SAN FRANCISCO, CA - The Conservation & Liquidation Office, which serves the California Insurance Commissioner, announced the receipt of $529 million from U.S. Life Insurance Company, an American International Group (A.I.G.) subsidiary, in partial satisfaction of a judgment affirming the Final Arbitration Award in favor of the Superior National Insurance Companies, a workers' compensation insurer in liquidation. The payment was made on June 18, 2010 pursuant to an agreement between the parties. Under the terms of the agreement, the California Insurance Guarantee Association immediately received $186 million to apply to their Workers' Compensation account. The balance of $343 million was received by the estates for future distributions to Superior National Insurance Companies' creditors pursuant to California Insurance Code Section 1033.
According to the Conservation & Liquidation Office, this is a huge success realized after nearly ten years of contentious arbitration and litigation. The payment contains $185 million in interest which reflects the tenacity and duration of the disputes related to reinsurance contract between U.S. Life and the Superior National Insurance Companies.
The Conservation & Liquidation Office reports that the Superior National team has committed to distribute the majority of the recovered funds after obtaining approval from the liquidation court. Barring any obstacles, a distribution to the Guaranty Associations is anticipated in the 4th quarter of 2010, and to all other approved policyholder creditors in the 1st quarter of 2011.
Source: Conservation & Liquidation Office