COURT APPROVES INSURANCE COMPANY REORGANIZATION PLAN BASED UPON ASSUMPTION REINSURANCE AGREEMENT
A Pennsylvania judge has approved the fourth amended plan for the rehabilitation of Fidelity Mutual Life Insurance Company, which is based upon Fidelity transferring its outstanding insurance and annuity contracts to Commonwealth Annuity and Life Insurance Company under an assumption reinsurance agreement. Assets of value equal to the assumed liabilities are also being transferred to Commonwealth, which is paying a ceding commission of $3.9 million and a contingent payment of up to $5.9 million. The proposed reinsurance transaction drew a single objection, which contended that Commonwealth was potentially financially unstable. The court rejected the objection, based in part upon Commonwealth’s A. M. Best rating of “A-“ and its estimated risk-based capital ratio of 8 to 1. The court found that the proposed plan complied with applicable regulations and was fair, equitable and financially sound. Ario v. Fidelity Mutual Life Ins. Co., No. 389 M.D. 1992 (Pa. Commonwealth Ct. Oct. 25, 2007).
This post written by Rollie Goss.
