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by John Darer CLU ChFC CSSC RSP
With a sign of increasing stability of the structured annuity market, A.M. Best has affirmed an A+ (Superior) for structured annuity issuer Pacific Life and Annuity Company, as well as the guarantor of structured settlement obligations assigned to Pacific Life and Annuity Services, Inc., Pacific LifeCorp. Moreiver the outlook on these companies has been upgraded to stable!
Read June 28, 2011 A.M. Best Press Release on Pacific Life here
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Structured Settlement Watchdog Celebrates End of His Third Blogging Millennium!
Top 10 Blog posts Since November 2009 by unique page views (Source: Google Analytics)
Top 10 Posts for Subscriber Click Throughs (Since August 2006)
Most Viewed Feeds By Subscribers (Since August 2006)
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Wading through the incredible volume of structured settlement information on the internet is a challenge, because not all of it is relevant. It's not always easy to find information from individuals or companies that can actually place you in a structured settlement annuity. In an effort to help, the structured settlement watchdog, John Darer, has performed a monthly structured settlement website survey using the Alexa search metric (a service of Amazon) and presenting his findings to the public for the last 4+ years.
Global Structured Settlement Website Top 10 (Alexa Rank as of 06/29/2011) of Structured Settlement and Settlement Planning Industry websites* (+ or- traffic from previous report). Lower number is better (e.g. Google.com is ranked 1 in the overall scheme)
Three Month Trailing Top 8 USA Traffic Rank (Alexa Rank as of 06/29/2011) of Structured Settlement and Settlement Planning Industry websites*.
No other primary market structured settlement web sites received USA rankings from Alexa in this month's survey.
The 3 month data is used as it is a measure of consistency. The USA data is meaningful because the United States is the country in which the predominant number of structured settlements are written.
CUMULATIVE STRUCTURED SETTLEMENT WEBSITE TRAFFIC STANDINGS
(out of a possible 51 months-this structured settlement survey began in April 2007)
GLOBAL STRUCTURED SETTLEMENT WEBSITE RANKING
Times Ranked #1 in 3 month global structured settlement website traffic, as measured by Alexa:
Times Ranked #2 in 3 month global structured settlement website traffic, as measured by Alexa:
USA only Structured Settlement Web Site Ranking (out of a possible 22 months; survey began September 2009)
Times Ranked #1 in 3 month USA only structured settlement website traffic, as measured by Alexa.
Times Ranked #2 in 3 month USA only structured settlement website traffic, as measured by Alexa.
Website survey criteria: Companies whose primary business is structured settlement factoring transactions are not counted in this survey because: (i) despite the propaganda and efforts of some to "frame" them otherwise, (i) they are part of the cash flow, factoring or settlement purchasing industry. sometimes referred to as "the secondary market"; and (ii) the additional purpose of this survey is to identify legitimate sources of information for tort victims, their families, consumers, attorneys, judges or companies looking for structured settlements and the structured settlement brokers, registered settlement planners, certified structured settlement consultants, settlement planners, appointed structured settlement companies and agencies, United States Treasury structured settlement providers, or other financial professionals, who have the ability to deliver this information
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by John Darer® CLU ChFC MSSC RSP CLTC
Smart lawyers representing clients in New York courts bring in qualified help for assistance with CPLR 50A or 50B calculations because they recognize that it's not an "off the cuff" type of thing. Setting aside the complexities of what goes on post-verdict and depending on the case, there may be ALOT of juice in the statute that can be used by either side to gain leverage in settlement negotiations that may happen before or after a verdict. Having no support, or engaging a person who doesn't completely know what they are doing in this area, can be a weakness to the side that engages them.
There are numerous interdependent moving parts in CPLR 50B calculations. You could run a calculation one way and then the attorney adjusts an expense number or the judge rules on a collateral source that affects many other numbers. If there's a bifurcated trial, or a wrongful death case, another set of calculations and permutations come into play.
New York CPLR 50B: It's Not Just An Annuity Quote!
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by John Darer® CLU ChFC CSSC RSP
Financial Planning magazine reports that "Most consumers don’t read the prospectus they receive when they purchase a variable annuity and a new report released by the Insured Retirement Institute on Monday found that 94% of consumers would prefer to receive a shorter, printed summary prospectus online or upon request".
The regulatory associations are taking notice! "We need to get away from account statements that have too much information that causes investors to just ignore them,” said Richard Ketchum, Chairman and CEO of FINRA who was cited by Financial Planning at the Insured Retirement Institute Government, Legal, and Regulatory Conference in Washington, DC on June 28, 2011. “We need to think about: How are we interacting in an effective way with investors? We need to figure out the right combination of how to capture client attention up front and remind customers the questions they should be asking again and again.”
I've recently criticized my structured settlements and settlement planning industry colleague and fellow blogger Patrick Hindert, who I know means well but continues to produce visually chaotic "concept maps" that for some might require a PhD in hieroglyphics to decipher. He's not alone.
