Cb Life Insurance: Rehabilitation And What It Means

On June 27, 2019, the Colorado Bankers Life Insurance Company (CBLIC) was placed into rehabilitation by the Superior Court of Wake County, North Carolina. The company is currently undergoing rehabilitation and is subject to a moratorium order that prohibits most surrenders, loans, or annuitizations. As of November 30, 2024, CBLIC was placed into court-ordered liquidation, with the North Carolina Insurance Commissioner appointed as the Liquidator. This means that CBLIC's policy obligations are now covered by state life and health insurance guaranty associations, and any policy benefit amounts above the state's coverage limits will become claims against the company's remaining assets. The rehabilitation and liquidation of CBLIC have been the subject of various court orders, rulings, and reports, with the Receivership Court retaining jurisdiction over the rehabilitation process.

Colorado Bankers Life Insurance Company's court-ordered liquidation

The Colorado Bankers Life Insurance Company (CBL) is in court-ordered liquidation as of November 30, 2024. The liquidation process was initiated by a North Carolina court order on December 30, 2022, which affected both Bankers Life Insurance Company and Colorado Bankers Life Insurance Company (Global Bankers). The North Carolina Insurance Commissioner, Mike Causey, serves as the court-appointed liquidator.

The liquidation of CBL follows a lengthy legal process that began in 2018 when concerns were raised about the company's financial obligations. The North Carolina Insurance Commissioner placed CBL and two other life insurance companies owned by former insurance executive Greg Lindberg under administrative supervision. Over the next two years, the commissioner monitored the companies' financial stability and ability to meet their obligations.

In December 2022, the commissioner filed a petition to liquidate one of the three companies, Southland National Insurance Corp., due to insolvency. The holding company that owned all three insurers, GBIG Holdings LLC, objected to the liquidation petition and requested additional time for discovery. However, the trial court denied the motion, and the companies were ordered into liquidation. GBIG Holdings appealed the decision, but the North Carolina Supreme Court dismissed the appeal in December 2024, clearing the way for the liquidation process to advance.

As a result of the court-ordered liquidation, CBL's policy obligations are now covered by various state life and health insurance guaranty associations. These associations provide coverage to the company's policyholders who are residents of their respective states, up to the coverage limits specified by state laws. Any policy benefit amounts exceeding the state guaranty association coverage limits become claims against CBL's remaining assets, after administrative expenses are paid. Policyholders can expect separate login information for the covered portion of their policies, which will become active in January 2025.

Moratorium on surrenders, loans, annuitizations

Colorado Bankers Life Insurance Company (CBL) is currently in court-ordered liquidation, with the North Carolina Insurance Commissioner acting as the court-appointed liquidator. As a result, a moratorium has been placed on policy surrenders, loans, and annuitizations for uncovered amounts. This means that policyholders may be restricted from accessing the full value of their policies or making changes to their coverage during the rehabilitation and liquidation process.

The moratorium on surrenders, loans, and annuitizations is a temporary measure intended to protect the interests of policyholders and stakeholders during the rehabilitation of CBL. During this period, policyholders may be unable to surrender their policies for their full cash value or take out loans against their policies. Annuitizations, which are options that allow policyholders to receive regular income payments from their policies, may also be temporarily unavailable.

The rehabilitation process aims to address the financial challenges faced by CBL and ensure that policy obligations are met. By imposing a moratorium on surrenders, loans, and annuitizations, the court aims to stabilize the company's financial position and prevent further deterioration. This measure allows for the orderly management of the company's assets and liabilities, ensuring that policyholders' interests are protected.

During the moratorium, policyholders' rights and benefits under their policies are typically preserved. The rehabilitation process seeks to restructure CBL's operations and finances to enable it to meet its obligations to policyholders. The North Carolina Insurance Commissioner, as the court-appointed liquidator, is responsible for overseeing this process and ensuring that policyholders' rights are upheld.

While the moratorium may cause temporary inconvenience to policyholders, it is implemented to safeguard their long-term interests. The rehabilitation and liquidation process aims to resolve CBL's financial difficulties and ensure that policy obligations are honoured to the extent possible, within the limits specified by state laws and the coverage provided by state life and health insurance guaranty associations.

North Carolina Insurance Commissioner as liquidator

The North Carolina Insurance Commissioner is an elected state executive position in the North Carolina state government. The current officeholder is Mike Causey, who assumed office on January 1, 2017, and was re-elected in 2020. The commissioner leads the North Carolina Department of Insurance, which regulates the insurance industry, handles insurance-related complaints, and licenses insurance agents. The department also houses the Office of the State Fire Marshal, which interprets building codes, trains firefighters, and awards grants to fire and rescue departments.

