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IN THE CHANCERY COURT FOR THE STATE OF TENNESSEE TWENTIETH JUDICIAL DISTRICT, DAVIDSON COUNTY "N c;::,:;) STATE OF TENNESSEE \ c::r- \ - ex rei. JULIE MIX McPEAK, I COMMISSIONER OF COMMERCE I ' (.,..) -- AND INSURANCE FOR THE STATE OF 0 TENNESSEE, : ::::- No. 03-295-(IV) :I! Petitioner, 0 -( '-<) 0 (~ (X) v. THE RECIPROCAL ALLIANCE (RRG), a Tennessee Domiciled Insurance Company, Respondent. THE RECIPROCAL ALLIANCE RECEIVER'S MOTION FOR THE COURT TO ACCEPT AND APPROVE NUMEROUS FINAL DETERMINATIONS AS TO ENUMERATED CLAIMS AND TO APPROVE PAYMENTS OF APPROVED CLAIM AMOUNTS FOR APPROVED CLASS 5, CLASS 6 AND CLASS 7 CLAIMS I. INTRODUCTION Julie Mix McPeak, as Commissioner of the Tennessee Department of Commerce and Insurance, in her capacity as Receiver/Liquidator ("Receiver") of The Reciprocal Alliance (RRG) in Liquidation ("TRA"), and through her appointed Special Deputy Receiver, moves the Court, under T.C.A. §56-9-331, to accept and approve, as final, the Class 5 and Class 8 determinations set forth in Exhibit A. This Motion does not request approval of a distribution, pro rata or otherwise, as to the approved Class 8 claim amounts set forth in Exhibit A, but rather only seeks acceptance and approval of the three listed Class .8 claims. As to payment distributions, this Motion seeks approval of 100% payment of the approved Class 5 claims listed in Exhibit Bl, the approved Class 6 claims listed in Exhibit C and the approved Class 7 claims listed in Exhibit D. II. DISCUSSION A. Requested Acceptance and Approval of Class 5 and Class 8 Claim Determinations. i) ROA/TRG Class 5 Claims. There are three Class 5 claims that have as Claimants either Reciprocal of America ("ROA") or The Reciprocal Group ("TRG"), which are entities related to TRA and are currently in receivership proceedings in Virginia- POC #2161 (TRG), POC #2163 (TRG) and POC #2190 (ROA). The TRA Receiver and these Claimants have recently reached agreement as to the adjudication and finalization of these POCs. As part of that agreement, on June 16, 2016, the TRA Special Deputy Receiver issued Final Agreed Notices of Determination setting forth the Approved Claim Amounts as to each of the above-referenced Class 5 claims. The Claimants (ROA and TRG) have agreed not to object to the Final Agreed Notices of Determination and have waived the thirty (30) day objection period under T.C.A. §56-9-327. Exhibit A sets forth the agreed upon final determinations as to those ROA/TRG Class 5 claims. Pursuant to T.C.A. §56-9-331, the TRA Special Deputy Receiver recommends, and moves, that the Court (a) accept this report as to the ROA/TRG Class 5 final claim determinations set forth in Exhibit A and (b) approve the final claim amounts listed for those ROA/TRG Class 5 claims. ii) Cessna and Skloss Class 5 Claims. Phyllis Cessna and Belinda Skloss submitted claims in the TRA Receivership proceedings that were determined by the TRA Special Deputy Receiver as Class 5 claims with Exhibit B includes the Class 5 claims that are listed in Exhibit A. 2 an approved claim amount for each set at $0.00- POC #463 as to Cessna and POC #1575A as to Skloss. Claimant Cessna and Claimant Skloss objected to their respective claim determinations and a hearing was held before Referee Gary Chaffin on October 6, 2015. The Referee affirmed the TRA Special Deputy Receiver's determination (see Recommendation of Referee filed on February 11, 2016). Claimant Cessna did not object to the Referee's Recommendation within the fifteen (15) day period allowed pursuant to T.C.A. §56-9-327. Accordingly, that Class 5 determination in the amount of $0.00 as to Cessna (POC #463) is final. Pursuant to T.C.A. §56-9-331, the TRA Receiver recommends that the Court accept this report as to the Class 5 Cessna claim (which is included in Exhibit A hereto) and approve the $0.00 final claim amount listed for that claim. Claimant Skloss filed with the Court materials that could be construed as an objection to the Referee's Recommendation as to her Class 5 claim. To avoid the costs of an objection proceeding before the Court and so as to be able to finalize all of the Class 5 claims, the TRA Special Deputy Receiver and Ms. Skloss have agreed to settle her pending Class 5 claim for an amount of $200.00. Accordingly, the TRA Special Deputy Receiver recommends, and moves, that the Court accept the Skloss Class 5 claim as reported herein and approve a final claim amount of $200.00, i.e. the agreed upon settlement amount of that Class 5 claim. That treatment of the Skloss Class 5 claim is also set forth in Exhibit A attached hereto. iii) ROA Class 8 Claims. The TRA Special Deputy Receiver and ROA have also reached