Opinion ID: 775559
Heading Depth: 2
Heading Rank: 2

Heading: Peoples' involvement with Frankel

Text: 3 Accepting Peoples' allegations as true for the purpose of deciding its motion to intervene, it appears that the following are the relevant facts: 4 In approximately 1993, Martin Frankel established the Thunor Trust in Tennessee in order to acquire ownership of insurance companies, including First National Life Insurance Company (FNLIC) and Franklin American Life Insurance Company (FALIC). 5 In June 1998, a broker of blocks of insurance business put Peoples and Veterans in touch with FALIC to explore the possibility of FALIC reinsuring certain blocks of insurance business that were originally underwritten by Peoples. 6 Peoples rejected the initial proposal because FALIC's financial rating was not high enough to assure regulatory approval. FALIC officials offered as an alternative, a substitute deal with FNLIC, FALIC's highest rated affiliate under the folds of the Thunor Trust. Based on a series of representations regarding FNLIC's financial condition and its statutory financial statements, Peoples entered into a set of agreements with FNLIC. 7 The agreements entered into included a Master Agreement, a Reinsurance Agreement and an Assumption Agreement. The Agreements were to transfer the initial blocks of insurance business from Peoples to FNLIC, as well as the corresponding $14,689,593 Reserve Fund which accompanied those blocks of insurance business. The Agreements provided that they would not and could not become effective until the Mississippi Commissioner of Insurance approved the Assumption Agreement. The documents also provided that FNLIC would immediately return any portion of the insurance business and the concomitant portion of the Reserve Fund that was not approved for transfer by the appropriate regulatory authorities. 8 Further, the Agreements failed to become effective because certain conditions set forth in the Agreements did not occur. However, FNLIC did not return the Reserve Fund because Frankel absconded with it. As a consequence, Peoples lost the Reserve Fund but remained liable for all claims and expenses for the corresponding insurance business.