As this 19th Century video shows, the "K.I.S.S." takes a while to perfect.
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by John Darer® CLU ChFC MSSC CeFT® RSP CLTC
Long term care insurance carriers have been squeezed by low lapse rates combined with low interest rates, at just the time when insurers are seeing more claimants, according to the March 2011 edition of InsuranceNewsNet magazine.
In the same article Jesse Slome, Executive Director of the American Association for Long Term Care told A.M. Best "that insurers are buckling under the trople whammy".
One insurer Berkshire Life Insurance Company of America will stop selling Long Term Care Insurance by the end of 2011. Will others follow?
If You Think You Are Too Young for LTC, Think Again
Think you're too young? I bought Long Term Care Insurance when I was 38. With annual increases my coverage is up to $585 per day by the time I'm age 60 and $747 per day by the time I'm 65. For lawyers and my industry brethren the insurance should be a no-brainer since you have an acute sense of what facilities and home care, respite care and assisted living cost. You also have the sense of how age is not a barrier to the potential need for these services.
Long term care insurance can help preserve your assets and quality of life and that of your family, give you choices about where care is delivered and save relationships that will undoubtedly be strained emotionally and financially if the worst happens. What it amounts to is a small percentage of what you should be saving for retirement each year. Think about it.
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An article titled "Abuses by Aggressive Factoring Companies**", attributed to Hank Didier, Jr., an actively practicing plaintiff's trial lawyer from Orlando Florida, with an interest in factoring company Vantage Capital Consultants, has been posted on Injuryboard.com June 24, 2011. Vantage Capital Consultants is described as a buyer of structured settlements and annuities, founded to provide sellers with a consultative, fair, and transparent approach in an otherwise predatory marketplace that lacks adequate protections.
The structured settlement watchdog dispenses a "yellow card" to Mr. Didier for promoting his services by taking advantage of inaccuracies of others (that detracts from an otherwise well written article). Didier uses two invalid examples for predatory factoring discount rates at the expense of his competitors, Imperial Holdings and Peachtree. While i have been highly critical of discount rates employed by these two companies, I am interested in credible information. One would assume that as a trial lawyer representing injured parties, Mr. Didier should too.
First, Didier states "in one reported case of such abuse, it was observed that "in what appears to be a record high discount rate charged for structured settlement transactions, Imperial Structured Settlements, LLC tried to charge its customer an interest rate of 82%". Yet a June 25, 2011 Google search for "Imperial Structured Settlements 82% rate" comes up with press releases of RSL Funding, a competitor of Imperial and Didier. Download Imperial structured settlements 82% rate - Google Search
When I placed a call to Didier's office yesterday the individual I spoke to suggested the cite was really a cite of a cite (apparently a "cite of a press release by RSL Funding, a competitor of Imperial and Vantage) but not a "reported case in the "legal court proceeding" sense of the word. The RSL press release provides not a shred of evidence to support its statement about the purported "82% rate". The case linked to its press release has a 16.56% annual discount rate! In Imperial Holding's S-1 filing with the Securities Exchange Commission prior to its Initial Public Offering, it was represented that the range of discount rates were in the high teens. Indeed on October 2, 2010 RSL Funding issued a press release in which it wrote that Deborah Benaim, then an executive of Imperial, testified that discount rates were "averaging 18-20%". (See : Imperial Factoring Exec Testified Discount Rates "Averaging 18-20%", Report, October 3, 2010). I also contacted a senior Imperial Holdings executive after reading Didier's post and he had no knowledge of an 82% discount rate, citing to the S-1 disclosure.
Last Fall RSL Funding engaged in what we referred to as a "bitch slap" campaign against Imperial Structured Settlements using "do it yourself press releases". Thus the 82% allegation needs to be put into context.
Unless Didier and RSL can produce a recent case that shows that the "effective annual discount rate" was indeed 82% then one can only assume that it is simply a misinterpretation of what a discount rate is. Both should refrain from using the misinterpretations .
Moving on to the Didier cite of the "71.4% discount rate referred to by Bronx, New York Supreme Court Judge Norma Ruiz. Had the full text of the Feliciano decision (Ruiz's case) been read, I doubt Didier would have posted what he did, because it makes him look less credible. Anyone with a basic knowledge of present value should know that Ruiz 71.4% number was bogus due the misinterpretation reflected in the decision that conflicted with what she said earlier in the decision. He certainly would not want to rest his closing argument on that one.
This may be helpful
New York General Obligations Law Section 5-1703 (e) through (g) Required Disclosures to Payee
(e) the gross advance amount and the annual discount rate, compounded monthly, used to determine such figure;
(f) an itemized listing of commissions, fees, costs, expenses and charges payable by the payee or deducted from the gross amount otherwise payable to teh payee and the total amount of such fees;
(g) the net advance amount including the statement: "The net cash payment you receive in this transaction from the buyer was determined by applying the specified discount rate to the amount of future payments received by the buyer, less the total amount of commissions, fees , costs, expenses and cahrges payable by you"
All the numbers corresponding to these statutory requirements were set out very clearly in the Feliciano decision, before the Judge's misinterpretation.
