Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Structured Celebrity Endorsement Fees: Deferred Compensation for Your Celebrity Client

by John Darer CLU ChFC CSSC RSP

Structured deferred payments are an excellent way for celebrities to manage excess income  (i.e. "Oh dear, another million dollars! What am I going to do with that?).  If you are (or our your client is) having a good year financially and anticipate endorsement fees that only add to this year's tax bill singers/songwriters, actors/ actresses, athletes and other famous personalities can benefit from structured celebrity endorsement fees.

There are several ways to do it (1) a fixed annuity backed program offered through the Allstate International Assignment Ltd.  (2) a non annuity backed solution through the Kenmare Assignmments, Ltd.

(1) Allstate Facility

The Allstate program is only available through certain agents of Allstate Life Insurance Company and Allstate Life Insurance Company of New York (including this author, John Darer) through what is known as the Non-Qualified Assignment process. 

Structured Endorsement Fee Obligations assigned to Allstate International Assignments, Ltd. are guaranteed by Allstate Life Insurance Company and offer customizable future payment streams that can be tailored to your specific needs.

One application to consider is using Structured Endorsement Fee obligations to fund future years of a Defined Benefit Pension.

Celebrity Endorsement Fee structures should also be of interest to agents, managers and legal representatives of sports and entertainment figures as well as corporations and entities who hire them. We are happy to work with all of you.

At this time, Celebrity Endorsement Fee Structures can be provided only for endorsement fees that would be payable to United States Citizens or United States Resident Aliens.

Following are downloads concerning relevant documentation that will be required for all Celebrity Structured Endorsement Fee assignments using the Allstate facility:

Representation and Acknowledgement for Celebrity Endorsement

Download representation_acknowledgement_for_celebrity_endorsement_structure.doc

Assignment of Obligation For Celebrity Endorsement

Download assignment_of_obligation_structured_celebrity_endorsements.doc

Sample Allstate Life Insurance Company Agreement To Pay

Download agreementtopay_specimen_pdf.html

Please note that annuity backed Celebrity Endorsement fee structured settlements are only available through life insurance agents or brokers appointed through Allstate's structured settlement distribution system and not necessarily through a local office which you may patronize for auto or homeowners coverage.

(2) Kenmare Facility

Same, idea with more possibilities for customization using different asset classes and professional management.

The Kenmare Assignment facility is available through a limited number of settlement consultants and settlement planners throughout the United States. There are fewer financial planners who have access to the Kenmare facility and thus you have to be sure are speaking with someone who is both knowledgeable about and has access to the facility.

For further information about either approach  or a comprehensive review of your situation, please contact John Darer at 888-325-8640

Constructive Receipt: Mixing Apples and Oranges

by Structured Settlement Watchdog

Settlement Professionals/SPI seems to have things mixed up concerning constructive receipt as it applies to structured sales (which it dubs the  "Ensured Structured Sale")**

SPI:  "The Doctrine of Constructive Receipt taxes income before that income is actually received"

Comment: Governments tax income not tax doctrines. This certainly applies in the United States.

SPI: "It's important to note that Constructive Receipt doctrine only affects your ability to obtain a tax-exempt structured settlement annuity, as part of your settlement plan".

Comments: 

1. It is important to differentiate between a settlement plan, a financial plan and/or an "exit strategy" plan. A "settlement plan" generally does not apply to structured sales unless the injured party in a law suit, or their attorney, is selling low basis/high value property. A settlement plan, incorporating a structured sale, might well apply in a divorce settlement scenario.

2. A structured sale annuity IS NOT tax exempt. Provided  the characteristics of IRC 453 apply, a structured installment sale should help the business or property seller defer capital gains taxes. Like a regular installment sale, when each installment is made, a portion of it represents return of basis in the property, part represents capital gain and part represents ordinary income.

SPI: "Myths That Do Not Trigger Constructive Receipt" (Relating to Structured Sales)

• Negotiating for payment of your full settlement to a QSF, subject to further Court control and oversight.
• You have been awarded a verdict, however the defendants have appealed to a higher court for review.
• Negotiating for multiple annuity issuers to share responsibility for your payments.
• Negotiating for all security interest in any annuities (versus being a general creditor of the annuity issuer)".

Comments:  This appears to just be a cut and paste job from structured settlement annuities. None of these scenarios applies to a structured sale. With respect to the third bullet point only Allstate Life Insurance Company and Allstate Life Insurance Company of New York currently offer this product.

Mind the Crack, Jack!

