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Structured Settlements...The Day of "The Jackal"

Patrick Hindert's post of October 1, 2008 is all the NSSTA Board needs to see concerning Patrick Hindert's true motivation.

True to form National Structured Settlement Trade Association member and token "cash now pusher" Patrick Hindert seems to be encouraging people to pawn the rights to their American General Life Insurance Company and American International Life Assurance Company of New York structured annuities. This encouragement is cloaked in the form of letting people know of their rights to sell. It also appears that Hindert supports lobbying judges to consent that worries over AIG meets the "best interest test" so that Peachtree Settlement funding and their ilk can take the worriers for big discounts.

If Patrick Hindert holds a  New York State insurance license I hope that New York Superintendent of Insurance Eric Dinallo takes note. Hindert appears to delight in what HE perceives as a loophole in Dinallo's memo and states "It can be argued (and probably already has been argued) that the news releases of Superintendent Dinallo and other state insurance commissioners do not apply to structured settlements".

While Hindert is correct when he states "Consumers don't purchase structured settlement annuities. Defendants and/or IRC section 130 Qualified Assignees (periodic payment obligors) purchase and own structured settlement annuities. Consumers (aka injury victims or structured settlement recipients) receive structured settlement "payment rights" not structured settlement annuity ownership. They are not policyholders" he automatically and incorrectly assumes that annuitants or their attorneys would not think to contact the broker who placed the annuity directly or through their attorney. By Hindert's logic "agents have duties to their insurance company principals. He opines that neither owe duties to "fully inform" injury victims about structured settlement transfers - not the possible costs of transfers, not the risks of transfers, not the laws of transfers". By the time Hindert got off his butt to write his first ever post concerning AIG on September 21, 2008,  I and many others had already reached out to clients who had AIG annuities or had been contacted by clients with questions with days to spare.

Folks we are only just over 2 weeks into the AIG bailout.

While Patrick Hindert's opportunistic, toxic, apparently profit motivated digital diarrhea continues why not stay tuned for the next couple of days?  If it's not already, wouldn't Hindert's judgment prove to  be in serious question if it turns out American General is sold? Bloomberg announced at 5:48pm on October 2, 2008 that AIG is seeking to sell its U.S. Life and annuities units. Potential bidders were said to be ING, Swiss Re and AXA.

Wouldn't you feel silly selling your asset at pawn shop prices ratcheted up from "abnormal" to capitalize on your fears if tomorrow there is a new owner?

*****TODAY, Friday October 3, 2008 is the date of AIG CEO Edward Liddy's conference call on which assets of AIG are being sold*******.He will be on CNBC at 1030am

A reminder to consumers, structured settlement annuitants and plaintiff lawyers, if the cash now pushers are offering money for AIG structured settlements then THEY PERCEIVE that they will get paid. Think about it, factoring companies can't print money like the United States government. They and their investors must have a reasonable expectation of being paid.

Questions to for NSSTA members and Board after what may be announced today.

1. Is there something in the NSSTA bylaws that requires it to retain at least one "cash now pusher"?
2. Has Patrick Hindert shown himself to be a jackal attempting to profit financially by fanning the flames of people's fears?
3. How much money have Patrick Hindert and other vig taking NSSTA members made referring people to sell the rights to their American General Life and American International Life Assurance Company of New York structured annuities at a deep discount since September 16, 2008? How about since September 21, 2008?

Any AIG structured settlement annuitants are free to contact this author via telephone at 888-325-8640 to discuss their concerns or via email to [email protected]. Unlike some of those from whom you may seek advicce, this author has no financial interest in whether or not you transfer your payment rights. Nor do any settlement professionals on the Structured Settlement Clean Vendor List.

Factoring Scum Preying on Tort Victims Using False Information About AIG  September 19, 2008
 Will Hyena "Cash Now Pushers" Come Out Tonight? September 15, 2008

Settlement Capital General Counsel Offers Responsible Contrast In Factoring Industry Response to AIG Situation

by Structured Settlement Watchdog®

In "Let's Be Careful Out There" Matt Bracy, General Counsel of factoring company Settlement Capital Corporation, offers an articulate, thoughtful and responsible voice on the AIG situation as it applies to structured settlement factoring. Unlike the opportunistic and hyena like from Woodbridge Investments, it is nice to see another voice of reason.

