Updates

Update - February 8, 2007

General News

If you have not read the Receiver’s Preliminary Report, you should do so. It can be accessed by this link.

If you have not read or heard of the Court's order to "pool" all assets, it can be accessed by this link. In short, the ruling from the Court means that no investor has a specific interest in a specific policy any longer. Contacting the Receiver or Examiner to find out the status of "your particular policy" is no longer material. In the event of the death of the individual insured on the policy in which you originally held an interest, the death benefit from the policy will be paid into the Receivership for the benefit of all investors.

All premiums for all policies are being paid current during the time that the Receiver completes his analysis of the policies, their value, the premium carry for the future and the strategies available to maximize the return to the investors. The Receiver has already completed his efforts to pay only "cost of insurance"; effectively paying the least amount that must be paid to keep the policies current. The Receiver has also determined which policies have sufficient cash values to pay premiums without the use of cash on hand in the Receiver's bank account and the premiums for those policies are being paid from their respective cash values. Finally, the Receiver has ordered and is collecting from every involved insurance company an up-to-date "premium illustration" for each policy. These premium illustrations are the best information available as to the projected cost of each policy over the next 3-5 years. The premium cost is fundamental to understanding how much money will be required to keep all or part of the policies in force, and therefore will be carefully reviewed to determine whether any of the policies need to be sold immediately or even terminated if no buyer can be found. The Receiver and the Examiner have arranged a meeting the week of February 19, 2007 to confer with the insurance advisory firm employed by the Receiver to thoroughly review each policy, its costs, its likely maturity, its value and a strategy for each policy and the portfolio as a whole.

Alternative Possible Strategies for the Portfolio:

The Receiver, Examiner, his counsel, the accountant for the Receiver and the insurance advisory team are working to develop a strategy for the future of the portfolio. The receivership team is taking the position at this time that all ideas are on the table. NO STRATEGY HAS YET BEEN DECIDED. ONCE THE STRATEGIES FOR HOW TO PROCEED ARE NARROWED, AN EFFORT WILL BE MADE TO PRESENT AN ACCURATE STATEMENT OF THE SITUATION, AND INPUT FROM INVESTORS WILL BE REQUESTED TO DETERMINE HOW BEST TO PROCEED. NO STRATEGY CAN BE IMPLEMENTED WITHOUT COURT APPROVAL. Among the strategies being considered, and stated only in general terms, are the following:

Borrow and Hold:
If the analysis of all circumstances supports that reasonable amounts of money can be borrowed, secured by the insurance policy portfolio to pay premiums for a period of time sufficient to allow for a number of maturities, then borrowing money to pay premiums and holding the portfolio may be the best strategy.
Sell Some Policies and Hold the Remainder:
As a means of raising money to pay premiums and costs of the receivership that would not have to be borrowed and to further rid the portfolio of policies that may be very expensive for a very long time, the Receiver may choose to recommend to the Court that some policies be sold for cash. This strategy assumes the remaining portfolio is reasonably expected to mature during the time made available by money from the sales.
Experience a Death and Hold:
If a maturity occurs for the right policy or set of policies, there may be sufficient money available to pay premiums, avoid borrowing to pay premiums and the portfolio could be held to maturity.
Mutual fund:
The idea has been offered to the Receiver that there may be mutual funds that will buy the entire portfolio or alternatively offer shares in the mutual fund in exchange for the investors' claims. The idea has also been offered to the Receiver that he should start his own mutual fund to raise money to pay premiums for the life of the portfolio.
Hedge fund:
The Receiver has been in contact with a hedge fund that may have an interest in purchasing the portfolio or exchanging the investors' claims for shares in the hedge fund.
Sale:
Certainly one option is to just sell the portfolio. This will be considered along with the other strategies.
Seek rescission of some policies:
If the potential sale price is simply too low, it may be possible to seek cancellation of the policy with an agreement from the carrier to return all or a substantial part of the premiums paid. Some Combination of the Above: It may also be best advisable to use some combination of the alternatives set out above.

