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

Warburg Pincus and Prudential form Prismic Life Re Bermuda based Life & Annuity Reinsurer

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Prudential "to Reinsure Block of Structured Settlement Annuity Contracts", if Regulators Approve

Prudential Financial, Inc. and Warburg Pincus announced September 7, 2023, the launch of Prismic Life Reinsurance, Ltd. (Prismic Life Re), a licensed Class E Bermuda-based life and annuity reinsurance company.  Prismic Life Re will assume a $10 billion block of Prudential's structured settlements if approved by regulators.

Note: The Prudential press release abbreviates to the shorter "Prismic". However an internet search brings up results for a San Francisco company, named Prismic, that builds websites.  Given Prudential's structured settlement footprint in all 50 states, I've opted to abbreviate to Prismic Life Re.

Who is Warburg Pincus?

At Warburg Pincus, is a private equity firm based in New York City. Established in 1966, Warburg Pincus has invested more than $112 billion in more than 1,000 companies in more than 40 countries around the world.

Source: Warburg Pincus website

What is a Bermuda Class E Long Term Insurer?

According to the Bermuda Monetary Authority,

LONG-TERM - CLASS E: Long-term insurers and reinsurers with total assets of more than $500 million; and not registrable as a Class A or Class B insurer.

Prudential and Warburg Pincus, together with a group of investors, have agreed to make equity investments in Prismic Life Re and will oversee its long-term strategy through participation on its board of directors.

On September 11, 2023 Reinsurance News reported that Nomura has announced it has made  an equity investment into Prismic Life Reinsurance, a licensed Class E Bermuda-based life and annuity reinsurance platform, alongside Prudential Financial, Warburg Pincus and other investors.  Combined, Prismic Life Re will have an initial equity investment of approximately $1 billion. 65% of the equity is owned by a group of investors that Nomura is a founding investor of, while Prudential Financial owns 20% and Warburg Pincus owns 15%.

How Will The Reinsurance of $10B of Structured Settlement Annuity Contracts Affect Annuitants?

According to the September 7, 2023 announcement, Prudential expects to reinsure to Prismic Life Re a block of structured settlement annuity contracts with reserves of approximately $10 billion, subject to the receipt of required regulatory approvals.

Prudential’s obligations to the holders of the rights to receive structured settlement payments will remain unchanged following the reinsurance arrangement and Prudential will continue to administer the contracts.

Why is Prudential's Motivation?

From there, the release states that Prudential aims for Prismic Life Re to be a strategic reinsurance partner with the ambition to grow their reinsurance relationship materially in years to come. PGIM and Warburg Pincus will provide asset management services to Prismic.  PGIM is the investment management business of Prudential Financial, Inc.

Through expanded reinsurance capacity, Prudential expects Prismic Life will allow the company to provide more people with access to its industry-leading life and annuity products.

Charles Lowrey, chairman and CEO of Prudential Financial, Inc., said in the press release: “This unique reinsurance platform will play an important role in our vision to be a global leader in expanding access to investing, insurance, and retirement security for people around the world. Prismic Life Re will enhance our ability to address the evolving needs of our insurance customers and clients while continuing to meet our obligations to policyholders. It represents a formidable combination of industry-leading expertise, global capabilities, and the backing of two of the world’s leading insurance and asset management firms.”

Prismic Life Re will leverage PGIM’s and Warburg Pincus’ global investment management capabilities across public and private markets, including public fixed income, private credit, private real estate, and private equity. Prismic will become a client of PGIM Portfolio Advisory, a newly established affiliate within PGIM that combines asset-liability management expertise with portfolio strategy and asset allocation to deliver

Prismic Life Reinsurance, Ltd. announced that it expects to receive $1 billion in funding from Nomura Holdings, Inc., Prudential Financial, Inc., Warburg Pincus LLC and other investors -September 10, 2023 | MarketScreener

Prudential Financial, Inc. and Warburg Pincus announce launch of Prismic Life Re (pgim.com)

Prudential Financial, Inc. and Warburg Pincus announce launch of Prismic Life Re - Warburg Pincus

Structured Settlement Brokers Attempt to Drive Sales with Sole 30 Year Old Legal Malpractice Case

by John Darer CLU ChFC MSSC CeFT RSP CLTC

For three decades certain structured settlement brokers and settlement planners have raised the 30 year old Grillo legal malpractice case to drive structured settlement annuity sales, by trying to scare the crap out of plaintiff lawyers.

But why has there been such a dearth of notable, relevant legal malpractice cases related to structured settlements in 30 years?

If there have been no other notable legal malpractice cases in 30 years, then maybe this is not such a big deal, even if the premise of offering a structured settlement is sensible.

"Since Grillo, other cases have been filed against attorneys and other participants in personal injury cases where lump sums were accepted instead of structured settlements" claims one of settlement advisers.

Well if that's really the case. why keep it a secret? How about providing the details, for the sake of credibility?

A Death That Nobody in the Structured Settlement Industry Noticed, until 12 Months Later

When celebrities and famous people die, we notice. Christina Marie Grillo Sullivan was certainly someone of note to structured settlement brokers and settlement planners. She left this realm on September 17, 2014. Nobody in the structured settlement and settlement industry noticed. No announcement, bulletin or anyone posting on Facebook or Twitter or memorial video on YouTube.

Then, September 14, 2015, I happened to look up Christina Grillo on the Internet and discovered that she had died a year earlier. I immediately wrote and published this tribute Christina Marie Grillo Sullivan (1982-2014) | An Extraordinary Woman - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)

But not a peep from NSSTA, SSP or any structured settlement broker or settlement planners who had been using her name to drive structured settlement annuity sales. Nobody noticed. 

The Court transcript from the more than three decade old late minor's prove up hearing does not appear to jive with the marketing by generations of structured settlement brokers and settlement planners

All is not what it seems folks. Giddy settlement advisers taking creative liberties concerning the case of Grillo v Pettiete, or Grillo v Henry (the guardian ad litem) is not a good look.  Sometimes a story gets told incorrectly and the "urban legend" gets passed from generation to generation. 

