Final Liquidation For Legion and Villanova

Final Liquidation For Legion and Villanova

NU Online News Service, July 30, 2:05 p.m. EDT?Pennsylvania insurance commissioner Diane Koken announced that the Commonwealth Court of Pennsylvania has granted final orders of liquidation for Legion Insurance Company and its subsidiary, Villanova Insurance Company.

The orders were effective July 28, 2003, at 12:01 a.m., she said.

"In August 2002, we determined that Legion did not have sufficient liquid assets available to pay its obligations as they came due," Commissioner Koken said in a statement. "At that time, we petitioned the Commonwealth Court for an order of liquidation."

"We are relieved to finally have the ability to move forward with liquidation," Ms. Koken continued. "Many policyholders and other claimants were being impacted because they did not have access to state guaranty association coverage."

The court's liquidation orders, she said, will now begin to trigger the state guaranty associations to pay policyholder claims "to the maximum levels provided by law."

"In addition, by law, all Legion and Villanova policies will terminate within 30 days of this action," she added.

The Commissioner is appealing to the Pennsylvania Supreme Court a portion of the Commonwealth Court ruling that allowed four large policyholders to collect claims directly from Legion's reinsurers.

These four policyholders successfully contended that, since Legion acted as a fronting company, they were the intended beneficiaries of the reinsurance, and that they should have a preference over other policyholders because their claims greatly exceed the maximums available from the guaranty funds.

The Commissioner on the other hand claims that all of the available reinsurance proceeds should benefit all Legion policyholders equally and that these four large policyholders should not be favored.

Legion and Villanova were both based in Philadelphia and owned by Mutual Risk Management Ltd., a publicly held Bermuda-based company. The companies specialized in commercial insurance products, including workers' compensation, medical malpractice, general liability and property coverages, and wrote business in all 50 states, the insurance department said.