AWLIC Court Report

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J. RAY BARRIOS, JR. (A3915)
Liquidation Office General Counsel
215 South State Street, Suite 300
Salt Lake City, Utah 84111
Telephone: (801) 799-7406
Attorney for Liquidator

Utah Insurance Commissioner, D. Kent Michie, (appointed Insurance Commissioner in January 2005), in his capacity as Court appointed Liquidator of American Western Life Insurance Company in Liquidation (“AWLIC” or “Company”), by and through counsel of record, hereby files this Quarterly Report To Court On Status Of The American Western Life Insurance Company In Liquidation Estate For The Period Ending December 31, 2007. The Liquidator sets forth herein a current Financial Report of assets, liabilities and expenses of the Liquidation estate. The attached Exhibit “A”, Financial Report, was prepared by accountant Robert C. Miller of EAB Associates, under the direction of the Court appointed Special Deputy Liquidator, Ronald G. Rosen. The Financial Report is for the period beginning the date of the Liquidation Petition and ending December 31, 2007. The format of the report is in conformity with the adopted reporting guidelines of the National Association of Insurance Commissioners, (“NAIC”), which does not address valuation methods. This format will continue to be used in future reports to the Court unless the Court orders otherwise.

A brief case background/completions and current/ongoing estate matters report of various issues in this Liquidation proceeding is set forth as follows:

            1. AWLIC was a life, accident & health insurer that was found insolvent and placed into liquidation by Order of this Court on August 28, 1997. Although AWLIC was a Utah domestic insurer, it was physically located in San Mateo, California. Most of the remaining policyholder claimants were located in Arizona. The AWLIC estate and a Third-Party Administrator (“TPA”) handled the run-off processing of claims for eighteen (18) state guaranty funds, fifteen (15) of which had claims payable. All liquidation administrative functions of the estate are located in Utah under the supervision of the Third Judicial District Court, Salt Lake County, State of Utah.

            2. Utah Insurance Commissioner D. Kent Michie’s predecessor, Merwin U. Stewart, was appointed Liquidator of AWLIC pursuant to statute, Section 31A-27-310, Utah Code Annotated. Pursuant to the order of the Court, the Liquidator took possession of the AWLIC estate and took an inventory of the Company’s assets. As provided by statute, the Liquidator appointed a Special Deputy Liquidator to handle the day-to-day operations of the liquidation estate. (Section 31A-27-314, Utah Code Annotated).

            3. Statutory notices were sent to all creditors, policyholders, shareholders, and others reasonably expected to have claims against the estate. In excess of 47,000 notices were sent. Notice also included publication as required by statute.

            4. In an arrangement negotiated with the various state Guaranty Associations that have statutory responsibility to process and pay claims on behalf of AWLIC policyholders in the respective states affected (AWLIC was licensed in 18 states), the estate completed the processing of policy claims for the Guaranty Associations (“GA’s”).

            5. As claim processing on behalf of the GA’s progressed and reached completion, downsizing of office operations was accomplished. The San Mateo, California office operation was closed in March 1998 and the claims operation, computer system, and necessary furniture were moved to the Company’s warehouse in San Mateo, California. Concurrently, all former Company employees were terminated. Two former employees were retained as consultants to complete the claim processing and system operation requirements of the liquidation estate. The administration of the liquidation estate was moved to the Insurance Receivers’ Office in Salt Lake City, Utah where it is ongoing at this time. Due to the vacancy by the primary tenant in the building that housed AWLIC’s warehouse, it became necessary in March 1999 for the claim operation to be moved again for the finalization of claim processing. A small office in Burlingame, California was leased through September 15, 2000 for this purpose, after which that office was closed and its contents moved to the Liquidator’s warehouse in Salt Lake City, Utah.

            6. During the six months prior to September 15, 2000, historical claim and subscriber data were processed to hard copy reports and magnetic media. As of September 15, 2000, claim processing had been completed, the system was shut down, the Burlingame office was closed, and all computer equipment (both operational and stored at the warehouse) had been sold.

