Insurance Department

At a Glance

SUSAN F. COGSWELL, Commissioner

Office of the Insurance Commissioner Established – 1865

Insurance Department Established – 1871

Statutory authority – CGS Title 38a

Mailing address – P.O. Box 816,

Hartford, CT 06142-0816

Central Office – 153 Market Street,

Hartford, CT 06103

Number of employees – 144

Recurring operating expenses – $20,087,875

Organizational structure – Administrative Division; Consumer Services Division; Financial Regulation Division; Legal Division; Licensing Division; Life and Health Division; Property and Casualty Division.

Mission

It is the mission of the Insurance Department to protect the consumer by administering and enforcing the Insurance laws in the most responsive and cost effective manner to ensure the financial reliability and responsibility of all regulated entities.

Statutory Responsibility

The insurance laws administered by the Insurance Department are set forth in Title 38a of the Connecticut General Statutes. They are divided into 28 chapters, each addressing a separate area of insurance regulation and insurance-related entities and products.

Public Service

In an effort to be more responsive to consumer needs and to improve overall communication within the Department, during the past fiscal year, the Insurance Department created the new Consumer Services Division. The Consumer Services Division consists of the Consumer Affairs Unit, the Market Conduct Unit and the Insurance Fraud Unit.

The Consumer Affairs Unit receives, reviews and responds to complaints and inquiries from Connecticut residents concerning insurance-related problems. During fiscal year 2005-2006, 5,887 formal complaints were logged into the Unit’s computer database. As a result of the review of these complaints, the Unit recovered $3,274,837 for Connecticut consumers in fiscal year 2005-2006. Additionally, the Unit mailed 1,370 informational pamphlets and booklets. Consumer Affairs also conducted a number of outreach programs designed to focus on, respond to and educate consumers on insurance matters. During fiscal year 2005-2006, the outreach programs continued to focus on senior groups, variable Annuity sales to seniors, small business owners, health fairs and medical providers.

The Fraud Unit receives complaints alleging fraud committed against insurers and health plans and, as appropriate, refers such allegations for criminal investigation or for regulatory or civil action. The Unit also develops and provides outreach programs and information to aid the public in recognizing, avoiding and reporting suspected insurance fraud and gathers data on insurance fraud patterns in the state.

The Market Conduct Unit performs examinations of insurance companies, health care centers, fraternal benefit societies, and medical utilization review companies doing business in Connecticut to analyze the treatment of Connecticut policyholders and claimants. In order to provide protection to the insurance consumer, the Unit also investigates allegations of improper conduct against individual licensees and pursues administrative action when warranted.

The Financial Regulation Division monitors the financial condition of domestic and foreign companies, health care centers and fraternal benefit societies authorized to do business in Connecticut. The analysis and compliance staff accesses financial information directly from the National Association of Insurance Commissioners’ (NAIC) database and, in many instances, the field examination staff can electronically access company data files to perform substantive testing. The Division has a priority-based approach to analysis and examination that is designed to provide timely identification of potential solvency concerns, and facilitate earlier regulatory intervention.

Actuarial staff is currently assigned within the various divisions to ensure that actuarial input is provided to various department functions and procedures. The actuarial staff participates in the analysis of the financial statements and other statutorily required information. Actuaries also conduct on-site examinations of insurance companies. The actuaries are responsible for examining the rates filed for all life, health and property/casualty insurance companies to ensure compliance with Connecticut statutory requirements.

The Legal Division directs the receivership and guaranty fund activities of the Insurance Department, and provides legal advice and related services to the Commissioner and the six divisions of the Insurance Department on a broad spectrum of issues that arise in regulating the insurance industry. The legal staff also drafts, monitors and analyzes legislation; drafts and promulgates regulations; and, participates in department hearings involving rates, license enforcement, and acquisitions of domestic insurance companies.

The Licensing Division is responsible for licensing professionals to ensure the quality and integrity of individuals and organizations in Connecticut which sell insurance products, provide insurance consulting services, and adjust insurance claims. The Licensing Division meets this benchmark by developing and maintaining up-to-date standards and educational programs for all licensees.

