between thetime the cedent learned of its claim and thetime the cedent reported that claim to thereinsurer. Cedents may also need to considerthese developments in the case law whenvaluing late-noticed claims in any negotiation.Catherine then turned to developments inallocation law. She discussed decisionsapplying differing standards of“reasonableness” to the “follow-the-allocations” doctrine, and addressed theobjective standard of "reasonableness”applied by one court versus the focus on acompany’s motivation in reaching asettlement applied in other decisions. Jim alsoalerted the audience to recent occurrence-related decisions in the mold and constructiondefect contexts, as well as recent junk fax classaction litigation and related coverage issues. NAIC News and Updates

Jim Mumford, First Deputy Commissionerwith the Iowa Division and Chair of the NAICReceivership and Insolvency Task Force,provided updates and highlights of NAICcommittee meetings. He started bycommenting on the FIO report, stressing thatit encourages uniformity in reporting by stateregulators and insurance guaranty funds. Jimthen turned to the goings on with theInternational Association of Insurance

Supervisors (“IAIS”) and the FinancialStability Board (“FSB”), and Dan Daveline,Assistant Director-Financial Analysis at theNAIC joined him on the stage. Jim and Davetalked about the FSB’s Key Attributes ofEffective Resolution Regimes for FinancialInstitutions, the IAIS Insurance CorePrinciples and their view of potential concernsto US insurers in the application of theinternational standards. They also addressedrecent guidance from the FDIC on resolutionplans for globally systemically importantfinancial companies or companies that are“too big to fail.” Jim ended the presentationwith highlights of issues before theReceivership and Insolvency Task Force. Thanks to all the participants who agreed tospeak at the Issues Forum and share theirknowledge and expertise with theorganization. Thank you also to those whohelped organize the Forum. IAIR is currentlyscheduled to host the Issues Forum on March30 in Orlando. Check the most up to dateschedule to confirm the time and location.

Carolyn Fahey is the Executive Director of AIRROC.AIRROC, a US based non-profit association, is anorganization of companies that have legacy business intheir portfolio. Carolyn joined AIRROC in May 2012bringing with her more than 20 years of re/insuranceindustry and association expertise to the organization.

Thank you to the Sponsors of the2014 IAIR Insolvency Workshop!

For 2014 sponsorship opportunities, please contact: Nancy Margolis, Esq. • 610.992.0015 • nancy@iair.org

19

IAIR’s 2014 Insolvency Workshop, themedShortening the Re ceivers hip Road Trip, washeld in at the Tempe Mission Palms Hotel in

Tempe, Arizona, on January 30 and 31, 2014.While abnormally cold weather elsewhere inthe United States certainly gave strongincentive to attend this event in warm andsunny Tempe, the broad range of timely topics,presented expertly and in depth, made theevent worthwhile for all attendees. And ourexperience was made even better by unlimitedfree access to the Hotel’s “Snack Shack” duringour networking breaks. Interesting IAIRattendees and presentations containing greatand timely information, all coupled withunbeatable snacks, were a truly wonderfulcombination.The Workshop began with Co-Chair DouglasHartz providing an overview of the entireprogram, which was comprised of tenindividual sessions, a luncheon speaker andseven networking opportunities. The programfocused on how to shorten the sometimes longand winding road of the troubled receiver andreceivership processes. Co-Chair Bruce Gilbertthen followed up with a detailed outline ofeach of the programs to be held over the nextday and a half.Michelle Avery ofVeris Consulting,Inc. presented thefirst program. Shediscussed the

financial regulatory aspects of where theinsurance insolvency process has been, where itpresently appears to be going and the potential

future of its regulation.Ms. Avery reviewed therecent history of theinsurance industry ascovered by the GAO’sReport to Congress,2002-2011, dealing withinsurance markets. Sheexplained thepermitted practicesutilized by severalinsurance departmentsto cope with potentiallytroublesome financial

conditions for certain insurers. Ms. Avery alsocovered the recently issued Report of theFinancial Stability Board and the suggestions inthe GAO Report for strengthening of theinsurance regulatory system. SolvencyModernization, Own-Risk SolvencyAssessment and the Insurance Holdings Actwere all covered by Ms. Avery’s comments.Additionally, Ms. Avery discussed possiblefuture actions of the Financial AccountingStandards Board concerning its insurancecontract project and proposed GAAPaccounting changes, which could move overinto the Statutory Accounting arena.WilliamLatza ofStrook &Strook &Lavan,LLP, andHaroldHorwichofBingham McCutchen, LLP explained the usualand unusual develop ments associated with theinsolvency of Financial Guaranty InsuranceCompany (“FGIC”), a New York domiciledmonoline financial guarantee insurer. Messrs.Latza and Horwich were involved in andrepresented clients on opposing sides of theFGIC insolvency proceedings. They explained

