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May 07, 2012


New York Apartments

Dear Mr. Darer, I posted to you under the name “New York Apartments.” I wanted to answer a couple of your statements, but it seems that there is no space left in your blog for me to add my comments. Is there a problem on your end, or was I banned from posting responses on your blog? I certainly hope there is an issue with the amount of comments that can be added to your blog, and that you can clear up this issue. Anyway, below is my response:

"ELNY created the product based on a flawwed business model which failed to make reasonable assumptions of reinvestnment risk on liabilities 30 years and out, discounting projected liabilities at once the interest rates 'from the moon" that were in play in the early 1980s."
"But the regulators failed again by not recognizing the problem sooner and not cutting benefits sooner like they did in California. I think you would be much happier if they did."

All this is probably true, I cannot argue these points because I am not an insurance industry professional. However, the shortcomings of those who make the mistakes in the insurance industry should never fall on the shoulders of the recipients of the guaranteed Annuities. These weren't stocks or risky investments that I was being sold. These policies were written by experts in the insurance industry, and supposed to be watched by people who apparently didn't do their jobs properly. Errors occurred at both times, when setting up the Annuities, and or during the time they needed to be maintained to ensure they can continue to pay out for 30 years or more. What should have been in place to protect people like me, was an insurance policy that was adequate to cover the guaranteed income, which in reality, were promises that fell way short. One thing that I will argue is that this sort of thing will happen again, because people, even the most well-intentioned, make errors in judgment. I also resent the fact that something that is sold by insurance industry professionals was misrepresented as guaranteed, when the supposed guarantee wasn't sufficient enough to be able to cover the payments when something goes wrong. One does not have to be an insurance industry professional or a rocket scientist to know that if you sell someone a policy, they should be getting what they were led to believe they were buying. I therefore will do everything in my power to advise everyone to stay as far away from making an investment in an annuity, until laws are enacted to protect the public. As far as I am concerned, if what you are saying is factual, the people who sold me a policy with false promises of guarantees that could not be backed up, should be in jail; and there should be an insurance industry fund set up to protect those who have this scenario happen to them, because it will happen again.

I would not have been happier, but to receive what I was promised, again, promised by insurance industry professionals. But at this point, nothing would make me happier than to see the entire process of selling promises in the form of annuities that cannot be delivered, get completely dissected, resulting in safeguards set up to protect the general public from those who either purposely, or accidentally, fail to do their jobs to make sure the guarantees made by the insurance industry, are guarantees on which they could actually make good… the operative word here is “guarantee.” Look it up in the dictionary.

John Darer

Dear Sandy,

Thank you for sharing. Today I locked in a structured settlement for an individual that combined 3 different life insurance companies. In the past 7 months I've done the other structure plans with 5 or 6 companies.

The system of the time failed you and others. I am angry about it (not at you) because I and others in the structured settlement industry feel for you and the legacy that it represents.

Back in 1983, which pre-dates my time in the structured settlement industry, I understand that few plaintiff attorneys used their own advisers. That is not the case today where on significant cases (like your son's) there would almost certainly be one, if you hadn't already found one yourself.

Had you had an advisor or been introduced to one, perhaps you would have seen other options and elected to diversify. Or perhaps not. I've observed that some people want to get the best yield no matter what. But you would have at least have had the dignity of this option.

The phrase "don't put your resources into the same project in case the project fails" had its origins in 1660 with Miguel Cervantes. Similar warnings came from Mark Twain "Put all your egss in one basket-and watch the basket" and in the German " make sure you have a lot of legs to stand on."

One important comment concerning something you shared is that the statutory prohibition on advertising the existence of statutory protection in New York by a licensed insurance agent in the connection with the sale of insurance or annuities. To use it is a violation of the insurance law. If you and others were sold the ELNY annuity on that basis that says something right there. However, if someone told you that it was guaranteed by the State of New York, there is and ALWAYS has been a limit. ELNY annuitants are seeing the benefit and the draw back of that limit now. It's preposterous to assume that the State of New York or the State of California will guarantee any "fakockta" company for any amount.

