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Case 3:00-cv-02009-EBB

Document 55-4

Filed 08/27/2004

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IN THE CHANCERY COURT OF THE FIRST JUDICIAL DISTRICT
HINDS COUNTY, MISSISSIPPI

GEORGE DALE , COMMISSIONER OF INSURCE OF THE STATE OF MISSISSIPPI
VS.

Plte
RESPONDENT

FIRST NATIONAL LIFE INSURACE COMPAN OF AMERICA
A Mississippi Domiciled Insurance Company

ORDER OF REHABILITATION
The Cour enters ths Order on Petition of George Dale , Commissioner of Insurance for the

State of Mississippi (" Commissioner "

or " Petitioner ) for the conservation and

complete

management of all assets and affairs of First National Life Insurance Company of America
FNLIC" or " Company "
or " insurer

). It appearing to the Court that the management of First

National Life Insurance Company of America is unable to substantiate to the Conunissioner of
Insurance of the State of Mississippi the asset capitalization that it has claimed in communications

submitted to the Mississippi Deparment of Insurance , and fuher, that this rehabilitation is in the

best interest ofFNLIC , its policyholders and the public , IT IS HEREBY ORDERED as follows:

This Order of Rehabilitation (" Rehabilitation Order
provisions of

) is entered into pursuant to the

Miss. Code Ann. 9 83- 24- et seq . (Rev. 1991).

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II.

George Dale , as Commissioner ofInsurance of the State of Mississippi , is hereby appointed

Rehabilitator of Respondent , First National Life Insurance Company of America, with all the powers

and immunties set

forth in

Miss. Code An.

9 83- 24-

et seq.

The Rehabilitator shall tae

possession of the assets of the insurer and manage them under the general supervision of the cour.

By operation of law, title to all assets of FNLIC is hereby vested in the Rehabilitator.
III.

The Rehabilitator may appoint a Deputy Rehabilitator. The Deputy Rehabilitator shall have

all powers and responsibilities of the Rehabilitator granted by this Order and all such authority as conferred by operation of law. The Commissioner retains the right to substitute another person as

Deputy Rehabilitator as he may deem necessar.

The compensation of any

Deputy Rehabilitator

shall be fixed by the Commssioner with approval of the Cour , and shall be paid from the fuds

of

FNLIC. The person appointed by the Commissioner pursuant to this paragraph shall serve at the
pleasure of the Commissioner as set forth at

Miss. Code An. 983-24-27(1).

The Rehabilitator and

Deputy Rehabilitator shall have all constitutional and statutory immunities.
IV.

FNLIC , its officers , directors , agents , stockholders , employees , and all other persons are

hereby enjoined and restrained from the transaction of any of the business of FNLIC. Furher
FNLIC , its offcers , directors , agents , stockholders , employees , and all other persons are hereby

enjoined and restrained from transferring or disposing of FNLIC assets , propert, books , records
electronic media or other information , wherever located (without the express permission of the

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Rehabilitator), wasting FNLIC assets , or transferrg or dissipating any of FNLIC'sassets or

ban

accounts.

Any cour. in

ths state before

which any action or proceeding in which FNLIC is a par, or

is obligated to defend a par, is pending when ths Rehabilitation Order against FNLIC is entered
shall stay the action or

proceeding for 90 days and such additional time as is necessar for

the

Rehabilitator to obtain proper representation and prepare for fuer proceedings. The Rehabilitator

shall tae such action respecting the pending litigation deemed necessar in the interest of justice
and for the protection of creditors , policyholders , and the public. Durig

ths 90 day stay, and such

additional time as determined necessar by the Cour , all persons are enjoined and restrained from

the institution or prosecution of any actions or proceedings.
VI.

The Rehabilitator shall immediately consider all litigation pending outside ths state and shall

petition the cours having jursdiction over that litigation for stays whenever necessar to protect the
estate of the insurer.

VII.
Pursuant to

Miss. Code

. 9 83- 24- 13 (Rev. 1991) all offcers , directors , agents , and

employees of Respondent , FNLIC , are hereby ordered to make available to the Rehabilitator all
books , accounts , documents , electronic media, or other records or inormation or propert pertaining

to FNLIC ,

wherever located ,

including any books ,

accounts ,

documents or other records or
accounting fimls

information or other propert of FNLIC in the possession

of accountants ,

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investment advisors , or any person or entity with which FNLIC has a contract for services or has
provided services to FNLIC.
VIII.