Insolvency Workshop Recap: Shortening the Receivership Road TripBy Alan N. Gamse

20

the traditional municipal bond guarantybusiness of FGIC and its more recent businessproviding guarantees in the real estatemortgage backed securities and credit defaultswap arenas. The insolvency proceedingsconcluded with the approval of a bondholderproposal. For those interested in this veryspecialized area, the FGIC website providesaccess to all of the documents filed in theinsolvency proceedings.Bret Barrett, the Deputy Commissioner of theUtah Insurance Department, and JamesKennedy, Counsel to the Receiver, TexasDepartment of Insurance, spoke aboutinsolvency issues involving captives, riskretention groups and special purpose vehicles.These entities have become more popular in theinsurance arena, but their structures createspecial financial regulation problems,particularly in the absence of guarantyassociation coverage. The discussion exploredthe technical differences of business structuresutilized in these specialized entities andregulatory issues impacting them.At the luncheon break, Darren Ellington, theDeputy Director of the Arizona Department ofInsurance spoke and covered a wide variety ofareas, including how the Arizona InsuranceDepartment was keeping up-to-date withvarious developing regulatory issues in theinsolvency arena.After lunch, Peter Gallanis,President of NOLHGA,spoke to the group aboutthe resolution of theliquidation of Executive LifeInsurance Com pany of NewYork (“ELNY”). Mr. Gallanisdetailed the establish ment ofGuaranty As sociationBenefits Company by theNOLHGA members affectedby the ELNY Liquidation and its additionalvoluntary financial support from certain lifeinsurance companies. The talk was quiteinformative and was accompanied by detailedslides showing how the liabilities of ELNYwould be assumed by the various players andwhich liabilities would remain uncovered. Mr.

Gallanis concluded his remarks by noting thatthe ELNY Liquidation could well serve as themodel for “the ugliest law school examinationquestion ever.”A panel comprised of Peter Kane of KaneCorporation and Michael B. Flynn and DennisO’Connor of AlixPartners, explained how todeal with difficult issues that keep estates open

and prevent their closure. They discussed suchestate assets as real estate, mortgage portfoliosand partnership interests, which may bevaluable but of limited liquidity. They also gaveadvice on dealing with such assets andutilizing them to attain the greatest value forthe liquidation estate.Michael A. Ludwig of Jones, Skelton &Hochuli, P.L.C., and Rand Chritton andGailAnn Y. Stargardter, both of Archer Norris,

P.L.C., discussed insurance claims issuesthat have extremely long liability tails andprevent liquidation estates from beingclosed quickly. These include constructiondefects, toxic tort claims, mass tort claimsand minors’ claims. Mr. Ludwig walkedthrough a sample of a construction defectlitigation matter and discussed litigationtrends such as Chinese drywall,dezincification and sulfate attacks. Theseare often situations where there are

Insolvency Workshop Recap (continued)

21

multiple insurers with exposures and many ofthem will still be solvent.Ms. Stargardter spoke about fracking andpollution claims, which are presently raised inabout 20 states. The claims include harm to theenvironment and individuals, long-tailexposure, uncertainty as respects responsibilityand difficulty in quantifying damages. Thetypes of policies with exposure to such claimsinclude CGL, Commercial Property, D&O andEnvironmental Liability. Litigation issuesinvolving such policies will include whetherthere has been an occurrence, the number ofoccurrences, policy triggers and exclusions,uninsured intervening years, allocation ofpolicy responsibility and lost policies.Rand Chritton explored foreseeable claims thatexist on the horizon. They include “football”claims from minors involving concussions andother physical injuries arising from high schooland college level sports, “Sandusky type”sexual predator claims involving both churchand non-church employers and responsibilityfor claims involving continuous loss triggertheories.A panel comprised of Christopher Fuller of the

