650 agents receive deferred comp., other creditors paid

Contact:  Ronda Sloan 502-564-6098

FRANKFORT, Ky. (Aug. 11, 2006) – More than $40 million was released today to former agents and other creditors by the estate of Kentucky Central Life Insurance Co. The distribution included $9 million in deferred compensation to about 650 former agents of the failed insurer.

“We were particularly pleased to be in a position to make the deferred compensation distribution,” said Julie Mix McPeak, Kentucky Office of Insurance executive director and Kentucky Central liquidator. “Under statute, these payments could not be made until other issues had been resolved, so we are very happy to have reached this point in the liquidation.”

Other claims paid today included:

• $16.5 million to state guaranty associations for support to the accounts of former Kentucky Central policyholders during a portion of the liquidation.
• $9.9 million to bondholders for the Lexington Festival Market development. Kentucky Central guaranteed the bonds, and when the project failed, the bonds went into default. With the exception of interest, today’s payment fulfills Kentucky Central’s liability.
• $2.1 million to Lexington-Fayette Urban County Government to fulfill Kentucky Central’s joint and several liability agreement for the Festival Market project.
• $1.9 million to Sterling Property Recovery Co., as assignee for Lincoln National Life Insurance Co., to cover Kentucky Central’s responsibility for an office building mortgage.
• $1.1 million to 50 other unsecured creditors.

McPeak said the estate is taking steps to prepare and finalize a reimbursement to Jefferson-Pilot Life Insurance Co., which entered into a reinsurance agreement for the majority of policies when Kentucky Central was placed in liquidation.

The reimbursement is for amounts owed to former policyholders of Kentucky Central for items such as additional expense charges and lower crediting rates on account balances. The reimbursement will have the effect of making policyholders whole for the limitations placed on the policies when Kentucky Central was placed in rehabilitation and for the five years subsequent to the transfer of the policies to Jefferson-Pilot.

The Office of Insurance assumed control of Kentucky Central in February 1993 and the company entered liquidation in 1994.