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

Pacific Life A+ Superior Financial Strength Rating is Affirmed by A.M. Best

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Pacific Life is a Leading Issuer of Structured Settlement Annuities

On June 22, 2022, rating agency A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of Pacific Life Insurance Company and Pacific Life & Annuity Company (collectively referred to as Pacific Life Group). The companies are leading issuers of structured settlement annuities, the latter company being Pacific Life’s structured settlement annuity issuer in the state of New York. Both companies are headquartered in Newport Beach, CA.

Additionally, AM Best has affirmed the Long-Term ICR of “a” (Excellent) of the group’s intermediate holding company, Pacific LifeCorp (Wilmington, DE). AM Best also has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of Pacific LifeCorp. PacificLife Corp serves as the guarantor of Pacific Life and Annuity Services, Inc., the Missouri domiciled company that serves as the qualified assignee for periodic payment obligations under qualified assignments pursuant to IRC §130(c)and which purchases and owns Pacific Life structured settlement annuities as qualified funding assets pursuant to IRC §130(d)

The A.M. Best outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Pacific Life Group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM). Pacific Life’s balance sheet is supported by a very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and its history of positive earnings trends, which are supported by being one of the industry’s leading sales organizations in its key product lines. The favorable business profile assessment reflects its prominence as a leader in the affluent market segment.

Pacific Life offers competitively priced fixed structured settlement annuities, medically underwritten life contingent structured settlement annuities,  index linked structured settlement annuities (ILAPA) and has a variable structured settlement annuity in development. Pacific Life & Annuity Company also issues structured judgment annuities in New York cases.

Pacific Life has been named one of the 2022 World’s Most Ethical Companies^®

2022 marks the fifth consecutive year Pacific Life has been recognized by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices. Pacific Life was evaluated on five categories, including its ethics and compliance program; culture of ethics; environmental and societal impact; corporate governance; and leadership and reputation. The Ethisphere Institute, which honors companies demonstrating exceptional ethics-focused programs and practices. Pacific Life was one of 11 insurance and financial service industry honorees.

Lawyer's Structured Settlement Trope Makes You Scratch Your Head

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Prolific Great Neck Medical Malpractice Lawyer Serves up a "Trope-I-cal Cocktail"

"First, a structured settlement is simply a way for the defense to pay you money over a period of time"  Gerald Oginski  Great Neck, NY

That appears under the heading why his New York medical malpractice client REFUSES to take a structured settlement. The emphasis is Oginski's.

Gerald Oginski's "cocktail shaker" produces foul tasting "cough medicine" with this statement and he knows it. The statement by Oginski is both misleading and inaccurate. 

Structured settlements are not funded over time. The defendant or the defendant' insurer funds the cost of the future periodic payments up front

These amounts and periodic payments are required to be disclosed under the New York State General Obligations Law Section 5-1702(e)

Oginski states on his law firm's website that he is a member of the New York State Trial Lawyers Association, New York State Academy of Trial Lawyers and the Nassau County Bar Association. NYSTLA solicits money from structured settlement brokers and other businesses that may be associated with a structured settlement broker/settlement planner and calls them "Partners for Justice".  Two such firms contribute more than $100,000 annually to NYSTLA.  A member of NYSTLA has, in a prior year, published on a confidential NYSTLA listserve that its members should do business with a particular firm because they made a $60,000 contribution to NYSTLA. If Oginski's trope (that can be heard in the sales pitches of cash now vultures) were true, then what would that say about NYSTLA, the New York State Academy or any other lawyers association that Oginski is affiliated with, that solicits money from (and takes money from) structured settlement brokers or settlement planners?

"Why did my lawyer not tell me about that?"

Any trial lawyer who believes the  trope and is biased because of it, may be doing a massive disservice to their clients.  Given that plaintiffs are increasingly doing their own research online, I hear from some of those people who ask me why did my lawyer (not specifically Oginski) not tell me about that?"

Oginski attempt to explain the trope:

"In a medical malpractice case here in New York, if your case goes to a jury verdict and the jury determines that you are entitled to receive compensation from the doctors and hospital who caused you harm, you are able to receive the first $250,000 upfront. The remaining amount of money is required to be paid out over a period of many years.

