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SuttonPark Nightmare for Houston Texas area Structured Settlement Annuitant

by Structured Settlement Watchdog

Houston TX Structured Settlement Payee Waits and Waits for Payment Split from Structured Settlement Servicer SuttonPark

Mavis Davis (Alias used) is a Houston Texas area structured settlement annuitant whose stuctured settlement was funded with an annuity from The Prudential Insurance Company of America. I spent some time speaking with her this morning.  Because Mavis sold part of her structured settlement payments, a payment servicing agreement is necessary. Unfortunately for Mavis, the servicing agreement is with SuttonPark, a Boca Raton company, that has been one of the largest servicers of structured settelment receivables in the USA. 

Prudential continues to mail checks to SuttonPark but the portion of the checks due Mavis aren't getting to Mavis (and other payees) under a payment servicing agreement with SuttonPark.

The money is bottlenecked in a lock box. It appears that limited current staffing is at insufficient levels to assure a normal payment schedule. Little information has been available to payees and that is a HUGE problem. A phone message has not presented an accurate date for payment distributions, raising the anxiety level of payees. With the holiday season having arrived, it's certainly a lump of coal. 

Mavis has made a few sales of structured settlement payment rights, to JG Wentworth and others. She told me this morning that a JG Wentworth rep told her that they used SuttonPark at one time but yanked the servicing away because they weren't happy.  Fortunately Mavis Davis is employed, but it is not going to be easy for her if this situation continues.

One thing that I was able to confirm through sources that as of Tuesday November 26, 2024, the following SuttonPark employees payees might have been dealing with are still there even if calls are not being returned: Anna, Servicing Specialist Wanda Velasquez and Servicing Manager Percy Forde – SuttonPark Capital . I understand that they are working through the backlog trying to do the work of many times more people that are no longer there.

For the Payees, I think it is reasonable that any further communications from SuttonPark need to be accurate and crystal clear.  Voicemail greetings should be changed daily.

You have Payees concerned with losing their homes and paying bills. 

Structured Settlement Watchdog coverage of the SuttonPark Nightmare is a pro bono public service for structured settlement payees.

Victim impact stories will continue to be published and in line with the stated mission of  The Structured Settlement Watchdog® John Darer®

A few key facts about structured settlement payment servicing to help provide some clarity about the process

• There is no need for payment servicing unless (1) the annuitant decides to sell part of a structured settelment payment stream or deferred lump sum; (2) actually does sell part of a payment steam or deferred  lump sum; (3) the annuity issuer does not service its own payments.
• Life insurance companies are highly regulated, in each of the states they do business. In the case of Prudential, it has been in business since 1875.
• Where SuttonPark is the payment servicer,  the life insurerer makes the entire annuity payment to SuttonPark on the payment due dates set forth in the qualified assignment executed at the time of settlement and the annuity contract issued to the qualified assignment company and payable to you, when your lawsuit was settled. For a refresher please follow this link to the 4structures.com LLC website How Do Structured Settlements Work | Structured Settlements Explained
• Payment must then be split by SuttonPark, subject to the terms of the applicable servicing agreement, so that (1) structured settlement payees receive their net remaining payment, AFTER (2) paying the investor(s) who bought the payment(s) the structured settlement payee and (3) the payment fee that SuttonPark charges per payment for servicing can be realized by them. This process can become more complicated if there is a tertiary sale of structured settlement payment rights by investors 
• As a result, payments that are being serviced will not exactly align with the payment dates set forth in the annuity contract and qualified assignment.
• Payments must be accurate for obvious reasons
• Payment servicing is common where a sale of structured settlement payment rights is a partial sale and the annuity issuer does not have the capacity and/or desire to service payments themselves. 

This author does not know what the fee is that is charged by SuttonPark, but per payment fees would be charged by other payment servicers.

