Pension Payments – NY to Close Expected $2B Shortfall in Insurance Fund

December 5, 2007

Nearly 11,000 people around the state will continue to receive annual pension and injury payments in the next decade after the New York Liquidation Bureau arranged to cover a projected $2 billion deficit in the funds of a defunct insurance company.

An agreement announced Tuesday is expected to ensure that customers of Executive Life Insurance Company of New York will continue to receive benefits from their structured settlements, Gov. Eliot Spitzer and state Insurance Superintendent Eric Dinallo said.

The bureau took over assets and obligations of the company in 1991 after it became insolvent. Officials said it became clear in recent years that ELNY was facing a $2 billion shortfall after another 12 to 15 years of payments.

Contributions from “a variety of parties” will fill the financial gap. The American Council of Life Insurers is organizing the assistance from various life insurance companies.

“This is a remarkable example of how public agencies can aggressively pursue resolutions for the public good rather than ignoring problems for future administrations to address,” Spitzer said.

The proposed agreement is subject to court approval in Nassau County.

The Liquidation Bureau is charged with protecting policyholders and claimants when a New York insurance company goes bankrupt.

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