The Life and Health Division reviews policy form and rate filings for all life and health insurance products to ensure compliance with Connecticut General Statutes and regulations. The Division oversees the external appeals process and the expedited review process for managed care organizations; licenses utilization review companies, preferred provider networks, medical discount plans and viatical settlement companies; and, publishes a managed care report card. It also publishes lists of carriers offering Medicare supplement, long-term care, small employer group health, individual health, and HMO policies. The Division provides technical assistance to other divisions, agencies and the Legislature, promulgates regulations and takes enforcement action against carriers regarding non-compliance issues.

The primary responsibility of the Property Casualty Division is to examine property and casualty insurance rates, rules, policy forms and underwriting guidelines to ensure that the insurance products sold in Connecticut by licensed carriers comply with Connecticut statutory requirements. This is accomplished through review, analysis, oversight and approval of insurance company programs covering home and automobile insurance; business property and liability; medical, legal and other professional liability; and workers’ compensation insurance. The Division also oversees the operation of assigned risk plans for automobile, property and workers’ compensation insurance.

Improvements/Achievements 2005-06

During fiscal year 2005-2006, Consumer Affairs staff met with members of the University of Connecticut Health Center, and other interested parties to address medical provider concerns about the infertility mandate. A series of meetings were held with the Auto Body Association of Connecticut and representatives from automobile insurance companies to mediate ongoing disputes over the way automobile property damage claims are handled. These meetings resulted in several changes, including updating the Department’s Arbitration program.

The Consumer Affairs Unit also completed conversion to a new computer database. The new system improves the ability to communicate with consumers and reduces the time in bringing complaints to resolution. The Department is now fully participating in the National Association of Insurance Commissioners’ Complaints Database System.

Throughout the year, Consumer Affairs representatives met with staff members from the Office of the Healthcare Advocate and federal government agencies to coordinate distribution of information regarding those insurance-related products over which they have jurisdiction, i.e., Medicare and self-insured plans. The Unit, in partnership with the U.S. Department of Labor, sponsored a compliance assistance seminar for insurance and human resource professionals on the Health Insurance Portability and Accountability Act (HIPAA) and Health Benefit laws.

Consumer Affairs staff attended training on the new Medicare Part D program. Daily phone activity and outreach assisted seniors in getting the proper information to make timely and informed decisions on what coverage would be best for them prior to the May 15, 2006 deadline.

The Consumer Affairs Unit’s medical/social outreach program educated the medical community on insurance matters, reviewed complaint files involving medical necessity and represented the Insurance Department on a number of committees. The Unit continues to meet with individual insurance companies on a regular basis to address specific concerns or complaint trends.

During fiscal year 2005-2006, development of the Department’s new automated “Connecticut Regulatory Information System” (CRIS) continued. Document imaging is a central component of this system, and as of the end of the fiscal year, over 13 months of consumer complaint files were totally electronic. Also during this year, development of the web component of CRIS was begun. This component will allow (via the Internet): online submission of complaints, online updating of license records, online application for licenses, as well as other features. Implementing the system’s web component and completing the automation of all divisions within the Insurance Department are the goals for the next fiscal year.

The Financial Regulation Division received a successful interim accreditation review for the year ending December 2005. A separate unit has been established within the Financial Regulation Division, solely responsible for the monitoring and licensing of foreign insurance entities doing business in the state. The Division completed review and approval of three mergers or acquisitions of control of Connecticut domiciled insurers and actively supervised four Connecticut financially distressed domestic insurers during the year with none going into liquidation.

The Legal Division, during Fiscal Year 2005-2006, promulgated two regulations and assisted Department divisions in 90 administrative enforcement proceedings or stipulated settlements that resulted in the assessment of $932,371.88 in fines and penalties. The Division also supported 37 insurance rate hearings and participated in two hearings under the Connecticut Insurance Holding Act regarding the merger or acquisition of control of a Connecticut domiciled insurer.

Through passage of Public Act 05-266, An Act Concerning the Renewal of Insurance Producer Licenses, significant changes have been made to licensing and renewal procedures for producers. This new legislation requires that individual producer licenses continue on a biennial basis, however, licenses will expire on the licensee’s birthday instead of on February 1 in even-numbered years. The passage of this legislation will allow for more efficient and organized processing of licenses.