agreement as to the final determination of two Class 8 claims to which ROA is the Claimant- POCs #2162 and #2184. It was agreed that the approved claim amounts of each of these Class 8 claims be set at $0.00. As part of that agreement, on June 16, 2016, the TRA Special Deputy Receiver issued Final Agreed 3 Notices of Determination setting forth those $0.00 amounts as the approved claim amounts for each of these Class 8 claims. ROA has agreed not to object to the Final Agreed Notices of Determination and has waived the thirty (30) day objection period under T.C.A. §56-9-327. In addition to setting forth the Class 5 claims referenced above, Exhibit A also sets forth the agreed upon $0.00 final determination of those Class 8 claims. Pursuant to T.C.A. §56-9-331, the TRA Special Deputy Receiver recommends, and moves, that the Court (a) accept this report as to the ROA Class 8 final claim determinations set forth in Exhibit A and (b) approve the final claim amounts of $0.00 for each of these two Class 8 claims. B. Requested 100°/o Distribution as to Approved Claims Amounts for the Approved TRA Class 5, Class 6 and Class 7 With the presentation, acceptance and approval of the ROA, TRG, Cessna and Skloss Class 5 final claim determinations above, all TRA Class 5 claims have been adjudicated, finalized, and have been accepted and approved by the Court (see Court Order entered on June 30, 2015 for acceptance and approval of all non-ROA/TRG/Cessna/Skloss Class 5 claims). Exhibit B hereto sets forth all of the finalized and approved TRA Class 5 claims and the final approved claim amounts for each claim (albeit that some are $0.00). The total approved claim amount for all of the approved Class 5 claims, set forth in Exhibit B, is $662,442.07. By previous Order of Court entered on December 23,2015, all of the TRA Class 6 claims have been adjudicated and finalized and have been accepted and approved by the Court. Exhibit C hereto sets forth all of the approved TRA Class 6 claims and the final approved claim amounts for each claim (albeit that some are $0.00). The total approved claim amounts for all of the TRA Class 6 approved claims, set forth in Exhibit C, is $73,457.51. By previous Order of Court entered on December 23,2015, all of the TRA Class 7 claims have been adjudicated and finalized and have been accepted and approved by the Court. Exhibit 4 D hereto sets forth all of the approved TRA Class 7 claims and the final approved claim amounts for each claim (albeit that some are $0.00). The total approved claim amounts for all of the TRA Class 7 approved claims, set forth in Exhibit D, is $51,712.34. Through this motion, the TRA Special Deputy Receiver requests approval of the 100% payment of the Class 5, Class 6 and Class 7 approved claim amounts, which, in the aggregate, totals $787,611.92. C. Adequate Assets Are Available For Requested Payments Along with Reserving for Administrative Expense Claims and Pending Class 2 Claims. Adequate assets exist from funds jointly recovered by TRA and its sister RRG companies (American National Lawyers Insurance Reciprocal, RRG (in Liquidation) ("ANLIR") and Doctors Insurance Reciprocal, RRG (in Liquidation) ("DIR")) so as to pay the above-referenced $787,611.92 on the TRA Class 5 - Class 7 approved claim amounts while also reserving funds for anticipated administrative expenses of the TRA Liquidation Estate. Other than the anticipated administrative expense claims, which are being reserved for, there are no other claims pending in the TRA Liquidation Estate that are superior in priority to the Class 5 - Class 7 claims, payment of which is sought though this Motion. The only other claims in the TRA Liquidation proceedings that have not been adjudicated to finality are claims that have been classified as Class 8 or Class 9 claims. Physicians Management Corporation has a pending Class 8 claim (POC #2215); Healthcare Providers, Inc. has a pending Class 8 claim (POC #2139); COPIC Insurance Co. has two pending Class 8 claims (POC #234/2139); and ACA Insurance Trust has a pending Class 9 claim (POC #1423.) These Class 8/Class 9 claims have received their claim classification (i.e. Class 8 or Class 9) through Notices of Determination previously issued by the TRA Special Deputy Receiver and no objection to those claim classifications were made within the time allowed. Accordingly, those Class 8 and Class 9 claim classifications are 5 2 final . Because adequate funds are reserved for administrative expenses, and because the remaining claims are either Class 8 or Class 9 claims, the requested payment of 100% of the approved TRA Class 5- Class 7 claim amounts is consistent with T.C.A.

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