Quarterly Status Conference January 26, 2009 The Quarterly Status - - PDF document

Quarterly Status Conference January 26, 2009 The Quarterly Status Conference for these estates took place on January 26, 2009 before the Special Master Tom Collins. It was the intent of the Special Master to allow interested parties to participate via conference call. Due to technical difficulties the Special Master terminated the call and requested that the SDR post to the estate website the notes from the

• conference. The SDR’s notes follow.

This report is presented by Donna Garrett, Special Deputy Receiver, for Lincoln Memorial, Memorial Service and National Prearranged Services Inc.  The Status Conference Reports for each of the estates have been provided to the Special Master and copies are posted on the estate website at www.lincolnmemoirallife.com.  Since we were last here in October a lot has been accomplished on both sides of the house - the receivership estate and the claims administration.  The Statement of Assets and Liabilities as of December 31, 2008 are reflected on the report provided. Combined the 3 estates have total cash assets of $8.9 million.  That is a decrease since the October Status Conference of roughly $725,000 - attributed to operating expenses for the quarter. We have been able to consistently reduce operating expenses for overhead and subcontractors in each of the last 6 months. For the month of July 2008 expenses for overhead and subcontractors totaled over $776,000. In

December 2008 the estate expense for overhead and subcontractors was less than $200,000.  Granted the operating expense will fluctuate as larger scale accounting or legal projects are added to the agenda. As you would expect, a portion of the expense was shifted to the administration agreement as the claims handling operations got into full swing. But overall I am pleased with the fiscal performance for the receivership estate.  There has been no significant change in the total liability figures. The Lincoln and Memorial liabilities are based on estimated IGA claims

• liabilities. The NPS liability includes estimated contract and vendor claims.

 Under Asset Recoveries section on the NPS report you will note the final receipt of almost $53,000 for the sale of furniture and fixtures in the St Louis office. The total collection for FF&E from that office was approximately $66 thousand.  The only other significant collection during the period is the interest earned

• n accounts.

 You will also note that on Lincoln and Memorial reports there is a small amount of premiums that was collected by the estate and reflected as a negative number on the report since the premium was transferred to the participating IGAs. At this point all premium collection activity has been transferred to the guaranty association accounts.  The SDR is under contract with NOLHGA on behalf of the participating IGAs to handles premium and claim administration. The numbers

provided in the Claims Section of the Lincoln and Memorial Reports are as

• f January 15th and show that between 10/23/08 when the Liquidation

Order was final and the GAs were triggered and 1/15/09, over 1800 claims have been processed for Lincoln and Memorial and checks totaling in excess of $8.5 million have been released.  Since January 15th an additional half million dollars has been paid on Lincoln claims and almost $450,000 has been paid on Memorial claims.  In addition, over this past weekend the claims staff finalized another 445 processed claims from 22 states totaling just over $2 million dollars. Those have been submitted to the audit team for approval.  The SDR claims department is currently processing claims submitted in December.  One significant point highlighted by the reports is the pending claim

• numbers. The report shows that Lincoln and Memorial combined had over

4,000 claims pending on 1/15/09. That number has been reduced by the million dollars in checks released since the 15th.  Earlier this month we reviewed the pending claims to see if we could determine what common issues were holding up payment. We found that 42% - almost half – were pending waiting for signature of release forms. 42% of the pending claims were processed and ready to pay but waiting for either the SDR staff to fax or email out the form or waiting for the service provider to complete and submit release forms.

 Since each payment by the participating guaranty associations represents a compromise and settlement of a claim, a signed release is required from the relevant parties before payment is released.  Statistics on Texas and Missouri claims were re-run this morning. Today there are 986 pending Missouri claims with a claim amount of $3.8 million. Of the 986 pending claims - 252 are pending for forms.  In Texas there are 1136 claims pending for almost $4.7 million. Over half - almost 600 approved claims at $2.5 million - are ready to fund and are awaiting completed forms. 100 of those are waiting for the SDR staff to send out the forms. But the other 500 are waiting on responses from service providers. The claims department has already sent follow up requests to 300 of the 500 claims pending in Texas for release forms.  That is a lot of numbers but the bottom line is that form submission is a bottleneck in the procedure. However no payment will be made unless the completed release forms are on file.  The NOLHGA Task Force and SDR team have reviewed and made revisions to the release forms that we anticipate will shorten the time required for SDR staff to fax or email out the forms and make the forms easier to complete and return. The revised release forms will be provided to the Funeral Homes in the next week or so.  The revised forms will only be accepted for claims with a date of death on or after February 1st, 2009. But I want to emphasize that no

payments will be released on behalf of the guaranty associations until the appropriate completed forms are on file.  The Application for Early Access has been circulated to both NOLHGA and RLO (receivership liquidation oversight division of Texas Department

• f Insurance). Comments have been provided and the Early Access

application should be filed in the near future.  In addition, we are working on an Application to Set Claim Filing Procedures and Deadline. It will be circulated to RLO in February.  One of the things that will be addressed in the claim filing procedures is the handling of NPS contracts that are not backed by insurance and therefore do not have guaranty fund coverage. This is a small percentage

• f the overall population - roughly 5000 contracts compared to 200,000

policies - less than 2% of claimants. However it is a big issue for both the SDR and the affected guaranty associations – primarily Missouri. We have been working diligently with the Missouri guaranty association to examine records and determine if sufficient information exists to support GA covered obligation status. Those NPS contracts that are not covered

• bligations of the IGA will become claims against the NPS estate and the

Application will address the handling of those NPS liabilities. The procedures will also address filing of vendor claims as well as claims for commissions or unpaid growth factors. Again, this application is in draft form at the moment. It will be circulated to RLO and I anticipate we will file the application sometime in the first quarter.

 The analysis of the premiums owed by former affiliate Forever Funeral Homes is complete and a demand letter will go out in February.  And on another accounting note, the analysis of preferential transfers has begun and we expect a preliminary report from the accounting firm soon.  Christopher Fuller, Counsel to the SDR, provided and update of legal activity as follows –  The stay remains in place on all actions.  Considerable time was spent on the Northstar reinsurance motion that is before the court.  Jacqueline Rixen, on behalf of the NOLHGA Task force stated that NOLHGA completed an assumption agreement as of 12/30/08 that transferred liability for 6,000 policies to assuming carriers.  Special Master Tom Collins stated that the next Status Conference is scheduled for April 20, 2009 at 12:15 CST.