In October 2005, the Life and Health Division published the annual managed care report card, A Comparison of Managed Care Organizations in Connecticut. The Division also surveyed health maintenance organizations for the Department of Social Services’ report card for Medicare Risk Plans in Connecticut. In 2005, there were 181 requests for external review, 59 of which reversed or revised the denials of the utilization review companies. The Division processed approximately 14,000 rate and form filings, including electronic submissions through the System for Electronic Rates and Form Filings. In addition, licenses were issued or renewed to 116 utilization review companies. As of December 31, 2005, 21 preferred provider networks were licensed.

The Market Conduct Unit opened 37 examinations of Property/Casualty, Life and Health and Utilization Review companies, and 126 investigations involving individual licensees. These examinations and investigations resulted in $1,393,013.86 in fines, as well as other actions including revocations, surrenders, and probations or cancellations of insurance licenses.

The Property and Casualty Division received over 4,000 insurance program filings of rates, rules and forms in 2005. The Division approved an overall +0.8 percent rate level change for workers’ compensation insurance for employers in the voluntary market and an increase of +1.7 percent in the assigned risk plan in Connecticut. The Division has also been developing the medical malpractice closed claim database that was required under Public Act 05-275, An Act Concerning Medical Malpractice. This reporting tool will enable companies to submit the data to the Division electronically.

The Department also worked with the Department of Environmental Protection, the Treasurer’s Office, and industry leaders to hold the first meeting on climate change issues facing the insurance industry. The goal was to share information with Connecticut insurance executives on the impacts of global climate change, and the business risk and opportunities this represents to the insurance industry. The meeting focused on climate change as it relates to underwriting, asset management, business operations, and long-term shareholder value.

Information Reported as Required by State Statute

As reported by the Financial Regulation Division, as of July 1, 2005 there were 1,179 insurance companies licensed in Connecticut. Of that total, 119 were domiciled in the state of Connecticut. The applications of 33 insurers applying for admissions were reviewed in fiscal year 2005-2006. Of the 33 applications reviewed, 25 were licensed and eight were rejected and/or withdrawn. In addition, 15 companies ceased to be licensed through dissolution, merger or voluntary surrender of their certificates of authority. As of June 30, 2006, 1,189 insurers were authorized to transact business in Connecticut. During fiscal year 2005-2006, 33 on-site examinations of Connecticut domiciled insurers were completed. As of June 30, 2006, there were five examinations in progress.

The following table indicates calendar year 2005 direct premiums written in Connecticut:

Life, Health and Annuities $22,232,211,339

Property and Casualty Lines 6,540,724,030

Health Care Centers 2,527,897,813

Fraternal Benefit Societies 35,033,126

Surplus Lines 517,069,308

Risk Retention Groups 74,756,968

Title 183,493,192

Pools and Associations 163,303,948

Total Premiums Written $32,274,489,724

In March 2006, the Life and Health Division prepared a report that was submitted to the Governor and General Assembly regarding the Commissioner’s responsibility concerning managed care organizations. This report included a summary of quality assurance plans, potential modifications to the consumer report card, market conduct activity, a summary of complaints filed with the Department, a summary of violations, and a summary of issues discussed regarding managed care at public forums. In June 2006, the Division reported to the Governor and General Assembly that no managed care organizations failed to file any data as required by Public Act 97-99 and Public Act 99-177.

The following information is provided in accordance with Conn. Gen. Stat. § 38a-13:

During fiscal year 2005-2006, the Insurance Commissioner served as the receiver of four domestic insurance companies: three property and casualty insurers and one health care center. In addition, the Insurance Commissioner served as ancillary receiver of two property and casualty insurers domiciled in Massachusetts.

