State financial department to take over insurer’s operations, assets
State financial department to take over insurer’s operations, assets | Insurance Business America
Life & Health
State financial department to take over insurer’s operations, assets
Supreme Court orders insurer’s rehab
Life & Health
By
Noel Sales Barcelona
The New York Supreme Court (NY SC) has ordered the rehabilitation of Columbian Mutual Life Insurance Co., with the New York finance department taking over the assets and operations of the company. The NY SC named Adrienne A. Harris, DFS superintendent, as the rehabilitator. It was in July this year that Harris requested the takeover.
According to an AM Best report, Harris has already commenced the review of the company’s financial condition and, if possible, will develop a plan to rectify Columbian Life’s situation.
The report also stated that the company’s board of directors unanimously agreed on the rehabilitation plan as ordered by the court to protect its policyholders, creditors, and other stakeholders.
Citing a statement issued for policyholders, the AM Best report stated that Columbian Life reassured its clients that “all policies remain in place and the order would not result in any coverage changes.” The company also ensures that it is “business as usual” with the claims processing and payment operations, notwithstanding the ongoing rehabilitation. However, the company did not specify how long the rehabilitation will last.
Meanwhile, the report noted that if the company should undergo liquidation, the state’s life and health guaranty association would honor policies up to the statutory cap of $500,000 for policies issued in New York.
“Columbian Life’s precarious situation was partially driven by mispricing of policies,” Alan Shortell, the administrator for The Life and Health Insurance Company Guaranty Corporation of New York, told AM Best. “There were also apparently some moves being made in terms of selling subsidiaries, which were initiated and, apparently, never materialized as a potential solution to their financial distress.”
Stell also explained that liquidation of a life insurer is an extremely rare event in New York, with Executive Life of New York being the last life carrier to be liquidated in the state. The action occurred in 2013 and was driven by the company’s position in structured settlement annuities, Stell told AM Best.
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