November 3, 2007

 

 

 

 

 

 

Maintenance of Keep Policies

 

Pursuant to the Courts September 14, 2005 Disposition Order, “Order on Disposition of Policies and Proceeds”, Viatical Services, Inc. (“VSI”) will continue to execute their duties as service administrator regarding maintenance of (“Keep”) policies. As administrator, VSI oversees the following on behalf of Investors on Keep policies:

 

-      Collection of Administration Fees

-          Collection of Investors’ pro-rata share of premiums

-          Payment of premiums to insurance companies, as they become due

-          Policy conversions

-          Maintenance of waiver of premium benefits, where applicable

-          Tracking of all insureds

-          Processing and collection of death benefit proceeds from insurance companies

-          Distribution of death benefit proceeds to Investors

-          Customer service

 

General

 

The Receiver and the staff of VSI recognize that the past three years has been a difficult time for Investors.    We therefore thank you for your patience and look forward to servicing your needs, to the best of our ability, in the future.

 

Administration Fees

 

During the initial billing cycle, Investors were billed separate from their premium obligation, a $175 Annual Administration Fee and a Pro-Rata portion of $195 as an Annual Policy Fee (collectively the “Annual Fee”). This fee structure resulted in some Investors paying $370 and others as little as $176, depending upon the number of Investors associated with a particular policy. 

 

The Receiver has advised the Court in the Twenty Fourth Report of the Receiver, that VSI will be billing Investors their Annual Fee as a flat fee of $240 in the next billing cycle.  Additionally, Investors will be billed the Annual Fee as a line item on the Notice of Premium Due, thus eliminating the need for a separate billing. This fee structure simplifies the billing process for both VSI and Investors and provides for a more equitable distribution of fees charged to Investors.

 

Click here for a direct link to a Sample of the revised Notice of Premium Due

 

 

Premium Obligations

 

During the initial billing cycle, Investors were first provided with a Notice of Premium Due representing their pro-rata share of the policies’ premium, due within 90 days (this time period was subsequently reduced by the Court to 45 days).  Following the Notice of Premium Due, and assuming insufficient premiums were collected, Investors were provided with a Notice of Premium Shortfall due within 45 days.  This Notice gave Investors three options to attempt to fully fund the policies’ premium obligation.  Option “A” represented an additional pro-rata share, calculated from investors who forfeited their interest(s) by not remitting their Notice of Premium Due. Option “B” represented an opportunity for Investors to remit, in addition to the Option “A” amount, an amount up to the total forfeited amount on a first come basis.  Option “C” represented no additional remittance. 

 

This process, as described above, will continue in future billing cycles with the exception of the inclusion of the Annual Fee for administration fees on the Notice of Premium Due.  To expedite receipt of Notices by non U.S. resident Investors, VSI will utilize a courier service such as DHL, Federal Express or UPS and a “Non-U.S. Mail Expedite Surcharge” will appear on their Notice of Premium Due.

 

 

 

 

 

On September 14, 2007, the Receiver filed a motion with the Court seeking relief on an emergency basis in that there are certain policies, following the Notice of Premium Shortfall period, for which Investors have not paid the required premium funds (“Undersubscribed Keep Policies”), resulting in fractional interests of death benefits which must be disposed of in order to avoid the Receiver having to use Receivership funds for premiums which may not be recoverable. In addition to analyzing a reduction in the face amount of the policy, which may be limited in many circumstances, the Receiver plans to expand the disposition of Undersubscribed Keep Policies.  Specifically, the sale of fractional interests in Undersubscribed Keep Policies, or groups of such interest, for which the premium obligation has not been funded, to third parties, again through an abbreviated auction process. The Receiver would communicate the availability of such interests to existing parties who have expressed an interest in the acquisition of said interests.  Potential buyers would be required to execute a confidentiality agreement, an affidavit of non-affiliation with any of the Receivership entities, and provide evidence of financial ability.  Potential buyers would receive the same information with respect to a policy that had been provided to the original Investors in the policy.  On September 26, 2007, the Court approved the Receiver’s motion pursuant to “Order Granting Receiver’s Emergency Motion to Authorize Dispositions of Undersubscribed Keep Policies.

Click here for a direct link to the Policy Billing Page set up by the Receiver to provide access to a listing of policies, categorized by policy number and date of mailing, for which Notices have been mailed to Investors. This listing will be updated on a weekly basis. If an Investor does not receive their Notice within a reasonable period of time from the date of mailing, they should contact VSI/Customer Service at (954) 582-0220.