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AUSTIN, Texas – Nearly a year after portions of a $13.8 million sum in receivership from defunct Members Mutual Insurance Co. went out to former policy holders, officials say they’re having trouble finding at least half of the 66,000 persons due checks, most of them being credit union members. The Texas Department of Insurance (TDI) mailed out checks for $209.50 each in March 2002 to former policyholders of Members Mutual, a property and casualty insurer that served credit union members, which was placed in receivership in September 1992. About half – nearly 33,000 – of the checks totaling $7 million were returned because the addresses were no longer valid, said TDI Spokesman Lee Jones. TDI has used Internet searches and other means to locate the owners, in addition to the Texas Credit Union League sending out notices to credit unions and reminders since 2001. Members Mutual owned and operated Members Service Insurance Co. and Members Insurance Co., which were also shut down although not individually insolvent. A special deputy receiver was able to pay all claims and other obligations of those two companies from their own funds, according to TDI. Their remaining assets became the property of Members Mutual, the sole stockholder of the two companies. The court determined that the assets left over after all obligations had been paid should be distributed to Members Mutual policyholders who had policies in effect between Jan, 1, 1991 and Sept. 30, 1992. The insurer stopped renewing policies in 1991. In addition to Texas, Members Mutual operated in Arizona, Arkansas, California, Colorado, New Mexico and Oklahoma. “It’s a rarity for a failed insurance company to have money that can be returned to its customers,” said TDI Commissioner Jose Montemayor. “A $200 check will buy a lot of groceries, and we hope that the Members Mutual policyholders who have not gotten theirs will call and tell us where they are.” As a courtesy, the Texas Credit Union League (TCUL) sent out notices in 2001 alerting credit unions that the receiver was looking for former policyholders and also distributed reminders of check availability in early 2002 pointing out that members should be aware that the checks are not advertisements. “We are talking to TDI officials to be sure that the league has the authority to send out additional reminders through e-mail and newsletters,” said Bob Gallman, TCUL senior vice president/COO. Although the checks indicate a `cash by’ date, Jones said the date has been waived. If former policyholders don’t step forward, the funds will be held in an unclaimed funds account until 2004, Jones said. After that, TDI can continue to try locating claimants. As a last resort, under Texas law, TDI can ask a judge to declare that the funds be placed in an abandoned funds account. Jones emphasized that while those abandoned funds can be used for activities related to other receiverships and to help finance continued operations of receiverships or conservatorships, “the money will always be there,” should a person step forward. “It happens,” Jones said. “Years later, someone may call saying, `gee, I heard about the money but I wasn’t sure if it was too late to collect it.’ As long as they can verify certain information, the money will be there.” TDI has distributed three separate news releases, with the latest one on Mar. 6 resulting in nearly 30 telephone inquiries, Jones said. Persons with questions about the distribution should contact TDI’s Liquidation Oversight Division at (800) 578-4677, extension 3-6450, for Jean Sustaita or extension 5-8152 for Bill Carter. Or write to: Texas Department of Insurance, Liquidation Oversight, Mail Code 305-1D, P. O. Box 149104, Austin, Texas 78714-9104. [email protected]

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