Colorado Bankers (CB Life)...

[rats0001]

Very bad news.
Just read an article by Lauren Ohnesorge in the Triangle Business Journal, that said Lindberg is appealing the liquidation order, and the author thinks it will eventually wind up in the North Carolina Supreme Court.
This sounds to me like a multi year process, the way courts work.
I hope my heirs enjoy this money, I'll never make it.

 

[rats0001]

more bad news from the cblife web site

Q. When will the Colorado Bankers Life liquidation order be effective?

The Order of Liquidation will become effective as of the first month-end occurring on or subsequent to ninety (90) days after the later of: (1) the entry of the Order; (2) a decision of the North Carolina Court of Appeals affirming the Order, if further review of that decision is not sought; (3) an order by the North Carolina Supreme Court denying discretionary review of the case; or (4) a decision of the North Carolina Supreme Court affirming the Order. Greg Lindberg’s company, GBIG Holdings, LLC, has stated its intent to appeal the Order of Liquidation. An appeal would delay triggering the state life and health insurance guaranty associations and delay payments to policyholders. Until the Order of Liquidation becomes effective, the Company remains in rehabilitation.

Sounds like a multi year process the way the court system works.

 

[QuestionsCBLife]

Thanks for everyone's posts. I've been reading since this situation started. If someone would be so kind to answer this question I'd appreciate it:

I've heard two explanations of how state guaranty funds work. Which one is correct?

A) each policyowner is covered up to the maximum in the state they live in at time of liquidation. With this approach a person with e.g. $400,000 in a state with $300,000 limit would get $300,000 and lose $100,000

Or

B) during liquidation the carrier will calculate how much money it has left, determine how much is applied to each policyowners (e.g. if 70% of company assets are gone and 30% remain, policyowners will get 30% of their policies from carrier) and then the balance that each policyowner is still missing (in this example, 70% missing per policy) will then be covered up to the maximum in the state they live in at the time of liquidation? With this approach, a person with e.g. $400,000 would get $120,000 from carrier and then $280,000 from state and be whole

Obviously "B" is better for policyowner.

Most posts I've read and comments seem to say it's "A" , though.

Thank you!

 

[scagnt83]

Thanks for everyone's posts. I've been reading since this situation started. If someone would be so kind to answer this question I'd appreciate it:

I've heard two explanations of how state guaranty funds work. Which one is correct?

A) each policyowner is covered up to the maximum in the state they live in at time of liquidation. With this approach a person with e.g. $400,000 in a state with $300,000 limit would get $300,000 and lose $100,000

Or

B) during liquidation the carrier will calculate how much money it has left, determine how much is applied to each policyowners (e.g. if 70% of company assets are gone and 30% remain, policyowners will get 30% of their policies from carrier) and then the balance that each policyowner is still missing (in this example, 70% missing per policy) will then be covered up to the maximum in the state they live in at the time of liquidation? With this approach, a person with e.g. $400,000 would get $120,000 from carrier and then $280,000 from state and be whole

Obviously "B" is better for policyowner.

Most posts I've read and comments seem to say it's "A" , though.

Thank you!

Technically its B. People just explain it in shorthand as A.

You are covered up to the State Limit, for whatever the Insurer does not have.

So if the insurer has $100k out of your $400k... the state is on the hook for $300k.

But in actuality its the other insurers in the state that are on the hook. Other members of the SGA will be given assessments by the state to cover the costs.

 

[Allen Trent]

nd then the balance that each policyowner is still missing (in this example, 70% missing per policy) will then be covered up

I believe there will also be a determination as to how much a person has already taken out of the policy in withdrawals as that would be considered already received money. IE: If I had put in $100k & it guaranteed 2% interest. If I had been in the policy 5 years, i might be owed a total of $111k or so in guarantees.

If I had been taking out $7000 per year during those 5 years, I believe the person would only be owed $76k still by the CBL. Whatever amount not paid by CBL to the policy holder would be assessed to the other member carriers to make it whole, up to the limit (and the other carriers will not be real happy about having to pay that money for a fraud they were not part of)

Again, not a lot of information out there as to exactly how this works as very few insurance companies become insolvent & the exact math of how it played out isnt easily accessible.

last document I saw showed almost all states annuity guaranty association limits were $250,000. A handful were $300,000 & I believe 3 were $500,000, one or two were $100k & lastly I believe California is like 80% of the amount to a max of $250k

can you imagine buying it in New York where there was $500k limit & then moved to say New Jersey where there is $100k limit? I believe New Jersey would be the state to handle it, but definitely something to ask an attorney or someone with more Guaranty Association real world experience

 

[QuestionsCBLife]

Thank you very much for your response.

The way I also understand it is step 1 is the state fund paying policyowner to the max, and step 2 is over time the excess (amount not covered by state) could also be paid to policyowner as liquidation proceeds over time.

Does this sequence seem correct?

Thanks again. Much appreciated.

 

[Allen Trent]

Thank you very much for your response.

The way I also understand it is step 1 is the state fund paying policyowner to the max, and step 2 is over time the excess (amount not covered by state) could also be paid to policyowner as liquidation proceeds over time.

Does this sequence seem correct?

Thanks again. Much appreciated.

that is the complete opposite of my belief. My understanding is the liquidation happens first to determine how much the insolvent company has to satisfy policholders guarantees. Any policy holders still left receiving below the given state limit would then get paid from the Association Fund

But, you could be right. Buy how would the Guaranty Fund know how much to assess each of the member companies if they dont know how much the liquidation will generate.

Likely have to research other previous insolvencies to see if there is information on how it occurs.

 

[QuestionsCBLife]

Thanks for your replies.

 

[Allen Trent]

Thanks for your replies.

I notice you show as being from New Jersey. Have you checked with New Jersey limits? I thought they were the only state with 100k Guaranty fund limit along with Puerto Rico.

But maybe that is the max if a cash surrender is elected & you can be protected for more if the money is received in the form of lifetime payout annuity checks

 

[QuestionsCBLife]

Thank you. Yes NJ is $100,000 surrender value, but higher if annuitized. However it's my understanding that a policyowner cannot annuitize at this time, so, only $100,000.