The Special Deputy Receiver over National Prearranged Services recently filed an application to assign a significant portion of the NPS preneed contracts to Liberty Bankers Life Insurance, and a subsidiary, Capitol Life Insurance Company.  If approved by the court, the NPS contracts will transfer on November 1st.  Preneed contracts sold in Missouri and Alabama will be assumed by Capitol Life, and the remaining states’ contracts will be assumed by Liberty Bankers.  Both companies will rely on an independent insurance company, Texas Service Life Insurance Company, to process claims.

Of the preneed contracts being transferred, Missouri is the largest block involved and Illinois is the second largest.  Missouri contracts will account for almost half of the business transferred.  Missing from the transaction are most Texas preneed contracts.  Texas contracts account for less than 1% of the transfer.  When NPS collapsed in 2008, Texas was hardest hit by the failure.  If the proposed sale to Liberty Banker Life does not include the Texas contracts, the SDR must have other plans (or offers) for the Texas contracts.

It is too early to tell how the transfer will impact the current claims process.  However, Liberty Bankers Life and Capitol Life specialize in final expense products, and therefore are familiar with the death care business.  The transaction will provide these insurance companies a marketing toehold with funeral homes.

Funeral homes should anticipate some joint announcement from the SDR and Liberty Bankers Life the second week of November.