Claims Process:

In addition to preserving and maximizing the assets of the receivership, the Receiver must also conduct a claims process to confirm who has invested, how much they have invested and seek approval from the Court for the amount of the claims that will be paid from the pool. The claims process will begin this month. The Receiver will mail a claim form to each individual investor (including all foreign investors) along with a set of simple instructions. A claim form is to be completed for each investment made, and, along with the supporting documents asked for on the form, returned as indicated on the form to an individual in Mr. Quilling's office. Upon receipt of the form, a post card will be sent to the investor confirming that the claim has been received. The amount claimed will be compared to the records of ABC, the documents submitted will be reviewed and the Receiver will determine the amount of the claim. THE CLAIM AMOUNT WILL ONLY BE THE ACTUAL AMOUNT OF MONEY INVESTED IN US DOLLARS. THE CLAIM AMOUNT WILL NOT INCLUDE ANY EXPECTED RETURN OR YIELD. DO NOT INCLUDE EXPECTED YIELD OR RETURN AS DOING SO WILL ONLY DELAY THE CLAIMS PROCESS.

If the Receiver agrees with the amount of the claim or claims as submitted by the investor, the Receiver will send a post card to the investor confirming that the claim amount is agreed and will then submit the claim amount for that investor to the Court for approval. If there is disagreement between the Receiver and the investor, the Receiver will attempt to communicate with the investor to clarify the amounts and reach an agreement. If no agreement can be reached, the Receiver will file a motion with the court to have the amount of the claim determined and the investor will have the opportunity to come to the Court and present his/her case.

The claims process will take some time. There are about 1800 Taiwanese investors, 400 Caribbean/South American investors, 800 American and some from Australia.

THE PROCESS FOR EVERY CLAIM MUST BE COMPLETED AND APPROVED BY THE COURT BEFORE THE RECEIVER CAN DISTRIBUTE ANY MONEY. IT IS LIKELY THAT THIS PROCESS ALONE WILL TAKE TWO YEARS. THUS, NO MONEY WILL BE DISTRIBUTED FROM THIS PROCEEDING UNTIL THE CLAIMS PROCESS IS COMPLETE, REGARDLESS OF WHETHER THE PORTFOLIO IS SOLD SOON OR HELD FOR AN EXTENDED LENGTH OF TIME.

Bonds:

Two companies posted surety bonds for the payment of policies in the event the insured did not die at or before the date of their life expectancy. The first, IFS, has refused to pay on bonds it should have paid in July 2006. An investigation into IFS is underway to determine why the payments were not made and to seek a recovery on the bonds if possible.

The second bonding company is called "Albatross". It is located in or about Rome, Italy. This company does not have an obligation that comes due until next year. The Receiver and the Examiner intend to make contact with representatives of Albatross promptly after some of the other more pressing matters are resolved. The Receiver and Examiner will make a determination as to whether Albatross can be relied on to pay in the event the terms of their bonds so require.

Communications:

Because of the large number of the foreign investors in this matter, this website and the Receiver's website have been prepared and posted in English and Mandarin Chinese. A Spanish version is being prepared. This site will be updated as relevant information is available.

In addition, because the majority of the investors in this matter are Taiwanese, the Receiver, Examiner, the Receiver's Counsel and the accountant recently traveled to Taipei Taiwan for a meeting with the key brokers for these investors. A nine hour meeting, translated between English/ Chinese was conducted with approximately 40 brokers / agents to inform them of the receivership, the process, the strategies being considered, the claims process and to answer their questions. The trip was also used to establish a reliable methodology for the claims process for the 1800 Taiwanese investors. This same team is headed to Puerto Rico for a similar meeting later this month.

It will be one of the principal concerns of the Examiner that investors know what is going on, what is planned, what the options are and to otherwise keep the investors informed of what they can expect from this receivership. Please keep in contact with this website. There may be periods where there is nothing significant to report and thus updates will occur only when there is new important information.