Fuller Law Group,Jackie Rixen of LawOffice of JacquelineRixen and Steve Durishof the Ohio and WestVirginia InsuranceGuaranty Associationsconcluded the day’spresentations by

explaining the efforts of receivership officesand guaranty associations to streamline theliquidation closure process. The second day of the Workshop began with apanel, comprised of Linda Loomis of the Officeof the Ohio Insurance Liquidator and BurnieBurner of Mitchell Williams, discussing thespecialized issues thatoccur when a title insurerbecomes insolvent andmust be liquidated. Ms.Loomis and Mr. Burnerexamined some of theproblems associated with

the long-tail exposures presented by aninsolvency in the title insurance business andgave a detailed explanation of the operations ofthe Texas Title Insurance Guaranty Association. Joel Glover of Lewis Roca Rothgerber, LLP,moderated a panel comprised of TheHonorable Tom Collins, the Texas Receivership

Special Master, andThe Honorable LouisF. Rosenberg, a CircuitJudge for MarionCounty, Indiana. Thepanel ists reviewed theinsurance recei vers -hip experience fromthe eyes of thesupervising court. Mr.

Collins and JudgeRosenberg discussedtheir individualtechniques andprocedures that theyutilize to keepinsurance insolvencycases moving ontheir dockets and toprotect the interests of the claimants in thosecases.

Rowe Snider, ofLocke Lord, LLP,then delved deeplyinto the issuesassociated withrecord maintenanceand retention byboth receivers andguaranty funds. Mr.

Snider explored the problems associated withinherited estate documents, litigation holdsand electronic versus computerizeddocuments. He also explored end-of-estateissues, such as how to destroy documents at the

proper time and thevarious restrictions onthe disposition ofdocuments byliquidation estates.Overall, the efforts of

Insolvency Workshop Recap (continued)

22

Messrs. Hartz and Gilbert, coupled with thereally great selection of speakers, presentedthe attendees with a workshop that gave in-depth exposure to issues that exist in manyestates but are often glossed over orinadequately treated. Even attendees whohave been long time members of the insuranceinsolvency community had the opportunity tolearn about new nuances in the evolution ofour rather esoteric arena!

Insolvency Workshop Recap (continued)

For 2014 sponsorship opportunities, please contact: Nancy Margolis, Esq. • 610.992.0015 • nancy@iair.org

A SPECIAL THANKS TO OUR 2014 CORPORATE SPONSORS FOR THEIR CONTINUED PARTICIPATION AND SUPPORT!

Alan Gamse is a Principal in thelaw firm of Semmes, Bowen andSemmes and practices law inBaltimore, Maryland andWashington, D.C. His practice isconcentrated in the areas ofinsurance regulation andinsolvency. He currently serves asFirst Vice-President of IAIR.

Publication of Notice by OIC Runoff

IAIR 2014 Committee Chairs

24

Executive CommitteeChair: Bart Boles

Audit CommitteeChair: Evan Bennett

Ethics CommitteeCo-Chairs: Joe DeVito and Mike Fitzgibbons

Education CommitteeCo-Chairs: James Kennedy andKathleen McCain

Finance CommitteeChair: Donna Wilson

Governance CommitteeChair: Dennis LaGory

Membership and PromotionCommittee

Co-Chairs: Betty Cordial, Bruce GilbertMary Cannon Veed

Newsletter CommitteeChair: Michelle Avery

Receivers & Guaranty FundsRelations Committee

Co-Chairs: Lynda Loomis andWayne Wilson

Website CommitteeCo-Chairs: Jenny Jeffers and Dale Stephenson

www.iair.org

If you are interested in participating as an IAIR sponsor, advertiseror wish to receive information about IAIR membership or committeeparticipation, please contact Nancy Margolis, Esq., AssociationManager, International Association of Insurance Receivers,telephone 610.992.0015 • nancy@iair.org

IAIR TechnicalDevelopment Series

June

5-6Rosemont, IL

Doubletree

Summer NAIC MeetingAugust

16-19Louisville, KY

Marriott and Hyatt Regency

Fall NAIC MeetingNovember

16-19Washington, DC

Marriott Wardman Park

INVITATION TO JOIN – If you haven’t done so, be sure to join one or more of the IAIRcommittees that catch your eye.  You can express an interest and join by reaching out to thecommittee chair, self-selecting the committee on the www.iair.org webpage, or speaking withNancy Margolis. And, if you aren’t sure, join us for a committee meeting in Orlando to see whatit’s all about. Everyone is welcome so pick something and get involved!