Rector & Associates believes that its practical approach to solving insurance regulatory and business problems allows us to assist our clients effectively and efficiently. Following is a representative sample of the insurance regulatory matters on which we have assisted our clients.
Results for Regulators
Served as supervisor for various insurance companies, including a life insurer with assets of $500 million. Monitored insurers’ operations and made recommendations for actions on topics such as investments, operating expenses and workforce reductions.
Targeted Financial Examinations
Assisted insurance departments with targeted financial examinations of various insurance companies, including property/casualty, life and health insurers. Services include:
1. A targeted financial examination of a large health insurance group, which consisted of analyzing the group’s financial condition, including reserve and premium adequacy and reinsurer relationships; assessing the group’s corrective action plan and financial projections; reporting on the group’s key financial problems; and making practical recommendations for future regulatory action.
2. A targeted financial examination of property/casualty insurers in run-off, which consisted of evaluating risks to the insurers arising from ongoing litigation; facilitating the commercial resolution of ongoing disputes; assisting the supervisor in ongoing financial issues; analyzing a Form A change in control filing; and examining the insurers’ reinsurance programs.
Targeted Market Conduct Examinations
Assisted insurance departments with targeted market conduct examinations of various insurance companies, including property / casualty, life and health insurers. Services include a targeted market conduct examination of a life insurer, which consisted of a detailed review of the insurer’s surrender and policy loan activity.
XXX / AXXX Insurance Matters
Assisted the NAIC and insurance regulators with complex issues with respect to XXX / AXXX insurance products and regulation. Services included overseeing the development of reserving rules pertaining to XXX / AXXX insurance products, as now embodied in Actuarial Guideline 38 (AG 38).
Captive Insurance Company-Related Issues
Assisted the NAIC and insurance regulators with complex issues with respect to captive reinsurance finance transactions. Services included developing a regulatory framework relative to XXX / AXXX reinsurance finance transactions, which resulted in Actuarial Guideline 48 (AG 48).
Performed financial examinations on behalf of insurance departments of property/casualty insurers and risk retentions groups, including examinations conducted in accordance with risk assessment approach.
Form A Filings
Reviewed several Form A filings (change of control transactions) on behalf of various departments of insurance with purchase prices of as much as $1.4 trillion. Analyzed complex funding mechanisms, ownership relationships and reinsurance agreements that were key to transactions.
Form D Filings
Reviewed several Form D filings (affiliated party transactions) on behalf of various departments of insurance. Types of affiliated party transactions reviewed included complex tax allocation and administrative services agreements, reinsurance agreements for all of the ceding party’s business, loans and sales of receivables.
Blue Cross / Blue Shield Matters
Assisted departments of insurance with regulatory issues relating specifically to Blue Cross/Blue Shield matters, including:
1. Acted as advisor to an insurance department commissioner during public hearings on the change of control of a Blue Cross plan with assets of $180 million and the plan’s conversion to a stock company. Also assisted the commissioner in evaluating issues involving the Blue Cross plan’s value.
2. Assisted an insurance department in its determination of whether any portion of a Blue Cross/Blue Shield insurer’s surplus is excessive.
Property / Casualty Actuarial Services
Provided property/casualty actuarial services as part of financial examinations of various insurers performed by departments of insurance. Services included actuarial valuations of insurers’ reserves, as well as evaluating insurers’ reserve methodology and actuarial opinions and reviewing reports of national accounting and actuarial firms.
Expedited admission applications on behalf of an insurance department, including making a recommendation to the department within 30 days of receiving a completed application.
Provided training services to various insurance departments’ financial examiners and analysts. Training encompassed the types of information to be reviewed as part of the examination or analysis of an insurer’s financial condition, triggers for further investigation, and the latest changes in accounting practices and procedures.
Results for Insurance Companies
Formation and Licensing of Insurance Companies
Led all facets of formation and licensure of several insurance companies in various states, including property/casualty and health insurance companies. Assisted with establishing financial operations, record keeping and claims processing systems. Assisted many other insurance companies in various states in obtaining foreign insurer Certificates of Authority.
Worked extensively with management to formulate a complex reorganization plan to convert a life insurer from multiple to a single class of stock. Assisted in presenting the plan to shareholders and preparing the Form A change of control filing.
Change of Control Filings
Assisted insurers in various states and with assets of as much as $36 billion in completing successful change of control filings involving complex funding mechanisms, ownership changes and reinsurance agreements. Also assisted an insurer with a difficult management dispute involving the board of directors’ control of the company.
