The Court appointed Liquidator of Wasatch Crest Mutual Insurance Company in Liquidation  ("WCMIC"), Utah Insurance Commissioner Kent Michie (" Liquidator"), successor in office to  Merwin U. Stewart, by and through his Special Deputy Liquidator, Len Stillman, herein files this Report On Status Of Liquidation Estate For Period Ending December 31, 2008 pursuant to the Liquidation Order issued July 31, 2003, and pursuant to Utah Code Annotated, Section 31A-27-314.  The case of Wasatch Crest Mutual Insurance Company (WCMIC) (Civil No. 030915528) is consolidated with the estate of Wasatch Crest Insurance Company in Liquidation (WCIC) (Civil No. 030915527).                                      

This report was prepared by the Special Deputy Liquidator and reflects the status of the liquidation estate.  Also attached  is a financial  report of assets and liabilities of the liquidation estate of WCMIC. The attached Exhibit "A" Financial Report was prepared by Jackie Muro of Vida Consulting, Inc., Los Angeles, CA under the direction of the Court appointed Special Deputy Liquidator, Len Stillman.

Brief History (This item will continue to appear in these reports for the convenience of the reader.) 

Wasatch Crest Mutual Insurance Company (WCMIC) [merged with or absorbed Electric Mutual Benefit Association (a VEBA trust)and Energy Mutual] wrote primarily workers compensation insurance, first as a captive for Utah Power and Light (NKA Rocky Mountain Power), then, in 2003, for other businesses. It also assumed insurance from Educators Mutual Insurance Company and from an affiliate, First Continental Life Insurance Company. Other lines included appliance warranty, private passenger, auto travel accident and health. Another affiliate, Wasatch Crest Insurance Company (WCIC) (FKA Home Fire Insurance Company, Utah Home Fire Insurance Company, Wasatch Crest Casualty Company, Transunion Casualty) wrote all personal lines except life insurance. WCIC was a subsidiary of Wasatch Crest Group (Group). Group sold WCIC to WCMIC on January 1, 2003. Group also owned First Continental Life Insurance Company which was sold and moved to Texas during the third quarter of  2004.

Administrative Update

Remaining activity relates to processing claims and collecting reinsurance. The claim-filing bar date passed on July 31, 2004. Collection activity for unpaid premium is complete. The company no longer has any employees and relies on services provided by consultants and employees of other companies in receivership in Utah and Idaho. Litigation activity and related expenses have ended. Subrogation collections are complete.

Claims

The Deputy Liquidator has valued virtually all claims filed in the estate. G.A. claims remain undetermined although only the Utah P&C G.A. has significant exposure on WCMIC policies. The first Notices of Claim Determinations were sent on January 27, 2004. The Special Deputy sought and received court approval to make a thirty percent distribution of allowed class 3 claims which was made during 2006.  No further distributions will be made until a valuation of receivables from WCIC has been completed.

During the claim determination process, the Liquidator denied one medical claim that resulted in an objection by the claimant. That objection was heard by a Special Master approved by this court and, in that hearing, the claimant prevailed over the Liquidator. That claim is being administered by the Idaho Life and Health Insurance Guaranty Association. Rocky Mountain Power opted out of the Guaranty Fund and is handling all of the claims attached to its policies.
 

Remaining Affected G.A.s 

(Utah, Idaho) are reporting monthly and paying claims in the ordinary course of business. G.A. proof-of-claim forms are filed as “contingent” due to the ongoing claim activity. Claim development as reported by some G.A.s have not yet been fully valued due to the time it takes for workers compensation claims to develop. The Idaho Property and Casualty Insurance G.A. has filed an Ancillary Proceeding against the estate in Idaho to obtain reimbursement for its payment to a policyholder.  The Special Deputy has stipulated to the proceeding and payment in the amount of $200,104.38 which is inclusive of losses and expenses.  The balance of the deposit remains with the Ancillary Receiver.

Workers comp. business written since April 2003:

This business covered by the G.A.s was being administered by WCMIC on behalf of the G.A.s but has been transitioned to the G.A.s due to the departure of the last of the WCMIC employees.  

Appliance Warranty: Hassle Free and Triad Warranty

Hassle Free was a policy issued to PacifiCorp (“PC”) on WCMIC paper and covers water heater repairs for subscribers.  This program was terminated by PC . All claims have been determined on this business and approved by the Court.

Triad Warranty Program claims have all been determined and approved by the Court.

Other Claims 

There are also general creditor claims all of which have been determined. As of the date of this report, distributions to creditors with a higher priority than class 3 appear unlikely.

Other than the partial distribution to class 3 claimants, there have been no material changes in the financial position of the company. However, since significant funds held by the company have been distributed to claimants, investment income has been reduced.

Reinsurance

The Special Deputy Liquidator has settled the attempt to recover premium paid to a London reinsurance broker just prior to the liquidation date. The Deputy Liquidator has agreed to accept 50% of the amount that remained unpaid however only expects to receive about one half of the amount due from them because the broker has now gone into liquidation. The amount allowed in the broker’s estate is approximately $265,000 on the claim and approximately 75,000 British pounds in interest and costs. Since the claim has been agreed, the Liquidator has received a partial payment from the London receiver of $48,395.00.  Further distributions are expected.  Relating to the claim that had been denied but approved at a hearing by a Special Master, the Liquidator sent a claim for the reinsurance the Liquidator believed was owed on the claim. The reinsurer (American National Insurance Company) has denied payment. The Liquidator filed an arbitration demand as required by the reinsurance contract.  The arbitration was delayed due to a dispute over the naming of an arbitrator for the estate.  A hearing was held in the Third District Court (Utah) after which Judge John Paul Kennedy allowed WCMIC to name its own arbitrator but awarded attorney fees to ANICO.  WCMIC prepared an appeal this result but ultimately settled the matter with no recovery to either party.

Detailed analysis, or additional information, regarding any estate function is available to the Court upon the Court’s request. Ongoing issues affecting the WCMIC estate will be brought to the Court’s attention on an as-needed basis.
   

             Dated this ____ of February, 2009.

                                                                     Wasatch Crest Mutual Insurance Company
                                                                         In Liquidation

 

                                                                      __________________________________

                                                                      Lennard W. Stillman,
                                                                      Special Deputy Liquidator                                                                   
                                                                      Wasatch Crest Mutual Insurance Company
                                                                          In Liquidation

                                                                

                                                                      ________________________________

                                                                       J. Ray Barrios, General Counsel

 

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