What factoring industry throught leaders Matt Bracy and Andrew Cravenho (of Settlement Quotes, LLC) get is that blog posts are indexed and seen all over the Internet. Not  everyone watches CNN, CNBC or reads the Wall Street Journal. Yet judging from my personal experience fielding phone calls from readers and mindful of the published statistics of Internet use by Americans (Nielsen/Net Ratings says 72.5% of the population), it is evident that hundred of millions of people of ALL levels of sophistication surf the Internet to find financial information. How many of you out there have made a phone call to a service provider and been trapped in automated response hell? What's your next option? Think about it! For some the Internet is their FIRST option.

When one "connects the dots" between the disclosure that she is getting the majority of her business from the structured settlement industry brokers and settlement planners AND her published acknowledgment that 90% of her clientele take kickbacks it doesn't say much about the judgment of said structured settlement industry professonals.

No factoring company or factoring brokers are members of the National Structured Settlement Trade Association (NSSTA) or a sponsor of any of its regional or national meetings.

Hong Kong Police Make Arrests For Spreading False Rumors About AIG

An AP report says that Hong Kong police have arrested and detained 11 agents and managers of MassMutual Asia Ltd on September 26, 2008 in connection with a forged letter that claimed insurance holding company American International Group, Inc. (AIG) was selling its Asian subsidiary.

This author opines that authorities need to get tough on opportunists in the United States who exhibit similar questionnable ethics.

The other day I discussed Woodbridge Investments "approach" to the AIG situation and opined on the ethics of it. A refresher on Woodbridge comments in a press release...

'We have been doing brisk business in efforts to help secure financial assets backed by AIG Insurance"  Woodbridge Investments- Scott Schwartz September 19, 2008

'Major banking institutions and insurance companies like Indymac, Lehman, WAMU, and AIG are reeling to recover from losses, and without a defined way out of turmoil"  Woodbridge Investments Scott Schwartz September 19, 2008

"Our customers are dealing with an inherent fear, and anxiety that naturally comes when you are expecting to receive payments for the next twenty or thirty years from companies like AIG that are linked with unprecedented real and rumored cases of bankruptcy". Woodbridge Investments Scott Schwartz

The best that Woodbridge has to offer is a pennies on the dollar offer.

 

Oregon Insurance Division of Department of Consumer and Business Services Warns of Misleading Information Concerning AIG

by Structured Settlement Watchdog

The Oregon Insurance Division of Department of Consumer and Business Services, echoing the voice of other insurance commissioners around the US, stated  in a September 24, 2008 press release that:

"AIG's insurance companies are financially sound, with substantially more in assets than they need
to pay all valid present and projected claims, the Department of Consumer and Business Services, Insurance
Division today reassured Oregon policyholders. If someone tells you to replace your policy because of AIG’s
recent financial troubles, the division urges you to consult with a trusted adviser or call the division’s toll-free consumer line at 1-888-877-4894.

As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its
subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of
policyholders. The Insurance Division monitors AIG insurance companies and any other company that is
licensed to transact insurance in Oregon to make sure it is financially sound and can pay claims".

For a copy of the complete Oregon Insurance Division press release on AIG please click the following link Download 092408-aig-policy-replace-caution.pdf

Structured settlement annuitants need to be especially careful of "cash now pushers", who attempt to prey and profiteer on the human frailties and vulnerabilities of American General Life annuitants. Beware that there are some wolves in sheep's clothing in the structured settlement industry who may take kick backs from the "cash now pushers".

This author is compiling an expose of experiences of any American General Life annuitants who encounter "cash now pushers" or their agents. You have the opportunity to stamp out bad behavior by naming names.