            7. The warehouse in San Mateo, California was vacated by the July 31, 2001 expiration date of the lease. The remaining AWLIC records determined to be necessary for the administration of the estate and those records not yet eligible for destruction in accordance with a prior court order were moved to a warehouse in Salt Lake City, Utah. In September 2005 records were purged, the warehouse lease was discontinued and the remaining inventory was transferred to the Utah Liquidation Office. Old claim and underwriting records not needed for estate administration are periodically being destroyed pursuant to order of the Court.

            8. A group of Arizona policyholders’ policies were administered by a third party administrator (“TPA”). The Arizona Guaranty Association contracted directly with the former AWLIC TPA to process approximately 7,925 policy claims that were incurred on policies administered by the TPA. As of September 30, 2002 the dollar amount of claims processed by AWLIC for the various guaranty funds was $2,249,924; additionally, the dollar amount of claims processed for the Arizona Guaranty Fund by AWLIC’s former TPA totaled $2,535,520 for a total of $4,785,444. In addition, $19,579 was processed in unearned premium claims. Approved claims in excess of the Guaranty Associations’ liabilities total $405,163. Accordingly, claims paid and/or approved for payment total $5,210,187.

            9. Mailing of Notice of Determination letters denying claims of policyholders whose claims were processed by the TPA and paid in accordance with policy provisions by the various guaranty associations began at the end of the second quarter of 1999. At the end of the first quarter 2000, all of the Notice of Determination letters, approximately 1,776, on such Proofs of Claim (POC’s) had been sent; several claimants’ objections to their Notices are pending review.
           Objections to claims adjusted by the TPA have been settled, heard by the Court, scheduled for hearing by the Court or are being analyzed and will be scheduled for objection hearings to be heard by the Court. There are but a few remaining objections to be scheduled.

            10. Setup of a database for 891 proofs of claim against the AWLIC estate for policyholder claims processed by AWLIC’s staff was completed in 1999. By the end of the second quarter of 2000, mailing of Notice of Determination letters had been completed. At the end of the fourth quarter 2000, all objections received for claims processed by AWLIC had been settled.

            11. During the first quarter 2001, the Special Deputy Liquidator completed the negotiation of a Sub-sublease for the first floor of the two-floor warehouse in San Mateo, California through July 2001, which Sub-sublease provided income to the estate during the first and second quarter, 2001. The second floor of the warehouse housed approximately 2,400 boxes of estate documents, of which about 1,000 boxes were moved to Salt Lake City before the lease expired at the end of July, 2001.

12. CNA Group Re, the largest of AWLIC’s reinsurers, performed a claims audit in March, 2001 at AWLIC in San Mateo, California and at the TPA in Agoura Hills, California for the purpose of verifying data related to their outstanding reinsurance obligation to AWLIC. All supporting documentation requested of the Liquidator by CNA was provided by the Liquidator and the TPA. In April, 2001 the AWLIC Estate received a wire transfer payment of $345,973 from CNA. During this audit the Liquidator discovered an additional excess of loss claim processed by the TPA that had not been reported to the Liquidator. A billing in the amount of about $153,000 for this newly discovered claim was sent to Cologne Life Re, AWLIC’s excess of loss reinsurer Payment was received on July 31, 2001. In addition, a final reconciliation was prepared for CNA on the quota share treaty resulting in an invoice totaling $180,273, of which $120,000 represented a new receivable. CNA did not dispute this billing, and upon further analysis the amount was increased to $190,164 which was received by wire transfer on October 31, 2001. Receipt of the wire transfer completed the reinsurance recoverable process on all claims paid to date.

13. During the course of the AWLIC liquidation, analyses were made of the probability of collection of certain receivables. Court approval was obtained in 2003 to abandon further collection efforts on one receivable when it was determined that further efforts to enforce collection were not cost effective. In another collection matter, the Liquidator was able to resolve the matter by recording a default judgment and later settling the matter to the benefit of the AWLIC estate.

