Case Studies
Arizona
As Special Deputy Receiver for the Arizona Department of Insurance (as Court appointed Receiver), Tharp has managed the affairs of several large troubled life and annuity insurance companies:
PMI Mortgage Insurance Co., PMI Insurance Co.
Tharp was appointed in 2011 by the Arizona Department of Insurance as Supervisor of PMI Mortgage Insurance Co. and its direct wholly-owned subsidiary, PMI Insurance Co. Both companies are widely-licensed Arizona domiciled insurers and hold certificates of authority to transact mortgage guaranty insurance.
On March 14, 2012 PMI Mortgage Insurance Co. (“PMI”) was placed in Rehabilitation by the Arizona Superior Court, and Tharp has been administering the Company under a rehabilitation plan since that time. In 2014, Tharp closed a material transaction with a large insurance holding company system, resulting in the sale of several PMI subsidiaries, PMI’s information technology platform and the transfer of PMI employees, while entering into a services agreement to facilitate the PMI run-off. The transaction resulted in the infusion of nearly $300 million into PMI, requiring court approval, regulatory approvals and approvals by Fannie Mae and Freddie Mac.
Old West Annuity & Life Insurance Company
In March 2004, Tharp was appointed Special Deputy Receiver to handle the day-to-day affairs of Old West Annuity & Life Insurance Company (Old West), a large Arizona domiciled annuity insurer and member of a publicly held insurance holding company system, and pursue a rehabilitation plan. Tharp formulated a rehabilitation plan which was implemented in 2004 and finalized in 2006, whereby Old West emerged from rehabilitation via outright sale to a third party. The rehabilitation plan formulated by Tharp and approved by the Court first required enhancement of the balance sheet by, among other things, the sale of over one hundred million dollars of defaulted commercial mortgage loans and, secondly, implementation of the rehabilitation plan itself. The rehabilitation plan, which was widely distributed and solicited, required sale through novation of the annuity business of Old West’s parent, an Idaho domiciled insurer, with the transfer of the Old West capital stock as partial consideration. This complex transaction was consummated without activation of the state guaranty system, and placed all of the annuity contract holders in safe harbor in one of the largest insurance holding company systems in the world, resulting in no policyholder diminution of principal and interest and no contract restructuring.
Farm and Home Life Insurance Company
Tharp successfully concluded litigation against former officers, directors and professionals, recovering nearly one hundred million dollars in cash settlements, fully reimbursing the state guaranty system.
As Special Deputy Receiver of Farm and Home, Tharp also served as President and Chairman of several solvent publicly held and widely licensed insurance company subsidiaries which were managed, operated and ultimately sold. An exchange transaction involving Farm and Home annuity contracts under Internal Revenue Code Section 1035 was consummated by Tharp with one of the largest insurers in the world, whereby all remaining annuity contracts were exchanged for contracts issued directly by the alternative insurer. Favorable rulings from the Internal Revenue Service were sought and obtained, thereby facilitating the transaction. Novation transactions were also structured and consummated by Tharp for the benefit of ordinary life insurance company policyholders.
AMS Life Insurance Company
Tharp formulated and closed several novation transactions with large alternative insurers relative to the life and annuity insurance policies on behalf of affected state guaranty associations, through the National Organization of Life and Health Insurance Guaranty Associations.
Tharp marshaled disputed reinsurance recoveries from numerous reinsurers and pursued litigation against former officers, directors and professionals resulting in recoveries of fifty million dollars.
Oklahoma
Tharp, as Assistant Receiver for the Oklahoma Department of Insurance (as court-appointed Receiver), directs the receivership process for certain Oklahoma- domiciled insurers placed in receivership, and is currently engaged to liquidate two affiliated insurers, Park Avenue and Imperial.
Park Avenue Property & Casualty Insurance Company
Tharp was appointed Assistant Receiver of Park Avenue (formerly known as Providence Property & Casualty Insurance Company) on November 18, 2009, when it became the subject of a Consent Order of Liquidation with a Finding of Insolvency and Permanent Injunction. Park Avenue, a writer of large deductible workers compensation policies to Professional Employer Organizations, was licensed in twenty-eight states. Tharp has worked closely and extensively with each of the activated state guaranty associations and the National Conference of Insurance Guaranty Funds in the adjudication and claim payment process. Litigation is pending against former officers, directors and Professional Employer Organizations. The litigation against former professionals settled.