**as of May 3, 2010 8:00pm EDT

Non Qualified Structured Settlement Annuities | Non Qualified Assignments

by John Darer® CLU ChFC CSSC RSP

With the announcement by Prudential that it has suspended new business via its Pruco non qualified assignment facility, the non qualified structured settlement market now includes:

Allstate International Assignments, Ltd., which funds assigned obligations through Allstate Life Insurance Company and Allstate Life Insurance Company of New York.

Barco Assignments, Ltd., which funds assigned obligations through Liberty Life Assurance Company of Boston. With "The Rock" now having "left the room" perhaps some will remember that Barco was the first comprehensive non qualified assignment company.

It is worth the reminder that litigation annuities from companies other than the above may possibly be used in such cases where the paying entity is willing to retain the annuities as an asset on the entity balance sheet. A requirement that the annuity be part of the resolution of of litigation is generally a prerequisite in such cases.

Allstate Life Insurance Company in Ratings Downgrade by S&P, Fitch, But A.M. Best Affirms Rating

While A.M. Best affirmed Allstate Life Insurance Company at A+ (Superior) this week, both Fitch and Standard & Poors have lowered their ratings on the company to A (Strong) and AA- (Very Strong) respectively. The ratings also apply to Allstate Life Insurance Company of New York.

A.M. Best

..."The ratings of the primary life/health members of Allstate Financial "continue to reflect the financial strength and support from its direct parent, Allstate Insurance Company (AIC)," the analysis continued. "To offset statutory net losses incurred in 2008, AIC provided ALIC with $1.75 billion in capital contributions." Best said it "believes this support demonstrates Allstate's commitment to Allstate Financial and that its operations remain strategically important to the Allstate Group."

Best also indicated that in "response to the current economic climate, Allstate Financial has initiated a number of actions to reduce risk and improve returns such as reducing its concentration in spread-based products, maintaining high liquidity in the investment
portfolio and decreasing the number of product offerings."...

Fitch Ratings

..."The life operations received $1.8 billion of additional capital from the holding company and AIC (Allstate Insurance Company) during 2008 as well as benefiting from an accounting change that added $350 million to statutory surplus. The 'standalone' financial strength ratings of Allstate's life operation is lower than the current 'A' level. The lower standalone rating reflects its more troubled assets relative to the property/casualty operation, liquidity needs from institutional product maturities, and generally weak performance. The current ratings on the life insurance subsidiaries receive an uplift due to the Capital Support Agreement from AIC and their access to company credit facilities."...

Fitch defines an "A" rating as "Strong". 'A' IFS ratings denote a low expectation of ceased or interrupted payments. They indicate strong capacity to meet policyholder and contract obligations on a timely basis. This capacity may, nonetheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

 

Current and Former Structured Annuity Issuers Listed Among The Street.Com Ratings (Weiss) Strongest Life and Health Insurers in US

The most recent quarterly financial safety ratings from The Street.com Ratings (formerly Weiss Research ratings) include a number of structured settlement annuity issuers:

Allstate Life Insurance Company A-
American General Life Insurance Company B+
John Hancock Life Insurance Company A
Massachusetts Mutual Life Insurance Company A
Hartford Life and Annuity Insurance Company B+
Metropolitan Life Insurance Company B+
New York Life Insurance Company A
New York Life Insurance and Annuity Corporation (NY Life qualified assignment company)
Pacific Life and Annuity Company A
USAA Life  A
Variable Annuity Life Insurance Company (VALIC) A-

Ratings agencies such as Standard & Poors, Fitch and Moodys have recently come under fire from regulators such as Rep. Henry A. Waxman (D-California) who is Chairman of the Committee on Oversight and Government Reform.  On October 22, 2008 the committee held a hearing "Credit Rating Agencies and Financial Crisis in which the aformentioned agencies actions leading up to the financial crisis were examined. The objectivity of these agencies was called into question given the fact that they are compensated by the entities they rate.

On the other hand, The Street.Com expressly states "we don't accept compensation from the companies we rate for issuing the rating. Nor do we give the companies an opportunity to preview the ratings or suppress their publication if they're unfavorable. We are totally independent and unbiased because our loyalty is to you -- the customer".

Every quarter, The Street.Com Ratings evaluates the financial strength of more than 13,000 institutions, including life, health, and annuity insurers, property and casualty insurers, HMOs, Blue Cross Blue Shield plans, banks, and savings and loans.   In addition, it tracks the risk-adjusted performance of over 20,000 mutual funds and more than 6,000 stocks.