Oginski attempts to explain a structured settlement using a long outdated characteristic of a medical malpractice structured judgment

But they are not the same and Oginski hasn't even got that right. First, ALL past damages are paid up front.  A portion of the future damages are also paid up front. The amount of the future damages that are paid up front varies by the applicable section of the New York CPLR.  CPLR Article 50- A  (CPLR 5031-5039) applies to Medical, Dental and Podiatric Malpractice since 1985. A companion law, CPLR Article 50-B (CPLR 5041-5049) applies to other types of judgments in personal injury, injury to property and wrongful death actions other than medical dental or podiatric malpractice. Until July 25, 2003, when the so-called "New 50-A" went into effect, $250,000 was lopped off future damages, and paid in a lump sum, just like CPLR 50-B. After that date the amount and process for calcualtions was radically changed. That was more than 16 years ago!

In "Unintended Consequences of Tort Reform: Rent Seeking in New York State's Structured Settlements Statutes" Spizman and Schmitt {2000), economists Lawrence Spizman and Elizabeth Dunne Smith inaccurately referred to New York's CPLR Articles 50-A and 50-B as 'structured settlement statutes", when the pair are structured judgment statutes unique to New York.

Examples of legitimate structured settlement statutes

IRC 104

IRC 130

IRC 139F

IRC 5891

NY G.O.L. 5-1702

How can a lawyer and economists miss what is actually written in the CPLR Article 50A statute? To wit PERIODIC PAYMENT OF JUDGMENTS IN MEDICAL AND DENTAL MALPRACTICE ACTIONS   

 

New York Structured Judgment Math Gets More Plaintiff Centric When Interest Rates Drop

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Lower interest rates impact plaintiffs favorably in New York structured judgment projections

The 10 Year Treasury is at record lows. At the time of publishing the 10 year bond was at 1.59%.  What this means is that the present value of elements of damages in a 50A or 50B judgment is more than it was yesterday.

Lower interest rates mean higher present values on New York CPLR 50A and 50B projections and structured judgments

Present value goes up when the discount rate used goes down. This impacts the value of future damages on a case that has gone to verdict and may have s an impact on settlement negotiations for those that understand it.

Example 

Let's take future pain & suffering damages $1,000,000 which, pursuant to Article 50B, must be crunched into a 10 year time frame. 

• The first $250,000 is carved off and paid in cash
• The remaining $750,000 is divided by 10 representing a 10 year payout of $75,000 that must be reduced to present value.
• The statutory 4% growth rate built into the statute must be applied first, then the discount rate of 1.59% if the date liability was determined is today.
• Because the statutory growth rate exceeds the discount rate by 2.41%, the present value of the cash flow is higher than the number awarded by the jury. There is actually a net growth rate
• Then 9% interest is applied to the inflated number!
• Note that Article 50A  (Medical, Dental and Podiatric Malpractice judgment cases) have a slightly different set of calculations for pain & suffering. One notable difference is that the greater of 35% or $500,000 is paid in cash with the remainder paid out over 8 years, not 10 years.

Last updated August 15, 2019

30 year bond now 1.97%

10 Year Bond 1.51%

 

 

NY Structured Judgment CPLR Article 50B | Narrowing Discount Advantage For NY Personal Injury Plaintiffs

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

Bond yields are increasing across the spectrum, reducing plaintiffs' CPLR Article 50B net discount rate advantage on structured judgments in New York. A discount rate inversion has served to inflate present values in excess of the actual numbers awarded by the trier of fact, for over a decade.

What is CPLR Article 50B?

CPLR Article 50B is a New York Civil Procedure that became effective August 1, 1986, part of a Periodic Payment of Judgments Act, that mandates that future damages in excess of $250,000 are paid in installments.  These are called Structured Judgments or Periodic Judgments.  Central to the process is the calculation of present value.

Present Value Has Exceeded Verdict For More Than a Decade |  Here's Why

As part of the calculation to determine the present value of future damages, each element of future damages, in excess of the first $250,000 payments are increased by a 4% for the time frame in the verdict and then discounted to present value.  The present value is used to calculate the attorney fees on future damages and the application of interest.

