Liquidation Comes For Lavish Insurer

January 26|By Laurie 

In 1990 Chicago insurance executive Raymond Ankner flew about 100 of his top agents to Germany to celebrate Oktoberfest in Cologne. The cost of the trip was $800,000, billed to Ankner`s businesses. regulators were already beginning to question expenses of  his main insurance unit, InterAmerican.

The failure of InterAmerican is a major headache for the many independent agents who represented the company. Many of them apparently believed that the insurer had virtually all its investments in government bonds and was financially sound-or ``hunky-dory,`` according to Eric Wiltshire.
``The agent`s got egg on his face,`` said Wiltshire, chairman of a Birmingham, Mich.-based pension-consulting and insurance firm that dealt with InterAmerican.
InterAmerican`s approximately 25,000 customers can`t currently cash in their insurance policies and annuity contracts or collect benefits. Most of their claims are expected to be covered in the next few months by life insurance guaranty associations in Illinois and the other 44 states in which InterAmerican did business
Though big by Illinois standards, InterAmerican`s demise is small potatoes compared with several widely publicized out-of-state failures that rocked the life insurance industry last year. Failed Executive Life Insurance Co. of Los Angeles, for example, had assets of about $10 billion;
InterAmerican`s assets totaled about $140 million as of year-end 1990.
Yet the company`s problems are typical of many ailing life insurers, regulators say. Besides a heavy dose of non-performing real estate, the troubles include rapid growth supported by a controversial financial InterAmerican`s assets totaled about $140 million as of year-end 1990.
Yet the company`s problems are typical of many ailing life insurers, regulators say. Besides a heavy dose of non-performing real estate, the troubles include rapid growth supported by a controversial capital.
InterAmerican`s collapse raises questions about the effectiveness of state insurance regulation, especially in cases involving complex financial transactions. Illinois is usually ranked among the top three states in policing insurers, along with New York and California.
But some insurance experts who have examined InterAmerican`s books say it was clear several years ago that the company was headed for a fall.
Illinois insurance director Stephen Selcke defends the department`s actions, calling them ``appropriate and timely.`` But he and other insurance department officials say the agency`s staff is overworked, particularly in the area of monitoring financially troubled life insurance companies.
Five people are assigned to spot potential problems among the nearly 900 life and health insurers operating in the state, including 160 based here for whom Illinois is the main regulator. Selcke said he hopes to get legislative approval to beef up the staff for fiscal 1993, beginning July 1, when a law takes effect that requires insurance companies to pay more of the department`s budget.