American Mutual Reinsurance Company
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Estate Closed
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Welcome to the webpage for
American Mutual Reinsurance Company. On February 22, 1988,
American Mutual Reinsurance Company was ordered into rehabilitation, and
the Director of Insurance was affirmed as Receiver. By Illinois
law, the Director may appoint a Special Deputy Receiver to administer
the receivership. By power of attorney, Patrick D. Hughes is the
Special Deputy Receiver to Director Michael T. McRaith, and the Office
of the Special Deputy Receiver handles the day-to-day administration of
the liquidation proceedings under the direction of the Special Deputy,
subject to the ultimate authority of the Director and to court
supervision. Here is additional information on American Mutual
Reinsurance Company: |
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| Rehabilitation Date: | February 22, 1988 |
| Claims Filing Deadline: | March 21, 2002 |
| Contingent Claim Deadline: | March 21, 2002 |
| Estate Closed: | September 16, 2009 |
| Docket Number: | 88 CH 01595 |
| Related Documents: | |
Financial Statements and Independent Auditors' Report 2008 |
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| Latest News: | |
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A final distribution in the amount of $89,341,606 having been made on
September 4, 2009, on September 16, 2009, the Supervisory Court entered
an order approving the Rehabilitator’s Final Report And Motion For
Approval Of The Dissolution Of Amreco, Termination Of The
Rehabilitation Proceedings And Closing Of The Estate. Pursuant to the
Supervisory Court’s order of September 16, 2009, Amreco has been
dissolved, the rehabilitation proceedings terminated and the estate
closed. See Final Report and Receivership Order |
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| Historical Data: | |
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American Mutual
Reinsurance Company (AMRECO), a domestic mutual insurance company,
consented to an Order of Rehabilitation issued by the Circuit Court of
Cook County, Illinois, on February 22, 1988. Since its inception in
1941, the company operated exclusively as a professional reinsurance
company, providing only reinsurance to other insurance companies. Those
insurance companies ceded to AMRECO a portion of the risks they had
underwritten and AMRECO, in turn, retroceded a portion of the risks
assumed to other insurance and reinsurance companies through the
company’s reinsurance pool. The company has no direct policyholders. The court supervising the rehabilitation entered an order on September 6, 1988, approving an Amended Plan of Rehabilitation for American Mutual Reinsurance Company. The Amended Plan contemplated the payment in cash of a fixed percentage of all outstanding claims presented in the ordinary course of business and the payment of the balance of each such claim with interest bearing surplus drafts. The Amended Plan also provided for progressive periodic increases to the cash portion of the payment formula and a corresponding redemption of the surplus drafts. Consistent with favorable loss experience during the rehabilitation, the Rehabilitator determined it was in the best interest of all concerned to accelerate the claims and adjudication process and wind up the estate. On December 21, 2001, the Supervisory Court entered an order approving the Second Amended Plan of Rehabilitation for American Mutual Reinsurance Company. Key provisions of the Seconded Amended Plan include, but are not limited to: (1) All claims of cedent creditors shall be valued as of June 30, 2001 (or earlier if a cedent fails to provide information as of that date); (2) March 21, 2002, was the final date by which the Rehabilitator may accept both new proofs of claim, as well as updates to existing proofs of claim; (3) cedent creditors could include as part of their claims reserves their incurred but not reported claims (“IBNR”), as reflected on their books and records on or before June 30, 2001, provided that they also submit work papers supporting the derivation of claimed amounts of IBNR; and (4) the Rehabilitator shall continue making quarterly distributions from general assets on allowed claims pursuant to the formula for payment (presently, 60% cash and 40% surplus draft), and to issue quarterly billings as was done under the First Amended Plan. The first payment under the Amended Plan was made February 1989, and the Rehabilitator has since made 68 consecutive quarterly payments. The final claim payment, made under the Second Amended Plan, was made on November 11, 2005. During the claim payment phase of the rehabilitation proceeding, claims liabilities in the amount of $513 million were paid as follows: $246.4 million in cash and offsets, and $166.6 million with surplus drafts. In 2006, the Rehabilitator filed a petition seeking leave to distribute substantially all of the estate’s assets to surplus draft holders, while retaining a portion for purposes of funding continued collection activities. One surplus draft