What may be surprising to the AIG "hacky sack dancers" is that both American General Life and former structured annuity issuer VALIC are on the list.

The Street.Com gives consumers, tort victims, potential and existing structured settlement annuity recipients, property casualty insurers, their attorneys, judges and the media a different perspective.

Athlete and Celebrity Endorsement Fees Can Now Be Structured Via "Non Qualified Assignments"

Allstate Life Insurance Company and Allstate Life Insurance Company of New York have announced the ability to utilize the Allstate International Assignments, Ltd. facility for the structuring of Celebrity Endorsement Fees through the Non-Qualified Assignment process.  X-----------------------------------------------

Structured Endorsement Fee Obligations assigned to Allstate International Assignments, Ltd. are guaranteed by Allstate Life Insurance Company and offer customizable cash flows.

Today's Allstate announcement represents a new long term financial planning opportunity for celebrities of all types including (but not limited to):

• Athletes
• Singers/Songwriters
• Actors/Actresses
• Comedians
• Famous Personalities
• and even "Celebutards"

Celebrity Endorsement Fee structures should also be of interest to agents, managers and legal representatives of sports and entertainment figures.

X---------------------------------------------

At this time, Celebrity Endorsement Fee Structures can be provided only for endorsement fees that would be payable to United States Citizens or United States Resident Aliens.

X---------------------------------------------

Following are downloads concerning relevant documentation that will be required for all Celebrity Structured Endorsement Fee assignments:

Representation and Acknowledgement for Celebrity Endorsement

Download representation_acknowledgement_for_celebrity_endorsement_structure.doc

Assignment of Obligation For Celebrity Endorsement

Download assignment_of_obligation_structured_celebrity_endorsements.doc

Sample Allstate Life Insurance Company Agreement To Pay

Download agreementtopay_specimen_pdf.html

For more information please call John Darer at 888-325-8640

Celebrity Endorsement Structures are only available through life insurance agents or brokers appointed through Allstate's structured settlement distribution system.

Allstate Companies' Florida Suspension | No Effect on Structured Settlements

by Structured Settlement Watchdog®

DealFlow Media reported the irrelevance on its Structured Settlements Wire last Tuesday that the insurance regulator for the state of Florida has announced that he will resume the suspension of certain Allstate companies. to write new business in the state until the company is in full compliance with subpoenas that were issued in October. THEN, on Monday April 21, 2008, the First District Court of Appeals in Tallahassee denied Allstate's motion for a rehearing.

The suspension applies to the following Allstate companies, and it only suspends the companies from writing new business in Florida.

• Allstate Floridian Insurance Co.
• Allstate Indemnity Co.
• Allstate Property & Casualty Insurance Co.
• Allstate Insurance Co.
• Allstate Floridian Indemnity Co.
• Allstate Fire and Casualty Insurance Co.
• Encompass Insurance Co. of America
• Encompass Indemnity Co.
• Encompass Floridian Insurance Co.
• Encompass Floridian Indemnity Co.

Florida's Allstate Action Does Not Impact Allstate Structured Settlements   

While the appearance in the DealFlow Media Structured Settlements Wire might lead one to believe that the commissioner's action affects Allstate's structured settlement operation, the fact is that NONE of the suspended Allstate companies writes structured settlement annuities, annuities used with non qualified assignments or structured installment sales.

Allstate Life Insurance Company is the  annuity issuer underwriting Allstate structured settlements, Allstate non qualified assignments and Allstate structured sales annuities in the State of Florida.

 

Shambolic Reporting From DealFlow Media. A Losing "Bargain" For Subscribers?

by Structured Settlement Watchdog

Deal Flow Media has completely cocked up its report on Non Qualified Assigments in its write up "Non Qualified Assignments: A Settlement Growth Area" in its subscribers only Structured Settlements Report.

Here's what DealFlow Media inaccurately reportsin its central topic sentence:

"A fast growing segment in the structured settlements industry is serviced by only two life insurance carriers – neither of which is domiciled in the United States". (underlines for emphasis)

Comments:

• The segment is serviced by four life insurance carriers each of which IS domiciled in the United States

For the record. those companies are:

1. Allstate Life Insurance Company, domiciled in Nortbrook, IL
2. Allstate Life Insurance Company of New York,  domiciled in Happauge, NY
3. Liberty Life Assurance Company of Boston, domiciled in Boston, MA
4. The Prudential Insurance Company of America, domiciled in Newark, NJ

Last time I checked, the states of Illinois, Massachusetts, New Jersey and New York had not seceded from the Union.

