ANLIR Status Report
ANLIR/Reciprocal of America
Status Report
December 19, 2005
Risk Retention Group Payment Distribution Uncertain
Policyholders of Reciprocal of America (ROA) will receive up to $77.5 million as approved by the Virginia State Corporation Commission, as part of a distribution ordered December 13, 2005. This did not answer the question of whether or not ANLIR and two other risk retention groups would recover some of their losses.
Reciprocal of America was placed in receivership in January, 2003. Since the three risk retention groups formed by ROA (Doctors Insurance Reciprocal for physicians, American National Lawyers Insurance Reciprocal for lawyers and The Reciprocal Alliance for mental health counselors) relied on ROA for reinsurance, they were placed in receivership also. American National Lawyers Insurance Reciprocal (ANLIR) insured lawyers in several states. ANLIR and the Doctors Insurance Reciprocal provided insurance for over 40,000 individuals and entities nationwide.
Since 60% of the losses fall on ROA policyholders, the SCC ordered payment of $77.5 million to those policyholders, with the balance held in reserve. The remaining 40% of ROA's current assets are being held pending the claim against those assets by the three risk retention groups.
The Virginia and Tennessee insurance commissioners are pursuing a lawsuit against ROA's officers and directors, ROA's accountant, and the reinsurer, General Re Corp, among others. One allegation is that General Re made secret deals with ROA to conceal the severity of the financial situation. Two former senior executives of General Re have already pled guilty to similar charges relating to AIG which resulted in CEO Maurice Greenberg's resignation. Two executives of ROA have already been sentenced to 12.5 and 5 years for fraud and conspiracy. They remain free while cooperating in the ongoing criminal investigation.
A criminal investigation is continuing, with John Williams Crews, the probable target. Crews was the founder of and general counsel to The Reciprocal Group. His firm, Crews & Hancock was paid over $63 million dollars (over the years) for legal work done for ROA entities.
February 9, 2005
Ex-insurance officers plead guilty
Sources say prosecutors are likely seeking cooperation against other fraud suspects. Many of our readers are aware of the receivership and subsequent liquidation of the lawyers professional liability company known as ANLIR or American National Lawyers Insurance Reciprocal, a company which was formed some years ago by a hospital/Doctor professional liability company that initially had written a couple of state bars on a sponsored basis.
ANLIR's business expanded into a number of states before the start of the problems which led to their subsequent demise. While the liquidation and civil suits regarding this unpleasantness continues forward, we were somewhat surprised to learn recently that two of the former officers had waived indictment and plead guilty to federal fraud charges.
To read the article, search on Google for Ex-insurance officers plead guilty and follow the link from the HealthLeaders site.
November, 2004
For those of you who are following the legal fallout of the American National Lawyers Insurance Reciprocal (ANLIR) and its related companies, this article may prove interesting reading. However, the allegations sound very much like those made by the insurance regulators in their suit against the same entities. It just looks like another 50 hospitals are getting in line for their share.
Other Articles
Recent articles in the Times-Dispatch of Richmond, Virginia highlight the allegations of a lawsuit filed by the Virginia Insurance Commissioner on behalf of the Reciprocal of America (ROA). This is the first big step toward recovering the estimated $200,000,000 needed to allow ROA and its related companies, including ANLIR, to pay their outstanding claims in full. The key defendants include the actuarial firm Milliman USA, Inc., the accounting firm Pricewaterhouse Coopers, LLP, General Reinsurance (Gen Re), and key management at ROA, including John William "Bill" Crews, the Richmond lawyer who organized and allegedly controlled the complex network of related insurance companies. Also named was Crews' now defunct law firm, Crews & Hancock and one of his former partners. (Remember that exclusion in your professional liability policy for claims relating to companies you own or manage? Here is a good example of why it is there.The suit basically alleges that the defendants conspired to enrich themselves and fraudulently concealed the company's financial situation from regulators. Through a complex series of reinsurance agreements, some of them secret side agreements that the insurance department discovered only after the takeover, the company appeared to be reinsuring some risks with Gen Re, a very stable reinsurance giant, when there was in fact no reinsurance in place with Gen Re for those risks. One of these side agreements resulted in premium rebates from Gen Re to ROA (or someone) of about $9.5 million, $3.5 million of which was never deposited in any ROA account. Based on an agreement between the Virginia Insurance Department, which is the receiver for ROA, and the Tennessee Insurance Department, which is the receiver for ANLIR, funds recovered as a result of this lawsuit will help to pay ANLIR claims.
