Update on troubled insurers, rating changes
Article Abstract:
The failure of Fidelity Mutual Life Insurance Co was the largest life insurance company failure in 1992. It was partly attributed to the fact that almost half the company's assets were in weak real estate loans. The company is discussing a merger with Acacia Mutual Life Insurance in Washington, D.C. The assets of Travelers Corp were severely impacted by write-downs from real estate losses, forcing the company to sell 27% of its stock to Primerica for $550 million in much-needed capital. The very weak commercial real estate market led to a fall in the credit ratings of several other insurance firms.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1993
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Single life policies cannot be exchanged tax-free for second-to-die policies, rules IRS
Article Abstract:
An IRS 1995 letter ruling on exchanges of single life insurance policies for second-to-die policies states such exchanges are not tax-free under IRC Section 1035. Although 1035 allows tax-free insurance contract exchanges, it is inapplicable when the policies do not relate to the same insured, as in second-to-die policy exchanges. If these policies are desired to pay estate taxes, policyholders may wish to exercise their whole life policies' nonforfeiture options or give the insurance to children or grandchildren.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1996
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More demutualization, mergers in the future
Article Abstract:
Two mutual life insurance companies, Phoenix Mutual Life Insurance and Home Life Insurance, are planning to merge. The new firm will be called Phoenix Home Mutual Life Insurance Co with assets of about $11 billion. Mutual insurance companies have a limited ability to raise capital. This transaction could mark a new trend in which these firms try to better their financial positions through mergers. Also, Equitable Life Assurance Society is planning to demutualize as allowed by New York State law.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1992
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- Abstracts: Linked benefit policies combine life insurance and long-term care insurance in one policy. Proposed legislation would repeal estate, gift, and GST taxes
- Abstracts: Tax-exempt entities face compliance challenges. Gaming activities can land a tax bill for tax-exempts. Receive substantiation when giving property to charity
- Abstracts: Inventions abroad warrant careful contracting; companies need to be aware of local laws and use contracts to determine ownership clearly
- Abstracts: Fee case shows fast-lane billing. Don't call them local; is office politics making some 'national' firms erase their hometowns?
- Abstracts: FDIC's powers face growing challenge. Repudiation powers are at issue again. Marketplace discipline is reintroduced