I have read a copy of the transcripts and it did not appear to go down the way a generation of settlement planners has spinned it, and continues to spin it to sell more structured settlement annuities or even special needs legal related services. Settlement advisers and anyone else interested can and should read them for themselves by clicking on the links below.

Download TRANSCRIPT1_001 Mr Juniker 1-3-1991

Download TRANSCRIPT2_001 Josephine 1-10-1991

Download TRANSCRIPT3_001 Texas Court of Appeals decision reinstating cause of action against Guardian Ad Litem 1-14-1999 likely led to the settlement.

The "Grillo case"  has been promoted as the poster child for potential attorney fee liability for failing to consider (or offer) a structured settlement to their client.  [see Grillo v Pettiete Cause No. 96-145090-92 and Grillo v Henry Cause 96-167943-96, 96th District Court Tarrant County, Texas.

In that now "dog-eared" legal malpractice case there arose legal questions over whether there is ever a duty to offer a structured settlement. Plaintiff's legal malpractice attorney was quoted as saying "the defendant insurance company offered a structured settlement to the child and plaintiff alleged that the offer was never relayed to the parents and, in fact, never relayed to the court.”. Read the transcripts.

In New York, the 22 year old 2001 Appelate Division 2nd Dept. ruling in Lyons v Medical Malpractice Insurance Association is cited from time to time. The focal point of the Lyons case was on plaintiffs' counsel understanding of Present Value and the duty of privity. In the case there were "questions of fact as to whether the represented present value of the settlement package was a fraudulent, intentional, or negligent misrepresentation, and whether the plaintiffs' alleged reliance thereon was reasonable".  Further, the Appelate  Division ruled that "there was sufficient privity between the parties to support a claim for negligent misrepresentation and that MMIA was aware that the alleged misrepresentation was going to be used for a particular purpose, the plaintiffs were a known party who allegedly relied on the alleged misrepresentation in furtherance of that purpose,and there was conduct by MMIA linking it to the plaintiffs and evincing its understanding of such reliance".

Cite: Alexander Lyons, an Infant, by His Father and Natural Guardian, David Lyons, et al., Appellants, v. Medical Malpractice Insurance Association, Respondent, et al., Defendants.2000-09060
SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT 286 A.D.2d 711, 730 N.Y.S.2d 345
June 26, 2001, Argued September 17, 2001, Decided.

Introduction of Structured Settlement Affidavits

Prior to Lyons, the 1990s saw voluntary structured settlement affidavits by a number of New York structured settlement brokers and settlement planners, which were also called a Certificate of Reliability and Assurances (CORA).

Structured Settlement Ethics | Why Structured Settlement Affidavit Matters (4structures.com)

In 2006, as part of sweeping legislation addressing business practices concerning the creation of structured settlements, as well as the possible factoring of structured settlement payment rights, passage of the New York Structured Settlement Protection Act in 2006 New York Code - Laws: General Obligations : (5-1701 - 5-1709) Structured Settlement Protection Act introduced a standard requirement under New York General Obligatons Law for certain mandatory disclosures.

Subsequently, a number of county Supreme Courts in the New York City Metropolitan area made structured settlement affidavits standard operating procedure wherea structured settlement was part of a settlement requiring court approval.

To put things into perspective on the "passage of time"

What Happened in 1991 - On This Day

United States President was George H.W. Bush

Historical Events in 1999 - On This Day

United States President was William Jefferson Clinton

Catching my drift?

 

 

John Darer Reviews Divorce and Structured Settlement Annuity Issuer Service Standards

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Divorce is a Reasonable Forseeable Possibilty

The divorce rate in the United States around 44.6% of marriages.  Source: The Hive Law

As the Structured Settlement Watchdog I typically do 100 hours of pro bono work each year. Not only is it well received and needed by consumers, it also informs on service gaps (known, unknown or should have known gaps) and on how companies in the industry can improve.  

Known Structured Settlement Servicing Issues That Have Been Uncovered

1.  Carefully Document the File When Split Funding Structured Settlements

When using split funded structured settlements in any combination, whether a mixed duration split, annuity company split, or a product split, it's a good idea to have a simple summary of the documentation delivered to the client.

In 2015, I received a call from a concerned Allstate annuitant whose benefits had been abruptly "cut off". The structured settlement payment stream from the annuity, was the annuitant's share from a divorce settlement, Naturally they were concerned. I did not write the policy.  

Unfortunately, just two years following its life insurnace companies ceasing underwriting this line of business, Allstate had outsourced customer service to a Phillipine call center with inadequate training. The rep ecnountrered by the annuitant was neither knowledgeable enough, nor helpful. The ill-prepared Allstate Phillipine call center rep needlessly sent the annuitant into a state of panic by incorrectly stating (because they likely did not know how Allstate issued annuity policies) that her benefits were over.

Fortunately, the annuitant contacted me, someone with enough experience to know the history and nuance and peculiarity of how Allstate issued policies. Instead of issuing a single policy, as is the customary practice with every single life insurance company I've dealt with in 40 years in the insurance industry, Allstate split the certain and life contingent portions into two separate annuity policies. 

_________________________________________________________________

SIDE BAR

Structured settlement annuities are a unique policy form that enables different types of structured settlement payments to be combined in a single annuity contract.

__________________________________________________________________

 

What happened was that the periodic certain policy stopped and the "switch" to the life contingent policy did not happen as it was supposed to. It took some calling to find someone at the home office of Allstate who was from the old structured settlement department  (Allstate stopped writing new structures in 2013), who could take remedial action but eventually the situation was rectified. It would have been helpful however and have saved the annuitant a quite a bit of agita, if the original broker had placed a summary in with the delivery of the policy. 

