Is the Use of the Term "Assured Annuity" in Genex Capital Assured Annuity™ Misleading?

by Structured Settlement Watchdog

Genex Capital Corporation is not an insurance company but uses the term "Assured Annuity" to describe the factored structured settlement payments streams it solicits and sells to investors through its website, AssuredAnnuity(dot)com and a network of financial advisers.  Genex chooses to defend its position using  "Aunt Merriam" (Webster) 

Two Key Reasons Why What Genex Capital is Selling To Investors Is Not an Annuity

1. What is Assured?

 let's look to Black's Law Dictionary, which defines "Assured" as a person who has been Insured by some insurance company, or underwriter, against losses or perils mentioned in the policy of insurance. Brockway v. Insurance Co. (C. C.) 29 Fed. 760; Sanford v. Insurance Co., 12 Cush. (Mass.) 548. The person for whose benefit the policy is issued and to whom the loss is payable, not necessarily the person on whose life or property the policy is written. Thus where a wife insures her husband’s life for her own benefit and he has no interest in the policy, she is the “assured” and he the “insured.” llogle v. Insurance Co., 6 Rob. (N. Y.) 570; Ferdon v. Canfield, 104 N. Y. 143, 10 N. E. 146; Insurance Co. v. Luchs, 108 U. S. 498, 2 Sup. Ct. 949, 27 L. Ed. 800.

That's a whole different thing from the factored structured settlement payment streams that Genex Capital is selling to financial advisers and investors.

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Side Bar

Genex Capital Corporation is a Delaware Corporation whose primary address is a UPS Store mailbox in Dover, Delaware, but is controlled out of Vancouver Canada and believed to be a division of Genex Strategies, Inc. According to its 2013 application to the United States Patent and Trademark Office, "Genex Strategies, Inc., a company organized under the laws of Canada, is the owner of the mark Genex Capital (the "Genex Mark"), and has continuously used the Genex Mark in connection with financial factoring services, namely purchasing of deferred streams of payment in the nature of structured settlements and annuities (the "Genex Services") since at least as early as 2004. Genex is currently using the Genex Mark in connection with those services". [Source: USPTO.gov]  In defending litigation against it by Woodbridge, Genex Strategies, Inc, through an affidavit of CEO Roger Proctor filed 8/11/2014 [Source: Woodbridge Structured Funding  LLC v Genex Strategies, Inc. et al.  United States District Court  District of CT 3:14-cv-00214-JAM  Document 29 p2  #4.   [see Pacer.gov] , stated that it did not do business in the United States, yet upon information and belief Canada does not permit factoring of structured settlement payments. 

According to the largest structured settlement company in Canada  "This does not occur in Canada. ... As a result, once implemented, Canadian structured settlements cannot be changed to redirect the payments to a factoring company".  [ Source  McKellar website]

So it begs the obvious question, in my opinion.  It is understood that Genex Strategies, Inc. licensed the mark to Genex Capital Corporation. 

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2. An Effort to Portray Genex Capital Corporation's Receivables Purchase Agreement as an Annuity Has Already Failed in Its Domicile State of Delaware (and the state of its address, a UPS Store mailbox at 73 Green Tree Lane Dover Delaware)

Setting aside Genex Capital's hackneyed approach to defending its position using  "Aunt Merriam"  (Merriam-Webster), it seems relevant that an adverse ruling in Delaware sinks their claim, See Greenwald v Caballero-Goehringer, M.D., et al. C.A. No. K14C-04-027 JJC.

In the March 2017 decision, the Delaware Superior Court ruled against the portrayal of a Receivables Purchase Agreement from Genex Capital as an annuity in the requested approval of a minor's Delaware medical malpractice claim. The Court denied Plaintiffs' Third Petition for Approval of Settlement, without prejudice to refile with proof of an annuity ready for purchase that adequately protects the Minor's interests. Plaintiffs moved for reargument or reconsideration of the Court's decision. The Court then set forth its reasoning for denial of Plaintiffs' motion for argument.  [ Ibid.]

From the Court's perspective, it provided clear guidance regarding the appropriate process. Nevertheless it states, the Plaintiffs continue to request reconsideration and exception from the Court's direction." Accordingly, before setting forth the Court's reasoning, a discussion of the background of this matter is appropriate.

Petitioner Colleen Greenwald (hereinafter "Petitioner"), the guardian ad litem for then five year old Kiley Ann Greenwald (hereinafter the "Minor"). In 2014, Petitioners sued the Minor's pediatrician for health care negligence allegedly causing the then-infant Minor to fall from an examination table in the doctor's office and fracture her skull. In addition to the Minor's claims, Petitioner and the Minor's father, Gary Greenwald, joined the Minor's lawsuit, making a claim for their mental anguish and emotional distress, despite suffering no injury and their being no allegation of intentional infliction of emotional distress. Litigation commenced and after mediation, the parties agreed to settle the claims for a gross amount, to be allocated pursuant to Court approval.