Weed Wacking through Misinformation About Structured Settlement Annuities in Conjunction with Sales or Structured Settlement Transfers

• A structured settlement annuity is not a bank account.
• Payees do not own the structured settlement annuity. 
• When someone raises cash from their structured settlement, they are not cashing in the annuity. They are selling or transferring some of their structured settlement payment rights
• There are websites run by companies that target consumers for the sale of their structured settlement payment rights that confuse consumers with nonsense like "sell your stuctured settlement annuity".  Such inaccurate statements by promoters and solicitors for structured settlement factoring companies are inaccurate, ignorant, cruel (on the part of their patrons to allow it to be published) and foster consumer confusion, and irresponsible.

John Darer has over 30 years of experience with structured settlements and over 40 years of experience in financial services. 

 

 

 

 

 

What Happens if You Die and Never Reviewed or Changed Beneficiary in 37 Years?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Why It's Important to Name and Review Beneficiaries? 

I've previously reviewed the important topic of beneficiary designations extensively in two blogs on the 4structures.com Settlement News Network blog.

Structured Settlement Beneficiary | Why It's Important (4structures.com)

Structured Settlement Beneficiary Designations (4structures.com)

This is also relevant and important to life insurance, bank accounts, investment accounts and retirement accounts and overall estate planning. "Setting it and forgetting it" could have unintended consequences.  Check out the Rolison case that has been heavily litigated in the Western District of Pennsylvania and a had published decision in April 2024.  See The Procter & Gamble U.S. Bus. Servs. Co. v. Estate of Rolison, Civil Action 3:17-CV-00762 | Casetext Search + Citator

Losinger is Winner as Former Partner of Dead Proctor & Gamble Employee Inherits $1M Plus 37 Years After Split

In 1987, Jeffery Rolison filed a handwritten form naming his then partner, Margaret M. Sjostedt  (now Margaret Losinger) the sole beneficiary of his P&G retirement account. Rolison never changed it between 1987 and his death in 2015.  Rolison and Marget broke up in 1988. Margret is set to inherit that $1 million retirement account (over Rollison's estate) as Rolison never updated the beneficiary designation and Margaret was still listed as the beneficiary when he died.

THE PROCTER & GAMBLE U.S. BUSINESS SERVICES COMPANY, as Plan Administrator and on Behalf of THE PROCTER & GAMBLE PROFIT SHARING TRUST AND EMPLOYEE STOCK OWNERSHIP PLAN and THE PROCTER & GAMBLE SAVINGS PLAN Plaintiff,
v. ESTATE OF JEFFREY ROLISON, Deceased, MARGARET M. LOSINGER, and MARY LOU MURRAY Defendants.
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIANo. 3:17-CV-00762
(JUDGE CAPUTO)

"Rolison Knew That He Needed to Check and Change Beneficiary Numerous Times But Simply Failed to Do So"-Court

"There no record evidence in this case that supports the Estate's position that Rolison failed to change his beneficiary status because of any misrepresentation or omission on P&G's part. Instead, again, the record reflects that P&G warned Rolison to check and change his beneficiary designation numerous times between 1987 and 2015 and that “Rolison knew that he needed to take affirmative steps to change his previous beneficiary status,” but that he “simply failed to do so.” - Court

 

 

It's a Jumble Out There | Fixed Income Annuity, Fixed Indexed Annuity or Index Linked Annuity?

by Structured Settlement Watchdog

It's a Jumble Out There

I was surprised to find this fixed income annuity Jumbleaya on the website of a group of esteemed industry colleagues:

Have a seat folks!

• "A fixed income annuity is an annuity with some guarantee against loss while also allowing for market rates of return inside the annuity.
• The upside in these annuities is usually capped at some amount, but the annuities offer downside protection (i.e., if the markets go down, the annuity payments remain the same).
• So, a fixed annuity often offers the potential of better rates of return than the structured settlement annuity fixed rates are offering".

Note: I've bullet pointed to isolate the 3 statements for ease of appreciating the contradiction.

What does Fixed mean?

Fixed Definition & Meaning - Merriam-Webster    "not subject to change or fluctuation (e.g. a fixed income) "

What is an Income Annuity?

Income annuities are an insurance product issued by life insurance companies that convert a premium to income starting immediately ( Immediate Annuity or " SPIA" ), or in the future  (Deferred Income Annuity or "DIA")

What Is a Fixed Annuity? Uses in Investing, Pros, and Cons (investopedia.com)

What Are Index Linked Structured Settlement Annuities?

