Report for Special Master’s Status Conference

May11, 2009

National Prearranged Services, Inc. #539

Background

  • Date of Permanent Injunction [Liquidation] - September 22, 2008
  • Date of Permanent Injunction [Rehabilitation] -May 14, 2008
  • Name/ Date of Appointment of SDR – Donna J. Garrett, May 15, 2008
  • Claims Filing Deadline – Not Set
  • No guaranty association involvement.
  • Date and amount of Last Early Access/Distribution – Not applicable.

Statements of Assets and Liabilities as of March31, 2009

  • $37,992,255 – Total Assets
  • $2,441,169 – Cash Assets
  • $35,551,086 – Non Cash Assets
  • $1,025,297,541 – Total Liabilities
  • $987,305,287 – Negative Equity

Status and activity

Asset Recovery

  • Cash - $224,167
  • Premiums (contract payments) - $212,386
  • Subrogation - $-0-
  • Reinsurance – $-0-
  • Statutory Deposits - $-0-
  • Other - $11,781
  • Interest - $1,007
  • Misc.- $10,774

Claims Activities

  • Claim (preneed contract) liability undetermined.
  • Continued work with IGAs to analyzeNPS contracts with no associated Lincoln/Memorial insurance policy to determine if sufficient “indicia of insurance” exists to recommend that IGA consider covered obligation status under the Liquidation Plan.
  • Working with Humana local counsel to transition administration of NPS contracts with New Life policies. Pending claims100 with approved amount of $223,390.
  • Working with American Memorial Life Insurance Co. to transition administration of Missouri NPS contracts with AMLIC policies. Pending claims: 10 with approved amount of$43,090
  • Initiated collection of delinquent contract and policy payments.
  • Researched status of funds collected by NPS on preneed contracts with no associated insurance policies.

General Legal Activities

  • Order Granting Application regarding Early Access 3/18/09.
  • Order Granting Application regarding Hardship Provisions 3/31/09.
  • Special Master’s Recommendation Denying Northstar’s Motion to Lift Stay issued 3/31/09.
  • Amended Application to Approve Notice, Set Claims Filing Deadline and Establish a Claims Processing Procedure filed on May 1st with submission date set for today, May 11th. One objection to original application filed and withdrawn.
  • The SDR will file an Application to Enforce Permanent Injunction and Automatic Stay. A demand on all third party plaintiffs to cease and desist from further efforts to pursue causes of action belonging to the SDR and NOLHGA yielded no result.
  • Continued efforts to negotiate resolution of certain reinsurance contracts while enforcing the automatic stay and permanent injunction on contracts where arbitration has commenced or been demanded.
  • Worked with solvent insurers and claimants on blocks of business reinsured by Lincoln and claims handled by NPS.

Administration

  • Closed 8 bank accounts to secure funds and consolidate accounts. Transferred $25,770 to NPS operating account.
  • Obtained from consulting actuary the updated reserve reports required to calculate and bring current the reinsurance reports.
  • Completed initial phase of preferential transfer analysis and began talks with RLO and NOLHGA regarding recovery plan.
  • Continued to work with the IGAs to review NPS contracts that do not reflect a Lincoln or Memorial policy to determine if sufficient “indicia of insurance” exists to warrant covered obligation by the IGAs as outlined in the Liquidation Plan.

Conclusion

  • Estate Team Goals to achieve prior to next Status Conference
  1. Initiate joint asset recovery efforts.
  2. Obtain Order approving claims procedures and provide Notice to interested parties.
  3. Seek Receivership Court approval of application for handling preneed contracts with no insurance coverage.
  • Estimated Closing Date of Receivership – Undetermined
  • Identification of Factors Affecting Closing Date and Final Distribution
  1. Establishing claims filing deadline and processing claims.
  2. Recovery of reinsurance proceeds.
  3. Complete asset recovery in cooperation with NOLHGA.

NPS R539 – 05/11/09 Status Conference Report 1