AIG Policyholders Warned of Illegal Approach in 2008 Panic- NY DFS Says Abuse Won't Be Tolerated!

by John Darer® CLU ChFC MSSC RSP CLTC

The New York Insurance Department now known as the New York Department of Financial Services, issued a press release dated September 22, 2008 in response to reports of solicitation abuse visited upon AIG policyholders and consumers in the wake of the recent news. Some of the key points made by then insurance superintendent Eric Dinallo:

1. " AIG insurance companies are financially sound, with substantially more in assets than they need to pay all valid present and projected claims"

2. “Don’t worry and don’t make any rash decisions if you have a policy issued by an AIG insurance company,” Dinallo said. “All your covered claims will be paid and all your annuity checks will come. Making sure insurance companies are solvent and able to pay every valid claim is my number one job, and the AIG insurance companies are strong and solvent"

3. “If you have a life insurance or annuity policy and someone tells you to replace it because of the troubles at AIG’s parent company, call the Insurance Department immediately at 1-800-339-1759,” Dinallo said. “Replacing or liquidating a life insurance policy or an annuity can have heavy hidden costs and tax consequences. That is why our Insurance Law requires that you get all the information you need to make an educated decision in your best interests. There may be a cancellation penalty if you cancel your automobile or homeowners policy. If someone tells you to replace any policy because an AIG insurance company is in trouble and may not be able to pay your claim, that is not only untrue, it is against the law. Call us. Some regulators have received reports that this is happening. We will not allow it to happen in New York. We will protect consumers from improper sales practices.”
4. "Why are the (AIG) insurers in a much better position than the financially challenged parent? State insurance regulators have numerous actions they can take to prevent an insurer from failing. Rating downgrades and drops in share price do not change an insurer’s ability to pay claims. From conservative accounting rules and mandatory annual CPA audits to investment regulations/limitations and minimum capital/surplus requirements, a state insurance regulator’s “toolbox” allows insurers to handle greater losses than other parts of the financial sector in down-market cycles. Additional regulatory tools include performing regular, periodic financial analysis of insurers, and on-site examinations".

The press release includes much more information that is not only useful for New York consumers with AIG policies,  but is informative for AIG consumers in other states.

Dinallo also announced he would issue notices to insurance companies, agents and brokers, reminding them of their responsibilities under New York Insurance Law to fully inform consumers of the possible costs of switching life insurance, annuity and other policies.

Kudos to New York superintendent of insurance Eric Dinallo for his leadership on the issue. Unfortunately the New York state law is missing stiff regulation of factoring industry solicitation practices. Even after September 16, 2008, structured settlement cash now companies have been using the AIG story to induce panic and get annuitants to sell their annuity policies, or in the case of structured settlement annuitants, the rights to receive structured settlement payments.

Links

New York Insurance Department Press Release on AIG dated 9/22/2008

 

 

Patrick Hindert Chums for the "Factoring Sharks" on AIG

by Structured Settlement Watchdog®

Monday morning quarterback Patrick Hindert's analysis of "The Week That Changed American Capitalism" begins with the tale of Hurricane Ike and the interruption of power for over 700,000 homes. In Hindert's case perhaps it should have stayed off.

Isn't it evident that Patrick Hindert is simply a tool for the misinforming opportunistic "cash now pusher" sharks that attempt to prey on tort victims over this crisis when he asks:

"How many of you utilized the negative 2005 A.M. Best announcement about AIG's financial condition (or the September 2008 AIG bailout) to discuss with your clients and customers IRC section 5891 and the state structured settlement protection laws?"

• IRC 5891 is the section of the Internal Revenue Code that levies an excise tax on structured settlement factoring transactions (the process by which a structured settlement recipient sell their structured settlement payment rights for a discounted amount of cash) and sets forth exceptions to the tax. Hindert and others have mischaracterized the enactment of this code section as the watershed moment "making factoring legal".
• Structured settlement protection acts set out certain consumer protections during the placement of structured settlements or sale of structured settlement payment rights. Unfortunately the laws are not comprehensive enough. Every state is dreadfully deficient in establishing and enforcing standards for the approach, marketing and solicitation of vulnerable consumers by "cash now pushers"

GIven that today's post is his first about AIG since he started blogging in 2004, where is Patrick Hindert's credibilty? Where was Hindert in the discussion about AIG in 2005, 2006, 2007 or early and mid 2008? 