An indexed linked structured settlement annuity is a tax-advantaged type of structured settlement option that provides protection for when the market goes down, combined with an opportunity for growth that varies with the market index the annuity is tied to. It gives you more income growth potential than a fixed income structured settlement annuity. or a fixed income structured settlement income annuity with a fixed percentage COLA, along with less risk and less potential return than a variable annuity.

Three life insurance companies that issue structured settlement annuities have index linked structured settlement annuity options:

1. Pacific Life Insurance Company and Pacific Life & Annuity Company introduced their Index Linked Annuity Payment Adjustment Rider (ILAPA), in 2014  ILAPA (pacificlife.com)
2. Independent Life Insurance Company introduced iStructure in 2021 iStructure Annuity | Industry's 1st Uncapped Index-Linked Structured Settlement Annuity ; and 
3. The Prudential Insurance Company of America introduced Income Advantage Prudential Income Advantage | Structured Settlement Index Linked (4structures.com)   Guaranteed Income Secure Growth Potential (scene7.com). Prudential refers to its product as "index linked" in consumer facing communication.

Currently, no life insurance companies offer variable structured settlement annuities. 

 

 

Survivor Payments | "All payments From a Structured Settlement Are Guaranteed" ?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement Survivor Payments

Seen on the Internet about Structured Settlements this week

A. "If no beneficiary was designated, the payments will become part of the recipient's estate and be distributed according to their will or state laws".

The statement needs further clarification.

Commentary

1. If the Payee dies without having designated a beneficiary to the annuity issuer prior to the Payee's death, AND there are any remaining period certain payments or guaranteeed lump sums, those payments will be paid, when due, to the Estate of the Payee. From there, payment will be distributed in accordance with the Payee's will, if there is one, or state intestacy laws if there is no will.  See intestacy | Wex | US Law | LII / Legal Information Institute (cornell.edu)

2. If a Commutation Rider is in place when the Payee dies, any remaining certain payments and guaranteed lump sums are commuted to a lump sum in accordance with the terms of the commutation rider.

3. If the Payee dies after there are no remaining period certain payments or guaranteed lump sums then payments will cease at the Payee's death.  

Structured Settlement Beneficiary | Why It's Important (4structures.com) May 8, 2024 update

Structured Settlement Beneficiary Designations (4structures.com) May 24, 2021

B. "All payments from a structured settlement are guaranteed"

Commentary

All payments from a structured settlement are contractually guaranteed in accordance with the terms of the contract. 

When a structured settlement is established there are multiple contracts

• A settlement agreement and release which establishes an obligation to pay periodic payments as damages in exchange for a release of claims.
• A qualified assignment, which is a subsitution of obligors from a Defendant or his/her/its insurer(s) to a qualified assignment company
• An annuity contract, which is purchased as a "qualified funding asset" by the qualified assignment company and is owned by the qualified assignment company.

How Do Structured Settlements Work | Structured Settlements Explained (4structures.com)

While the terms "guaranteed" and "certain" are often used synonymously by those holding an insurance license, including some settlement planners and structured settlement brokers and even lawyers, such use is inaccurate and can lead to misinterpretation and/or misunderstanding by Payees.

 

Structured Settlement Industry On Track for $9B After Stellar First Half of 2024

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement Industry production figures have been released and it's looking to be a record year, again!

• The total for June                         $   708   Million
• The total for 2^nd Q 2024                $2.220   Billion
• The total for 1^st Half of 2024         $4.485   Billion

A Structured Settlement Is All It's " Quacked Up" To Be | John Darer Reviews

by John Darer CLU ChFC MSSC CeFT RSP CLTC Structured Settlement Expert

Ways to Use Structured Settlements in Settlement Planning 2024 (4structures.com)

Comprehensive Settlement Planning Services for Injured Persons & Law Firms (4structures.com)

Settlement Experts and Services for Defendants, Lawyers and Claims Pros (4structures.com)

New York Structured Settlements Experts | Settlement Consulting (4structures.com)

Structured Settlement Experts, Settlement Planning Experts NY | CT| NJ | USA | London (4structures.com)

QARP and UCC Article 9 | Choice of Law Considerations in AL, AK, ND, NM, TX, WI, WY, DC

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A Qualfied Assignment Release and Pledge Agreement (QARP) is a type of qualified assignment that gives a
structured settlement payee a security interest in the qualified funding asset pursuant to the Uniform Commercial Code (UCC). 