Split Funded Structured Settlements Require Careful Documentation - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews (typepad.com)

2.  When a Policy payment is split between two former spouses then each spouse should receive notices concerning the policy

Eight years from the above Allstate issue there is a new issue.  The payments are life contingent and require an annual attestation of Proof of Living [see Proof of Living and Structured Settlements (4structures.com)]. It was relatively smooth sailing from 2016-2022.  Something has changed. The divorce split annuitant had been contacting E.M. at Allstate and she would send the Proof of Living form which the annuitant would complete and send in. However apparently things changed in 2023 when E.M. was no longer there and Allstate having been reconstituted as Everlake Allstate Life Structured Settlements | What You Need To Know (4structures.com).

The split annuitant speaks of intolerable on hold times on the Everlake service line and being told  that Everlake (or its servicing company) would only send notice to her ex-husband, who she has been divorced from for 15+ years! She is listed as an annuitant in the company records as a result of the long in place divorce decree.

3. When one divorced spouse payee initiates a Structured Settlement Transfer and the Annuity Issuer will not split, or further split payments?

This exposes the non-selling split annuitant spouse and dependents to a servicing agreement and possible invasion of privacy from secondary market actors that are mostly non regulated. At what point should this issue be disclosed and who is responsible for disclosing it? 

4. Companies who are divesting their life insurance or annuity divisions or product lines that include structured settlements should include this consideration on their punch list

It seems to me that dealing with this forseeable issue earlier rather than later, by establishing updated policies and procedures to address these issues, will be less of a burden for the annuity issuer and qualified assignment company than having to dig out after a divestiture. There is the reputational risk exposure as well.

Divorce Statistics that Validate Why Annuity Issuers, Attorneys and Settlement Planners Must Initiate Discussions to Address Reasonably Forseeable Issues in updated Company Procedures and Workflow

• The average length of a marriage that ends in divorce is 8 years.
• Women file for 66% of divorces.
• The most common age for divorce is between 25-39 years old.
• The median age for divorce is 39.
• The divorce rate among those over 50 (gray divorce) has doubled since the 1990s.
• 60% of second marriages end in divorce.
• The rate of divorce decreases with higher levels of education and income.
• States that have no-fault divorce laws have higher divorce rates than states that require proof of fault.
• Children of divorce are more likely to experience emotional and behavioral problems.
• Children of divorce have a higher risk of divorce themselves when they grow up.
• The average age for couples to divorce for the first time is 30 years old for men and 29 years old for women.
• The divorce rate for first marriages within the first five years is around 20%.
• The divorce rate for military couples is higher than the general population, with a rate of 3.7% compared to 3.2%.
• The percentage of divorced adults in the US has more than doubled since 1960, from 9% to 22%.
• The percentage of divorced adults who remarry is around 75%.
• The divorce rate for couples who marry before age 25 is around twice as high as for those who marry after age 25.
• The divorce rate for same-sex couples is around 39%

Source: 113 Divorce Statistics On The Divorce Rate In America (For 2023) - The Hive Law

What About Non Binary Couples and Divorce?

How Many Gay Marriages End In Divorce? - Pride Legal

 

 

 

 

John Darer Reviews the NAIC Warning About Unlicensed Companies Selling Non-Insurance Products

by John Darer CLU ChFC MSSC CEFT RSP CLTC

The National Association of Insurance Commissioners provides expertise, data, and analysis for insurance commissioners to effectively regulate the insurance industry and protect consumers.

NAIC Warns of Unlicensed Legitimate Companies Selling Unregulated Non-Insurance Products

In a June 13, 2023 update, the NAIC warns that

"Legitimate companies that are not licensed by the state to sell insurance might lead consumers to think they are selling “insurance” while evading state insurance regulations"

The NAIC uses as an example "a company selling a health sharing plan might call the plan insurance when it is actually an unregulated, non-insurance product".

Factored Structured Settlement Receivables Are An Unregulated Non-Insurance Product Sold by Legitimate Companies as "Secondary Market Annuities"

Factored structured settlement receivables have been marketed to investors, including seniors, injury victims, trial lawyers and fiduciaries as "secondary market annuities", even by people they trust.

The NAIC, in its Statutory Issue Paper No. 160, which was finalized April 6, 2019 made it clear that acquired structured settlement payment rights are not annuities or insurance products.

80% of the US states have adopted the 2017 Revisions to the Life & Health Guaranty Associations Model Act (#520), which expressly excludes acquired structured settlement payment rights from insolvency schemes. The application of the exclusion expressly includes acquired structured settlement payment rights that were acquried prior to the effetcive date that the investor's state adopts the 2017 Revisions to the Model Act.

The NAIC cautionary statement shows an increasing awareness of what is going on in the structured settlement secondary and tertiary markets. The introduction of HB845 in North Carolina, if enacted, puts the regulation of structured settlement factoring under the auspices of the North Carolina Insurance Department effective 2024.

 

Cordero v Transamerica Society of Settlement Planners Post Mortem

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Next week attorneys Eddie Stone and Stephen G Harris reprise their debate concerning the matter of Cordero v Transamerica in a post mortem for members of the Society of Settlement Planners. Patrick Hindert of Independent Life Insurance Company again moderates.

The Cordero case is over, a failed effort notable for not targeting, as a Defendant, any structured settlement factoring companies and instead going after the life insurance companies that issued the structured settlement annuities and the qualified assignment company.

The losing cause focused on the anti-assignment provisions and there was an attempt to make that three pointer, but ended up with nothing but rim.

Hindert Said That Anti Assignment Clauses Were a Pitfall, in 2013

So in my opinion Patrick Hindert, as moderator, is an a difficult position. There are questions he should be answering. Hindert cannot hide the fact that in 2013,  while still basking in the glow of the 2012 National Association of Settlement Purchasers' Alexander Hamilton Award, he participated in Strategic Capital's "Factoring Roundtable". Patrick Hindert is quoted and the still published quote excerpt says the following   

"A... pitfall occurs if settlement documents include anti-assignment clauses, which do not specifically reference and permit transfers pursuant to IRC 5891 and state structured settlement protection statutes".

pitfall - Patrick Hindert - Sell Structured Settlement Payments - Cash For Future Payments (strategiccapital.com)

It should be noted that the Cordero settlement agreement does not have that language, nor would it, given that the Victims of Terrorism Tax Relief Act of 2001 (that begat IRC 5891) did not go into effect until January 2002

Hindert supported and defended the right to free alienability of property rights (in this case the right to factor)

NASP has bestowed its Alexander Hamilton Award eight times "to distinguished individuals who have supported and defended the right to free alienability of property rights." NASP considers this right to be its own cornerstone and the foundation of the structured settlement factoring business".  Patrick Hindert,  S2KM Ltd  November 22, 2015  Source: S2KMblog.typepad.com, retrieved May 4, 2023. 630pm EDT.