14. During the third quarter 2001 the Superintendent of the New Mexico Insurance Department belatedly opened an ancillary proceeding in New Mexico regarding the AWLIC insolvency. The AWLIC estate had a statutory deposit in the amount of $150,000.00 and a premium tax refund in the amount of $1,851.00 being held in that ancillary proceeding. The New Mexico Superintendent of Insurance as ancillary receiver administered the ancillary proceeding. The New Mexico ancillary receiver filed a motion to close the New Mexico ancillary receivership during the second quarter of 2002, and the Court signed an order closing the estate during the fourth quarter, 2002. The balance of funds not needed to pay the state guaranty association for New Mexico claims, the New Mexico Guaranty Association administrative expenses, and administrative expenses of the ancillary receivership totaled $106,091.74 which was paid to the AWLIC estate on October 29, 2002.

The AWLIC Estate received a final accounting from the New Mexico Ancillary Receiver for a $1,250.00 trust deposit held by the ancillary receiver’s counsel when the ancillary receivership was closed during the fourth quarter, 2002. Included with the final accounting was a check in the amount of $605.05, received in February 2003, representing funds not needed by the New Mexico Ancillary receivership that were returned to AWLIC for the benefit of claimants. The Liquidator received another check in the amount of $532.00 in April 2003. The Liquidator will continue to pursue the premium tax refund from the New Mexico Department of Insurance.

15. In 1998 the Liquidator brought a lawsuit for breach of fiduciary duty, recoupment from affiliates and other causes of action against the former officers and directors of AWLIC as well as its affiliates. That case is entitled American Western Life Insurance Company, in Liquidation, and Merwin U. Stewart vs. Leland Arno Wolf, et al., Civil No. 980905251 MI. The case was assigned to Judge Tyrone Medley. Numerous motions in the lawsuit against the former officers and directors of AWLIC (the “Wolf litigation”) were filed during the third quarter, 2001. Several motions were resolved during the fourth quarter 2001. The Defendants filed a motion to allow the inclusion of two third-party defendants, which was approved by the Court. The Liquidator filed a Motion For Approval of Advancement of Defense Costs, which was approved. The two third-party defendants filed motions to dismiss, which were denied. The defendants filed their first Motion For Partial Summary Judgment, which was heard on January 6, 2003. The Liquidator filed a motion for a scheduling conference and scheduling order, which was heard and a scheduling order issued in the first quarter 2002. A mediation utilizing the services of former Utah Supreme Court Justice Michael Zimmerman occurred during the second quarter 2002 in an attempt to resolve the issues in litigation. Although the mediation did not result in a resolution to the case, it did assist in communicating the issues and evidence for the parties. The case proceeded pursuant to the first Scheduling Order until the fourth quarter of 2002 when a second Scheduling Order was signed by Defendant’s counsel. Discovery continued during the third and fourth quarters of 2002.

16. The last of Defendants witnesses and/or expert witnesses were deposed in the fourth quarter 2002. The Liquidator retained various experts to support its claims and defend claims brought by the Defendants. The Defendants took the deposition of only one of the Liquidator’s experts. Discovery in the litigation ended during the first quarter, 2003.

17. On June 17, 2002 a status conference was held with the trial Judge and all counsel. Another status conference was held in November 2002 at which time the trial dates of May 5-13, 2003 were scheduled. Due to extensive settlement discussions that continued through May 2003, the parties agreed to continue the May 5-13 trial dates. The Court granted the continuance and the trial dates were rescheduled to November 3-7 and 12-14, 2003.