At that point, Petitioner's approach deviated from the best interest of the Minor when Plaintiffs filed a petition seeking Court approval of the settlement pursuant to Superior Court Civil Rule 133. In the initial petition, the Petitioner alleged that "in the interest of fairness, the plaintiffs should receive an equal share of the net settlement amount." In other words, although the Minor was the only Plaintiff suffering injury or that had any cognizable claim in the matter, the Minor's parents requested to receive twice as much of the net settlement proceeds as the injured Minor.

The Court held a hearing on February 19, 2016. After the hearing, the Court held that it would not approve a settlement where the Petitioner received any less than the full net amount of the settlement. The Court determined that any less would not be a fair and equitable settlement of the Minor's claims". [Ibid.]

"Thereafter, the Petitioner filed an amended petition seeking amounts to be placed in a Delaware Uniform Transfers to Minors Account (hereinafter "UTMA") in part, or in the alternative providing for the placement of funds in an annuity. The revised petition, however, did not provide for any terms for an annuity that the Court could review and consider. At that time, it was evident that no work toward that end was completed. The Court became further concerned that based on the parent's initial vigor (1) to divert funds to them that in fairness belonged solely to the Minor, and (2) a continued effort to provide for parental access to the Minor's funds (albeit through a UTMA), it was in the Minor's best interest to require all net proceeds to be placed in a structured settlement where the parents would not have access.  By Letter Order on November 23, 2016, the Court denied the Second Petition. In that Order, the Court held that the gross settlement amount and the net present value of the settlement was fair and in the best interest of the Minor, provided all net amounts are applied for the benefit of the Minor. The Court also directed the Prothonotary to provide the structured settlement check list to the Petitioner, long used and available, setting forth the requirements for approval of the settlement. In other words, the Petitioner was instructed to file a revised petition proposing the purchase of a suitable annuity to protect the Minor's interests.

Thereafter, the Petitioner submitted a Third Petition not meeting the requirements of the checklist. It included the proposed purchase of a receivable purchase agreement. The proposed "structured settlement" was described in the Third Petition as a structure to be purchased through a third party to be facilitated by a Houston, Texas law firm. The "annuity" proposed by the Petitioner was in fact a "receivable purchase agreement" which involved purchase of the rights of payment of a structured personal injury settlement from a California injured party having nothing to do with this case. In other words, the annuitant in the proposed plan facilitated by the Texas law firm was the California claimant, not the Minor. Furthermore, despite the Petitioner describing The Hartford as providing the annuity, the seller of the receivable purchase agreement was Genex Capital. No rating was provided for that entity in the petition. The Court denied the Third Petition, without prejudice.

Thereafter, Petitioner moves for reargument pursuant to Superior Court Civil Rule 59(e). Petitioner alleges that the proposed mechanism for payment qualifies as a structured settlement and the Court misapprehended that fact. The two settling defendants opposed the Third Petition on the basis that the Petitioner did not propose a true structured settlement. Defendant Linda Cabellero-Goehringer also filed a separate response in opposition to the Petitioner's motion for reargument. Both defendants argued that the proposed payment mechanism was not in the best interest of the Minor. The Court agrees and also finds that there is no basis for Petitioner's motion for reargument in this case.

The standard for granting reargument under Superior Court Civil Rule 59(e) provides that such motions be denied

Unless the Court has overlooked precedent or legal principles that would have controlling effect, or misapprehended the law or the facts such as would affect the outcome of the decision. Motions for reargument should not be used merely to rehash the arguments already decided by the Court, or present new arguments not previously raised. Such tactics frustrate the efficient use of judicial resources, place the opposing party in an unfair position, and stymie the orderly process of reaching closure on the issues.

Here, Petitioner does not demonstrate that the Court overlooked controlling legal precedent, or misapprehended the law or the facts.

The Court has the obligation to review proposed settlements of minors' claims to ensure they are in the best interest of the injured minors. In reviewing such a petition pursuant to Superior Court Civil Rule 133, the Court has two options: either approve or reject the settlement petition.³ Considerable deference from the Court is appropriate for the negotiated resolution of claims by counsel. Namely, counsel are the most familiar with the claims and defenses in such actions, not the Court.  [ Ibid.]

"Not in the Best Interest of the Minor"

However, under the very unusual circumstances of this case, the Petitioner still does not present a proposed settlement that is in the best interest of the Minor. For that reason, and the Petitioner's failure to provide a basis for reargument or reconsideration of the Court's prior decision, Petitioner's motion for reargument is DENIED.  { Ibid.}

Note: All highlights and emphasis  for purpose of commentary, mine.

While I have presented several valid reasons why Genex Capital's usage of the two words Assured and Annuity together presents a misleading picture to a yield starved but less sophisticated investor, you will have to judge for yourself or seek independent advice and be guided accordingly.