Imperial Casualty and Indemnity Company
Tharp was appointed Assistant Receiver of Imperial on May 12, 2010, following a lengthy trial when Imperial became the subject of a Consent Order of Liquidation with a Finding of Insolvency and Permanent Injunction. Imperial, a writer of large deductible workers compensation policies to Professional Employer Organizations, was licensed in forty-seven states. Imperial was a wholly owned subsidiary of Park Avenue Property & Casualty Insurance Company prior to Park Avenue’s sale on January 29, 2009. Tharp has worked closely and extensively with each of the activated state guaranty associations and the National Conference of Insurance Guaranty Funds in the adjudication and claim payment process. Litigation is pending against former officers, directors and Professional Employer Organizations. The litigation against former professionals settled.
Petrosurance Casualty Company
While serving as Assistant Receiver for Petrosurance Casualty Company, an Oklahoma-domiciled large deductible workers compensation insurer, Tharp marshaled forty million dollars of reinsurance ceded balances in the London Market.
Indiana
Indiana Department of Insurance
Mr. Tharp spent nine years with the Indiana Department of Insurance, beginning his insurance career as a financial field insurance examiner, examining life, accident and health, and property casualty insurers in conjunction with the triennial examination process, while achieving the status of Senior Insurance Examiner.
From 1985 to 1989, Mr. Tharp was engaged by the Indiana Commissioner of Insurance (as Court-Appointed Receiver) to direct the supervision, rehabilitation and liquidation processes for Indiana domiciled troubled insurance companies.
During this time, Mr. Tharp represented the Indiana Commissioner of Insurance as Chairman of the National Association of Insurance Commissioners (NAIC) Rehabilitators and Liquidators Task Force Other Model Act Issues Working Group, charged with reviewing and rewriting the Insurers Supervision, Rehabilitation and Liquidation Model Act.
Allied Fidelity Insurance Company
Mr. Tharp directed the successful liquidation of Allied Fidelity Insurance Company, a large writer of surety, personal lines and commercial property and casualty lines, interfacing with fifty state guaranty associations and the National Conference of Insurance Guaranty Funds, collecting substantial off-shore reinsurance ceded balances, while procuring significant off-balance sheet recoveries through litigation with former officers, directors and professionals.
National Association of Insurance Commissioners (NAIC)
Tharp and Associates has been active in the NAIC over the years.
The National Association of Insurance Commissioners (NAIC) is an organization of chief insurance regulators from the 50 states, the District of Columbia and the four United States territories.
The NAIC provides a forum for the development of uniform policy when uniformity is appropriate.
A state regulator’s primary responsibility is to protect the interests of insurance consumers, and the NAIC helps regulators fulfill that obligation. That assistance is related to the regulator’s shared objectives of financial and market conduct regulation.
The mission of the NAIC is to assist state insurance regulators, individually and collectively, in serving the public interest and protecting the public interest, promoting competitive markets, facilitating the fair and equitable treatment of insurance consumers, promoting the reliability, solvency and financial stability of insurance companies, and supporting and improving state regulation of insurance.
National Conference of Insurance Guaranty Funds (NCIGF)
Tharp and Associates has worked extensively with NCIGF over the years.
The NCIGF is a nonprofit, member-funded association that provides national assistance and support to the property and casualty guaranty funds located in each of the 50 states, the District of Columbia, Puerto Rico, Guam and the Virgin Islands. Incorporated in 1989, the NCIGF coordinates information for multi-state insolvencies and provides legal, data management, administrative, communications and public policy support to member state guaranty associations across the nation.
Each of the state guaranty associations in the 50 states and the District of Columbia are members of NCIGF. Established in 1968 by public policymakers and the insurance industry to pay the outstanding claims of insolvent insurance companies, the property and casualty fund system has delivered protection to hundreds of thousands of policyholders, beneficiaries and their families. Since its beginning, the guaranty funds system has paid more than $27 billion to policyholders, beneficiaries and claimants affected by more than 550 insolvencies nationwide.
National Organization of Life & Health Insurance Guaranty Associations (NOLHGA)
Tharp and Associates has worked extensively with NOLHGA over the years.
NOLHGA is a voluntary association made up of the life and health insurance guaranty association of all 50 states, the District of Columbia, Puerto Rico, Guam and the Virgin Islands.
NOLHGA was founded in 1983 when the state guaranty associations determined that there was a need for a mechanism to help them coordinate their efforts to provide protection to policyholders when a life or health insurance company insolvency affects people in multiple states.
State life and health insurance guaranty associations provide a safety net for policyholders, ensuring that policyholders continue to receive coverage even if their insurer is declared insolvent. Working together with NOLHGA, the guaranty associations form a national safety net, protecting insurance consumers all across the United States in their time of need.