When the growth rate exceeds the discount rate, the result is a net growth rate.   Without getting too much into the weeds, to illustrate this phenomenon,  please refer to the following example:

Historical Yield on 10 Year United States Treasury

LESS THAN TWO YEARS AGO:

On July 16, 2016                      1.358%

Net Growth Rate                     2.642%  (4%-1.358%)

Present Value of $2 million over 10 Years      $2,221,500.35    

NOW:

On February 16, 2018               2.874%

Net Growth Rate                     1.126%    (4%-2.874%)

Present Value of $2 million over 10 Years       $2,042,731.81         

The Difference                                                $   178,768.54   LESS

Plus the lost interest!

If you bucket interest rates as a strategy to get a higher present value

5 Year UST     Then  1.12%    Now  2.6727%  

2 Year UST    Then   0.682%  Now  2.194%

1 Year UST    Then   0.498%  Now  1.979%

6 Mo.  UST    Then   0.422%  Now  1.831%

Negotiating and Obtaining Better Settlements At Mediation

• For plaintiffs a structured judgment expert can let them know what a liability case is really worth.
• For defendants a structured judgment expert can let them know what the bottom line cost is for any set of assumptions, whether pre trial, post trial, or post entry of judgment while the case in on appeal.

 

New York City Structured Settlements 2022 | Structured Settlement Annuities in NY State

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2022?

 

New York City Sunset

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund Structured Medicare Set Asides in 2022.

1. First Berkshire Hathway Life Insurance Company Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County, NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific Life and Annuity Company
3. United States Life Insurance Company in The City of New York

The onerous acceleration provision for late payments in Articles 50A and 50B is the primary reason for why only three carriers write structured judgment annuities in New York.

Periodic Payment Reinsurance is available through National Indemnity Company (Berkshire Hathaway).

Structured settlement annuities are only offered through appointed structured settlement managing general agencies by their insurance licensed employees, or through affiliated insurance licensed independent agents and brokers.

Current as of July 3, 2022

Note that structured settlements can also be funded with United States Treasury Obligations. Market based options are also available.

What You Need To Know About Structured Settlement Quotes in New York

Structured Settlement quote form online.

Click left or call 646-849-1588 for New York City structured settlement quotes, employment structured settlement quotes, divorce structured settlement quotes, periodic payment reinsurance structured sales quotes for business installment sales and real estate installment

New York Structured Settlements

 

Last updated February 13, 2022

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2022?

 

New York City Sunset

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund Structured Medicare Set Asides in 2022.

1. First Berkshire Hathway Life Insurance Company Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County, NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific Life and Annuity Company
3. United States Life Insurance Company in The City of New York

The onerous acceleration provision for late payments in Articles 50A and 50B is the primary reason for why only three carriers write structured judgment annuities in New York.

Periodic Payment Reinsurance is available through National Indemnity Company (Berkshire Hathaway).

Structured settlement annuities are only offered through appointed structured settlement managing general agencies by their insurance licensed employees, or through affiliated insurance licensed independent agents and brokers.

Current as of July 3, 2022

Note that structured settlements can also be funded with United States Treasury Obligations. Market based options are also available.

What You Need To Know About Structured Settlement Quotes in New York

Structured Settlement quote form online.

Click left or call 646-849-1588 for New York City structured settlement quotes, employment structured settlement quotes, divorce structured settlement quotes, periodic payment reinsurance structured sales quotes for business installment sales and real estate installment

New York Structured Settlements

 

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2022?

 

New York City Sunset

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund Structured Medicare Set Asides in 2022.

1. First Berkshire Hathway Life Insurance Company Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County, NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific Life and Annuity Company
3. United States Life Insurance Company in The City of New York

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2022?

 

New York City Sunset

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund Structured Medicare Set Asides in 2022.

1. First Berkshire Hathway Life Insurance Company Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County, NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific Life and Annuity Company
3. United States Life Insurance Company in The City of New York

The onerous acceleration provision for late payments in Articles 50A and 50B is the primary reason for why only three carriers write structured judgment annuities in New York.

Periodic Payment Reinsurance is available through National Indemnity Company (Berkshire Hathaway).

Structured settlement annuities are only offered through appointed structured settlement managing general agencies by their insurance licensed employees, or through affiliated insurance licensed independent agents and brokers.

Current as of July 3, 2022

Note that structured settlements can also be funded with United States Treasury Obligations. Market based options are also available.