Strategic Capital is a structured settlement factoring company based out of Toronto, Canada.

Hindert Cited on Anti Assignment Clauses in 2015 Structured Settlement Factoring Company Guide by Factoring Company Strategic Capital

In Strategic Capital's Structured Settlement Guide | Selling Structured Settlements Across the Country and the World, published in December 2015, it says at pages 101-102.

"As Patrick Hindert, Managing Director at S2KM Limited and a lawyer highly experienced in the settlement industry, said 'anti-assignment clauses in settlement documents are enforceable and, if enforced, could prevent structured settlement recipients from selling structured settlement payment rights'.

For example, says Strategic Capital, "one Florida court case (Rapid Settlements, LTD v Kimberly Dickerson, et al) made it to the court of appeals  (and still the judge declined the sale, saying it was clearly against the agreement. But judges do not always uphold such language".  Strategic Capital says "Thus, even if your paperwork has such a clause it may be worthwhile to consult with them ('Stratcap') and see what they say about your chance of approval"

Here is a link to the guide:

Structured-Settlement-Guide.pdf (strategiccapital.com)

Stratcap does not give the cite to the 2006 case, but here it is:

District Court of Appeal of Florida,Fourth District RAPID SETTLEMENTS, LTD., Appellant, v. Kimberly DICKERSON, et al., Appellee. No. 4D05-4643 decided November 22, 2006

Obviously the 2006 decision is a Florida District Court of Appeals decision and not the 11th Circuit Court of Appeals or the New York Court of Appeals, decisions that were made by a higher courts and were more recent.

Resources for People Who Have A Structured Settlement and who:

• Are being bombarded with calls from structured settlement factoring companies
• Are being bombarded with texts from structured settlement factoring companes
• Have had some weirdo show up announced at your house who knows all about your structured settlement
• Had friends or relatives mention they were contacted by a structured settlement factoring company and now they are trying to influence you.

Selling A Structured Settlement in 2023? Get The 411 on Cash Now. Don't Be a Victim (4structures.com)

Independent Professional Advice (IPA) for Structured Settlement Sellers (4structures.com)

• Turned 18 (or will turn 18 shortly) and just found out you have "this thing called a structured settlement" and want to know "What the heck is that?"

Structured Settlements | What Is a Structured Settlement? (4structures.com)

Settlement Planning Financial Calculators (4structures.com)

 

 

Annuities and "Bobby Bonilla Day" | Time to Stick a Fork in It?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

If you really think about it, you too may find it quite odd that some promoting annuities, including structured settlement annuities, persist with the lack of awareness in using the joke that is Bobby Bonilla Day in their annuity marketing. 

Does Bobby Bonilla Have An Annuity, or Something Else?

Was what Bobby Bonilla agreed to an annuity, or was it actually unfunded deferred compensation? Let's discuss...

What is an Annuity in New York?

"An annuity is a contract between a purchaser and an insurance company in which the purchaser agrees to make a lump sum payment or series of payments in return for regular disbursements, beginning either immediately (within 12 months) or at some future date".  Source: New York Department of Financial Services

Is/Was the New York Mets an Insurance Company?

Is the New York Mets an insurance company? Hmm, we'll revisit that later in this post.

Bobby Bonilla Day | "In Good Fun" Picking The Scabs Of Victims of a Crime Every July 1st?

Marketers seemingly can't help themselves in making Bernie Madoff part of the Bobby Bonilla "annuity" story. in marketing materials and news articles on an annual basis. The repetiton of the story and the Madoff connection, is disprespectful to victims of the Madoff Ponzi scheme, . Among Madoff's victims were director Steven Spielberg, actors Kevin Bacon and Kyra Segwick, Nobel Peace Prize winner and Holocaust survivor the late Elie Wiesel, Hall of Fame pitcher Sandy Koufax, in addition to former Mets owners Fred Wilpon, Jeff Wilpon and Saul Katz who were major investors, not to mention others who were not celebrities. 

"As a side note, the Mets had significant investments at the time with Bernie Madoff and believed they were poised to rake in large profits to offset some contract moves. We all know that did not work out very well (more on market volatility later)". -Boston area structured settlement brokerage firm Chronovo "How an Annuity Turned $6M into $30M!!!" June 30, 2022 (and still posted on its website June 20, 2023)

Too bad they didn't read this, or if they did read it, didn't give it much thought:

• "Some victims, including those who could barely afford to invest in the first place, lost their entire life savings and several later committed suicide as a result". Source: Daily Mail April 14, 2021
• For Madoff Victims, Scars Remain 10 Years Later : NPR
• "It was disbelief. It was distrust. I mean this man was highly recommended,” said Ilene Kent of Columbus, Georgia, who said her elderly parents lost three-quarters of their net worth in the $65 billion fraud".  CNBC December 10, 2018
• For Bernie Madoff victims, 'betrayal still hurts' years later | CUOMO | Watch (msn.com)  January 11, 2023

Must people keep picking at these people's scabs as a reason to hock annuities, to party, or in one case, offer mobile phone service?  Was this "Eephus Pitch" about something that wasn't even an annuity, as defined by New York's insurance regulator? Would it be enough without the embellishment of a financial term and the tie in by sales people and reporters to a dead crook?  Perhaps not.  Please read on.

Fact or Fiction?  Bobby Bonilla Day| Was It Really an Annuity, or Just Unfunded Deferred Compensation?