What is a Qualified Assignment? (4structures.com)

What is the Uniform Commerical Code?

The Uniform Commercial Code (UCC) is a standardized set of regulations for conducting business and financial transactions in any state in the USA as well as the District of Columbia and US Territories. The UCC governs a wide range of transactions, including the sale of goods, secured transactions, negotiable instruments, as well as others. It provides rules and guidelines for parties engaged in business dealings, ensuring consistency and predictability.

State-specific variations exist within the Uniform Commercial Code (UCC). While the UCC is standardized across states, each state may introduce slight modifications or adaptations to particular sections. Generally, these alterations are minor and do not substantially affect the UCC's overall uniformity.

How Does Article 9 of the UCC and Impact the Rights of a Structured Settlement Payee?

Article 9 of the UCC overrides any language in the QARP that would restrict the claimant's ability to assign the right to receive their payment.

This poses a problem for  the QARP because structured settlement annuities must restrict the claimant's ability to assign their payments, While many states have carved out an exception for structured settlement agreements, some have not and this may impact choice of law selection for the QARP with certain annuity issuers.

Seven States and DC That Have Not Expressly Exempted Structured Settlement Agreements from the UCC

Alabama

Alaska

New Mexico

North Dakota  

Texas

Wisconsin

Wyoming

District of Columbia

These 8 juridictions may not be permitted to be used for Choice of law on the QARP.

 

 

 

 

 

 

 

 

Independent Life Reinsurance Ratings | Settlement Planner Deceptive Rating Analysis

by Structured Settlement Watchdog

Doing a side by side comparison between structured settlement annuity issuers without identifying the rating agency does not properly inform the consumer in my opinion

Despite express communications from Independent Life Insurance company to contrary for more than 4 years, some settlement planners are misrepresenting the nature of Independent Life's ratings and its reinsurance in side by side structured settlement annuity issuing company comparisons when business is on the line. The question is why are some settlement planners misprepresenting this?

Other Life Insurance Companies Use Reinsurance in Their Financial Operations, Why Single Out Independent Life Inurance Company?

Why is the settlement planner singling out Independent Life? Zat is ze question! 

What Independent Life Insurance Company Expressly States on its website

1. "High marks from rating agencies"

"Independent Life earns high marks from rating agencies designated and approved by the Securities and Exchange Commission: A by Egan-Jones and A- by KBRA.  The rating agencies cite Independent Life’s high credit quality investment portfolio, the diversified experience of the company’s management team and demonstrated acceptance by key industry players".

 

Independent Life with Other Rating Agencies Besides Egan Jones and KBRA

Independent Life does not have an A.M. Best Rating

Independent Life does not have a Moodys Rating

Independent Life does not have an S&P rating

Independent Life does not have a Fitch Rating

Independent Life has a Weiss Rating

A.M. Best is the most commonly used rating if only one rating is used.

Each of the rating agencies uses at least a letter rating. Some may be modified with a plus or minus  ( S&P, A.M. Best, Weiss, KBRA, Fitch, Egan Jones), while others may be modified by lower case letters and/or numbers.  (Moodys).  

A settlement planner who spreadsheets proposed diverse structured settlement annuity placements with an Egan Jones Rating and/or KBRA rating in the same line as AM Best ratings, without clear differentiation, within a row simply labeled "ratings", is simply outrageous conduct.

Read my blog on the Settlement News Network Independent Life's Reinsurance with Hannover Life Re | What It Is and Isn't (4structures.com)

 

 

 

 

Structured Settlement Industry BEST Quarter EVER in Q1 2024 After Record 2023!

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Has the "golden age of structured settlements" returned?   