From the perspective of the National Structured Settlement Trade Association membership thank you Patrick Hindert for your "transparency" concerning your factoring company allegiances.

AIG Bailout of 2008 | Understanding the AIG Rescue Plan 101

by John Darer CLU ChFC CSSC RSP CLTC

Much has been written about the AIG bailout and some of it has unfortunately been misinterpreted. This post attempts to help educate our readers

Under the American International Group, Inc. ("AIG") rescue plan, the Federal Reserve will make available an $85 billion revolving credit line to AIG. In return, it will receive warrants (a form of warrants called equity participation notes) that, upon exercise, would give the government a 79.9% common stock interest in the company, if AIG shareholders approve. No evidence appears to exist that such a vote has taken place at the time of this writing.

According to Bloomberg and Wall Street Journal, there is speculation that shareholders, including former CEO Hank Greenberg, Sovereign wealth funds and other investors,  may try to derail a government takeover by helping to repay the federal loan. The New York Post reports that former AIG CEO Hank Greenberg's attorney David Boies indicated in an interview that his client may try to end government involvement in the company "as prompt as possible"

Sources: AIG Form 8K filed with the SEC on September 18, 2008 Wall Street Journal, New York Times, Huffington Post, Deal Book blog, New York Post, Bloomberg

According to London's Financial Times "the issuance of the equity participation note to the government is designed to prevent existing shareholders from profiting from a rescue of the company, which has been hobbled by the losses on complex securities backed by mortgages and other assets". As AIG begins to sell off assets the taxpayers will have their loan repaid. Assuming the financial health of the company improves, the government's warrants will increase in value.

Quoting anonymous Federal Reserve staffers, Bloomberg reported on September 17, 2008 that "the Fed's loan doesn't require asset sales or the company's liquidation, though these are the most likely ways AIG will repay the Fed".

On Bloomberg.com David Havens, a credit analyst at UBS AG in Stamford, Connecticut, expressed enormous relief, referring to AIG as "the biggest commercial insurance business in the U.S" and  "the best Asian insurance franchise in life and general insurance of any Western company''. According to RBC Capital Markets an AIG meltdown would have cost the financial industry $180B because AIG provided insurance on more than $441B of fixed income investments tied to the world's biggest institutions, including $57.8B tied to sub prime mortgages. See definition of systemic risk below

The National Association of Insurance Commissioners ("NAIC") has a wealth of useful information for insurance consumers on its website and stresses that the AIG "conversation should stay focused on the facts".

NAIC has a consumer information resource that enables you to check on the financial status, licensing and complaints of any insurance company licensed to do business in your state

As an interesting side observation to all of this, while I was "making the rounds" this week reaching out and speaking to attorneys and fielding calls from a few concerned annuitants there was a disproportionate interest in "whether it was a good time to buy AIG stock?". A number indicated they already had made such purchases.

Important Financial Definitions Relating to AIG and the Fiancnial Crisis

Revolving Credit With revolving credit, the lender (the bank, or in this case the Federal Reserve) allows the debtor (in this case AIG) to continuously borrow money up to a certain credit limit (in this case $85B!). Every time you buy something on credit, that amount is subtracted from your total credit limit. And every time you pay off your balance, your credit limit goes back up. Credit cards are the perfect example of revolving credit.

Stock Warrant A type of security issued by a corporation that gives the holder the right to purchase a certain amount of common stock at a stated price "as a sweetener" to give the creditor something to claim in case you default on the loan obligation.

Common Stock Each share of common stock represents a single undivided unit of ownership in a corporation. Common stock owners generally have the right to vote to elect the corporation's board of directors.

Form 8-K Form 8-K is the “current report” companies must file with the United States Securities and Exchange Commission ("SEC") to announce major events that shareholders should know about.

