Source: http://www.caclo.org/perl/index.pl?document_id=e8facbc611f0afe9eb636145ceecd9ab
Timestamp: 2018-12-19 14:47:40
Document Index: 750860418

Matched Legal Cases: ['§1011', '§1016', '§1033', '§1033', '§1035', '§1035', '§1035', '§1035', '§1035', '§1035', '§1035', '§1035', '§1035', '§1037', '§1037', '§1037']

PROPOSAL FOR SECOND
EARLY DISTRIBUTION OF
ASSETS TO STATE
ASSOCIATIONS OR FUNDS;
MEMORANDUM OF POINTS AND AUTHORITIES 7
(1989) 48 Cal.3d 805 9
(1937) 10 Cal.2d 307 9
(1939) 33 Cal.App.2d 649 9
§1011 1
§1016 1
§1033(a)(1) 4, 5
§1033(a)(2) 4, 5
§1035(e) 8
§1035.5 2, 5, 7, 8
§1035(a) 2
§1035.5(b)(1) 4, 8
§1035.5(b)(2)(c) 8
§1035.5(b)(3) 8
§1035.5(b)(4) 5, 8
§1035.5(b)(5) 8
§1035.5(d) 3, 4, 8
§1037 9
§1037(a) 9
§1037(b) 9
On January 30, 2006, this Court approved the Commissioner's request, pursuant to Insurance Code section 1035.5, to make an early distribution of $5,000,000 to the California Insurance Guarantee Association and other state insurance guaranty associations or funds. At the time that the Commissioner secured the approval of the Court, the Company had insufficient assets to make any additional distributions of assets to other state guaranty funds pursuant to Insurance Code section 1035.5
The Commissioner has concluded that the estate of Great States now possesses sufficient funds to request approval to make a second early access distribution to the California Insurance Guarantee Association and other state insurance guaranty associations or funds. Specifically, as of May 31, 2006, net available assets of the estate of Great States total $9,780,118, from which the Commissioner now proposes to make a second early access distribution in the approximate amount of $5,000,000. (See attached Exhibit A ("Great States 3rd Quarter 2006 Early Access Distribution").)
As of May 31, 2006, a Total of seven (7) guaranty funds have paid a total of $24,913,164 in losses and loss adjustment expenses on behalf of Great States. Specifically, the Special Fund of the Industrial Commission of Arizona has paid $3,205,043, the California Insurance Guarantee Association has paid $10,956,190, the Colorado Insurance Guaranty Association has paid $9,841,366, The Illinois Insurance Guaranty Fund has paid $304,818, the Nevada Insurance Guaranty Association has paid $492,914, the New Mexico Property & Casualty Insurance Guaranty Association has paid $3,374 and the Texas Property and Casualty Insurance Guaranty Association has paid $109,460. (See attached Exhibit B ("Great States 3rd quarter 2006 Early Access Distribution Detail of individual IGA distribution amounts.").)
The Commissioner's proposal with respect to Great States is to distribute and pay 40.3463 percent of the paid losses and loss adjustment expenses of each of the above-referenced guaranty funds, as of March 31, 2006, for a total payment to all funds of approximately $5,000,000. (See attached Exhibit C ("Great States 3rd quarter 2006 Early Access Distribution Analysis of cumulative distribution percentage").) Subtracting the total proposed distribution of $5,000,000 from Great States' total net available assets of $9,780,118 would leave Great States HIH America with remaining net assets in the approximate amount of $4,780,118.
(See attached Exhibit B ("Great States 3rd quarter 2006 Early Access Distribution Detail of individual IGA distribution amounts").)
There are no statutory deposits on deposit in the states of Arizona, California, Colorado, Nevada or Texas. Accordingly, the Commissioner will distribute the above-referenced amounts without applying an offset of a statutory deposit as set forth in Insurance Code section 1035.5, subdivision (d). Arizona and California have both recovered amounts pursuant to their workers' compensation surety bonds. Specifically, Arizona has reported recoveries of $2,378,960 and California has reported recoveries of $3,341,959. Such amounts have been credited against each state's total losses.
In distributing $54,180 to the Illinois Insurance Guaranty Fund, the Commissioner has credited a previous early access distribution of $18,620 and has offset statutory deposits of Great Stales on deposit with the State of Illinois in the total amount of $50,183 for a total credit in the amount of $68,803. (See attached Exhibit B ("Great States 3rd quarter 2006 Early Access Distribution Detail of individual IGA distribution amounts").)
