In response to the July 2, 2012 Order of Rehabilitation, and an anticipated Order of Liquidation, against Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company (collectively, “Lumbermens”),1 we have prepared the following “frequently asked questions” guide summarizing issues related to: (i) the financial regulation of insurance companies; (ii) the liquidation and proof of claim process in Illinois; (iii) potential recovery by policyholders of the amount of “covered” workers’ compensation claims from state guaranty associations; (iv) policyh
The Federal Reserve announced the approval of a final rule to implement the Dodd-Frank resolution plan requirement set forth in Section 165(d) (the “Final Rule”). The Final Rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by the Financial Stability Oversight Council to annually submit resolution plans to the Federal Reserve and the FDIC.
On Tuesday morning, the Federal Deposit Insurance Corporation (“FDIC”) Board unanimously approved two rules regarding resolution planning: one rule for large bank holding companies and nonbank financial companies supervised by the Federal Reserve Board of Governors (“FRB”),1 and the other rule for large banks.2
The FDIC Board approved a final rule on the orderly liquidation process, which was the culmination of a series of rulemaking efforts begun earlier this year. The rule implements several provisions of Title II of the Dodd-Frank Act. Title II establishes an “orderly liquidation authority” (the “OLA”) through which the FDIC can be appointed as receiver and liquidate a covered financial company, such as a bank holding company, whose failure threatens to have serious adverse effects on financial stability in the U.S.
The July 6, 2011 Federal Deposit Insurance Corporation Board of Directors (the “FDIC Board”) meeting marked the changing of the guard from Chairman Sheila Bair to FDIC Vice Chairman Martin Gruenberg. Chairman Bair’s valedictory meeting was not merely ceremonial; it also covered several key developments regarding the timing of a final rule on resolution plans under section 165(d) of Title I and a final rule on the Orderly Liquidation Authority (“OLA”) under Title II.
A. RESOLUTION PLANS/ LIVING WILLS
In response to an imminent Order of Liquidation against the Kemper Insurance Companies, we have prepared the following “frequently asked questions” guide summarizing issues related to: (i) the financial regulation of insurance companies; (ii) the liquidation and proof of claim process in Illinois; (iii) potential recovery by policyholders of the amount of “covered” workers’ compensation claims from state guaranty associations; (iv) policyholder collateral; and (v) planning a response to the Kemper liquidation.1
I. FINANCIAL REGULATION OF INSURANCE COMPANIES