Systemic Risk A form of financial risk that affects an entire financial market or "system". May also be called systematic risk. It is not possible to avoid systemic risk through diversification. The AIG rescue plan was a defensive measure to counter what was perceived as massive systemic risk that would result from its demise.

Structured Settlement Cash Now Villains Prey on AIG Structured Settlement Annuitants with Lies

by Structured Settlement Watchdog

Structured Settlement Factoring Companies Trafficked in Fear and Exploited AIG Annuitants

A number of cash now for structured settlement companies are exploiting the fears of tort victims with AIG structured settlements. According to our sources tort victims are being falsely told that AIG is going bankrupt.  This author understands that AIG attorneys are on the case. The "cash now pushers" are apparently omitting the facts concerning the $85B loan from the Fed and reports from today's Wall Street Journal which said that AIG major shareholders are trying to come up with a plan to pay back the Fed within the term of the loan so that majority control of the company does not have to be ceded.

If you are the recipient of a structured settlement annuity from American General Life insurance Company, American International Life Assurance Company of New York or Variable Annuity Life Insurance Company (VALIC), do not panic! Speak with a structured settlement professional or other qualified financial advisor WITH NO FINANCIAL INTEREST in whether you transfer your rights to the structured settlement payments. 

The vultures who call themselves financial advisors who prey on tort victims in the above manner deserve to be identified for all to see, in my opinion.

Selling your structured settlements for cents on the dollar to vultures disguised in benevolence whose ultimate role is ri[ bloody chunks from your financial carcass, does not make financial sense.

Woodbridge Vultures

One could opine that one such vulture is Woodbridge Investments, LLC, whose Vice President of Sales Scott Shapiro was quoted in this press release dated September 18, 2008 (published AFTER the AIG bailout was announced) " (all underlines for emphasis)

• "Major banking institutions and insurance companies like Indymac, Lehman, WAMU, and AIG are reeling to recover from losses, and without a defined way out of turmoil..."
• "We have been doing brisk business in efforts to help secure financial assets backed by AIG Insurance"
• "Our (Woodbridge) customers are dealing with an inherent fear, and anxiety that naturally comes when you are expecting to receive payments for the next twenty or thirty years from companies like AIG that are linked with unprecedented real and rumored cases of bankruptcy".

___________________________________________________________________________________________________________________

Update : Ironically in December 2017 Woodbridge filed for bankruptcy and in October 2019, Robert Shapiro its CEO was sentenced to 25 years in prison after he pleaded guilty to running a Ponzi scheme that ripped off thousands.

______________________________________________________________________________________________

The obvious questions to ask Woodbridge or ask yourself are:

1. “if AIG is going under, why would the factoring company be willing to accept future payments from AIG?  Naturally they would only proceed with a purchase if they were sure they would recover their money”. 
2. " If the purpose of the bail out loan of up to $85B to AIG from the Fed is designed to help AIG raise capital by buying it time to sell of cetain assets in an orderly manner, why should tort victims be burnt at the stake in the cash now pushers fire sale?

On September 18, 2008 a $2,000/month AIG annuity with 360 monthly payments increasing annually at 3% could be sold for $256,000 (a discount of 9.2%). Thats $1,141,810 in future benefits for $256,000! The cost of those benefits in today's dollars is approximately $500,000! Source: Settlement Quotes, LLC

Recipients of AIG structured settlements who have been approached by aggressive cash now pushers trying to buy their structured settlements are encouraged to email this author with your story. We will be preparing a dossier for states' attorneys general.

Structured Settlement Industry Teachers Must Be Fluent in the Facts to Inspire Confidence

by Structured Settlement Watchdog

Consumers and Annuitants Need Accurate Information from Fluent Settlement Consultants

In this episode of teaching the structured settlement teacher, we focus on the web site of a settlement planner in the Southeastern United States and his description of "the structured settlement process":

The settlement planner states erroneously, "Once the defendant agrees with the claimant on a stream of periodic payments designed in the best interest of the claimant, the defendant assigns its obligation for payment to a life insurance company. The life insurance company then funds the claimant’s payments through the purchase of an annuity policy which offers attractive pricing and flexibility. The Structure may also be funded through the purchase of government securities"

Comments

The Defendant assigns its obligations to the qualified assignment company ("the assignee"). The assignee then funds its obligation to make payments to the payee (examples of payee may be the claimant or a trust, the claimant's attorney or the claimant's attorney's firm) through the purchase of an annuity or alternative permissible qualified funding asset. Click How Structured Settlements Work | Structured Settlements Explained (4structures.com) for more information.