In my November 6, 2010 criticism of the bogus use of the bogus "71.4%" by the NSSTA (see below for the full post) I wrote, citing the Feliciano decision and including a copy of the Feliciano decision:
"If the Judge admits that the discount rate of 14.99% equals (the gross advance)
of $19,540 and $17,340 (the net advance amount after expenses) is 88.74% of the
present value with a 14.99% discount rate then logically, the (effective annual discount)
rate CANNOT be 71.4%!"
Following are links to my reporting of the Feliciano decision and the rampant abuse of "judicial misinterpretation" by some, to meet the end of marketing against a competitor and public relations.
All in the Factoring: A "Bunker" Mentality, Starring the NSSTA Blog November 19, 2010
NSSTA Seeks to "Wiggle It" Just a Little Bit (with its "Added Groove" November 17, 2010
"Ruiz The Day" Did NSSTA Embellish the Judge's Words, Why? To What End? November 13, 2010
What is Present Value and How Does It Apply to Structured Settlements? November 8, 2010
NSSTA's Structured Settlement Factoring: The 71% Non Solution is Wide of The Mark November 6, 2010
Judge Norma Ruiz Gives Peachtree Settlement Funding the "Bronx Cheer" July 28, 2010
I know a big fat misinterpreted discount rate LOOKS juicy, but it's no more real than one of those fake soup bones that "the dog" gets tossed every now and again that do nothing but squeak),
So let's educate the public with reality. OK?
Post Script: Received a call at 11:12 Sunday morning from a phone with "Henry Didier" in the Caller ID. No message was left, just static. I called back the number and the same static. Hank, I'm always happy to chat about anything that keeps structured settlement stakeholders informed and helps curb abusive business practices in either the primary or secondary structured settlement market.
** subsequent to the posting of this blog, the 82% and 71.4% references were removed from Didier's post to Injuryboard.com June 27, 2011 1:50pm
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With a structured settlement you can plan for multiple needs and address them all within a single contract. You can reduce your adminstrative burden. If you could solve a problem with ann annuity, without using structured settlements you would likely need to use multiple contracts.
Note: On larger cases and depending on the nature of the cash flows (e.g. immediate, deferred, long duration) it may be prudent to diversify with more than one insurance company.
This post begins a new series on the best things about structured settlements. The format will be quick hits or sound bytes on each topic.
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by John Darer® CLU ChFC MSSC CeFT RSP CLTC
A respected industry colleague , who is not a tax attorney, remarked that Revenue Ruling 79-220 supports a structured settlement directly to the heirs of a decedent for pre-death pain & suffering and other elements of damages associated with the decedent's claims, as opposed to direct actions of survivors like wrongful death claims.
Let's look at the the express language of Revenue Ruling 79-220
Comments
The New York Injury Cases Blog, written by Plaintiff lawyer John M . Hochfelder of White Plains, New York is a good resource for news on pain & suffering.
Hochfelder speaks of a $3,500,000 verdict was upheld on appeal in Rivera v. City of New York (2d Dept. 2011).
During the terrible final 4 3/4 hours of Anna Rivera's life, she suffered enormous physical pain and terror from:
Other cases cited by Hochfelder...
One of the nation's Leading authorities on settlement tax law, Robert Wood of San Francisco's Wood & Porter, refers to the IRS application of "narrow and unforgiving reading of the scope of section 104" in his article " The Uncertain Effects of a General Release" (May, 2, 2011 Tax Notes) .
The stakes are high for defendants and insurers, and even plaintiffs who could lose secured creditor status if an IRC 130(c) unwind were to go into effect.
Where is the tax support to justify an allocation to wrongful death ostensibly to accomodate the amount someone wants to structure, or the structure broker wants to sell, after the case has been pleaded for years on pain and suffering of the decedent in order to jack up the numbers?
is there any structured settlement broker or settlement planner that has enough errors and omissions to cover the taxes and penalties resulting from a mistake?
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Healthy attorneys may get a better deal on structured attorney fees by pairing a life only annuity with life insurance , if the attorney is insurable. Life only annuities yield more than life annuities with a certain period. The certain period is really insurance. Since attorney fees are both income taxable and may also be part of an attorney's estate, companion life insurance, purchased through an ILIT may help solve the problem. There's usually enough money in the spread to make it work. Plus 20 year level premium term insurance is now available up to an issue age of 70, and up to age 65 for those who want 25 years level premium.
A properly designed ILIT will keep the life insurance proceeds (which are income tax free) out of the attorney's estate. There is no estate on a life only annuity since payments cease upon death.
Attorneys aged 50 and up who want to structure legal fees should consider this strategy among others.
For more information John Darer, CLU ChFC MSSC RSP 888-325-8640
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