Past articles and notices leading up to the lawsuit:
November 16, 2003
"Insurance empire takes hard knocks in court" article in the Richmond, VA Times Dispatch
November 14, 2003
"Lawsuit alleges fraud at insurer" article in the Richmond, VA Times Dispatch
October 20, 2003
"Receiver Hopes To Pay All ANLIR Claims In Full" article in the Virginia Lawyers Weekly.
June 13, 2003
A NOTICE OF LIQUIDATION of American National Lawyers Insurance Reciprocal, RRG ("ANLIR"), Doctors Insurance Reciprocal, RRG ("DIR") and The Reciprocal Alliance, RRG ("TRA") was sent to all Subscribers and Insureds of ANLIR, DIR, and TRA, and all defense counsel, all claimants and their counsel, and known creditors of ANLIR, DIR and TRA. The notice states that all ANLIR, DIR and TRA policies in effect on June 3, 2003, which was the date of liquidation, will be CANCELED on July 3, 2003, unless the policy expires or is replaced before that date. Each claim must be submitted to the Special Deputy Receiver for consideration in the liquidation proceedings, on a special, enclosed Claim Form. For more information, contact:
The Reciprocal Receiverships
Administrative Office
P.O. Box 281348
Nashville, TN 37228
Phone: (615) 255-5487
E-mail: reciprocals@bytesofknowledge.com
August 25, 2003
"VTLA, VADA And Doctors Craft Mediation Alternative" article in the Virginia Lawyers Weekly.
August 4, 2003
"ALPS Gains Business After Demise Of ANLIR" article in the Virginia Lawyers Weekly.
June 30, 2003
"Reciprocal Of America Declared Insolvent" article in the Virginia Lawyers Weekly.
June 23, 2003
"ANLIR Is Ordered Into Liquidation" article in the Virginia Lawyers Weekly.
May 19, 2003
"State Guaranty Fund Would Cover ROA Claims" article in the Virginia Lawyers Weekly.
May 16, 2003
"ANLIR Nearly $36M In Debt" article in the Virginia Lawyers Weekly.
May 12, 2003
"Defense Lawyers Seek To Help ANLIR Insureds" article in the Virginia Lawyers Weekly.
May 8, 2003
"It Is Time To Liquidate ANLIR" article in the Virginia Lawyers Weekly.
May 8, 2003
"Failure To Replace ANLIR Risks CRESPA Licensure" article in the Virginia Lawyers Weekly.
May 1, 2003
"Receiver: Reciprocal Of American Insolvent" article in the Virginia Lawyers Weekly.
April 28, 2003
"SCC Asked For Help On ANLIR Stays" article in the Virginia Lawyers Weekly.
April 21, 2003
"High Court: Case Stayed Involving Reciprocal" article in the Virginia Lawyers Weekly.
Background information on ANLIR - American National Lawyers Insurance Reciprocal (Risk Retention Group):
The American National Lawyers Insurance Reciprocal (Risk Retention Group), generally known as ANLIR, has been offering lawyers professional liability coverage since 1993. The company insures approximately 14,000 lawyers in several states. Until they were taken over by the Tennessee Insurance Department, they were the state bar sponsored carrier in Tennessee, Georgia, Mississippi and New Mexico. On January 22, 2003, ANLIR announced that it could no longer bind new or renewal policies. ANLIR was placed in receivership by the Tennessee Insurance Department on January 31, 2003, two days after its primary reinsurer, the Reciprocal of America, was placed in receivership by the Virginia Insurance Department.
Many of you who insured with ANLIR are facing a difficult situation. At the present time ANLIR's funds have been frozen due to the takeover of ANLIR itself by the Tennessee Department of Insurance, and the takeover of the Reciprocal Group of America, the primary reinsurer for ANLIR, by the Virginia Department of Insurance.
As a relatively small company, ANLIR reinsured the majority of the coverage they sold. ROA insures primarily hospitals in the southeastern states. ROA was also the primary reinsurer for ANLIR. In addition, ROA's management company, The Reciprocal Group, is also the management company that runs ANLIR.