The Connecticut Surety Company -- The Insurance Commissioner was appointed Rehabilitator of The Connecticut Surety Company ("CSC”) by the Superior Court on February 6, 2002. CSC was a Connecticut domiciled surety company that issued commercial and contract surety and fidelity bonds. CSC’s principal offices were in Hartford, Connecticut and were licensed to transact the business of insurance in Connecticut and 25 other states and the District of Columbia. On May 17, 2002, the Superior Court entered an Order of Liquidation, which declared CSC insolvent and appointed the Insurance Commissioner Liquidator of CSC. The Liquidator was directed to take possession of the assets of CSC and to administer them under the supervision of the Superior Court. All policies and contracts of insurance or bonds issued by CSC were cancelled by the Liquidation Order. Promptly after the issuance of the Liquidation Order, the CSC Liquidator mailed notice of the Liquidation Order to all known creditors of CSC, together with a copy of a proof of claim and directions to file with the Liquidator any and all claims against CSC on or before November 15, 2002. On May 16, 2003, the Liquidator filed her First Report with the Superior Court and noted therein that approximately 1,094 proofs of claim were filed with the Liquidator and that the CSC balance sheet as of March 31, 2003 showed assets of $6,152,664.20 and liabilities of $14,675,211.20. CSC and its corporate affiliates operated as an integrated organization, sharing office space, personnel and cash management systems. As a result of the management and shareholders’ abandonment of CSC’s corporate parent, Connecticut Surety Corporation, and its corporate affiliates, the Liquidator determined that the affairs of CSC’s affiliated entities should be wound-up as part of the receivership proceedings of CSC. The CSC Affiliates consist of the following companies: The Connecticut Surety Company, Connecticut Surety Corporation, Connecticut Surety Insurance Agency, Inc., Funds Management, Inc., Connecticut Surety Insurance Agency of Arizona, Inc., Bonds II Surety Group, Inc., and Connecticut Surety Insurance Agency of Nevada, Inc., (collectively, the “CSC Affiliates”). On May 29, 2003, the Superior Court granted the Liquidator’s Motion for Substantive Consolidation of CSC and its affiliates and entered an Order for Substantive Consolidation, which joined the CSC Affiliates in the pending liquidation proceedings. The Order for Substantive Consolidation directed the Liquidator to take possession of the assets of each of the CSC Affiliates and to administer the assets jointly along with the assets of CSC under the supervision of the Superior Court. The Liquidator promptly gave notice to persons interested in the CSC Affiliates of the Order for Substantive Consolidation and August 29, 2003 deadline for the filing of claims against the estates of the CSC Affiliates. In December 2005, the Liquidator made an interim partial distribution of assets to certain Class 3 claimants holding allowed claims and paid $219,757.32 to creditors residing in Arizona, Connecticut, Oregon and South Carolina, thereby paying their claims in full. In addition, the Liquidator paid an interim partial distribution of 30 percent of the allowed claim to creditors residing in Alaska, California, Florida, Iowa, Louisiana, Maryland, Missouri, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Pennsylvania, Texas, Vermont, Washington, and Quebec, Canada. This partial interim distribution totaled $302,282.18. On January 25, 2006, the Superior Court granted the Liquidator’s Motion for Disallowance of Late-Filed Claims. On March 29, 2006, the Superior Court granted the Liquidator’s Fifth Motion for Allowance of Claims. On June 15, 2006, the Superior Court approved and accepted the Liquidator’s Fourth Report dated May 15, 2006 detailing the status of the liquidation proceedings. As of May 5, 2006, approximately 1,239 proofs of claim of various classes of claims were filed with the Liquidator. The consolidated balance sheet of CSC and the CSC Affiliates as of March 31, 2006 shows a deficiency of assets over liabilities of $15,043,643.73, with total assets of $6,205,686.49 and total liabilities of $21,249,330.22. On June 29, 2006 the Superior Court granted the Liquidator’s Sixth Motion for Disallowance of Claims. The Department's website (http://www.ct.gov/cid) continues as a source for news and information regarding the liquidation of CSC and the CSC Affiliates.