This 2020 article by NBC Sports explains deferred compensation. Reminder: Bobby Bonilla's payments from the Mets aren't mockworthy - MLB | NBC Sports

Had the Mets actually purchased an annuity to fund their obligation to Bobby Bonnilla from the outset, their cost would have fixed at effective discount rate in the annuity purchase cost at the time the deal closed. But they would have had to put up the cash to buy the annuity which they were using for other things. They would have locked-in the prevailing rate at the time of the contracted agreement and instead of getting squeezed as interest rates dropped, the present value of the payments would have done the opposite.

Interest rates/ Discount rates rise means lower present value. Conversely interest rates/ discount rates drop means higher present value.

So... if the New York Mets were/are not an insurance company as that is defined under New York law and had the New York Mets owners had actually funded their obligation to Bobby Bonilla by buying an annuity, they would not have found themselves in the financial predicament they found themselves in. And, if it wasn't an annuity and all the only logical conclusion putting together these clues, then it undermines the entire sales pitch of those that make a meal out of "Bobby Bonilla Day"

Bobby Bonilla Deal Referred to as Deferred Payment Agreement NOT an Annuity

Deferred-money deals have been going on for a long time, but the Mets did more of them than most, according to a 2016 report by ESPN. The first deferred-money deal we know about is Darryl Strawberry's 1985 contract, in which the Mets deferred 40 percent of his 1990 $1.8 million team option ($700,000) at a 5.1 percent interest rate. The deal, which pays out $1.64 million from 2004 to 2033, was obtained through a life insurance company.

Bonilla's agent, Dennis Gilbert, was an insurance agent at the same time he developed into a superagent (Gilbert's clients included Bonilla,Barry Bonds, Jose Canseco and Danny Tartabull), so he was more uniquely prepared to understand annuity-type payouts than other agents.  Source: ESPN " Why the Mets Pay Bobby Bonilla" June 30, 2016

And the definitive from Bloomberg, citing Dennis Gilbert, Bobby Bonilla's frickin agent...

"Nothing about this Bonilla contract seems so bad so far, right? No talent squandered, no flotsam acquired in return. Just a rich family’s pocket change. Who cares? It’s not your money. Most accounts of the Bonilla deal describe it as a bold innovation gone awry, but it wasn’t in either respect. It was just an annuity. (Technically, Gilbert clarified for me, it was “nonqualified deferred compensation.” Annuities pay out for life.)  See Bobby Bonilla Contract Was Good for Baseball’s New York Mets - Bloomberg  by Devin Gordon March 16, 2021 

Time to Switch Up The Narrative and Pinch Hit For Bobby Bonilla as an "Annuity" Example

Bobby Bonilla made a good deal.  But enough already. As I've previously proved in prior writing, Bonilla's stats and his "annuity" was well eclipsed by more than capable former baseball players.

In 2022, I highlighted how a Boston area company opted to promote Bobby Bonilla Day 2022. despite local legend Manny Ramirez having a far more impressive career, better stats and a better "annuity", or deferred payment agreement, I also cite Ken Griffey, Jr. and others who are better examples. See Chronovo Could be Promoting Annuities Using Red Sox Legend Instead of Bobby Bonilla, NY Mets Madoff Misery - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com August 4, 2022

What about Babe Ruth  (1895-1948) who played for the Boston Braves and the New York Yankees?

Babe Ruth DID have annuities and actually bought annuities. For example, see 1923 Babe Ruth Annuity from Equitable Life Assurance Society

The image from the auction house includes authentication "The policy (12 x 17 inches),which is not signed by Ruth, displays one horizontal and two vertical folds (as issued), as well as a few small edge tears and tiny stains. In Very Good to Excellent condition overall. Accompanied by a second-generation photo (10 x 8 inches; of Babe Ruth (late in life) shaking hands with an unidentified insurance executive and vintage newspaper clippings documenting his annuities with the Equitable Life Insurance Society"

" I may take risks in life, but I will never risk my money, I use annuities and I never have to worry about my money"-Babe Ruth

The inscription on Babe Ruth's grave at Gates of Heaven cemetery in Valhalla New York reads

"May the divine spirit that animated Babe Ruth to win the crucial game of life inspire the youth of America!"- Cardinal Spellman   Source: Find-a-Grave.com

What About NBA legend Shaquille O'Neal on Annuities? Shaq actually bought annuities

Shaq: “He was very successful and he had saved a lot of money, so I asked him how he and his family did so well. He told me, “We have annuities.” I asked, “What the hell is that?” He explained to me, “It’s when you pay a life insurance company a single premium, which they will pay back years later in the form of a fixed sum.” That sounded like something I needed. When I started making all the big bucks and I had more money than I could spend, I put big hunks of it into annuities. I bought them for myself, my parents, for my brother, and for my two sisters. What it meant was when I turned forty years old, which back then seemed like light-years into the future, I would receive a nice monthly sum for the rest of my life that would keep me in excellent financial shape. Thanks, Lester.”  (Lester was Shaq's accountant)  Read the full story here Having blown $1,000,000 in 1 day, Shaquille O'Neal Sought Accountant's Help to Prevent Going 'Broke' in the Future - The SportsRush  April 19, 2023

Other NBA Players and Annuities

Grant Hill, Caron Butler among retired NBA players thriving financially - Sports Illustrated

Football Players and Annuities

What About Steve Young, Former USFL Quarterback "The Happiest Annuity Story Ever"?

Football For A Buck: Steve Young Has The Happiest Annuity Story Ever (forbes.com) October 10, 2018

SportsBlog :: NFL Retired Players United :: The NFL Player Annuity Plan: How Sweet it is! November 26, 2016

A Witty Story About The Rolling Stones and the Alliance for Lifetime Income

The Rolling Stones Know What You Need: An Annuity - The New York Times (nytimes.com)

Writers and Annuities

"Buy an annuity cheap, and make your life interesting to yourself and everybody else that watches the speculation".

Time to sunset the Bobby Bonilla Day false narrative. It may be a story for deferred compensation, but when Dennis Gilbert Bonilla's agent says it was a deferred payment agreement, it takes the wind right out of the sails from those pushing the Bobby Bonilla annuity false narrative. Think about it!