18. The Wolf lawsuit proceeded to trial in November 2003. However, on January 6, 2003 a hearing was held on various motions. One was a Motion for Partial Summary Judgment filed by the Liquidator seeking the recoupment from affiliates of all distributions made during the five year “reach-back” period (prior to the filing of the application for the order of liquidation). Included in the motion were three affiliate transactions that fit the statutory requirements. A second motion was a Motion to Strike Affirmative Defenses of Defendants wherein the defendants alleged that there was willful misconduct on the part of the Supervisor and/or Liquidator. A third motion was a Motion to Strike an Affidavit of Leland A. Wolf on the basis that it did not contain admissible evidence. The hearing was continued to January 24, 2003 to allow for further briefing by the parties. On January 29, 2003 Judge Medley ruled in the Liquidator’s favor on all the motions.

Significantly, one of the motions, a Motion for Partial Summary Judgment, was granted regarding the three affiliate transactions under the Recoupment From Affiliates statute in Title 31A, Chapter 27 of the Utah Code. The Defendants filed a Motion for a Rule 54b certification, which was denied.

19. Trial on the remaining issues in the Wolf lawsuit was scheduled for eight days. The trial proceeded on November 3-7, and 12-14, 2003. Prior to the first day of trial the Liquidator had obtained an Order on Supplemental Proceedings allowing a deposition of defendants Lee and Sally Wolf to obtain more information on their assets. This supplemental proceeding was required as a result of the Motion for Partial Summary Judgment the Court had previously issued in favor of the Liquidator. On the morning of the first day of trial the depositions of Lee and Sally Wolf were concluded. Thereafter an Order to Show Cause was issued by the Court based on the Wolfs inconsistent testimony and failure to disclose assets. The Wolfs were thereafter held in contempt and a pre-judgment writ of attachment was issued ordering that the Wolfs place approximately 1.3 million dollars into a bank account in Salt Lake City, Utah.

20. During the trial, the Liquidator had his witnesses and expert witnesses present, and voluminous documentary evidence was numbered for exhibits. Third-party defendants, Michael Wheeler, the former CFO of AWLIC and Bruce Noriega, the former President of AWLIC, were present. The Liquidator’s witnesses and expert witnesses and the third-party defendants testified on behalf of the Liquidator, and hundreds of documents were entered into evidence. Testimony by each of the Liquidator’s witnesses, as well as the testimony of the third-party defendants, was substantial and effective. After the Liquidator had presented his case in chief, and before the defendants presented their case, the defendants agreed to dismiss all claims against third-party defendants Michael Wheeler and Bruce Noriega. After the third-party defendants were dismissed, defendants moved the Court for a dismissal of several of the Liquidator’s causes of action based on defendants’ view of the Liquidator’s evidence not supporting the Liquidator’s claims. The Court ruled that the Liquidator had presented enough evidence to support the causes of action in the Complaint and denied defendants’ motion. The defendants thereafter presented their case through numerous witnesses, expert witnesses and documents. At the conclusion of the evidence, Judge Medley took the matter under advisement and requested further briefing on certain discreet issues.

21. All post-trial briefing was completed in January 2004. Defendants also filed a post-trial Motion for Reconsideration of the ruling on the Liquidator’s Motion for Partial Summary Judgment from January 29, 2003. Judge Medley issued a ruling on all matters before him on February 26, 2004. Defendants’ Motion for Reconsideration was denied. The Findings of Fact Conclusions of Law and Judgment issued by Judge Medley found the Liquidator entitled to a judgment against the Wolf Defendants in an amount in excess of $6.273 million dollars.

22. Two of the Wolf Defendants, Leland Wolf and Sally Wolf filed a Chapter 11 Bankruptcy Petition in the Tucson, Arizona Bankruptcy Court on January 16, 2004. Leland and Sally Wolf, debtors in the Arizona Bankruptcy Court, filed the required Bankruptcy Statements and Schedules disclosing their assets and liabilities. The Statements and Schedules as filed reveal that the Wolf debtors have several million dollars more in assets than liabilities, and enough in asset value to satisfy the Liquidator’s judgment. The remainder of the Wolf Family Defendants filed a “Motion For Amendment of Findings and Conclusion and For Amendment of Judgment” on or about March 11, 2004. Judge Medley denied defendants Motion to Amend the Findings, Conclusions, and Judgment.

