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Case 3:00-cv-02009-EBB

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Filed 08/27/2004

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AMIL Y GUARTY LIFE INSURCE COMPAN
A Mississippi Domiciled Insurance Company

RESPONDENT

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 Family Guaranty Life Insurance Company (" FGLIC" or
Company " or " insurer ). It appearng to the Cour that the management of Family Guaranty Life

Insurance Company is unable to substantiate to the Commissioner of Insurance

of the State of

Mississippi the asset capitalization that it has claimed in communications submitted to the

Mississippi Deparent of Insurance ,

and fuer, that ths rehabilitation is in the best interest of

FGLIC , 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 An.

83- 24- et seq . (Rev. 1991).

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II.

George Dale , as Commssioner of Inurance of the State of Mississippi , is hereby appointed

Rehabilitator of Respondent , Family Guaranty Life Insurance Company, with all the powers and

imunties

set forth in

Miss. Code An. ~ 83-24- et seq .

The Rehabilitator

shall take possession

of the assets of the insurer

and manage them under the general

supervision of the court.

operation oflaw , title to all assets ofFGLIC is hereby vested in the Rehabilitator.
III.
The Rehabilitator may appoint a Deputy Rehabilitator. The Deputy Rehabilitator shal have

all powers and responsibilities of the Rehabilitator granted by ths Order and all such authority as
conferred by operation of law.

The Commissioner retains the right to substitute another person as
The compensation of

Deputy Rehabilitator as he may deem necessar.

any Deputy Rehabilitator

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

of

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

Miss. Code An. ~ 83- 24- 27(1). The Rehabilitator and

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

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

hereby enjoined and restrained from the transaction of any of the business of FGLIC. Furer
FGLIC , its officers , directors , agents , stockholders , employees , and all other persons are hereby
enjoined and restrained from transferrng or disposing of FGLIC assets ,
propert, books ,

records

electronic media or other information , wherever located (without the express permission of the

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Rehabilitator), wasting FGLIC assets , or transferrng or dissipating any of FGLIC' s assets or ban

accounts.

Any cour in this state before which any action or proceeding in which FGLIC is a par,
is obligated to defend a par, is pending when ths
Rehabilitation

or

Order against FGLIC is entered
the

shall stay the action or proceeding for 90 days and such additional time as is necessar for
Rehabilitator to obta proper representation and prepare for

fuer proceedings. The Rehabilitator
ths 90 day stay, and such

shall tae

such

action respectig the pending litigation deemed necessar in the interest of justice

and for the protection of creditors , policyholders , and the public. Durg

additional time as determined necessary 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

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

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

to FGLIC ,

wherever located ,

including any books ,

accounts

, documents or other records or
accounting firms

information or other propert of FGLIC in the possession

of accountants ,

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

If it appears to the Rehabilitator that there has been

crial or tortious conduct, or breach

of any contractu or fiduciar obligation detrimental to the insurer by any offcer, manager, agent,

broker , employee , or other person , all appropriate legal remedies may be pursued on behalf of the
insurer.

IX.
All insurance agents ,

agencies , brokers ,

securty dealers ,

service providers and all other

persons are hereby ordered to account to the Rehabilitator for all f1ds ofFGLIC held by them in

their fiduciar capacity or due to FGLIC. As said fuds are vested in the Rehabilitator as provided
by law, it is Ordered that such fuds
be diected 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 revitaize FGLIC. 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 ful power to direct and manage , hire 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 incured by FGLIC
(Rev. 1991).
, as defined by

Miss. Code An.

g 83-24- 27(6)

XII.

The Rehabilitator, in accordance with
set forth therein

Miss. Code An. ~ 83-24- 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. ~ 83- 24- et seq

, is

hereby authorized to examine the affairs , transactions , accounts , records , documents , and other assets

of FGLIC , its parent ,

subsidiaries

, and affliates to determine whether any dividends or other
recoverable under

distributions made by FGLIC to its parent , subsidiares , or affliates are
Code Ann.

Miss.

~ 83- 24- 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 of FGLIC or pursuant to assessments authorized by
27 (Rev. 1991).

Miss. Code An.

~ 83- 24-

XV.
FGLIC's directors , offcers , employees , or other authorized representatives may not tae any

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

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creditors , or shareholders , or the administration of ths

proceeding, including but not limited

to

solicitation of offers and negotiation of terms for the purchase ofFGLIC or FGLIC' s policyholders

without the express permssion of the Rehabilitator.
XVI.

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

though Petition

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

to this action , including without limitation , examination , expert, and attorney s fees , from FGLIC

fuds

pursuant to

Miss. Code

83-24- 27 (Rev. 1991). The Rehabilitator may employ such

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

clerical help shall be paid .fom the fuds
1991 ).

of

FGLIC pursuat to

Miss. Code An. g 83- 24- 27

(Rev.

XVIII.
The Rehabilitator shall report to the Cour regarding the status of the rehabilitation at such
intervals as the cour 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. g 83- 24-25(2)
XIX.

(Rev. 1991).

Ths Cour shall retai

exclusive jursdiction ,

as provided in

Miss. Code An. g 83- 24-25(1)
of ths Order or any

(Rev. 1991), to determine all suits or motions related to the enforcement
litigation related to FGLIC or the Rehabilitator

and his deputies , agents , employees , or

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representatives , which shall be determined in this rehabiltation

proceeding; provided furter that

this proceeding including all petitions , orders and other filed papers shall be considered public

records until fuer order of this cour otherwse providing.
This Order of Rehabilitation is entered ths
SO ORDERED ths

/tf

day of May, 1999.

day of May, 1999.

Chancellor First Judicial Distrct, Hin s County,
ED BY:

Mississippi

T:::m
Lee Harell

Special Assistat

Attorney General

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

Chief Legal Counsel for Mississippi Deparent 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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