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Will Everest Continue to Pay if a Settlement with Sutton, et al is Reached?

Everest National Insurance has vowed to continue paying default protection insurance (DPI) on subprime auto loans purchased through the Centrix Portfolio Management Program (PMP), but a possible settlement is worrisome to officials at the NCUA and of concern to many credit unions as well.

By Staff Writer | Updated on June 29, 2007

ALEXANDRIA, Va. — Everest National Insurance has vowed to continue paying default protection insurance (DPI) on subprime auto loans purchased through the Centrix Portfolio Management Program (PMP), but a possible settlement is worrisome to officials at the NCUA and of concern to many credit unions as well.

Everest has sued Sutton and other Centrix principals for various frauds and breach of contract, while Sutton claims certain PMP loans owned by credit unions are excluded from DPI coverage. Sutton’s personal guarantee to Everest of Jan. 2004 that Founders Insurance Co. LTD, which he controlled, would cover certain DPI claims payments resulted in Everest demanding some $76 million last January. Sutton responded with a declaratory judgment in Colorado (where Centrix was based) claiming he had no responsibility for payment, because Everest procured his signature on the agreement through fraud. The company has “engaged in a continued pattern of overreaching and coercive conduct,” his complaint stated.

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