Covenant Mutual Insurance Company -- The Insurance Commissioner was appointed Rehabilitator of Covenant Mutual Insurance Company ("Covenant") on March 1, 1993. Covenant was a Connecticut domiciled insurer established in 1831 and was licensed to do business in 31 states. On May 4, 1994, the Superior Court entered an Order (“Confirmation Order”) confirming a Plan of Rehabilitation of Covenant. The Confirmation Order, among other things, (i) confirmed the Covenant Plan of Rehabilitation (“Plan”), (ii) declared Covenant insolvent as of the date of the Confirmation Order, (iii) directed that the assets and liabilities comprising Covenant’s estate be liquidated as provided in the Plan; and, (iv) established a December 31, 1994 Bar Date for the filing of claims against the Covenant estate. On October 5, 2005, the Superior Court approved the Trustee’s Third Motion for Allowance of Claims. On December 22, 2005, the Trustee filed her Report with the Superior Court. As reflected in the Report, the June 30, 2005 balance sheet of the Covenant Mutual Liquidation Trust shows a deficiency of assets over liabilities of $9,348,889.21, with total assets of $13,568,258.51 and total liabilities of $22,917,147.72.

Westbrook Insurance Company -- On July 17, 1997, the Superior Court appointed the Insurance Commissioner Rehabilitator of Westbrook Insurance Company (“Westbrook”), a Connecticut domiciled property and casualty insurance company which had its principal office in Wallingford, Connecticut. Westbrook was incorporated in 1994 and licensed only in Connecticut; it underwrote direct insurance and reinsurance on auto liability and auto physical damage risks. Westbrook is a wholly owned subsidiary of Home State Holdings, Inc. (“HSH”) and part of an affiliated group of property casualty insurance companies (the “Home State Group”) domiciled in the states of New York, New Jersey, Pennsylvania, and Georgia. The Rehabilitator determined that it was in the best interest of policyholders, creditors, and the public to sell Westbrook’s ongoing business and transfer Westbrook’s claim handling functions to financially reliable parties. Accordingly, the Rehabilitator entered into a Policy Acquisition Agreement and a Reinsurance Agreement dated as of August 15, 1997 with Eagle Insurance Company (“Eagle”), whereby Eagle assumed all of the obligations of Westbrook under all direct policies issued by Westbrook for losses with dates of accidents on and after August 15, 1997. In order to ensure the continued handling of claims on Westbrook policies arising out of accidents prior to August 15, 1997, the Rehabilitator entered into a Claims Service Agreement dated August 15, 1997 with Material Damage Adjustment Corp. (“MDA”), an affiliate of Eagle. During this period, the Rehabilitator arranged for Westbrook to transfer to First Security Insurance Company of Hartford performance of all services it provided to the company as its reinsurer of certain commercial auto business, including the collection of premium and the adjustment and payment of claims. On October 26, 1998, the Superior Court granted the petition of the Rehabilitator and ordered that Westbrook be placed into liquidation and appointed the Insurance Commissioner Liquidator of Westbrook. The claim bar date set by the Court for filing proofs of claim was January 31, 1999. The Receiver filed with the Superior Court her Seventh Accounting on November 12, 2002. On August 20, 2002, the Liquidator made a distribution of the estate in the amount of $1,058,071.10 to claimants whose claims have been previously allowed by the Court. The amount distributed to each claimant was equal to 100 percent of the allowed amount of each claimant’s claim falling within Class 1 through Class 5 and 75 percent of the allowed amount of any claim 6 claim. On February 27, 2003, the Superior Court issued an order approving (A) the Liquidator’s claims report and final distributions to creditors, (B) establishment of reserves, (C) administrative claim procedures, and (D) procedures for the retention and/or destruction of records. Pursuant to this Order, Class 6 claimants receive the remainder of their allowed claims in full, the Class 7 claim is paid in full and Class 8 claims receive pro rata distributions in accordance with their allowed amounts, if all preceding classes have been paid in full. On July 2, 2003, the Liquidator obtained a release from the United States of America from any liability for federal claims pursuant to 31 U.S.C. § 3713(b). On or about November 18, 2003, the Liquidator made a second distribution to the creditors of Westbrook with unpaid claims in the total amount of $3,646,486.62 which, together with the amounts distributed in 2002, represented payment of 100 percent of their allowed claims. On or about December 14, 2004, the Liquidator made a third distribution to creditors in the total amount of $525,032.22 representing interest on their claims filed against the Westbrook estate. On April 5, 2005, the Liquidator executed a Quitclaim Assignment in favor of Home State Insurance Company in Liquidation, whereby certain amounts receivable from Westbrook reinsurers are transferred to Home State in satisfaction of its claim against Westbrook. On May 11, 2005, the Superior Court, upon motion of the Liquidator, entered an Order Approving Closure of the Westbrook Liquidation Proceedings which approved the dissolution of Westbrook, approving the procedures for remaining administrative claims, authorizing disposition of unclaimed and withheld funds, discharging the Liquidator, enjoining actions against Westbrook, the estate and the Liquidator, closing the liquidation, and authorizing the Liquidator to make such filings and take such other action as she may deem appropriate to conclude the liquidation proceeding. In September 2005, the Liquidator filed her report of unclaimed property with the Office of the State Treasurer in the amount of $90.76. On December 23, 2005, the Liquidator transferred the residual funds in the Westbrook receivership estate to the Liquidator of Home State Insurance Company in the amount of $624,558.14. In May 2006, the Liquidator filed her 2005 Return of Organizations Exempt from the U.S. Income Tax together with a Request for Prompt Audit under I.R.S. Revenue Procedure 81-17. In July or August 2006, the Liquidator expects to file a Certificate of Discharge and Closure of the Westbrook receivership with the Superior Court.