Due Diligence Analysis
Performed extensive evaluation of finances and operations of various insurance companies on behalf of potential purchasers of companies, including property/casualty, life, and health insurers. Presented findings of evaluations to purchasers and responded to questions and concerns regarding potential purchases.
Operations, Claims and Market Conduct Reviews
Performed market conduct operational reviews for several insurance companies and very large medical management company. Reviewed underwriting, policy cancellations and terminations, and claims and complaint processing for an international property / casualty group with assets of $480 million. Review enabled the group to make needed corrections in advance of state departments of insurance market conduct examinations.
Coordinated efforts when a multi-state full-service HMO with 40,000 enrollees decided to cease operations. Successfully terminated complex risk-sharing provider agreements and handled difficult negotiations to resolve regulatory issues related to terminating enrollees’ coverage and extinguishing the HMO’s liabilities. Also helped smaller managed care companies wind-up operations by overseeing financial operations, working with the insurance department on license surrender and resolving final claims.
Results for Litigation Support
Insurance Company Transaction Disputes
Served as expert in connection with complex breach of contract action involving the sale of an insurance group. Issues involved the sale’s likely financial impact on the insurance group and the standard of review used by departments of insurance in considering change of control filings.
Provided litigation consultation services in an action involving the sale of an insurer group to management that resulted in claims that management defrauded the sellers.
Valuation of Insurance Companies
Served as expert in a case involving a dispute between owners over an insurer’s fair market value. Issues included valuing the insurer based on expected future net income and losses by taking into account insurer and industry historical data.
Life Insurance Issues
Served as expert in connection with a dispute over the replacement of life insurance policies.
Commercial Property / Casualty Insurance Issues
Served as expert in connection with a dispute over the renewal of a commercial insurance policy.
Title Insurance Issues
Served as expert in cases involving the rates charged by title insurers for the issuance of lender’s policies in connection with residential refinancings. Services required in-depth understanding of title insurance regulation and premium rate filings.
Health Insurance Issues
Served as expert on behalf of both insurance companies and claimants in cases involving denial of health insurance claims. Services required interpreting complex benefit language in policies and opining on the need to investigate potential policyholder fraud before paying a claim.
MEWA (Multiple Employer Welfare Arrangement) Issues
Served as expert in cases involving MEWA regulatory compliance and coverage. Services required in-depth understanding of regulatory issues involving MEWAs.
Automobile Insurance Issues
Served as expert in an action involving a dispute over payment of auto insurance claims. Issues required extensive analysis of the policy’s uninsured motorist and liability coverage and exclusions.
Mutual Insurance Company Demutualization Issues
Served as expert in cases involving the payment of demutualization proceeds upon the conversion of a mutual insurance company to a stock insurance company. Services required in-depth understanding of the demutualization process and the rights of members of mutual insurance companies.
Property / Casualty Actuarial Issues
Served as expert on numerous property/casualty actuarial matters. Services included analyzing the effect of various assumptions relating to an insurer’s claims settlement practices and methodology on the insurer’s losses.
Statutory Accounting Issues
Served as expert on statutory accounting issues. Issues involved the insurance company auditor’s responsibility to perform adequate testing and to disclose information to the board of directors and in the audit report and alleged attempts to manipulate the insurer’s financial results to improve IRIS ratios.
Reinsurance and Reinsurance Intermediary Issues
Provided litigation consultation services on issues involving complex reinsurance pools and regulatory duties of reinsurance intermediaries.
Bad Faith Issues
Served as expert in actions claiming bad faith in connection with claims. Issues included determining actions by insurer that constitute bad faith, including to failure to pay claims.
Agent and Broker Compensation
Served as expert in cases involving broker compensation. Services required interpretation of complex agency agreements and of regulatory restrictions on payment of agent compensation.
Title Insurance Agent Disputes
Served as expert in case involving title insurance agent authority and termination. Services required extensive understanding of the relationship between title agents and title insurers and the regulatory agent appointment and termination process.
Coordination of Benefits
Served as expert in case involving coordination of benefits between health and auto insurance policies. Services required in-depth analysis of the applicability of coordination of benefit regulations.
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172 East State Street
Columbus, Ohio 43215
Phone: (614) 224-6200
Fax: (614) 224-6283
Overland Park, Kansas
11011 King Street
Overland Park, Kansas 66210
Phone: (913) 362-8500
Fax: (614) 224-6283
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