NU Online News Service, Feb. 9, 1:42 p.m. EST
Liquidators in charge of bankrupt insurers around the nation are moving to shut down some of the larger estates ordered liquidated in the early 2000s or before, according to the National Conference of Insurance Guaranty Funds.
NCIGF said in addition to that trend property and casualty guaranty funds had seen new activity in 2009 due to insolvencies that included a residential insurer and a commercial insurer in Florida, and a couple of workers' compensation carriers.
In its annual Insolvency Trends, NCIGF said that in November 2009 two Florida p&c companies were found insolvent and are now being liquidated. American Keystone Insurance Company insured residential property risks in the state, while First Commercial Insurance Company and its subsidiary wrote commercial coverages, NCIGF said.
Southeastern U.S. Insurance, a workers' compensation insurer in Georgia, was placed into liquidation a month earlier in October, NCIGF said.
The insolvency of workers' comp insurer Park Avenue Property & Casualty Company required quick action by Oklahoma regulators, NCIGF said, due to the conditions of the estate.
"The company was liquidated with no prior notice to the guaranty funds…. The guaranty funds and the receiver are now hard at work to transition the files with minimal disruption of ongoing benefits to injured workers," NCIGF reported.
The process has been complicated, NCIGF said, by issues related to data conversion and electronic files. NCIGF said this insolvency showed the need for "proven and tested electronic systems to ensure quick and secure transfer of insolvency-related claims information between guaranty funds and receivers."
NCIGF added, "While small in number of claims, this situation is a case study in why it is important to keep the guaranty fund safety net in place and 'ready to roll' literally at a moment's notice."
Regarding the trend to shutter larger estates, the organization said that the Commonwealth Court of Pennsylvania has rendered a final bar date order in PHICO, a large medical malpractice insurer that went insolvent in 2002. NCIGF noted that the company's operations have been moved out of its offices and into the Pennsylvania Insurance Department.
In California, the California Conservation & Liquidation Office (CLO) plans to complete two final distributions in 2010 to add to the five it has completed over the last two years, NCIGF said. "All seven of these estates are expected to be judicially closed by year-end 2010," NCIGF added.
"In addition to these closure estates, the CLO has distributed in excess of $2.7 billion in early access payments and final distributions over the past five years as the organization works to position large insolvencies such as the Superior National estates, Fremont and the Mission estates for closure in the next couple of years."
The Illinois liquidator closed seven estates in 2008 with distributions totaling $9.4 million, and closed five more estates in 2009 with distributions totaling $96.3 million, NCIGF said, adding that Illinois plans to close at least four more estates in 2010.
Other large insolvencies that have gone to liquidation, such as the American Mutual Companies (American Mutual Liability Insurance Company and American Mutual Insurance Company of Boston) and Transit Casualty Insurance Company, are expected to wind down soon as well, NCIGF said.
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