If it appears to the Rehabilitator that there has been criinal
of any contractual or fiduciar
obligation detrimental to

or

tortious conduct , or breach

the insurer by any offcer, manager, agent

broker , employee , or other person , all appropriate legal remedies may be pursued on behalf of the
msurer.
IX.
All insurance agents ,

agencies , brokers , bans , security dealers , service providers and all

other persons are hereby ordered to account to the Rehabilitator for all fuds
in their fiduciar
capacity or due

ofFNIC held by them

to FNIC. As said fuds are vested in the Rehabilitator as provided
be

by law, it is Ordered that such fuds

directed and forwarded by such insurance agents , agencies

brokers , security dealers , service providers and all other persons to the Rehabilitator.

The Rehabilitator is hereby authorized to take any and all action he deems necessar or
appropriate to reform and revitalize FNLIC. He shall have all the powers of the directors , offcers

and managers whose authority shall be suspended ,

except as they are redelegated by the

Rehabilitator. He shall have full power to direct and manage , hie and discharge employees subject
to any contract rights they may have , and deal with the property and business of the insurer.

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XI.

The Rehabilitator is hereby authorized to void and set aside all fraudulent or improper

transfers made or obligations incurred by FNLIC
(Rev. 1991).

, as defmed by

Miss. Code An.

9 83- 24- 27(6)

XII.
The Rehabilitator , in accordance with
set forth therein

Miss. Code An. 983- 24- et seq . and the limitations

, is hereby authorized to recover on behalf of the insurer the amount of any

improper, unauthorized or fraudulent distrbutions.
XIII. The Rehabilitator , pursuant to the authority under

Miss. Code An.

9 83- 24-

et seq , is

hereby authorized to examne the afairs , transactions , accounts , records , documents , and other assets

of FNLIC , its parent ,

subsidiaries ,

and affiliates to determne whether any dividends or other
are recoverable under

distributions made by FNIC to its parent , subsidiares , or afliates
Code Ann. 9 83- 24-

Miss.

et seq
XIV,

All reasonable expenses of any litigation , including attorney s fees and costs incured

by the

Rehabilitator, now or in the futue , related to or arsing out of ths rehabilitation shall be paid out of

the fuds or assets
27 (Rev. 1991).

of

FNIC or

pursuant to assessments authorized by

Miss. Code An.

9 83- 24-

xv.
FNLIC's directors , offcers , employees , or other authorized representatives may not take any

action which might lessen the value of FNLIC assets or prejudice the rights of policyholders

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creditors , or shareholders , or the administration of this proceeding, including but not limited to
solicitation of offers and negotiation of terms for the purchase of FNLIC or FNLIC' s policyholders

without the express permission of the Rehabilitator.
XVI.

FNLIC , its officers , directors , agents , stockholders , employees , and all other persons are
hereby enjoined and restrained from interfering with the Rehabilitator other than though Petition
of this Cour.
XVII.

The Commissioner is relieved from giving bond and he shall be allowed his expenses related

to this action , including without limitation , examination , expert , and attorney s fees , from FNIC
funds pursuant to

Miss. Code Ann. 9 83- 24- 27 (Rev. 1991). The Rehabilitator may employ such

clerks , assistants and clerical help as necessar, and the compensation of such clerks , assistants , and

clerical help shall be paid from the fuds
1991 ),

of FNIC

pursuant to

Miss. Code

83-24- 27 (Rev.

XVIII.

The Rehabilitator shall report to the Cour regarding the status of the rehabilitation at such
intervals as the court specifies from the date of ths Rehabilitation Order, and provide an accounting

to this Cour on a semi-anual basis

, pursuant to

Miss. Code An. 9 83-24- 25(2)
XIX.

(Rev. 1991).

Ths Cour shall retain exclusive jursdiction , as provided in

Miss. Code An.

83- 24- 25(1)

(Rev. 1991), to determine all suits or motions related to the enforcement of this Order or any

litigation related to FNLIC or the

Rehabilitator and his deputies , agents , employees , or

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(0)
representatives , which shall be determined in this rehabilitation proceeding; provided

fuer that

this proceeding including all petitions , orders and other fied papers shall be considered public
records until further order of this court otherwise providing.
This Order of Rehabilitation is entered this

/o..
day of May, 1999.

day of May, 1999.

SO ORDERED

this

ihan lfSt
RESENTE
L.

U lCla lStrCt,

m

ounty, lSSlSSlppl

Lee Harell

Special Assistant Attorney General

Post Offce Box 79 Jackson , Mississippi 39205 6011359- 3577
Miss. Bar No. 8957

Chief Legal Counsel for Mississippi Deparment of Insurance

Dave Scott Special Assistat Attorney General Attorney for Mississippi Deparent of Insurance Post Offce Box 79 Jackson , Mississippi 39205 6011359- 3577 Miss. Bar No. 8765
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