What You Need To Know About Structured Settlement Quotes in New York

Structured Settlement quote form online.

Click left or call 646-849-1588 for New York City structured settlement quotes, employment structured settlement quotes, divorce structured settlement quotes, periodic payment reinsurance structured sales quotes for business installment sales and real estate installment

New York Structured Settlements

 

by John Darer CLU ChFC CeFT MSSC RSP CLTC

 

Which New York life insurance companies issue structured settlement annuities to fund New York structured settlements in Bronx, Brooklyn (Kings), Queens, Staten Island (Richmond) and New York (Manhattan), Nassau, Suffolk, Westchester, Orange, Putnam and Rockland Counties in 2022?

 

New York City Sunset

These insurance companies are the primary issuers of structured settlement annuities for the New York City area to fund NY personal injury, NY medical malpractice, NY wrongful death, auto accident, NY workers compensation settlements and to fund Structured Medicare Set Asides in 2022.

1. First Berkshire Hathway Life Insurance Company Home Office: Flushing, NY
2. Metropolitan Life Insurance Company   Home Office: New York, NY
3. Metropolitan Tower Life Insurance Company Home Office: Wilmington, DE
4. New York Life Insurance Company Home Office: New York, NY
5. Pacific Life and Annuity Company   Home Office: Newport Beach, CA
6. The Prudential Insurance Company of America Home Office: Newark, NJ
7. United States Life Insurance Company in The City of New York Home Office: New York, NY
8. USAA Life Insurance Company Home Office: San Antonio TX (where parties consent to using non admitted carrier)

Cases in surrounding counties such as Fairfield County, CT and Bergen County, NJ would substitute, Berkshire Hathaway Life Insurance Company of Nebraska, Pacific Life Insurance Company and American General Life Insurance Company for numbers 1, 6 and 8 respectively. Please note that a limited number of insurance companies underwrite structured settlements compared to other types of annuities.

For New York cases that go to a structured judgment, pursuant to CPLR Article 50A or Article 50B, the following of the above structured settlement annuity issuers will write annuities to fund 50A or 50B structured judgments:

 

1. Metropolitan Life Insurance Company
2. Pacific Life and Annuity Company
3. United States Life Insurance Company in The City of New York

Structured Settlement Rated Ages | The Good News Is That People Are Living Longer...

by John Darer  CLU ChFC MSSC RSP CLTC

AIG Structured Settlements recently announced that it was going to revise all active rated ages downward to better align its rated ages with its actual mortality experience. A February 21, 2017 company statement to its agents said that the impact of this revision will lower a rated age by no more than 5 years.

My rated age is perfectly aligned, in puppy years of course

What Are Structured Settlement Rated Ages?

A rated age is an age used in the pricing of life contingent structured settlement annuities that reflects the opinion of the annuity issuer's medical underwriter on the life expectancy of a prospective annuitant. So if a 50 year old has a rated age of 65, that simply means that the structured settlement expert can calculate the cost of funding $10,000  in monthly medical costs for the rest of the plaintiff's life based on a 65 year old's price, which will be much cheaper.  Rated ages vary from company to  company.  Some companies will not do rated ages at all.  It's important to note that the highest rated age does not necessarily result in the cheapest price.  For example. a company with better base rate may be more competitive even with a lower rate.

Period certain or guaranteed lump sum payments are not affected by a rated age.  

Is this anything to be concerned about?

It is not uncommon for an insurer to revise its underwriting in response to changing experience.The rated age action announced by AIG Structured Settlements is a responsible decision for a company that is in business to insure long term obligations. It reflects very positively on AIG's quality control. In its notice AIG reaffirmed its commitment to the structured settlement industry.

AIG Structured Settlements underwrites structured settlement annuities through two AIG subsidiaries, American General Life Insurance Company  (Est. 1925) and United States LIfe Insurance Company in the City of New York  (Est. 1850) and its annuities are available though appointed agents authorized for the structured settlement product line. United States Life is one of the few companies that will underwrite annuities to fund future damages on New York Structured Judgments.

Interesting research on mortality stats

Mortality in the United States, 2015 by Jiaquan Xu, M.D., Sherry L. Murphy, B.S., Kenneth D. Kochanek, M.A., and Elizabeth Arias, Ph.D.   NCHS Brief No. 267   December 2016

 

What is a Structured Settlement Policyholder?