• March 2024 premium production for the structured settlement industry was $774 MILLION!
• Q1 2024 industry production was $2.273 BILLION, a new quarterly record
• On top of the Structured Settlement Industry's $8.68B Record Year in 2023

What's Behind Structured Settlement Industry Growth?

John Darer reviews what he sees

1. One obvious reason is the return of interest rates post pandemic, beginning in 2022 which eventually eroded anti-selection bias.  Contrast when in April 2020, the 10 year United States Treasury yielded 0.40% to the Internal Rates of Return seen in recent times on 10 year structures that have exceeded 4.5% and at times have exceeded 5%. Bear in mind that because periodic payments from qualified structured settlements (personal physical injury, physical sickness, wrongful death and workers compensation are income tax free[IRC 104(a)(1) and IRC 104(a)(2)], the payment recipient is benefiting from a very competitive taxable equivalent yield. See Tax Advantages of Structured Settlements | Taxable Equivalent Yield Chart (4structures.com)
2. It is clear from multiple sources and surveys that decumulation risk is a major concern for Americans. In June 2023, Allianz claimed that Americans fear running out of money more than fear of death. Nobel laureate William Sharpe has called decumulation "the nastiest problem in Finance".  Humans in Financial Transition are who we deal with. Structured settlements are an important part of the conversation and the solution.
3. Years of declining interest rates encouraged producing structured settlement industry particpants (including settlement planners) to up their game and be better educated and skilled at what they do. 
4. Diversification of product offerings within the industry. Annuity issuers and other product providers have stepped up to the plate.
5. Industry workflow systems continue to improve operating efficiency.
6. Increased investment by product providers and brokers/planners in business development tools. MetLife has made the most visible marketing efforts to be seen everywhere
7. Increased investment in knowledge by industry participants leads to more fluency in approach and delivery of services to clients and prospects that leads to greater opportunities
8. Continued growth of flexible business models. 
9. To some extent, there are Pandemic era backlog cases continuing to work their way to resolution.
10. To some extent the severity levels of claims have increased.

Why Structured Settlements?  Because Certain Sells®

 

 

 

 

 

Insurer Insolvency Exclusions in Agents/Brokers Errors & Omissions Insurance Policies

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Virtually all E&O carriers place some type of insurer insolvency exclusion on their policies, either in the exclusions section of the basic form or by endorsement

Example  "The coverage under this policy does not apply to any claim based upon, or arising out of, or related to, directly or indirectly, the insolvency, liquidation, receivership, rehabilitation, bankruptcy, or financial inability or refusal to pay, of any organization, including but not limited to the insured or any insurance company, reinsurer, self-insured program, trust, risk retention group, or risk purchasing group."

E&O carriers have come to the conclusion that an agent's selection of insurers to represent and place business with is wholly within the agent's control.

If the agent places business with a company that has a poor financial rating or no rating at all, E&O carriers believe it is a risk that the agent has assumed. However, the exclusions vary significantly from one insurer to another. Some policies exclude any E&O claim arising out of placement with a low-rated or unrated insurer, even if the insurer is solvent. You need to take a look at your own policy, or any prospective policy, to determine the exact scope of the insurer exclusion.

The Association of Insurance Agents of Texas Suggests the Following Questions Be Asked

(1) What is the (A.M.) Best rating threshold for application of the exclusion? Some exclusions apply if the insurer is rated less than "B" while others apply a threshold as high as "A-."

(2) Does the exclusion apply to claims arising out of placement with such a carrier

(a) whether it is insolvent or not (worst) or,

(b) when it becomes insolvent, even if the claim against the agency does not arise out of the insolvency (bad), or

(c) the insurer's inability to pay a claim due to insolvency (better)?

(3) Does the exclusion apply even if the insurer had a favorable rating at the time of placement but later became insolvent (bad), or only if the insurer's rating didn't meet the threshold at the time the policy was placed (better)?

(4) Are there any other exceptions to the exclusion? In addition to a Best-rating threshold, many E&O policies include an exception for insurers protected by a state guaranty fund. 

Source: Independent Insurance Agents of Texas Ten Things You Don't Want to See in Your E&O Policy | IIAT