Suburban Health Plan, Inc. -- On May 20, 1999, the Superior Court entered a Stipulated Order of Liquidation declaring Suburban Health Plan, Inc. (“Suburban”) to be insolvent and appointed the Insurance Commissioner Liquidator of Suburban. Suburban was an HMO based in Shelton, Connecticut which served more than 8,000 members, and was an affiliate of Griffin Hospital in Derby, Connecticut. On May 12, 2004, the Superior Court entered an Order approving the Liquidator’s claims report, distributions to creditors, and other relief that will permit the Liquidator to substantially complete the administration of the estate. The Order: allowed approximately 2,400 claims filed by participating providers and individuals that had paid participating providers; permitted the Liquidator to make a distribution to those creditors based on the priorities established by Conn. Gen. Stat. § 38a-944; authorized a compromise of claims with the United States, which had asserted a claim in connection with a payment it had made to a provider under Medicare; allowed a claim by the Insurance Department as an expense of administration; authorized the Liquidator to offer participating providers an enhanced distribution from the estate if they were willing to agree to release any claims they might have against enrollees; and entered injunctions that prohibit participating providers that accept an enhanced distribution from pursuing any enrollees of Suburban. On September 9, 2004, the Superior Court approved the Liquidator’s Fifth Accounting and Status Report. On April 20, 2005, the Superior Court entered an Order disallowing the claim of Greenwich Hospital. The Liquidator has made final distributions to all of the creditors of Suburban. On July 14, 2005, the Superior Court issued an order approving the closure of the Suburban liquidation proceedings, including the dissolution of Suburban, distribution to the Connecticut Insurance Department of its allowed administrative claim, destruction of records, discharge of the Liquidator, discharging the Liquidator, the issuance of injunctions, and authorizing the Liquidator to make such filings and take such other action as she may deem appropriate to conclude the Suburban liquidation proceedings. In November 2005, the Liquidator filed her 2004 Return of Organizations Exempt from the U.S. Income Tax. In December 2005, the Liquidator filed her report of unclaimed property with the Office of the State Treasurer in the amount of $93,512.50 and made her final distributions in the Suburban receivership estate. In May 2006, the Liquidator filed her 2005 Return of Organizations Exempt from the U.S. Income Tax together with a Request for Prompt Audit under I.R.S. Revenue Procedure 81-17. In July or August 2006, the Liquidator expects to file a Certificate of Discharge and Closure of the Suburban receivership with the Superior Court.

