Maryland Judge Rules on GAMHC Assets

Cole County Circuit Judge Thomas J. Brown issued an order setting rules on how to distribute $1.2 billion in proceeds from the sale of General American Mutual Holding Co.’s (GAMHC) assets to MetLife.

As a mutual company, GAMHC was owned by its policyholders, and those rendered eligible by Brown’s ruling will share in the distribution of the sales proceeds and interest income, probably in the year 2003. Brown’s order provides that:

• Eligible policyholders as of Jan. 5, 2000 will participate in the distribution. This ruling removes the last doubts about the ability of policyholders to make changes or cash in their continuing General American Life Insurance Co. insurance contracts, if they so choose, without jeopardizing their GAMHC share.

• All eligible policyholders will receive a “fixed share” that equally divides 5 percent of the net sales proceeds. Eligible policyholders will receive so-called “variable shares” of the remainder of the funds under a complex formula that takes into account the number of policies held, their age, amount and other factors. Brown accepted the special deputy rehabilitator’s proposal on the broad terms of the formula.

• Parties that want to legally challenge the terms of the sale or management decisions last year that precipitated the sale must file a “claim” by Jan. 31, 2001 or forfeit their right to do so. Brown approved a proposed claim form and public notice about the so-called “bar date.”

After a mailing to all 330,000 policyholders potentially affected, Brown only received eight written challenges or comments to the special deputy rehabilitator’s proposals. A few were represented by counsel at the Nov. 16 public hearing on the proposals before Brown.

Topics Legislation Maryland