 

 

 

 

 

 

11th Circuit Court of Appeals Pulls The Plug on Cordero Serial Structured Settlement Factoring Case

by Structured Settlement Watchdog

The 11th Circuit of the United States Court of Appeals has pulled the plug on Lujerio Cordero's Serial Structured Settlement Factoring Case, following the majority opinion in the New York Court of Appeals in April 2023.

What is Serial Structured Settlement Factoring?

Serial Structured Settlement Factoring refers to actions by individuals who have engaged in multiple structured settlement factoring transactions, sometimes in a short time frame, leading in some of the worst cases to erosion of the financial security that was established at the time of settlement. 

The Cordero Serial Structured Settlement Factoring Case

Over the course of just twenty-two months, plaintiff-appellant Lujerio Cordero—a childhood victim of lead poisoning—assigned his rights to nearly one million dollars in structured settlement payments to factoring companies for pennies on the dollar. Through six transfer agreements that he lacked the capacity to understand, Cordero relinquished his rights to monthly payments with a total aggregate value of $959,834.42 spread over the course of about twenty-six years for a series of immediate lump-sum cash payments that amounted to $268,130.  Source: 11th Circuit Court of Appeals opinion filed June 16, 2023.  LUJERIO CORDERO, Plaintiff-Appellant, versus TRANSAMERICA ANNUITY SERVICE CORPORATION, a.k.a. Wilton Re Annuity Service Corporation, Defendant-Third-Party Plaintiff-Appellee,TRANSAMERICA LIFE INSURANCE COMPANY, Defendant-Cross Claimant-Appellee, on Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:18-cv-21665-DPG

Mother Helped Him Sell?

"At the urging of his mother, he gave up his right to the $1 million over the next three decades — in exchange for lump-sum payments of about $268,000, the court documents indicate", said Insurance Journal Structured Settlement Cash-out Left Impaired Man with Little. Transamerica Not Liable (insurancejournal.com) June 22, 2023

Cordero's acted on his behalf in the establishment of the structured settlementin the first place.

11th Circuit Notes That Cordero DID NOT Sue the Structured Settlement Factoring Companies

After Cordero exhausted his cash payments, he endeavored to recover the money that he assigned to the factoring companies. But, instead of suing the factoring companies or attempting to void the transactions, Cordero sued Transamerica Annuity Service Corporation and Transamerica Life Insurance Company (collectively,“Transamerica”), the entities that issued and funded his periodic payments before he assigned them. Cordero asserted two claims against Transamerica: one for breach of contract under New York law, and the other for exploitation of a vulnerable adult under Florida’s Adult Protective Services Act (“FAPSA”), Florida Statute § 415.111  Source: Ibid.

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Side Bar

The wording of the 11th Circuit decision in the immediately above referenced section needs clarification in the opinion of this author.

Transmerica Annuity Service Corporation (TASC) was the Qualified Assignment Company and Transamerica Life Insurnace Company was the Annuity Issuer of the annuity that funded the periodic payment obligation that TASC

TASC did not issue the periodic payments TLIC did not fund the periodic payments. The Defendant or its insurer made a promise to pay the future periodic payments, the obligation to make the payments was assigned to TASC along with money and TASC then funded the future periodic payment obligation it assumed by way of the qualified assignment and funded it with a structured settlement annuity it purchased from TLIC.

For details of the sequencing, please visit this link and the flow chart on the page. How Structured Settlements Work | Structured Settlements Explained 4structures.com)_

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Cordero's Strategy | Attack Structured Settlement Annuity Insurers Not Factoring Companies

Thirteen months earlier, on May 18, 2022, Cordero's counsel was quoted in Do insurers have duty to question possibly ‘abusive’ annuity cashouts? | Reuters

“Because this is an important question without a clear answer, we certify it to the New York Court of Appeals,” the 11th Circuit said in a per curiam opinion by the three judges who heard argument in March (2022). Cordero’s lead lawyer, Brenton Ver Ploeg of Ver Ploeg & Marino, called the court’s question “perfectly appropriate.”

“This crucially important issue concerning abuses in the structured settlement industry is without a definitive opinion from New York’s highest court and long overdue for resolution,” Ver Ploeg said in an email,  Reuters' Barbara Grzincic reported at the time. We now know the answer.

The 11th Circuit Appeals Dismisses All 

This appeal followed the district court’s with-prejudice dismissal of Cordero’s claims and the New York
Court of Appeals answered a reformulated version of a question that we certified for its review. See Cordero v. Transamerica Annuity Serv. Corp., 34 F.4th 994 (11th Cir. 2022), certified question answered, No. 21, --- N.E.3d --- (N.Y. Apr. 25, 2023).

Given its guidance from the New York Court of Appeals that "such allegations (by Cordero) do not state a cognizable cuase of action for breach of an implied covenant (under New York law), we affirm the district
court’s with-prejudice dismissal of Cordero’s breach of contract claim.

Cordero's Florida Adult Protective Service Act (FAPSA) Claims Failed

Cordero’s FAPSA claim fails under the plain language of the statute. In his operative complaint, Cordero does not allege that Transamerica intended to deprive him of the use of his funds. See id. § 415.102(8)(a). Instead, Cordero asserts that Transamerica “allowed” (or “facilitated”) his exploitation by the factoring companies, which resulted in an unauthorized taking of his assets. Based on the facts that Cordero pleaded, Transamerica’s actions simply do not amount to “exploitation” as that term is defined in FAPSA.Because Cordero has failed to state a violation of FAPSA, we affirm the district court’s with-prejudice dismissal of his FAPSA claim.

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SIDE BAR

FAPSA § 415.102(8)(a) “Exploitation” means a person who:

1. Stands in a position of trust and confidence with a vulnerable adult and knowingly, by deception or intimidation, obtains or uses, or endeavors to obtain or use, a vulnerable adult’s funds, assets, or property with the intent to temporarily or permanently deprive a vulnerable adult of the use, benefit, or possession of the funds, assets, or property for the benefit of someone other than the vulnerable adult;

 

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In the footnotes the 11th Circuit remarked:

The facts as Cordero has alleged them are truly troubling. They describe a situation where it appears an industry is able to systematically victimize individuals who are not in a position to protect themselves. See Cordero, slip op. at 30 (Rivera, J., dissenting). But given the governing law, we cannot grant Cordero the relief that he seeks based on the claims that he asserted against Transamerica.

