Washington Insurance Commissioner Mike Kreidler assumed control of Western United Life Assurance Company this week in a move intended to assist the Spokane insurer deal with financial problems reportedly stemming from its parent holding company.
Western United has operated under Kreidler’s administrative supervision since late December when the insurer’s board of directors sought his help in preserving the company’s assets and financial integrity in the face of mounting financial problems at Metropolitan Mortgage & Securities, the parent holding company.
Metropolitan filed for Chapter 11 bankruptcy reorganization on Feb. 4, 2004. Western United and its policyholders are not associated with the bankruptcy filing.
Kreidler filed the uncontested petition for receivership this week in Thurston County Superior Court after the insurer indicated that it likely would be responsible for an $18 million tax liability reportedly incurred by Metropolitan.
The tax liability stems from a tax shelter that Metropolitan reportedly made on behalf of itself and Western United. The Internal Revenue Service and recent court decisions now suggest that the tax shelter will be disallowed as a tax credit. Metropolitan had indemnified Western United against this development, but that promise was reportedly rendered meaningless with Metropolitan’s bankruptcy filing.
Kreidler emphasized that the petition for Western United’s receivership was not based on the issue of the company’s solvency. He described the move as a safeguard measure to help protect policyholders and provide reassurance that their interests will be placed ahead of all other considerations.
“I want to assure Western United policyholders that this action was taken to protect the assets that secure their investments,” Kreidler said. “The company will continue day-to-day operations under the direction of Chief Deputy Receiver Wayne Metcalf. We plan to continue conducting Western United’s business as usual.”
Western United ranks as one of Washington’s largest domestic life insurance companies with 35,000 policyholders and $1.7 billion in assets.
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