holder, EMLICO, objected on the grounds that the Rehabilitator’s petition excluded $23,000,000 in surplus drafts it held from participation. In January 2007, the supervisory court held that EMLICO’s surplus drafts would not be subordinated in a final distribution of estate assets, and the court entered an order denying the Rehabilitator’s petition. In May 2007, the Rehabilitator sought approval of procedures for a final distribution to surplus draft holders (approximately a 50% dividend), consistent with the court’s January 2007 order. Four lower priority claimants, holders of guaranty fund certificate notes, objected (this lower class, as a whole, has a $13,000,000 claim), arguing surplus draft holders would be overpaid and the court should require either a present value discount or the estate remain open until 2041. In late 2007, the court found the Rehabilitator’s plan was reasonable and did not constitute an abuse of discretion, and entered an order overruling the objections. An appeal was filed that is still being briefed. On January 22, 2009 the Rehabilitator presented his annual report and the Supervisory Court entered an order approving the payment of interest for the period December 1, 2007 through November 30, 2008, and setting the rate of interest for the period of December 1, 2008 through November 30, 2009 at 0.50%, without compounding. Copies of the Rehabilitator's Annual Report and Order are available (See Receivership Orders). June 8, 2009 - Notice is being provided of a hearing to be held on July 9, 2009 at 9:30 a.m. in courtroom 2510 of the Richard J. Daley Center, 50 West Washington Street, Chicago, Illinois, on the Rehabilitator's Motion for Approval Of Settlement With Objecting Guaranty Fund Certificate Note Holders. Approval of the proposed settlement will allow the Rehabilitator to seek court approval for the issuance of a final distribution to surplus draft holders and closing of the estate. See Notice Letter, Rehabilitator's Motion For Approval Of Settlement On July 9, 2009 the Supervisory Court entered an order approving a settlement between the estate and four parties that had appealed the Supervisory Court’s December 2007 order approving the Rehabilitator’s procedures for the final distribution of estate assets and closing of the estate. Subsequent to the order becoming final and non-appealable and the dismissal of the pending appeal, the Rehabilitator will pay $1,675,000 to the holders of guaranty fund certificate notes, in full and final settlement of their asserted right of participation in a final distribution of estate assets. The court’s approval of the settlement represents an important step in the Rehabilitator’s efforts to issue a final distribution and close the estate prior to the end of this year. On August 21, 2009, the Supervisory Court entered an order approving the Rehabilitator's Award of Bid to PRO Insurance Solutions, Ltd. for the sale of the estate's outstanding reinsurance receivables. On August 25, 2009, Based upon best estimates and barring any unforeseen circumstances, the Special Deputy Receiver expects to close this estate in the third quarter of 2009. Pursuant to the provisions of Amreco’s Amended and Second Amended Plans of Rehabilitation, Amreco has paid its assumed reinsurance liabilities in full, in the amount of $401,728,704.86, as follows: $235,091,276.98 has been paid in cash and $166,637,427.88 has been paid with debt instruments referred to as “Surplus Drafts.” To date, the Rehabilitator has made four prepayments on the Surplus Drafts. Pursuant to the provisions of the Second Amended Plan of Rehabilitation, a fifth and final prepayment will be made on the outstanding Surplus Drafts by way of a final, partial, dividend distribution of 53.69866%. This good faith estimate is based upon information available and the circumstances known at the time that it was made. Before basing any decisions on this estimate, be aware that the underlying facts and circumstances are subject to change. At the same time that the final, partial, dividend is paid, the Rehabilitator will issue payment of the 0.5% annual interest accrued on the Surplus Drafts On September 2, 2009, the Supervisory Court entered an order approving the Rehabilitator’s Application For An Order Approving The Final Distribution Of Estate Assets, Consisting Of The Payment Of Accrued Interest On Surplus Drafts And The Fifth And Final Prepayment Of Outstanding Surplus Drafts. Pursuant to the Supervisory Court’s order, on September 4, 2009 the Rehabilitator will be issuing payments to Surplus Draft holders consisting of payment of the accrued interest on Surplus Drafts for the period of December 1, 2008 through September 4, 2009 and the fifth and final prepayment of outstanding Surplus Drafts, at the dividend rate of 53.69866%. The amount of interest to be paid is $634,574, and the amount of the fifth and final prepayment is $89,341,606. See Application and Receivership Order. Questions pertaining to this rehabilitation should be directed to Michael Cosentino at mcosentino@osdchi.com. Last updated September 2009. |
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