            23. The Liquidator continued in settlement negotiations with the Wolf Family Defendants into the third quarter, 2004, and achieved a settlement on July 26, 2004, which was approved by both the Wolf’s Bankruptcy Court Judge in Arizona, and Judge Medley in the judgment matter. The settlement agreement provides for the payment of $4 million, plus interest, by all the Wolf defendants in full and final settlement of the lawsuit.

            Payment of an initial $2 million was received during the third quarter of 2004 and was comprised of approximately $1.4 million held in a Wells Fargo Bank account pursuant to a Writ of Attachment the Liquidator had previously been successful in obtaining, and approximately $600,000 from proceeds of the sale of a warehouse in Belmont, California owned by the Wolfs. A shortfall to reach the initial $2 million payment amounted to $24,780.34, which was paid by the Wolf children defendants. Pursuant to the settlement agreement, payment of the initial $2 million allowed the Wolf children defendants to be released from further obligations under the judgment, in addition to all the Wolf defendants’ agreement not to appeal the judgment.

24. The balance of the $4 million settlement, plus interest, is secured by the Court-ordered sale of a house in Tucson, Arizona being built by and owned by the Wolf defendants (The “Speculation Home”). The settlement agreement provided that the Wolf defendants had 300 days from the date of the settlement agreement in which to sell the Speculation Home and pay the remaining $2 million, plus interest, to the AWLIC estate. If the Speculation Home was not sold within that time period, the Bankruptcy Court would appoint a Real Estate Administrator who would oversee the marketing and sale of the Speculation Home. The expiration of the 300 day period was May 22, 2005.

The Speculation Home did not sell by May 22, 2005 and the Liquidator filed a motion before the Bankruptcy Court to appoint the Special Deputy Liquidator of AWLIC as Real Estate Administrator for the purpose of marketing and selling the Speculation Home. The Wolf debtors objected to the naming of the Special Deputy Liquidator as Real Estate Administrator. On June 7, 2005 a hearing was held before the Bankruptcy Court during which the Judge rejected the motion filed by the Liquidator and gave the Wolf debtors and the AWLIC Liquidator ten days in which to agree on a Real Estate Administrator or the Judge would appoint a Real Estate Administrator of her own choosing. The Liquidator filed a motion with the Bankruptcy Court naming three individuals with expertise in selling “high-end” properties. The debtors never made a filing with the court listing potential candidates for Real Estate Administrator, and on June 20, 2005 the court appointed one of the individuals named by the Liquidator as Real Estate Administrator.

25. The individual appointed by the Bankruptcy Court to act as Real Estate Administrator was unavailable to serve in that capacity. The Liquidator recommended two additional individuals with expertise in marketing “high end” residential real property. Debtors’ counsel objected and submitted six names for consideration. The Liquidator referred the six individuals’ names to its bankruptcy counsel in Tucson and from those names he identified two who were acceptable. The Liquidator stipulated to the naming of one of those individuals and in August 2005 the Bankruptcy Court appointed a Real Estate Administrator for the purpose of marketing and selling the Speculation Home.

After the sale of the Speculation Home, and pursuant to the terms of the settlement agreement, if there remains a shortfall in the amount needed to pay the AWLIC estate the remaining $2 million, plus interest, the Liquidator has obtained a security interest through a deed of trust on the Wolf’s personal residence in Tucson, Arizona in the amount of $300,000. There is sufficient equity in the Wolf’s personal residence to secure AWLIC’s second deed of trust. The deed of trust was executed and recorded as provided for in the settlement agreement, and as approved by the Bankruptcy Court. As of December 31, 2005 the debtors closed on a sale of the Speculation Home and paid the AWLIC estate approximately $2.16 million. The bankruptcy proceeding was terminated in January 2005 in that the objectives sought by the moving parties were met. However, the Bankruptcy Court retained jurisdiction over the sale of the Speculation Home.