On April 26, 1989, the Insurance Commissioner was appointed ancillary receiver of American Mutual Liability Insurance Company ("AMLICO") and American Mutual Insurance Company of Boston ("AMI"), both domiciled in Massachusetts and placed in liquidation on March 9, 1989. The ancillary receiver has distributed assets from the AMLICO and AMI receivership estates to the Connecticut Insurance Guaranty Association (“CIGA”) in the total amount of $20,000,000 and $4,000,000, respectively, as early access distributions for the administrative expenses, claims and claims handling expenses CIGA had incurred for covered policy obligations in connection with the AMLICO and AMI insolvencies. By letter dated September 22, 1989, the United States Department of Justice gave notice to the Ancillary Receiver that the United States, its departments, agencies, and instrumentalities assert priority status pursuant to 31 U.S.C. § 3713 with regard to the debts due it from AMI and AMLICO (“the Federal Priority Statute”). On October 4, 2002, the Ancillary Receiver filed with the Superior Court her Plan of Liquidation of Connecticut Assets of AMLICO and AMI (the “Plan”). The Plan provides for the payment of the expenses of administering the companies’ estates and also provides for the payment of claims by policyholders that are Connecticut residents or claims by claimants against policyholders that are Connecticut residents. The Plan also provides for the payment of the claims and loss adjustment expenses of the two Connecticut insurance guaranty associations. The Plan further provides that after the payment of the foregoing claims and the establishment of reserves for disputed claims and administrative expenses, all remaining funds are to be transferred to the Massachusetts domiciliary receiver. The Superior Court entered an order approving the Plan on November 21, 2002 and subsequently entered an order authorizing the payment of certain allowed Class 2 claims under and pursuant to the Plan. These claims, totaled $805,225.03 and $142,098.53 for AMLICO and AMI, respectively, and were paid by the Ancillary Receiver on April 30, 2003. On May 9, 2003, the Ancillary filed with the Superior Court her Second Motion for Disallowance and Allowance of Claims. On November 5, 2003, the Ancillary Receiver signed an agreement with the Permanent Receiver and CIGA which establishes a procedure by which to resolve CIGA’s remaining claims against the AMLICO and AMI Connecticut ancillary receiverships in order to facilitate the closure of the receiverships. On January 28, 2004 the Superior Court entered an Order allowing a Class 2 claim in the amount of $1,600. On January 28, 2005, the Ancillary Receiver and the U.S. Department of Justice entered into a Release Agreement to withdraw the United States’ 1989 priority claim asserted against all assets of the AMLICO and AMI ancillary receivership estates with respect to debts that may be owed to the United States, its departments, agencies, and instrumentalities, thereby permitting the distribution of ancillary receivership assets to creditors. On March 29, 2005, the Connecticut Ancillary executed a transfer agreement between her and the Massachusetts Permanent Receiver of AMLICO and AMI, whereby the Permanent Receiver will be to indemnify, hold harmless and defend the Ancillary Receiver from all liabilities and claims, thereby allowing the distribution of the residual assets of AMLICO and AMI to the Permanent Receiver. On May 9, 2005, the Ancillary Receiver paid the Connecticut Life and Health Insurance Guaranty Association $138,996.09 in final settlement of its claims against the AMLICO and AMI ancillary receivership estates. On May 11, 2005, the Superior Court, upon motion of the Ancillary Receiver, entered an order enabling closure of the AMLICO and AMI ancillary receivership proceedings. The Superior Court order approved the agreement with CIGA and authorized the transfer of $5,737,500 from the AMLICO ancillary receivership estate and $1,012,500 from the AMI ancillary receivership estate to the escrow established in the CIGA agreement for the payment of CIGA’s remaining claims against the ancillary receivership estates. The order also authorized disposition of the Ancillary Receiver’s records, authorized the Ancillary to take other administrative action to close the ancillary receivership estates, and other requested relief. On December 14, 2005, the Ancillary Receiver transferred the residual funds in the ancillary receivership estates of AMLICO and AMI to the Massachusetts Permanent Receiver of AMLICO and AMI in the respective amounts of $15,935,050.96 and $2,812,067.82. On December 28, 2005, the Ancillary Receiver of AMLICO and AMI filed a Certificate of Discharge and Closure of Ancillary Receivership Proceedings with the Superior Court.