• DealFlow Media reporting on the structured settlement industry could best be described as "shambolic". Their entry into the marketplace has been beset by inaccurate reporting. I've reported that accurate information is easily avaialble for free from existing sources. If I were a subscriber paying $1,195-$1,500 I would take about  a millisecond to question the value of what I was receiving and would be screaming from the balcony "its my money and I want it NOW!".

FREE Resources on Non Qualified Assignments (click titles to access)

Looking for a Non Qualified Assignment  May 22, 2007

Non Qualified Structured Settlements and Non Qualified Assignments

For further information on Non Qualified Assignments feel free to contact John Darer at 203-325-8640

Structured Annuity Issuers Again Rank Well In Fortune "Most Admired" Survey

Structured settlement annuity issuers again appear in the FORTUNE list of America's Most Admired Companies for 2008. The annual FORTUNE survey has been called "the definitive report card on corporate reputations".

There's nothing better than having your peers recognize you and the survey that forms the basis for these rankings does just that. Peers are asked to rate their competitors on the basis of these 8 points: Innovation, People Management, Use of Corporate Assets, Social Responsibility, Quality of Management, Financial soundness, Long Term Investment and Product/Service Quality.

Structured settlement annuity issuers fall into two categories (1) Insurance-Life and Health; and (2) Insurance-Property and Casualty. A number of structured settlement annuity issuers fall into the P&C Category because of the diversity of their businesses.

Life & Health Category

New York Life #2

Prudential Financial #5

MetLife #6  improvement

P&C Category

Hartford Financial #3 improvement and a solid #3

Allstate #5 (but rated #4 in financial soundness)

AIG #7 (but rated #4 in innovation)

Liberty Mutual #8  improvement

Former structured settlement annuity issuers Massachusetts Mutual and Genworth Financial deserve mention because structured settlements are meant to provide long term security and both are in the top 10 for life and health. The #1 company on the domestic life side, perennial leader Northwestern Mutual, issues annuities but does not write structured settlement annuities.

On a global basis, this the world insurance leaders surveyed by Fortune, rank companies in their industry:

Life & Health Category

Prudential Financial #1

New York Life #3

MetLife #4

Aviva#12

P&C Category

Hartford Financial #2

AIG #4

Liberty Mutual #8 

For a list of Who Writes Structured Settlement Annuities, financial ratings and company links, including links to companies that write annuities for non qualified assignments, structured attorney fees and structured sales, all in one spot, please click here.

Structured settlement annuities are available through specialist structured settlement brokers and settlement planners who hold life insurance agent or broker's licenses in the state where the structured settlement is being solicited.

Allstate Goes Retro

The Allstate Structured Settlement Program has gone retro, apparently for strategic business reasons.

Until today tort victims who faced a defendant or respondent that was an Allstate insured, who wanted a structured settlement could essentially have the structure placed with any annuity issuer rated A+ (Superior), or better, by AM Best & Company.  Prior to the guidelines in place until today the Allstate Structured Settlement Program was fairly restrictive. The change to the immediately prior guidelines was generally received favorably by the entire settlement community.

Tort victim attorneys should note that the new more restrictive guidelines apply to ANY claims involving Allstate Property Casualty, Encompass, Deerbrook and Allstate Commercial insureds. According to the news release "any case that settles from today forward should be placed with Allstate Life Insurance Company  (AM Best A+XV), AIG/American General Life Insurance Company (AM Best A++XV) , John Hancock Life Insurance Company (AM Best A++XV) or Metropolitan Life Insurance Company (AM Best A+XV). The release goes on to state that "all non-qualified cases must utilize Allstate International Assignments, Ltd." Exceptions require corporate approval. It was unclear from the release whether the New York subsidiaries of Allstate Life Insurance Company or AIG would be permissible under the new Allstate Structured Settlement Program. For example to read the release literally, the only two companies on the list that are New York licensed and approved are MetLife and John Hancock. Allstate should issue a clarification on the New York issue as soon as possible to avoid unnecessary confusion.

What this all means is that tort victim attorneys and their advisers must be prepared in advance. Involve your settlement planner or structured settlement broker early on in the process. I'M NOT KIDDING! The above four companies are all fine life insurance companies but the structured settlement planner or structured settlmeent broker must shop the entire marketplace to assure your client is getting the best deal. If that deal can be had by doing the considerable required leg work and then getting one of the 4 companies to match, the tort victim should then be OK with respect to pricing. It will generally be a less costly route than going the qualified settlement fund strategy for cases under $1 million.