Colorado Bankers (CB Life)...

[scagnt83]

"There are companies that fall within the B++ category but are still considered excellent by AM Best. A carrier with an alphabetical rating of B or less is considered to be vulnerable."

That is incorrect.

Go straight to the source:
http://www.ambest.com/ratings/guide.pdf

Ratings of B - B+ are defined as "Good claims paying ability".
Not an "Excellent ability to pay claims".

And for those non-agents out there, there is one category above that with a "Superior" ability to pay claims.

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That article you linked to does not say that either from what I saw when skimming. They also state their own minimum rating that they consider "safe" is an A-.

 

[rousemark]

That is incorrect.

Go straight to the source:
http://www.ambest.com/ratings/guide.pdf

Ratings of B - B+ are defined as "Good claims paying ability".
Not an "Excellent ability to pay claims".

And for those non-agents out there, there is one category above that with a "Superior" ability to pay claims.

---
That article you linked to does not say that either from what I saw when skimming. They also state their own minimum rating that they consider "safe" is an A-.

What I posted was an unaltered copy and paste so it most definitely did say that. An d it reads as if she is quoting someone from best but she does not give attribution.

 

[Tahoe Ray]

They are not perfect by any means.

That's because the bests analysts work for Goldman making millions...not AM Best or S&P making 200k.

 

[Allen Trent]

But as you pointed out, we are talking about insolvency

I know it doesn't matter how insolvency happens, but this one feels different to me as an owner raided the values of the company from what I understand I & have read. In the handful or less of insolvent carriers over the last few decades it tended to be a long methodic failure of leadership to price products, invest surplus get too aggressive. This seems more like outright fraud than insolvency.

Reminds me of when famed former Detroit Tiger bought a local meat packaging company & raided it's pension to invest in other fraudulent companies he was also raiding of their inventory & assets. While those employees suffered greatly, they didn't lose their pension as all. Companies with pension pay into pension guarantee program in advance & it is backed additionally by government oversight & protection with much more thorough auditing, etc

 

[rousemark]

I know it doesn't matter how insolvency happens, but this one feels different to me as an owner raided the values of the company from what I understand I & have read. In the handful or less of insolvent carriers over the last few decades it tended to be a long methodic failure of leadership to price products, invest surplus get too aggressive. This seems more like outright fraud than insolvency.

Reminds me of when famed former Detroit Tiger bought a local meat packaging company & raided it's pension to invest in other fraudulent companies he was also raiding of their inventory & assets. While those employees suffered greatly, they didn't lose their pension as all. Companies with pension pay into pension guarantee program in advance & it is backed additionally by government oversight & protection with much more thorough auditing, etc

It was out and out fraud. The owner is in prison for related crimes.

 

[David Nyman]

When my wife and I bought $310K of 5 year annuities from Bankers Life, I did not get the feeling that I was buying a junk rated product, and if there was any problems I would be covered by the Utah State Insurance Guanantee program. I honestly thought this was a program run by the state of Utah and acting like the FDIC. They should rename this to The Insurance Guarantee program of Utah. I was assured that if anything were to go wrong I would be made whole by said program. NOT! At what point do you loose your money to an insurance company that refuses to return your money? At what point do you loose your money to a insurance guarantee program that refuses to pay..
Is'nt it the feduciary responsibility of the (in my case LPL financial) agent to make the client aware of the real risks of these products.

 

[David Nyman]

It was out and out fraud. The owner is in prison for related crimes.

Lindburg was convicted of attempting to bribe a NC insurance regulator. As far as I know he wasn’t breaking any laws by funneling money to his other businesses or to himself to buy yachts and $25 million houses in the woods of Idaho. In fact that is why he moved his companies to North Carolina. NC allowed this to happen.

 

[scagnt83]

Lindburg was convicted of attempting to bribe a NC insurance regulator. As far as I know he wasn’t breaking any laws by funneling money to his other businesses or to himself to buy yachts and $25 million houses in the woods of Idaho. In fact that is why he moved his companies to North Carolina. NC allowed this to happen.

Convicted so far. Other investigations are ongoing.

NC might have laxer laws than other states. But they did not allow him to make the company insolvent. What he did was illegal in all 50 states.

 

[scagnt83]

At what point do you loose your money to an insurance company that refuses to return your money? At what point do you loose your money to a insurance guarantee program that refuses to pay..

The Guaranty Program is not refusing to pay. They are going through the liquidation process. Claims will be paid up to the state limits, unfortunately, it can take months for it all to be processed... and thats when there isnt massive fraud at play.

Is'nt it the feduciary responsibility of the (in my case LPL financial) agent to make the client aware of the real risks of these products.

Well that is an interesting statement.

Assuming LPL was acting in a Fiduciary Capacity, then yes, they absolutely had a legal responsibility to disclose what was certainly a risk to your assets. Especially compared to alternatives at rates close to what CBL offered.

It was no different than selling you a B rated Bond.

They also should have shown you alternative rates that were A rated carriers so you could judge if the risk was worth it. (the rates were very close at the time)

It was also illegal of them to utilize the State Guaranty Program in their sales pitch (assuming thats were you got the info from). Or to infer it was insurance in any way. Or that your assets were fully covered (many states have a $250k limit, some make that a cumulative limit).

If they were acting as a Fiduciary, and the above assumptions are accurate, then you should probably talk to an attorney. You should certainly file a complaint with LPL's compliance division, and also with your state Department of Insurance. But talk to an attorney, the Fiduciary Duty makes it a whole different thing than a normal insurance sale.

 

[Newby]

When my wife and I bought $310K of 5 year annuities from Bankers Life, I did not get the feeling that I was buying a junk rated product, and if there was any problems I would be covered by the Utah State Insurance Guanantee program. I honestly thought this was a program run by the state of Utah and acting like the FDIC. They should rename this to The Insurance Guarantee program of Utah. I was assured that if anything were to go wrong I would be made whole by said program. NOT! At what point do you loose your money to an insurance company that refuses to return your money? At what point do you loose your money to a insurance guarantee program that refuses to pay..
Is'nt it the feduciary responsibility of the (in my case LPL financial) agent to make the client aware of the real risks of these products.

Agents are not ever allowed to mention the State Guarantee Program for the very things you mention. It is NOT like FDIC insurance and it’s not funded by a single penny of state funds. If the agent promised you any more than the strength of the company and the claims paying ability of the company he sold you might have a claim against him.