Texas Insurance Commissioner Mike Geeslin has issued an emergency cease-and-desist order to a firm based in New Braunfels, Texas, engaged in the life settlement business.
The department alleges that Retirement Value LLC and its founder and chief executive, Richard H. Gray, have violated many insurance laws, including that they are not registered either as a life settlement provider or broker or as a life insurance company.
Geeslin said in his order the subjects have committed fraudulent and dishonest acts and/or engaged in unfair or deceptive acts. “Texas citizens who have participated or loaned money for the purchase of insurance policies from or through (the company) face serious risk of loss,” he said, noting they sometimes promised investment returns of 16.5%.
Also named in the order was Midwest Medical Review LLC, allegedly for engaging in the business of a life settlement broker and issuing life expectancy certificates without being registered by the department.
Catherine Reyer, senior associate commissioner for enforcement, told BestWire the department alleges that Gray and Retirement Value LLC are “engaging in unauthorized insurance and are purchasing life insurance policies in or from Texas without being registered as a life settlement provider.” Also, all involved are providing life expectancy certificates provided by an unregistered life settlement provider that contain confidential information, she said.
On March 29, Texas Securities Commissioner Denise Voigt Crawford issued a similar emergency cease-and-desist order against the parties. She said Retirement Value and Midwest, owned by George Kindness, are purported to have sold life settlement investments to as many as 800 investors paying as much as $100 million.
The parties named in the commissioner’s order have 30 days from the time they receive the order to request a hearing before the commissioner to show cause why the order should not be affirmed.
About $12 billion worth of life insurance face values were settled in 2008 and about $31 billion of life settlements were in force at the end of that year. Texas is among the 38 states that regulate all kinds of life settlements (Best’s Review, April, 2010).
(By Ron Panko, senior associate editor, Best’s Review: Ronald.Panko@ambest.com)