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

Members of the settlement community have a responsibility to accurately describe structured settlement and/or settlement planning related terms and jargon.  Who better than the experts? 

Inaccurate use of industry jargon gets picked up by content generators without the expertise to correct the inaccuracy, which then proliferates to the detriment of consumers and the industry as a whole. 

A good example of this is where factoring companies claim to buy structured settlement annuities and tertiary market companies claim to sell structured settlement annuities under the label "secondary market annuities" 

Some other examples:

• Awarded a settlement
• Sell your settlement

Structured Settlement Annuitants inaccurately described as a Policyholders

 Let me break it down for you.

• A structured settlement is a method of settling a lawsuit in exchange for part of the damages being paid in a negotiated stream or streams of future periodic payments.
• A tax-exempt structured settlement is funded with a "qualified funding asset", which is often a structured settlement annuity, however it may also be funded with obligations of the United States Government (Treasury Funded Structured Settlement)
• When a structured settlement is funded with an annuity, the terms of the annuity are set forth in an annuity contract issued by a life insurance company.
• The purchase of a structured settlement annuity contact can be done in several ways:

A. Buy and hold method

Buy and hold is where the structured annuity is purchased and held by the purchaser.  When it comes to establishing a structured settlement the purchaser cannot be the payee, so if the buy and hold method is used the purchaser is either the Defendant, or the Defendant's Insurer.  In a buy and hold, the policyholder is the Defendant or the Defendant's insurer.

B. Qualified Assignment method

When a qualified assignment is used in an annuity funded structured settlement,  the future periodic payment obligation is assigned, with the consent of the parties, to a qualified assignment company, which is generally a subsidiary of the life insurer or a related entity in the corporate family. The qualified assignment company then purchases the qualified funding asset. With the qualified assignment method, the qualified assignment company is policyholder.  See How Structured Settlements Work | Structured Settlements Explained (4structures.com)

C. Non Qualified Assignment method

A tax deferred structured settlement method used when a structured settlement is desired but damages are taxable. When a non qualified assignment is used in an annuity funded structured settlement,  the future periodic payment obligation is assigned, with the consent of the parties, to a non qualified assignment company, which may be an offshore company**, often in Barbados,  and an unrelated entity to the annuity issuer. The annuity issuer may provide a guarantee of performance or a keep well agreement of the assignment company.  Similar to a qualified assignment, the non qualified assignment company then purchases the qualified funding asset. With the non qualified assignment method, the non qualified assignment company is policyholder.

D. Reinsurance Method

Reinsurance, in its simplest terms, is insurance of an insurance company, a form of risk transfer.  In terms of risk bearing there is a similarity to the buy and hold and assignment concepts when using three party reinsurance agreements in lieu of assignments.  A three party reinsurance with release sees the releasing party consent to look to the insurer for future payments instead of its reinsured, the insurer of the defendant.  With a two party reinsurance agreement there is still contingent liability for the insurer (reinsured) similar to a buy and hold.  Regardless of the reinsurance method, the person who receives the reinsurance structured settlement payments is not a "policy holder" or a  reinsured for that matter.

So what is the person receiving the payments called?

The Payee, The Annuitant, the Measuring Life, or possibly in the case of Reinsurance, the Reinsured ( In some cases more than one of these)

You may enjoy my parody of an old joke to help illustrate the difference  An Annuitant, A Measuring Life, A Payee and a Beneficiary Walked Into A Bar...  April 12, 2012

Can a policyholder receive payments from a  structured settlement annuity?

Yes, where a Defendant or Defendant's Insurer has used the buy and hold to purchase an installment refund annuity or a cash refund annuity.  This would occur where a Defendant or Defendant's insurer has a large New York judgment to pay subject to New York CPLR Articles 50A or 50B. or other elsewhere where a significant life contingent cash flow being structured elects to insure against mortality risk where there obligation only exists where the plaintiff is alive.

PostScript  

**Since 2021, there are a number of entities that have domestic non qualified assignment companies. 

AGL Assignment Company is a non qualified assignment company for non qualified structured settlement ustilizing annuities and funding agreements issued by Corebridge Financial subsidiaries, American General Life Insurance Company  (all states except New York) and United States Life Insurance Company in the City of New York  (New York cases). A Funding Agreement is not an insurance policy. Ergo, payee is not a policyholder for that reason as well.