At the time of writing this author believed the only qualified assignee that is a life insurance company is the New York Life Insurance and Annuity Corporation, the assignee used with structured settlement annuities issued by New York Life insurance Company.

The settlement planner on AIG situation:

• The settlement planner's website also includes a Q&A regarding the AIG situation which is highly commendable. The Q&A however, includes erroneous information concerning prior structured annuity issuer impairments.
• The settlement planner erroneously states that Executive Life is the only company "that went into receivership".
• In addition to the 1991 Executive Life impairment, there was Confederation Life, Monarch Life (significant because bankruptcy creditors were not permitted by the Court to have priority over the structured annuity recipients).
• The settlement planner erroneously states that the Court ordered 100% payments to Executive Life annuitants, but neglects to point out that Executive Life had shortfalls that, for those structured settlement entered into in the days before qualified assignments (or simply weren't assigned), had to be made up by the Defendant or Insurer annuity owner. It wasn't pretty.

It's vital that those disseminating information in the structured settlement/settlement planning space check the facts, please!

Last updated July 10, 2023

 

US Government Intervention with AIG Postmortem

by John Darer CLU ChFC MSSC CeFT RSP CLTC

It's September 17, 2008 and the financial panic over AIG appears to be over

According to CNBC, BBC and other published sources. the Fed will lend AIG $85B in exhange for a 79.9% interest in the company. As I understand it taxpayer money is secured by the assets of the company and its subsidiaries. The board of the Federal Reserve made its decision about AIG "with the full support of the Treasury Department", it said in a statement, adding that the secured loan included conditions designed to protect "the interests of the US government and taxpayers". The thing is if the Fed stepped in Friday, before the credit downgrades the loan would be much smaller.

The BBC reports that "the AIG plan calls for the government to seize up to 80% of the company and remove its management, in a similar fashion to the way it took control of mortgage giants Fannie Mae and Freddie Mac which were crippled by the US housing crisis."

Commentary

1. The core insurance business of AIG was not the problem that created the crisis.
2. The fact that it took the fear mongering financial media over 24 hours to let consumers know that the core insurance operations of AIG were safe has not gone unnoticed. The irresponsible reporting that "the company was toast" led to needless panic among consumers. Reporters should be educating consumers not effectively committing what was referred to on CNBC as "financial homicide". Ridiculous!
3. After the announcement of the bail out, financial columnist Suze Orman reiterated her support for the bali out and said that in a "what if" scenario people with AIG insurance policies would have "been just fine" in the event of the company going belly up and, that claims and other obligations would have been paid.  Orman erred however, in implying that state guarantee funds would guarantee the full face amount of a life insurance policy in the event the company went belly up. This is simply not the case in every situation. The National Organization of Life and Health insurance Guaranty Associations website contains relevant information on the topic for consumers.

4. Insurance is a highly regulated industry. All US insurers are regulated by state law and are required to maintain enough capital and surplus to satisfy the obligations to their policyholders. The September 2008 issue of Best's Reviews states that US insurers will pay $1.5B for states to regulate them in 2009! In addition the type and quantity of investments that insurers may invest in is limited by state law. With respect to AIG, its subsidiaries that write structured settlement annuities are individually responsible for the liabilities associated with the policies they write. Each subsidiary insurer is individually regulated by the state of its domicile( and in all all states admitted), for compliance and financial solvency tests independent of its parent or any affiliates. Major transactions regarding insurance companies are generally required to be approved by the resposible state regulator.

5. The general accounts of the structured settlement annuity issuing companies of AIG/American General are not obligated to support any other AIG businesses.