Attorney Ver Ploeg's comments from an email to a reporter published in May 18, 2022 and cited above, makes a false equivalency by commingling of the primary structured settlement market with the secondary market. 

Primary Market

• Insurance companies are regulated in each state that they do business.
• Insurance companies are required to use statutory accounting priniciples (SAP) when preparing their financial statements. Insurers in all states are required to use a special accounting system when filing annual financial reports with state regulators.
• Licensing of insurers, brokers and agents is mandatory.
• Having professional liability insurance is customary
• In addition to licensing many participants have industry professional designations and may hold additional professional licenses such as securities licenses.

Secondary Market

• There is no requirement for professional licensure in any state.
• A few states require registration of structured settlement transferees. Those that do have often been legislatures reaction to shockng stories exposure of misdeeds that appear in regional and national news media. However there is no licensing standard in the way that life settlements are regulated and how other fiancial professionals are regulated. One can onlyhope and continue to advocate for such a standard.  But the almost universal lack of such standard is on state legislatures who have had 22 years to get it right. 
• Probably one of the most notable statements in the New York Court of Appeals part of the case was Cordero's attorney's explanation of why Cordero did not go after the structured settlement factoring companies, which were referred to as " fly by night". This meme just about sums it up, figuratively speaking of course.
• While one can understand why a lawyer such as Mr. Ver Ploeg,would attempt to go for a perceived deep pocket. Nobody works for free, right?  Instead of shaking down life insurance companies that issue structured settlement annuities, while ignoring the bad actors, perhaps another avenue is those who are investing in reprobate structured settlement secondary market companies. Who is loaning the reprobate companies money to do what they do? If they can go after Jeffrey Epstein's bank, why not the deep pocketed investors in naughty structured settlement factoring companies? Perhaps it would be worthwile to explore those that finance serial structured settlement factoring transactions?  

Last updated June 24, 2023

The Cordero v Transamerica Case | A Hot Dog With Cold Flaw Please?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

 

"O'er the Ramparts We Watched..."

 

Gobs of money have been spent on childhood lead paint victim Lujerio Cordero's legal case trying to pin the tail of responsibility for Cordero's serial structured settlement factoring (approved in Florida Courts), on a life insurance company that stopped writing structured settlement annuities in 2003, instead of the unlicensed, unregulated/under regulated structured settlement factoring companies. 

 

The 1996 settlement agreement, signed by Lujerio Cordero's mother (who some years later, purportedly helped him with the first factoring deal) appears to make no mention of Cordero's lead poisoning. Instead of even suing the factoring companies, Cordero's legal strategy has attacked the perceived deep pocket in an effort to overcome the two decade long strategic failure of state legislatures to enact and implement regulations concerning the sales practices of structured settlement factoring companies, their personnel, along with a friendly Sumter County Florida judge, who  approved deals which might arch the eyebrows to cartoon level proportions. So far, Cordero's efforts have failed.

 

Pass the Cold Flaw. Please!

 

"The Cordero Settlement Agreement provided that the landlord and his insurer 'agree to pay and to make periodic payments' to Lujerio Cordero, beginning at age 18, in the monthly amount of $3,183.94 for a period of 30 years." 

 

Source: New York Court of Appeals April 25, 2023 Cordero v. Transamerica Annuity Serv. Corp., 2023 N.Y. Slip Op. 2091 | Casetext Search + Citator

 

Three Questions 

1. If Cordero's structured settlement was a Period Certain, why would the Insurer Obtain medical information?
2. If Cordero's structured settlement was a Period Certain, why would the Insurer Use medical Information?
3. If Cordero's Structured Settlement was a Period Certain why would the Insurer Keep medical Info for decades  (which, by the way, is well in excess of the time that hospital and doctors are required to keep medical records)? For what business purpose?

 What is a Period Certain Structured Settlement Annuity?

• A period certain structured settlement annuity is a one of the types of structured settlement payments.
• A period certain structured settlement annuity provides for payments for a fixed period, known as a "period certain". Payments  for that type of payment stream stop once the defined period certain is completed.
• A monthly period certain of 30 years is 360 monthly payments, full stop.
• A period certain structured settlement annuity requires no medical underwriting. Pricing of a  period certain annuity is unaffected by medical information, gender or gender identity.
• There are no medical questions on a structured settlement annuity application.

When Would Medical Information Be Obtained by a Structured Settlement Annuity Issuer?

• One of the unique features of structured settlement annuities is the ability to have more than one type of payment stream in a single contract.
• Among the options are types of payments where all or part is life contingent, such as certain and life, temporary life, life only and life contingent lump sum payments
• When payments are in life contingent mode, structured settlement payments are only made if the Measuring Life is still living. 
• Where payments are for certain and life, paments will be made whether or not the Measuring Life is still living until the end of the certain period, following which payments will only be made if the Measuring Life is alive.
• This is where so-called Rated Ages come into play.

What Are Rated Ages? | What do Rated Ages Have To Do with Structured Settlements?

A rated age is an underwriting age determined by the medical underwriting department of a life insurance company, that is used in the pricing of annuity to fund payments that are life contingent. Read more about Rated Ages and Structured Settlement Cost | How It Works (4structures.com)

• None of the Cordero structured settlement payments appeared to be life contingent  (i.e they are " for a Period of 30 years". 
• Why did Cordero's mother elect to have payments go for only 30 years instead of lifetime? 
• If Cordero was severely cognitively impaired in 1996 at age 5, and possibly unemployable, why have payments just end?

The possibilities:

1. No rated ages were obtained
2. Rated ages were obtained but they were unremarkable, so unremarkable that a decision was made to forego certain and life payments and proceed with a finite period certain which would pay more per month than a longer payment stream that included a wild card life contingent component.

