Insolvency/Guaranty Fund

Foley’s Insurance attorneys regularly advise insurers, reinsurers, third-party administrators, guaranty funds, regulators, and creditors in connection with domestic and foreign insurance insolvencies.
Foley’s Insurance & Reinsurance Industry Team attorneys understand state-based solvency regulations for insurance companies and the corresponding state insolvency legal regimes that exist in each of the 51 U.S. jurisdictions.

We regularly counsel insurance companies facing the prospect of state insurance insolvency proceedings and have helped them structure and implement voluntary rehabilitation and/or liquidation plans, and also to successfully resist an involuntary insolvency proceeding

Our attorneys counsel current or potential creditors of insurance companies that are at risk of insolvency or are already insolvent. We help creditors analyze their potential financial exposure to the debtor and to identify strategic options for protecting themselves against such risks. We also help clients maximize their collections from an insolvent insurer by identifying potential priority rights and/or potential offsets and submitting proofs of claim and any other requisite pleadings to preserve a creditor’s rights.

We counsel guaranty associations whose statutory mandates are triggered by state insolvency proceedings, as well as third-party vendors that often work with such associations, in the administration and funding of policyholder claims against an insolvent insurer. We also counsel the conservators, rehabilitators, and/or liquidators presiding over insurance insolvency proceedings in respect of their strategic efforts to marshall the assets of, and resolve claims against, the debtor’s estate.

Representative Matters

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Foley served as counsel for the Wisconsin Office of the Commissioner of Insurance (OCI) in its role as domestic regulator of Ambac Assurance Corporation (AAC) and as rehabilitator of the Segregated Account of AAC. We have been closely involved with the overall restructuring of AAC, including the recently announced global settlement with the CDO of ABS counterparties.
Represented a major life reinsurer in an arbitration against its ceding company and in related court proceedings against the ceding company's officers and affiliates. The matter involved complex issues of misrepresentation as well as the proper interpretation of essential provisions in life reinsurance agreements. The case also required a detailed understanding of "pre-need" life insurance policies and their use in the funeral expenses industry. Following a two-week evidentiary hearing, the ceding company was placed into liquidation. The matter subsequently has involved novel life and health insurance insolvency issues.
Represented reinsurers in challenges to the liquidation plans presented by receivers in the home and the integrity insurance insolvencies. The cases involved issues concerning the proper priority of claims in liquidation, estimation of contingent claims, rights to interpose defenses and related issues. This matter was handled prior to joining Foley.