No distribution will be made to the New Mexico Property & Casualty Insurance Guaranty Association, which has paid $3,374 in losses and loss adjustment expenses on behalf of Great States, because as of March 31, 2006, Great States had $210,000 on deposit with the State of New Mexico to offset any payments made by the New Mexico Property & Casualty Insurance Guaranty Association on behalf of Great States claims. After offsetting the payments made by the New Mexico Property & Casualty Insurance Guaranty Association against the statutory deposits, Great States still has $208,639 in statutory deposits available to cover payments made by the New Mexico Property & Casualty Insurance Guaranty Association. (See attached Exhibit B ("Great States 3rd quarter 2006 Early Access Distribution Detail of individual IGA distribution amounts").)
In accordance with Insurance Code section 1035.5, subdivision (b)(l), the Commissioner has reserved certain amounts of the estate's assets for the payment of expenses of administration and the payment of claims of secured creditors and claims falling within the priorities established in Insurance Code section 1033, subdivisions (a)(l) and (a)(2). Subtracting the total proposed distribution of approximately $5,000,000 from available net assets of $9,780,118 leaves remaining net assets in the amount of approximately $4.7 million for the payment of expenses of administration, and all other unrecorded liabilities and contingencies. If closure of the Great States estate is not imminent, the Commissioner will seek approval of an additional early access distribution when such liabilities and contingencies become known and are quantified.
In accordance with Insurance Code section 1035.5, subdivision (b)(4), the Commissioner has secured from the guaranty funds receiving a distribution an agreement to return the distributed assets, as required, to pay claims of secured creditors and claims falling within the priorities established in Insurance Code section 1033, subdivisions (a)(l) and (a)(2).
Approving the Commissioner's proposal to disburse a total of approximately $5,000,000 of the net assets of the estate of Great States to the six (6) state guaranty associations and funds set forth above and in the amounts set forth above.
I have read the VERIFIED APPLICATION FOR ORDER AUTHORIZING PROPOSAL FOR SECOND EARLY DISTRIBUTION OF ASSETS TO STATE INSURANCE GUARANTY ASSOCIATIONS OR FUNDS and know the contents thereof; If called upon to testify, I could competently testify to matters contained in the Verified Application as they are personally known to me, except as to the matters which are therein stated upon information and belief and as to those matters, I believe them to be true. The statements contained in the Verified Application are based upon information that has been assembled by authorized employees of the Conservation & Liquidation Office from the official records maintained there under my supervision. I am informed and believe that the statements based upon those records are true. As to those matters that are within my own personal knowledge, the statements are true.
Executed on September 29th, 2006 in San Francisco, California.
The proposal for which the Commissioner seeks court approval in this application fully satisfies the statutory provisions of section 1035.5. First, the Commissioner will retain general assets of Great States in the amount of approximately $4.7 million to fund the estate's general administrative expenses and claims of secured creditors, pursuant to Insurance Code section 1035.5, subdivision (b)(l). Second, the Commissioner proposes to disburse, on a pro rata basis, to each of the six (6) guaranty funds eligible for a distribution, funds which the Commissioner has determined to be the "available assets" of the estate, pursuant to section 1035.5, subdivisions (b)(2) & (c). Third, the proposal provides for an equitable allocation of certain assets to the state insurance guaranty funds, pursuant to section 1035.5, subdivision (b)(3). Fourth, disbursement of the assets will be subject to an agreement by each of the state insurance guaranty funds to, if necessary, return assets previously disbursed to pay claims of secured creditors, pursuant to section 1035.5, subdivision (b)(4). Fifth, disbursements of the assets will also be subject to an agreement by each of the state insurance guaranty funds to make a full report to the Commissioner accounting for all assets disbursed to each fund, all disbursements made therefrom, and any interest earned by the guaranty fund on the assets, as required by section 1035.5, subdivision (b)(5). Finally, the Commissioner will offset the amount disbursed to any entity or person performing a function in any other state similar to that function performed by the California Insurance Guarantee Association by the amount of any statutory deposit, premiums, or any other asset that Great States held in that state, pursuant to section 1035, subdivision (d). Notice of this application has been given in accordance with the provisions of section 1035, subdivision (e).
For all of the foregoing reasons, the Commissioner respectfully requests that the verified application for an order authorizing the proposal for a second early distribution of assets to a total of six (6) state insurance guaranty funds be approved.