Vanguard Fire & Casualty has been ordered into liquidation by Leon County Circuit Court Judge Terry P. Lewis due to the inability of the carrier to pay claims. The Maitland-based company was placed in rehabilitation in January at the request of the Department of Financial Services when state auditors determined the company could no longer meet its financial obligations. The company didn't object to the legal move, which came after the carrier indicated that it would stop writing new business and would stop writing any renewal policies as of April 19. Under the liquidation order, all Vanguard policies will be cancelled as of April 25.
The Maitland-based carrier was specifically created in 1998 to help depopulate the former Florida Property and Casualty Joint Underwriting Association. After several years of profitability, the carrier took a financial turn for the worse following the 2004 and 2005 hurricane seasons. Since being placed into rehabilitation, regulators have paid out over $6 million in claims while calculating that the carrier does not have adequate cash and reserves to pay additional claims. As a result, the state will now pick up any remaining claims.
"Getting the company into the liquidation process will allow us to immediately begin paying claims from the state's Florida Insurance Guaranty Association," said Chief Financial Officer Alex Sink. "Our top priority is to take care of policyholders and ensure their claims are paid."
The department has a request pending before Judge Lewis asking permission to allow the carrier's 57,000 current policyholders to be offered coverage through the Ormond Beach-based Royal Palm Ins. Co. and Security First Ins. Co. The two companies also have offered policies to 120,000 Allstate Floridian policyholders who were dropped by the company in 2006. Royal Palm and Security First market policies solely through Allstate agents.
Royal Palm is backed by $65 million from the Illinois-based Ritchie Capital Hedge Fund. The carrier also has applied for a $25 million matching loan from the state. As part of the homeowners' insurance bill passed by the legislature earlier this year, lawmakers set aside $250 million earmarked for loans to companies that will step forward and sell homeowners' insurance in the state. The carriers are the brainchild of Locke Burt, who was a state senator from 1991 to 2002.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.