26. During the fourth quarter of 2002, the Liquidator prepared calculations and agreements to pay a distribution to Class 2 claimants. Claimants in this class consisted of the state guaranty associations, and were reimbursement for their administrative expenses for the handling of AWLIC claims in their respective states. Even though claims were processed by AWLIC liquidation staff, guaranty associations incurred administrative expenses in establishing accounts, issuing claim checks and performing oversight of their respective residents’ claims. This distribution was for 100% of the expenses incurred from the inception of the liquidation through December 31, 1999, a total of $340,000. The order was approved by this Court on February 22, 2001 and payment was distributed on March 8, 2001.

27. During the third quarter 2004 the Liquidator obtained “Early Access” Agreements from each affected state guaranty association in order that a second “Early Access” distribution could be made to affected state guaranty associations. Each affected state guaranty association received an additional distribution of fifty percent (50%) of its approved claim. This “Early Access” distribution, together with the first “Early Access” distribution of twenty-five percent (25%) of the guaranty associations’ approved claims, approved by this Court on October 30, 2002 brought the total distribution to guaranty associations to seventy-five percent (75%) of their approved Class 3 claims, for a total of $3,547,904. The New Mexico Guaranty Association did not participate in these “Early Access” distributions in that it received payment in full of its Class 2 and Class 3 claims from the New Mexico Ancillary Receiver out of the $150,000 statutory deposit. No payment was made at that time on the three claims that exceed the guaranty association statutory maximum obligations in that those claimants had no statutory obligation to repay the AWLIC estate should the need arise as provided by the “Early Access” agreements.

28. On September 7, 2006 the Liquidator filed a Request for Order Approving Class 3 Claims and Request for Order Authorizing Class 3 Final Distributions. There being no opposition, on September 29, 2006 the Court signed the Orders as requested by the Liquidator. In November 2006 the AWLIC estate made a final Class 3 distribution to all affected guaranty associations totaling $1,209,695.09 and $405,163.36 to three policyholders whose claims exceeded the guaranty association statutory maximum liability for a total distribution of $1,614,858.41.

29. In November 2006 the Liquidator completed the evaluation of the Guaranty Associations/Funds Class 2 administrative expense claims and mailed Notices of Determination to the various Guaranty Associations/Funds allowing the balance of their Class 2 administrative expense claims in the total amount of $137,457. The Guaranty Associations/Funds filed no objections. On March 21, 2007 the Liquidator filed a Request for Order Approving Class 2 Claims, and Request for Order Authorizing Class 2 Final Distributions with the Court. No objections were received and on April 30, 2007 this Court issued the Order as requested., In May, 2007 the Liquidator paid $137,457 on the balance of the Guaranty Associations/Funds Class 2 administrative expense claims. Such payment was in addition to the $340,000 distributed in March 2001 to the various Guaranty Associations/Funds and completed the payment in full of all Guaranty Association/Fund obligations.

30. The AWLIC estate will continue to be liquidated pursuant to statute. (See, 31A-27-101 et seq., Utah Code Annotated). The liquidation process includes, but is certainly not limited to, the following very basic steps: (1) marshaling and collection of all assets of the estate; (2) analysis of all Proofs of Claim (“POC”) as filed against the estate (Claimants had until August 28, 1998 in which to timely file their claims against the estate); (3) determination of the POC’s by the Liquidator and recommendation of such determinations to the Court for approval; (4) claims hearings pursuant to statute for claims upon which claimants dispute the Liquidator’s determination; (5) distribution of payments on claims pursuant to statutory priorities to the extent assets are available for such distribution; and (6) ultimate closure of the estate and discharge of the Liquidator. The statutory liquidation process typically takes several years to complete.

