We are in receipt of your offer to settle and are aware of the terms you are requiring, among them, your requirement that if my client is to obtain a tax qualified, section 130 assignment of periodic payments, that we use either your broker or a life market selected and priced by your firm. I have attached your offer to settle in the form of a structure, the terms of that structure, and other related information to this letter as addendum A.
As you are aware, several states now require the assignor to provide internal rates of return, cost of the annuity and full disclosure of any commutation options the life company might have available in their policy form. As a matter of disclosure to our client in this case, we are requesting those same items listed above be provided in this matter, and will require them prior to acceptance of any offer. If you can not provide them my broker, who I have engaged separately, will be glad to obtain them for us.
As you are further aware, the recently decided Connecticut Supreme court case, Macomber v. Travelers, exposed several long standing questionable practices in the area of settling claims with settlement annuities. Among them, illegal or questionable commission sharing, selling insurance with out a license, short changing schemes and direction of premium to in house markets with out an open bid to insure the best price for the injured party. While we hope that your firm does not engage in any such activity, given the certification of this case as a class action, we now have a duty to our client in this matter to insure that we have on record that such harmful practices are not occurring in this case. As you know our fee agreement with our client requires we know exact costs or we will potentially be over charging our client and be in a very awkward position.
Given the above, we need a letter or release specifically stating that your firm does not and will not participate in any commission sharing, i.e. rebating, arrangement between the broker you are requiring us to use, and your company or any of its agents or assigneds. We would like further assurance that in the placement of this annuity that any and all daily rates, rate improvements, or pricing changes that reduce the cost or boost the payout will be immediately disclosed and provided to our clients in order to insure that any cost savings in the pricing process go to benefit our client and are not diverted back to the casualty company in the form of savings.
If company policy means that you are unable to provide the specific items in writing to us on this case we will then ask to use a broker of our choosing, who has a fiduciary relationship with our client and firm, to arrange the funding of this agreement and placement of the annuity contracts. Or if you prefer, we can have our brokers work jointly on this matter so both of our interests are protected. However, our acceptance of the offer to settle using a structure is contingent on the above terms, so please contact my office to let me know if you will be able to comply with them before I relay this offer to my client.