I dont know what your settlement amount is but if I was your advisor I would have pushed for diversification.

As I related before to you an dothers, the excessive has to do with the pricing of the annuity, not the value of the settlement.These annuities were pricing using the "from the moon rates" well past the expiration date of the underlying investments.

ELNY did it, NY Insurance Department should have caught it and nixed it. NYLB should have addressed the problem earlier instead of kicking the can down the road. There was a $1B shortfall! But the need for prudent diversification is also a harsh lesson learned for ELNY victims and people with other classes investments (dot com crash, 2008-2009, people who had all their money in their homes as the housing market crashed)

Sandi Rabinowitz

Dear Mr Darer, after a 3 week trial the doctor was found "GUILTY". My husband and I were then informed that we could either accept a "GUARANTEED ANNUITY" or risk an appeal and possibly have to go through another trial. Earlier in the trial we had been offered a settlement which was turned down by us. We were then informed that had we accepted that figure we would have been removed as our son's guardians and the court would appoint someone else as we would have been remiss had we accepted. After the verdict was read we were offered the A+ rated, guaranteed annuity. This proposed settlement was to avoid an appeal, and to insure that our son would be protected for the rest of his life, that WAS THE GUARANTEE. This was the alternative to having a young man in a position to squander or lose his security. There was no need for us to question this decision, it was "GUARANTEED" There was no mistaking the fact that that was what was in the best interest of our son. After all, what's better than a "GUARANTEED BY THE STATE OF N.Y." We were never given a choice nor did we need one, it was "GUARANTEED". The judge and our lawyer reiterated that fact.
The surgery was when he was 10 months old. The trial was in 1983. How can you put a price on what vision is worth? How do you repay someone for their lost youth, inability to play sports, never see 3D. How do you repay someone for years of bullying and ridicule due to someones negligence? To say that the annuities are excessive, according to who?
If this ELNY situation isn't illegal and a total fraud and sham why would the receivers and their designees seek immunity from civil and criminal prosecution? Why weren't the facts available to counsel for the annuitants at trial?

John Darer

Dear Sandi,

I do in fact see the where the blame lies as my post explicity states. What I ask of you is to share with me your personal experience in getting into ELNY. Who sold you the structure? Who was involved in the decisions? Were you given a take it or leave by the judge or your lawyers? Did you have you own settlement consultant? Was there any comparison shopping done? Do you have any of that in a written record? I'm not pointing blame. I want to get to the bottom of it and tell a story that it would be helpful fro others to hear. Email me privately if you wish. I didn't place any ELNY business. I am giving you and others a voice where there really is none. If there's a disgrace in that, then so be it.

John Darer

Dear New York New Apartments,

I hear where you are coming from, but my statement expresses the cruel reality that the annuities were grossly mispriced and WAAAAY out of line with the rest of the market:

ELNY created the product baed on a flawwed business model which failed to make reasonable assumptions of reinvestnment risk on liabilities 30 years and out, discounting projected liabilities at once the interest rates 'from the moon" that were in play in the early 1980s.

The NY insurance regulators approved ELNY products for sale

Judges had to approve the product where minors were involved.

And ideally you want to trust your financial advisors.

But the regulators failed again by not recognizing the problem sooner and not cutting benefits sooner like they did in California. I think you would be much happier if they did.

Had a MetLife annuity or New York Life annuity been placed to begin with at a lower benefit, but you would still be getting paid at 100%. That's my point.

I am doing this because I want to record for history, for you, for the other 1,499 ELNY victims and for those that benefit from structured settlement every day an accurate portrayal of how you and others came into the ELNY annuities. Was Karen has kindly shared with us some insight. Perhaps you can as well. Thank you again.

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