Not only are the funds that ANLIR paid to ROA for reinsurance tied up due to the status of ROA, but even ANLIR operating funds are unavailable, because the management company has also been taken over. The Tennessee receiver for ANLIR is appealing to the Virginia receiver (for the ROA) to release the funds that belong to ANLIR.
At the present time the Reciprocal of America is continuing to pay hospital claims. The Virginia receiver's first responsibility is to cover the claims made by ROA's policyholders, the hospitals. ANLIR is not considered a policyholder, but a creditor, so payment of ANLIR's claims will be addressed only after the hospital claims are taken care of.
The following links will provide additional information about the demise of ANLIR:
April 3, 2003
"Class-Action Suits Filed Against Reciprocal Companies" article in the Virginia Lawyers Weekly.
March 31, 2003
"Tennessee Receivers Ask SCC To Stay Cases" article in the Virginia Lawyers Weekly.
March 24, 2003
"SCC Officials To ANLIR Receiver: Be Patient" article in the Virginia Lawyers Weekly.
March 17, 2003
"The Reciprocal Companies: The Cast Of Players" article in the Virginia Lawyers Weekly.
March 17, 2003
"Commissioners Tilt Over ANLIR Status" article in the Virginia Lawyers Weekly.
March 10, 2003
"Receiver: Don't Pay Claims with Premiums of ANLIR Insureds" article in the Virginia Lawyers Weekly.
March 10, 2003
"Some ANLIR Employees Land With New Malpractice Carrier" article in the Virginia Lawyers Weekly.
March 3, 2003
"VSB Council Questions ANLIR Board Chair" article in the Virginia Lawyers Weekly.
February 24, 2003
"Shopping for Replacement Legal Malpractice Coverage" article in the Virginia Lawyers Weekly.
February 17, 2003
"ANLIR Receiver: Lawyers Could Be Personally Liable" article in the Virginia Lawyers Weekly.
February 7, 2003
"ANLIR in Receivership, Status of Claims Unknown" article in the Virginia Lawyers Weekly.
February 3, 2003
"SCC Acts Cloud Future of Malpractice Carrier" article in the Virginia Lawyers Weekly.
Status Report
December 19, 2005
Risk Retention Group Payment Distribution Uncertain
Policyholders of Reciprocal of America (ROA) will receive up to $77.5 million as approved by the Virginia State Corporation Commission, as part of a distribution ordered December 13, 2005. This did not answer the question of whether or not ANLIR and two other risk retention groups would recover some of their losses.
Reciprocal of America was placed in receivership in January, 2003. Since the three risk retention groups formed by ROA (Doctors Insurance Reciprocal for physicians, American National Lawyers Insurance Reciprocal for lawyers and The Reciprocal Alliance for mental health counselors) relied on ROA for reinsurance, they were placed in receivership also. American National Lawyers Insurance Reciprocal (ANLIR) insured lawyers in several states. ANLIR and the Doctors Insurance Reciprocal provided insurance for over 40,000 individuals and entities nationwide.
Since 60% of the losses fall on ROA policyholders, the SCC ordered payment of $77.5 million to those policyholders, with the balance held in reserve. The remaining 40% of ROA's current assets are being held pending the claim against those assets by the three risk retention groups.
The Virginia and Tennessee insurance commissioners are pursuing a lawsuit against ROA's officers and directors, ROA's accountant, and the reinsurer, General Re Corp, among others. One allegation is that General Re made secret deals with ROA to conceal the severity of the financial situation. Two former senior executives of General Re have already pled guilty to similar charges relating to AIG which resulted in CEO Maurice Greenberg's resignation. Two executives of ROA have already been sentenced to 12.5 and 5 years for fraud and conspiracy. They remain free while cooperating in the ongoing criminal investigation.
A criminal investigation is continuing, with John Williams Crews, the probable target. Crews was the founder of and general counsel to The Reciprocal Group. His firm, Crews & Hancock was paid over $63 million dollars (over the years) for legal work done for ROA entities.
February 9, 2005
Ex-insurance officers plead guilty
Sources say prosecutors are likely seeking cooperation against other fraud suspects. Many of our readers are aware of the receivership and subsequent liquidation of the lawyers professional liability company known as ANLIR or American National Lawyers Insurance Reciprocal, a company which was formed some years ago by a hospital/Doctor professional liability company that initially had written a couple of state bars on a sponsored basis.