31. The Special Deputy Liquidator continues to assess funds held in the estate which inure to the benefit of estate policyholders and claimants. In that regard the Special Deputy Liquidator reviews the investment of estate funds on an ongoing and regular basis. Prior to May 15, 2003, an investment committee reviewed the investment vehicles utilized by the estate to assure a balance between adequate return on investment and safety of estate funds. As a cost savings measure, the quarterly investment committee meetings were discontinued in May 2003. The investment guidelines of the estate established in 1998 have not changed and continue to be followed.

32. The Liquidator will continue to report to the Court on the status of the AWLIC liquidation, including a financial report, on a quarterly basis consistent with calendar quarters. All such quarterly reports will be filed within forty-five (45) days after the end of the calendar quarter. Unless the Court orders otherwise, future quarterly reports and financial reports (Exhibit “A” as attached hereto) will continue to follow the National Association of Insurance Commissioner (“NAIC”) guidelines and reporting format for insolvent insurers in liquidation proceedings. In recognition of the payment in full of the Class 3 claims, the determination and fixing of the Class 2 Guaranty Associations/Funds claim liabilities and that the evaluation of the proofs of claims filed by Class 6 general creditors is complete, adjustments to the financial statement attached hereto as Exhibit “A” were made in December 2006. Class 6 claims were processed post judgment in the Wolf litigation as the judgment amount had a direct effect on whether there would be funds to pay any portion of this class.

33. On November 17, 2006 the Special Deputy Liquidator submitted Release Agreements along with his Affidavit with the Internal Revenue Service and the United States Department of Justice seeking their release of any and all claims against the AWLIC liquidation estate. In February 2007 counsel for the United States Department of Justice responded, seeking additional information. The information requested was submitted in June 2007. The United States Department of Justice executed the Release Agreement in September 2007 and it was executed by the Special Deputy Liquidator on behalf of the AWLIC liquidation estate and returned to the Department of Justice in October 2007. It is anticipated that the Internal Revenue Service will enter into the Release Agreement in that it does not appear that the AWLIC estate has any obligation outstanding to that agency. The Liquidator is following up with the Internal Revenue Service to determine status of its entry into the Release Agreement. To date, efforts to secure a release from the Internal Revenue Serivice have been futile. The Liquidator has engaged the services of a tax preparation service in order to determine what further steps, if any, must be taken by the Liquidator to secure the release of the Internal Revenue Service. Payment of allowed Class 6 claims and the subsequent further distribution of remaining assets and closure of the AWLIC estate is contingent upon the receipt by the Liquidator of an executed Release Agreement from the Internal Revenue Service.

34. The Liquidator will schedule “status conferences” with the Court when there are matters the Liquidator believes need to be brought to the Court’s attention, or if the Court, sua sponte, desires to schedule a “status conference”.

I hereby certify that I mailed a true and correct copy of the foregoing QUARTERLY REPORT TO COURT OF THE AMERICAN WESTERN LIFE INSURANCE COMPANY IN LIQUIDATION ESTATE FOR THE PERIOD ENDING December 31, 2007, postage prepaid, to the following this ____ day of February, 2008:

                        Commissioner D. Kent Michie, Liquidator
                        State Office Building
                        3110 State Office Building
                        Salt Lake City, Utah 84111-6901

                        Ronald G. Rosen, Special Deputy Liquidator
                        American Western Life Insurance Company in Liquidation
                        215 South State Street, Suite 300
                        Salt Lake City, Utah 84111

                        David M. Connors, Esq.
                        Joseph M.R. Covey, Esq.
                        LeBoeuf, Lamb, Greene & MacRae, L.L.P.
                        136 South Main Street, Suite 1000
                        Salt Lake City, Utah 84101

                        Lowell E. Rothschild, Esq.
                        Scott H. Gan, Esq.
                        Mesch, Clark & Rothschild, P.C.
                        259 North Meyer Avenue
                        Tucson, Arizona 85701-1090

                        Deno G. Himonas, Esq.
                        Jones Waldo Holbrook & McDonough
                        170 South Main Street, Suite 1500
                        Salt Lake City, Utah 84101