In the context of liquidation, the North Carolina Insurance Commissioner serves as the court-appointed liquidator. When a company is ordered into liquidation, such as in the case of Colorado Bankers Life Insurance Company (CBL), the Insurance Commissioner takes on the role of overseeing the process and protecting the interests of policyholders. During liquidation, each state's life and health insurance guaranty association provides coverage to the company's policyholders, up to the limits specified by state laws. The Commissioner ensures that CBL's policy obligations are fulfilled by various state life and health insurance guaranty associations, subject to applicable statutory limits.

The North Carolina Insurance Commissioner's role as liquidator involves coordinating with special deputy liquidators and overseeing the rehabilitation process. This includes the filing of quarterly rehabilitation reports, which provide updates on the financial condition and recovery efforts of the company in rehabilitation. The reports are filed with the Insurance Commissioner to ensure transparency and compliance during the rehabilitation period.

The North Carolina Insurance Commissioner's duties extend beyond liquidation and rehabilitation. The commissioner is responsible for regulating the sale of insurance, licensing insurance professionals, investigating insurance fraud, and providing consumer assistance. The department's Public Services group answers consumer queries, while the Company Services group evaluates the financial condition of insurance companies. The Technical Services group monitors rates and industry practices to ensure fairness and compliance.

The North Carolina Insurance Commissioner, as a member of the Council of State, plays a crucial role in overseeing the state's insurance industry and protecting the interests of policyholders, especially during liquidation and rehabilitation processes. The commissioner's duties and powers are outlined in the North Carolina Constitution, specifically in Article III, Section 7.

Policy obligations and guaranty associations

Colorado Bankers Life Insurance Company (CBL) is in court-ordered liquidation as of November 30, 2024. In the event of an insurance company's impairment or insolvency, policyholders are protected by state guaranty associations. These are state-sanctioned organizations that ensure policyholders' claims are covered if an insurance company goes out of business. All US states have an insurance guaranty association, and insurers are required to participate in the guaranty fund of the state where they are licensed.

When an insurance company is liquidated, each state's life and health insurance guaranty association provides coverage to the company's policyholders who are residents of that state, up to specified coverage limits. CBL's policy obligations are now covered by various state life and health insurance guaranty associations, subject to applicable statutory limits and requirements.

Insurance guaranty associations are given their powers by the state insurance commissioner, who also oversees the review of the financial health of insurance companies operating in their state. If an insurance company is deemed impaired (at risk of meeting its financial obligations), the commissioner will determine the steps the company must take to reduce its risk during a rehabilitation period. If the company still fails to meet its obligations, it is considered insolvent, and the state insurance commissioner, the state insurance guaranty association's board, and the courts determine how to pay the covered claims.

Guaranty associations obtain funds by assessing member insurers that operate in the same market as the insolvent insurer. These assessments, along with the assets of the insolvent insurer, are used to pay the covered claims of policyholders, up to statutory limits. Guaranty associations may also provide continued coverage for the policyholder or transfer policies to financially healthy insurers.

The amount of coverage provided by guaranty associations varies by state but typically includes life insurance death benefits, net cash surrender or withdrawal values for life insurance, annuity benefits, long-term care insurance benefits, and disability income insurance benefits. Most states impose an overall cap of $300,000 in total benefits for any individual with one or multiple policies with the insolvent insurer.

Receivership Court jurisdiction

The receivership court's jurisdiction typically includes overseeing the liquidation or restructuring process, ensuring compliance with legal and regulatory requirements, and protecting the rights of all stakeholders, including policyholders, creditors, and shareholders. The court has the authority to appoint a receiver, who acts as an independent trustee to manage the company's business, assets, and financial and operational decisions during the receivership period.

In the case of CBL, the receivership court's jurisdiction also extends to approving moratoriums on policy surrenders, addressing potential claimant notices, and overseeing the distribution of assets to creditors in accordance with applicable laws and priority schemes. The court is responsible for ensuring that the liquidation process is fair, transparent, and in compliance with relevant state laws and insurance regulations.

Additionally, the receivership court has jurisdiction over related legal proceedings, such as the US Department of Justice Indictment of Greg Lindberg, which may have implications for CBL's liquidation. The court's role is to ensure that all legal matters related to the receivership are resolved in a manner that aligns with the overall objectives of the receivership process.

The receivership court's jurisdiction typically ends once the receivership goals have been achieved, and the company has either successfully restructured or completed the liquidation process. However, the court may retain some oversight functions to ensure that the receiver's final account and report are accurate and that all parties' rights are respected.

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