Another Cordero v Transamerica Case Flaw | Code Name "Rappers Delight"

To the parodied words of Old School rappers, The Sugarhill Gang, "I said-a hip, hop, the 'HIPAA', the 'HIPAA; to the Hip 'HIPAA' hop hop-a you don't stop the rock It to the bang-bang boogie, say up jump the boogie To the rhythm of the boogie, 'they' beat" .

 

Keeping in mind the stream of thought outlined in the section above, I reached out to a few insurers CURRENTLY underwriting structured settlement annuities, to get an idea how long medical records used to obtain rated ages are kept. Not long it so happens. 

1. In this context, a life insurer receives protected medical information for a limited purpose, to price out structured settlement annuities it issues with lifetime payments.
2. Requests for medical authorizations from plaintiffs in a legal case are typically limited in scope.
3. Medical providers typically keep records for 6 or 7 years.
4. Cordero's structured settlement was established in 1996, when he was 5 years old

His mother helped him with the first structured settlement factoring deal.

Prior to HIPAA, no generally accepted set of security standards or general requirements for protecting health information existed in the health care industry. At the same time, new technologies were evolving, and the health care industry began to move away from paper processes and rely more heavily on the use of electronic information systems to pay claims, answer eligibility questions, provide health information and conduct a host of other administrative and clinically based functions.

 

With regard to life and casualty insurers, some may may use and disclose individually identifiable health information. However, Congress did not include life insurers and casualty insurance carriers as “health plans” for the purposes of this rule and therefore they are not covered entities, while others may maintain some information to justify reserving to state insurance regulators where there is a rated age leading to placed business.

 

Sumter County Was an Easy Yay

 

For many years Sumter County had the reputation of a structured settlement forum shopping venue

Seneca One Hosed Met Life Annuitant in Sumter County with Wilder 18.94% Discount Rate - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

The Sumter County Florida Structured Settlements Three Ring Circus - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

Sumter County Forum Shop | Judge Morley Does The "Tighten Up" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)

 

 

 

 

SC Governor Signs Structured Settlement Protection Law Knee Caps "Flim Flammers"

by John Darer CLU ChFC MSSC CeFT RSP CLTC

South Carolina Gov. Henry McMaster signed a more robust comprehensive structured settlement protection reform bill May 16, 2023, that protects severely injured accident victims and their families who receive long-term structured settlement payments arising from settlements of lawsuits for traumatic brain injuries, and other injuries. The bill S259, passed the South Carolina General Assembly on May 5, 2023. Download SC Bill 259 Structured Settlement Payments

“This is a much needed step to ensure that our most vulnerable South Carolinians are no longer preyed upon by unscrupulous flim-flam artists,” McMaster said in a statement referring to structured settlement factoring companies that buy structured settlement payment rights for pennies on the dollar.  Source: The State SC changes law to protect accident victims’ money from abuse | The State May 17, 2023

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What Does Flim-Flam Artist Mean?

The Urban Dictionary defines "flim flam" as scam or swindle.

Merriam Webster defines flim flam artist as "a criminal who steals money from people by tricking them"  Flimflam artist Definition & Meaning - Merriam-Webster   

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Latest news from McClatchy's award winning commentary by David Weissman and McClatchy Team

SC bill to protect accident victims’ money close to passing | Myrtle Beach Sun News (myrtlebeachonline.com)

John Darer Reviews of the McClatchy South Carolina Structured Settlement Protection Commentary

Structured Settlement Factoring Companies' Victim Impact Statements Featured in New McClatchy
- Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) March 19, 2023

SC Structured Settlement Protection Amendment Introduced After Negative Media Exposure - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)  January 18, 2023

SC Legislators Pressured to Up South Carolina Structured Settlement Protections After Troubling Findings - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) October 2, 2022

Murdaugh and Mayhem | Client of Color Ripped Off Then Factoring Cos. Churned His 6 Children's Structures - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) September 12, 2022

Structured Settlement Production Surpasses $2B For Second Quarter in a Row

by John Darer CLU ChFC MSSC CeFT RSP CLTC

The Structured Settlement Industry got off to a great start in Q1 2023, with substantial increases over Q1 2022. The structured settlement industry saw its second straight quarter with in excess of $2B in production.

Summary

1. The structured settlement industry placed $2,069,165,084 of premium in Q1 2023.
• This represents an increase of $904,770,552 or +77.7% Q1 YOY and the second straight quarter with industry production in excess of $2B.
2. Structured settlement industry case count totaled 7,180 in Q1 2023.
• This represents an increase of 2,572 cases or +55.8% Q1 YOY
3. Average structured settlement premium per case was $288,185 in Q1 2023.
• This represents an increase of $35,495 per case or +14% Q1 YOY   Source: Matthew Ross

MetLife was the leading company in terms of Q1 2023 production with $584,900,000. MetLife structured settlement underwriting companies are Mettropolitan Tower Life Insurance Company and Metropolitan Life Insurance Company. The former is the primary underwriting company and the latter is the MetLife underwriting company that has been in business since the 19th Century, having been founded in 1868.

Pacific Life was the second leading structured settlement annuity issuing life insurance company, not far behind behind MetLife, with $513,699,241  Together MetLife and Pacific Life made up more than 50% of the undustry's Q1 2023 production, combining for more than $1B in production between them in Q1. Pacific Life writing companies include Pacific Life Insurance Company in all states except New York and Pacific Life and Annuity Company for all structured settlement cases with a nexus to New York (e.g. venue, parties).

In third place in terms of production was USAA LIfe, which exploded in growth, leaning into its sweet spot on long term structured settlement payouts with $357,000,000

In fourth was New York Life Insurance Company, with $222,229,672, founded in 1845.

IStructure, the first and only uncapped index linked structured settlement annuity issued by Independent Life Insurance Company (the only structured settlement annuity issuer that issues structured settlement annuities  as its sole product line), is running at about 60% of Independent Life Insurance company sales according to company sources this author spoke with. Independent did $130,313,000 in Q1

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