ANLIR's business expanded into a number of states before the start of the problems which led to their subsequent demise. While the liquidation and civil suits regarding this unpleasantness continues forward, we were somewhat surprised to learn recently that two of the former officers had waived indictment and plead guilty to federal fraud charges.
To read the article, search on Google for Ex-insurance officers plead guilty and follow the link from the HealthLeaders site.
November, 2004
For those of you who are following the legal fallout of the American National Lawyers Insurance Reciprocal (ANLIR) and its related companies, this article may prove interesting reading. However, the allegations sound very much like those made by the insurance regulators in their suit against the same entities. It just looks like another 50 hospitals are getting in line for their share.
Other Articles
Recent articles in the Times-Dispatch of Richmond, Virginia highlight the allegations of a lawsuit filed by the Virginia Insurance Commissioner on behalf of the Reciprocal of America (ROA). This is the first big step toward recovering the estimated $200,000,000 needed to allow ROA and its related companies, including ANLIR, to pay their outstanding claims in full. The key defendants include the actuarial firm Milliman USA, Inc., the accounting firm Pricewaterhouse Coopers, LLP, General Reinsurance (Gen Re), and key management at ROA, including John William "Bill" Crews, the Richmond lawyer who organized and allegedly controlled the complex network of related insurance companies. Also named was Crews' now defunct law firm, Crews & Hancock and one of his former partners. (Remember that exclusion in your professional liability policy for claims relating to companies you own or manage? Here is a good example of why it is there.The suit basically alleges that the defendants conspired to enrich themselves and fraudulently concealed the company's financial situation from regulators. Through a complex series of reinsurance agreements, some of them secret side agreements that the insurance department discovered only after the takeover, the company appeared to be reinsuring some risks with Gen Re, a very stable reinsurance giant, when there was in fact no reinsurance in place with Gen Re for those risks. One of these side agreements resulted in premium rebates from Gen Re to ROA (or someone) of about $9.5 million, $3.5 million of which was never deposited in any ROA account. Based on an agreement between the Virginia Insurance Department, which is the receiver for ROA, and the Tennessee Insurance Department, which is the receiver for ANLIR, funds recovered as a result of this lawsuit will help to pay ANLIR claims.
Past articles and notices leading up to the lawsuit:
November 16, 2003
"Insurance empire takes hard knocks in court" article in the Richmond, VA Times Dispatch
November 14, 2003
"Lawsuit alleges fraud at insurer" article in the Richmond, VA Times Dispatch
October 20, 2003
"Receiver Hopes To Pay All ANLIR Claims In Full" article in the Virginia Lawyers Weekly.
June 13, 2003
A NOTICE OF LIQUIDATION of American National Lawyers Insurance Reciprocal, RRG ("ANLIR"), Doctors Insurance Reciprocal, RRG ("DIR") and The Reciprocal Alliance, RRG ("TRA") was sent to all Subscribers and Insureds of ANLIR, DIR, and TRA, and all defense counsel, all claimants and their counsel, and known creditors of ANLIR, DIR and TRA. The notice states that all ANLIR, DIR and TRA policies in effect on June 3, 2003, which was the date of liquidation, will be CANCELED on July 3, 2003, unless the policy expires or is replaced before that date. Each claim must be submitted to the Special Deputy Receiver for consideration in the liquidation proceedings, on a special, enclosed Claim Form. For more information, contact:
The Reciprocal Receiverships
Administrative Office
P.O. Box 281348
Nashville, TN 37228
Phone: (615) 255-5487
E-mail: reciprocals@bytesofknowledge.com
August 25, 2003
"VTLA, VADA And Doctors Craft Mediation Alternative" article in the Virginia Lawyers Weekly.
August 4, 2003
"ALPS Gains Business After Demise Of ANLIR" article in the Virginia Lawyers Weekly.
June 30, 2003
"Reciprocal Of America Declared Insolvent" article in the Virginia Lawyers Weekly.
June 23, 2003
"ANLIR Is Ordered Into Liquidation" article in the Virginia Lawyers Weekly.
May 19, 2003
"State Guaranty Fund Would Cover ROA Claims" article in the Virginia Lawyers Weekly.