MetLife Assignment Company, Inc. is domestic assignment company used for BOTH qualified assignments and non qualified assignmnet where the annuity issuer is Metropolitan Tower Life Insurance company.

Last updated February 16, 2024

 

New York Structured Judgments Affected by Increasing Treasury Yields

by John Darer® CLU ChFC MSSC RSP CLTC

Increasing yields on the 10 year United States Treasuries narrow the negative interest rate spread that has served as a growth rate when calculating the present value of damages under New York's Article 50-B structured judgment statute for almost a decade.  

As it stands at time of publication,  the present value of whatever amount a New York jury awards is higher than the amount awarded by the jury on any element of damages. This is because the statutory growth rate of 4% is higher than the discount rate. For the typical defendant,  9% interest* is then added onto the higher amount! Until the discount rate arrives at or exceeds 4% this phenomenon will continue.

United States 10 Year Treasury yields have ranged from 1.318% to 2.356% over the 52 weeks preceding the time of publication.

*State and local government defendants may pay a lower rate.

 

11 Ways That A Structured Settlement Expert Can Help Attorneys or Adjusters At Mediation

by John Darer® CLU ChFC MSSC RSP CLTC

Should you bring a structured settlement expert to a mediation?  While a few attorneys may think that the presence of such a consultant weakens the negotiating

Structured settlement experts are bridge builders

position, here are 11 ways that a structured settlement expert can help attorneys or adjusters at a mediation or settlement conference.

1. Quantify the cost of any element of future damages in today's dollars in real time.
2. Calculate the cost to defendant of  a judgment for a particular combination of elements of damages and across various scenarios. In New York, run CPLR 50A or CPLR 50B calculations, in real time.
3. Use rated age surveys to help resolve disputes over life expectancy during settlement negotiations.
4. Give plaintiffs a new dimension...something practical to visualize that puts them on track to a new normal instead of the abstract.
5. Another set of eyes, another set of ears and depending on the experience, intellectual input and insight that may be helpful to clients and counsel.
6. If a structured settlement is desired making sure that nothing is signed at mediation that would inadvertently eviscerate the opportunity to structure.
7. For plaintiffs, someone for a client to speak with while the attorney is out of the room. Stress management. 
8. A structured settlement expert with Sudden Money training can make a difference for plaintiffs in transition, as most plaintiffs are. Sudden Money transition work can be done while the attorney has been called out of the room, making such time more productive and less stressful.
9. Answer technical questions, in real time.
10. Respond to developments during the mediation in real time. Most mediation centers have wireless and the structured settlement expert can conduct fine granular research, if needed on relevant items, leaving the attorney to focus on the job at hand.  For example, can the plaintiff afford that house in Virginia Beach and do X, Y and Z with the settlement offer on hand?  Let's start with the cost of a house in Virginia Beach, what are the taxes etc.
11. Run structured settlement quotes and proposals.

New York Structured Judgments | The Interest Rate Lever on Present Value

by John Darer CLU ChFC MSSC RSP CLTC

Periods when there is a low interest rate environment favors New York plaintiffs willing to try strong liability cases due to a 30 year old statutory growth rate juxtaposed against low interest rates that are under 4%.

1. When the 4% statutory growth rate under New York's Article 50-B statute, set in 1986, exceeded the 10 year bond by 2.63% as they did in July 2016.
2.  Long term damage awards which used to afford a significant discount when the statute was established in 1986  no longer do with the net discount rate closing in on -2%. A negative 2% discount rate is a growth rate of 2%.

What Does a Rate Inversion mean in a Present Value calculation?

• Assume $1,000,000 net future pain & suffering (after accounting for the first $250,000 in future damages under Article 50-B)
• Instead of a discount, with a net growth rate of 2.63% for 10 years the present value adds $26,000 plus per year for 10 years to the verdict number.
• When calculating the present value of other elements of damages like future medicals and future lost earnings, you could be adding close to $20,000 annually per $1,000,000 to the verdict, for the number of years awarded by the jury
• Then interest gets added onto that at 9% (less if state or city government)
• Do the math.