Kentucky Central Life
- Doug Andrew
- Garvice D. Kincaid
- 1980 0111 - Lexington Herald-Leader - Court rules Kincaid's daughter doesn't have to forfeit stock - newspapers.com/article/lexington-herald-leader/148100046/
- William Tozer
- https://www.newspapers.com/article/the-olathe-daily-news/148101519/
- 1987 - https://www.newspapers.com/article/the-courier-journal/148101701/
- Tax-Free Borrowing
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...Stauffer suggests switching the annuity to the universal life policy offered by Kentucky Central Life Insurance Co. which is guaranteed to return 11.75 percent interest for one year if opened by Feb. 1.
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He said the Kentucky Central plan also will permit tax-free borrowing against the money you put in.
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- 1996 0430 - Los Angeles Times - Pressure Mounts to Curb Insurance Industry Guard, By Scot J. Paltrow - [link]
- Hunter and others say the Kentucky Central episode stands as a textbook example of the risk of leaving regulation to a company’s home state.
- Based in Lexington, Kentucky Central was among the nation’s biggest sellers of universal life policies.
- In the late 1980s, it began investing heavily in questionable real estate deals. As the value of those investments dropped, Kentucky Central’s reserves for paying customers’ claims dwindled.
- As the problems grew, Kentucky’s insurance department did nothing to stop the company from selling new policies.
- The Louisville Courier-Journal unearthed evidence that when Kentucky Central started to get into trouble, it went to great lengths to court state officials. Court records show that weeks before Gov. Wallace Wilkinson’s inauguration in 1988, Kentucky Central paid $12.6 million to buy a money-losing hotel from him in the state capital. The price included a $120,000-a-year “consulting fee” payable throughout his term in office.
- (The company’s liquidator is suing Wilkinson to try to get the money back. A Wilkinson spokesman said the governor never tried to influence state insurance regulators.)
- In 1992, the NAIC’s newly beefed-up computer system began kicking out warnings. As Kentucky Central’s problems worsened, one state after another, including California, suspended the company’s license to sell policies.
- Finally, in late May 1993, the Kentucky Insurance Department banned the company from writing new policies and put it into liquidation.
- A lawyer for Kentucky Central’s liquidator said the company then had on hand $141 million less than it needed to cover potential claims. The liquidator estimated, however, that once all assets are disposed of, Kentucky Central’s customers will have suffered no permanent loss.