May 16, 2003
"ANLIR Nearly $36M In Debt" article in the Virginia Lawyers Weekly.
May 12, 2003
"Defense Lawyers Seek To Help ANLIR Insureds" article in the Virginia Lawyers Weekly.
May 8, 2003
"It Is Time To Liquidate ANLIR" article in the Virginia Lawyers Weekly.
May 8, 2003
"Failure To Replace ANLIR Risks CRESPA Licensure" article in the Virginia Lawyers Weekly.
May 1, 2003
"Receiver: Reciprocal Of American Insolvent" article in the Virginia Lawyers Weekly.
April 28, 2003
"SCC Asked For Help On ANLIR Stays" article in the Virginia Lawyers Weekly.
April 21, 2003
"High Court: Case Stayed Involving Reciprocal" article in the Virginia Lawyers Weekly.
Background information on ANLIR - American National Lawyers Insurance Reciprocal (Risk Retention Group):
The American National Lawyers Insurance Reciprocal (Risk Retention Group), generally known as ANLIR, has been offering lawyers professional liability coverage since 1993. The company insures approximately 14,000 lawyers in several states. Until they were taken over by the Tennessee Insurance Department, they were the state bar sponsored carrier in Tennessee, Georgia, Mississippi and New Mexico. On January 22, 2003, ANLIR announced that it could no longer bind new or renewal policies. ANLIR was placed in receivership by the Tennessee Insurance Department on January 31, 2003, two days after its primary reinsurer, the Reciprocal of America, was placed in receivership by the Virginia Insurance Department.
Many of you who insured with ANLIR are facing a difficult situation. At the present time ANLIR's funds have been frozen due to the takeover of ANLIR itself by the Tennessee Department of Insurance, and the takeover of the Reciprocal Group of America, the primary reinsurer for ANLIR, by the Virginia Department of Insurance.
As a relatively small company, ANLIR reinsured the majority of the coverage they sold. ROA insures primarily hospitals in the southeastern states. ROA was also the primary reinsurer for ANLIR. In addition, ROA's management company, The Reciprocal Group, is also the management company that runs ANLIR.
Not only are the funds that ANLIR paid to ROA for reinsurance tied up due to the status of ROA, but even ANLIR operating funds are unavailable, because the management company has also been taken over. The Tennessee receiver for ANLIR is appealing to the Virginia receiver (for the ROA) to release the funds that belong to ANLIR.
At the present time the Reciprocal of America is continuing to pay hospital claims. The Virginia receiver's first responsibility is to cover the claims made by ROA's policyholders, the hospitals. ANLIR is not considered a policyholder, but a creditor, so payment of ANLIR's claims will be addressed only after the hospital claims are taken care of.
The following links will provide additional information about the demise of ANLIR:
April 3, 2003
"Class-Action Suits Filed Against Reciprocal Companies" article in the Virginia Lawyers Weekly.
March 31, 2003
"Tennessee Receivers Ask SCC To Stay Cases" article in the Virginia Lawyers Weekly.
March 24, 2003
"SCC Officials To ANLIR Receiver: Be Patient" article in the Virginia Lawyers Weekly.
March 17, 2003
"The Reciprocal Companies: The Cast Of Players" article in the Virginia Lawyers Weekly.
March 17, 2003
"Commissioners Tilt Over ANLIR Status" article in the Virginia Lawyers Weekly.
March 10, 2003
"Receiver: Don't Pay Claims with Premiums of ANLIR Insureds" article in the Virginia Lawyers Weekly.
March 10, 2003
"Some ANLIR Employees Land With New Malpractice Carrier" article in the Virginia Lawyers Weekly.
March 3, 2003
"VSB Council Questions ANLIR Board Chair" article in the Virginia Lawyers Weekly.
February 24, 2003
"Shopping for Replacement Legal Malpractice Coverage" article in the Virginia Lawyers Weekly.
February 17, 2003
"ANLIR Receiver: Lawyers Could Be Personally Liable" article in the Virginia Lawyers Weekly.
February 7, 2003
"ANLIR in Receivership, Status of Claims Unknown" article in the Virginia Lawyers Weekly.
February 3, 2003
"SCC Acts Cloud Future of Malpractice Carrier" article in the Virginia Lawyers Weekly.